Farm Operator Benefits from Direct Marketing Strategies: How Does Local Food Impact Farm Financial Performance?

In the era of a global economy, farmers face increasing pressure in developing a portfolio of various marketing channels. However, the literature on direct marketing strategies has mainly focused on consumers. Using farm-level data this study investigates factors associated with the choice of three direct marketing strategies. We apply a selectivity based approach for the multinomial logit model to assess the relationship between the choice of direct sales marketing strategy on the financial performance of the business. Findings from this study suggest that obtaining an Internet connection and accessing the Internet for farm commerce increases the likelihood of using intermediated marketing outlets. Using the Internet for farm commerce and operating diversified farms (more enterprises) is associated with increases in the likelihood that the farmer relies on direct to consumer marketing outlets. The gender of the operator, the portfolio of input acquisition and management practices, and participation in Federal, State, or local farm program payments is positively associated with total farm sales in all three direct marketing strategies. Finally, an accurate evaluation of the projected earnings from the direct-to-consumer marketing outlet must account for selectivity effects.