Selling Your Products on the Farm

Technical articles - Diversification

Settling in agriculture Short supply chains Market gardening Arboriculture On-farm processing

Direct selling is a "sales operation that takes place without intermediaries, between the producer and the final consumer." The seller must therefore be the origin of the products offered.

Description

The use of a dedicated, fitted-out premises for sales is the most common form of direct selling on the farm.

It requires being available and ensuring the quality of the product and the sales area.

As with all direct selling methods, the producer must remain attentive to their consumer and possibly adapt their offer to retain them.

Signage panel

Investments

• Install signage panels, well designed and attractive.
• Provide a space for parking and ensure the good upkeep of the farm.
• The sales premises must be located in a pleasant place, it must be clean and tidy. The layout must be attractive, while remaining in line with the farm's image. Customers will appreciate finding information about the production method, product quality...
• Invest in furniture and equipment for product display, at minimum, clean crates.
• Display prices and legal product information on labels. You can also highlight certain products with small informative texts.
• Provide a scale for weighing, a cash register, bags...
• For the specific case of pick-your-own farms, it is advisable to display simple rules to avoid any damage. Likewise, harvesting equipment should be provided for customers as well as packaging.

Store layout

Health rules

The producer must :

• Have the necessary refrigeration equipment to respect the cold chain for storage and sale of products to be kept cold
• Have undergone hygiene training and implement appropriate measures to prevent food contamination,
• Prohibit access to the store for animals.
• Since the producer is responsible for what they sell, it is important to check the condition of the products put up for sale, especially those received from other farms.
• The sales premises must be closed to the public road and protect goods from sun and pollution.

For more information on the regulations to follow, see this article and this one.

Farm shop

Efficiently setting up a shop

• Welcoming and clear exteriors : upon arrival at the farm, the customer must clearly identify where to park and where the shop is.
• Easy circulation inside the shop.
• Clear product placement.
• Smart product placement: analyze customer flow and behavior in the shop. Place products that customers may buy on “impulse” in the busiest and most spontaneously seen areas.
• Impression of abundance and no emptiness : highlight products, avoid empty shelves which repel customers (or explain why they are empty : seasonality of production…).

Shop signage

Signage is all the panels and communication on site that guide the customer to the shop entrance.

Road signage

These are regulatory direction, indication, or service information signs, located at the roadside. To obtain this type of sign, inquire with the manager of the relevant road :

• Town hall for municipal roads,
• Departmental council for departmental roads,
• Interdepartmental Roads Directorate for national roads.

Advertising signage

It includes advertisements, signboards and pre-signs. The supports used must not cause confusion with regulatory signage.

The contact for advertising signage is the town hall or the prefect if the municipality does not have a local advertising regulation (RLP).

Signs must be simple, clear and precise and include : the shop name, a summary of what is sold there (example : farm products or fruits and vegetables), the logo if there is one, and the word "sale" or "shop" so customers know they can buy products.

Be careful with colors used : they must not spoil the readability of the sign. Use simple colors, black and white or possibly red to attract the eye and keep the sign effective.

Where to place signs?

Near the shop and on the main roads closest to the farm. This will attract new customers who will come to see what the shop and products look like.

A tip is to keep the same style of sign even if the dimensions change and position them at the same eye level because it reassures and guides the customer looking for the next sign.

Internal markings

Internal markings are all signs, displays, and placards in the shop that guide the customer and share information. For example, "Parking" and "Entrance" or "Welcome" signs are appreciated.

Once inside the shop, the customer must know what it is and be able to find their way. Product names and prices must be clearly displayed.

Several types of signs are possible :

• Signs that introduce the producers of the highlighted products.
• A poster at the entrance explaining the shop concept.
• Information leaflets : promotions, organization, opening hours, events…

Developing the shop's product range

To complement the range of products sold in the shop with other farm products, buying and reselling allows purchasing products from fellow producers and reselling them in the shop with a margin.

To do this, start by looking for what is produced around you and that you would like to highlight in your shop : local products? Products with a specific label? What product categories to complement yours? (dairy products, meat, savory groceries, sweets, vegetables, drinks…).

Then contact the producers you are interested in and ask if they would consider a partnership. It is important to have the following information :

• Purchase prices and recommended resale prices.
• Delivery conditions if possible.
• Payment conditions.
• Expiration dates of what you buy.
• Free shipping threshold and minimum order.
• Best sellers they would recommend (to start the partnership and test with your customers).

The commitment is not definitive : if what you ordered does not sell well with you, you can stop the partnership at any time.

