A USDA report published in 2021 says that sales of local edible farm products grew 35% from 2015 to 2017. This growth is thanks to increased sales through retailers, institutions, and wholesalers.
Wholesale or business-to-business (B2B) selling is when a business (farm in this case) sells their products to another wholesale buyer or business (e.g., restaurant, grocery store, meat box service). The rise of food hubs, which often aggregate products from multiple farms to sell wholesale, has boomed by 288% growth since 2006. This means more farmers are getting involved in wholesale markets to support and meet the demand for local food.
If you're interested in selling your farm products wholesale or simply want to learn more about this business model, keep reading to learn how to successfully sell produce wholesale successfully and sustainably.
Wholesale selling is one of the many different types of farming business models. The difference between wholesale and retail or direct-to-consumer (DTC) sales lies in the relationship between price and quantity. These differences might help you decide if wholesale selling is feasible over selling DTC (or the other way around).
Now that you know the key difference between selling wholesale and retail. Here’s a full breakdown of the pros and cons of selling produce wholesale.
Selling wholesale is not for everyone, just like selling retail isn’t for everyone. There’s no one-size-fits-all all.
In a study on family farms in central New York, farmers were asked to rank their perceived risks for each sales channel (i.e. CSA, U-pick, farm stand, farmers’ market, restaurant, distributor, and wholesale). Regarding wholesale, disruption to lifestyle and stress were the top concerns.
Here’s a summary of the results:
The concerns mentioned are only impactful if you’re unable to fully commit to the demands of wholesale selling (more on that in a moment). Successfully selling wholesale depends on your dedication and commitment, using the right mix of sales channels, and most importantly, the vision for your farm.
As a farmer selling wholesale products, you agree to provide consistent production, reliable fulfillment, and compliance with necessary food safety and traceability practices. Here are seven factors to consider before you decide to go all-in on selling produce wholesale.
Wholesale buyers are looking for producers who can produce high-quality products reliably. Before selling wholesale, you need to ensure you can keep up with demand.
Consider whether you’re at a phase in your production where you can keep a consistent production flow. With enough time and practice, you should be able to accurately predict production over the season to keep up with your buyer’s expectations.
Some questions to ask yourself:
You don’t need to be able to predict a full year ahead. Season by season will work. Truthfully, the nature of farming is that it’s unreliable. Wholesale buyers know this and are typically open to working with their farms when issues arise.
Beyond being able to deliver orders regularly (i.e., weekly, bi-weekly), you need to ensure that you’re producing sufficient quantities in the first place.
Can you produce enough products to fulfill what a buyer wants? How big is your buffer in case you have a crop failure? Having these conversations with wholesale buyers is important before you begin your relationship with them.
Tip: For those just starting out with selling wholesale, we recommend estimating supply lower than expected. This ensures you don’t oversell and you have enough buffer in case you experience any disturbance to production.
Building your customer base takes time and energy when selling directly to buyers, and farmers should be prepared to invest in this process. Building relationships when selling DTC can take some effort, but there’s a plethora of resources to help like email marketing and social media, just to name a few.
That said, the same marketing strategies used for selling DTC may not be fruitful when finding wholesale buyers. Instead, consider existing connections with potential buyers or whether those in your network have connections you can leverage. Seek relationships by stepping out of your comfort zone and pitching your business.
For example, search for local restaurants or independent buyers who promote local food and strike up a conversation! Starting out can be difficult, but remember that it’s okay if not all conversations lead to deals. Just keep going and you’ll find the right buyer.
Farms that clearly understand their production costs and pricing strategy are better prepared to negotiate with wholesale buyers. It’s key to have a good sense of your profit margins and know how to price your farm products for wholesale to ensure it’s profitable for your business. Also, have an understanding of current wholesale prices for similar products–will these prices enable you to meet your goals?
As you scale up your production for wholesale, determine whether your current operations and workflows are also scalable. You should have systems for inventory management, quality control, and packing to meet wholesale demands efficiently and effectively.
For instance, a good question to ask yourself is, “What parts of my business would not work if my farm sales doubled in the next year?”. This may sound like an unrealistic event, but it’s a good question because it can clarify the top few things that you should be consistently working to improve.
Fulfillment plays a significant role in a thriving wholesale operation. Getting the logistics right is a big opportunity to win over more wholesale buyers and even increase your profits. You must consider your minimum order, delivery fee, and service area. With the right mix of all three, you can win over buyers and make money on your fulfillment strategy.
For example, farmers may need to arrange to deliver their products. This might involve purchasing a truck or coordinating delivery with a buyer-owned truck.
Wholesale buyers may require liability insurance, Good Agricultural Practices (GAP), Primus GFS certifications, or other requirements. Understand the requirements each buyer will need. This could indicate whether or not selling wholesale is a possibility or a non-starter. As you’d expect, the bigger the buyer, the more requirements they will have.
If you check off all the boxes of what it takes to sell wholesale, there are many different types of wholesale buyers you can sell to. From selling to chefs, meal box services, grocery stores, and schools, the possibilities are near endless!
Here’s a list of each buyer type you may consider selling to:
Selling wholesale can present some challenges, like needing to produce larger volumes, meeting strict and specific quality standards, building relationships, and managing more complex operations and logistics.
However, selling wholesale can be a highly rewarding opportunity for farms. That is, wholesale sales provide steady, larger-volume orders and can open new markets for farms, leading to greater stability and growth.
Yes, you need to ensure that you’re producing sufficient quantities to meet buyer expectations and demand when selling wholesale. For new farmers, it’ll take some years of experience before you can accurately predict the buffer. On the other hand, more experienced farmers may be able to predict better buffers needed for extra production.
Buffers will vary depending on different factors (i.e., geographical area, size of farm, climate) but keep in mind that being able to predict and set a buffer season by season is enough.
Yes, existing relationships are key when selling wholesale. Strong relationships with buyers can lead to consistent orders, better communication, and better yet, stronger and long-term partnerships. Trust and reliability built over time can help you navigate challenges, making it easier to grow and sustain your wholesale farm business.
When fulfilling farm wholesale farm orders, you may choose to partner with local distributors or deliver directly to your wholesale buyers. The latter may involve purchasing a truck or coordinating delivery with a buyer-owned truck.
To get your products to wholesale customers, you can streamline the process using farm e-commerce platforms like Local Line. Local Line can help you manage wholesale orders, track inventory, and handle fulfillment easily.
Most of the time, wholesale buyers have stricter quality requirements that farmers must meet to sell their products. For example, they may require liability insurance, Good Agricultural Practices (GAP), Primus GFS certifications, or other requirements.
Understand the requirements each buyer will need to ensure you’re upholding food safety when selling wholesale. As a good rule of thumb, the bigger the buyer (i.e., schools, restaurants), the more requirements they will tend to have.