This practice is regulated.

Event Idea: Invite fellow producers to the shop for an open house day, for example, so they can present their products and offer tastings. This will later provide key information about the products to explain to customers.

Regulations for sales

Sale of farm products only

Direct sale of agricultural products from the farm is legally considered an agricultural activity of a civil nature. The direct sales activity may use commercial methods and advertising while retaining its agricultural and civil character. Socially, it falls under the Agricultural Social Mutuality (MSA). For tax purposes, it generates agricultural profits and is not subject to the territorial economic contribution (formerly professional tax).

Consignment activity

Consignment refers to a marketing method in which a producer entrusts their products to another producer, who handles their marketing for a commission.

It is essential to establish a clear consignment contract in this case.

It must be as detailed as possible to facilitate consignment management :

• Consignment note established by the supplying producer listing the nature of the deposited products, date and quantity, possibly their price. If there are unsold items, a withdrawal note can be made by the supplier.
• Periodic sales summary (agree on frequency at the start of collaboration). It must include sales amounts excluding tax, including tax, the VAT share, and the commission taken by the consignee. This sales summary is used for payment to the consigning producer.

The commission amount is set based on the consignee's costs (storage, labeling, sales, sales management, etc.) and sales estimates, but also the product's appeal.

In consignment organization, there are two possibilities :

• The consignee pays the consigning producer for the products sold, deducting the commission.
• The consignee pays the full amount received for product sales to the consignor, who then returns the commission.

All these exchanges are formalized by invoices. The commission is subject to VAT at the rate of the product concerned.

Buying and reselling activity

This is the purchase of a product from a third party with a view to reselling it. Buying and reselling is formalized by invoices. It is a commercial act. For tax purposes, these revenues fall under Industrial and Commercial Profits (BIC). According to the article 24 of law n° 2017-1837 of December 30, 2017, Finance Law for 2018, if the annual average of agricultural receipts from buying/reselling is less than 50% of receipts from agricultural activity and less than €100,000 including tax, then they can be attached to the calculation of Agricultural Profits (BA) in real farms. Farms under the flat-rate scheme must declare these revenues as BIC, within certain limits.

More information here.

Price display rules

All products sold must be labeled in accordance with packaging regulations or on a document, a sign, or a collar, depending on the product presentation.

For more information on price display regulations, see this article.

Setting prices

Knowing the right price for a product is not obvious but can make a difference with customers.

• Assessment: Research prices of similar products in established stores near you (about twenty minutes by car) by visiting supermarkets and smaller sales points, and look at prices of direct geographic competitors.

• Product positioning: Where did our customers usually buy? Are our products different or quite similar to those found in supermarkets or organic stores? Do they have an organic label? In which range is the product sold (high-end/mid-range…)?

• Define production cost (or purchase price from another producer in case of buying and reselling).

Based on all the information gathered, set a price that seems consistent with competitors, production cost, and desired margin. Then adjust according to customer feedback or sales statistics.

Advantages

• Price definition by the farmer.
• Contact with consumers.
• Showcase for the farm.
• No travel.
• Direct direct feedback from customers on production.

Limitations

• Setting up a sales area adapted to consumers.
• Significant presence time.

Practical advice for direct selling

• Reception and opening hours: Try to open the shop during broad time slots. Define precise and suitable sales time slots for customers. Also, a welcoming smile for the customer is the first step to their satisfaction. Ensure farm accessibility.
• Fast checkout and various payment methods offered: Try to offer a card terminal to speed up checkout and reduce waiting time.
• Customer loyalty through communication: Collect customers' email addresses to send newsletters and create a Facebook/Instagram account to communicate about seasonal products.
• Stocking the shop: Ensure the shop offers a wide choice to customers: beware of stockouts. Offer quality products.
• Intuitive customer journey: Create a path through the arrangement of stalls and shelves, inviting customers to go everywhere to see each product.
• Develop a commercial strategy.

Getting support

Organizations offer support to producers who want to develop an authentic farm shop project that reflects them. This support can take place over several key stages to achieve results such as acquiring new customers, better profitability, and increased turnover.

These stages include works and layout, development of product ranges sold and price positioning, as well as shop communication, digital tools, and online sales management.

The Les Bergers network offers this type of support.

La technique est complémentaire des techniques suivantes

• Selling in short supply chains: regulations and labeling
• Selling your products at a market
• Installing a vending machine
• Developing on-farm picking

Sources

• BA - Scope - Taxable income - Other taxable income - bofip.impots.gouv.fr

• Editorial assistance from the Les Bergers network.