A Vision for 5 Million CSA Members by 2030

By Simon Huntley

Originally published on the Small Farm Central blog on 02/17/2017 

I have been doing a lot of thinking about the future of CSA farms over the past few years. With CSA Day 2017 upon us, I wanted to take time to reflect on where we are, where we are going, and why we are doing this.

I am passionate about CSA farming because I see the special connection between farmers and eaters, but also see a path to an economically sustainable small-to-medium scale farm. I believe that economic sustainability is tied extricably to agricultural sustainability and that CSA is an important part of that puzzle because it allows a farmer to control his or her market with a degree of certainty and margin that no other marketing channel allow.

In addition, CSA is the most direct connection that an eater can have with his or her farmer and is a connection to the land that an eater can’t get in any other way. Through CSA, we imbue food with meaning, story, and connection. In a world of intractable problems, being a CSA farmer or CSA member is an act we can take to make life better for our land, economy, and community as a whole.

The CSA Market Right Now

However, CSA only touches a tiny minority of households. I was focused on this fact through the Local Food Marketing Practice Survey that was released in December by the USDA (hat tip to Elizabeth Henderson for emailing the data to me). This data is for the United States only, but I think the lessons can be applied anywhere in the world.

They list the total sales of all 7,398 CSA farms at $226,000,000 in 2015. In a lot of ways, I look at that data and think CSA has been a huge success in 30 seasons in the United States. This is a concept that has resonated with the public without any corporate, governmental, or moneyed interests behind it.

On the other hand, let’s look at that data in terms of the overall food marketplace.

If we take the average share price data from our CSA Farming Report of $450, then we get the number of approximately 500,000 CSA shares sold in 2015.

There are 124.6 million households in the U.S., so that means approximately 0.4% of US households purchase a CSA share each year.

So, despite the huge success of the CSA concept, it is still very niche. Looking at these numbers, I can’t believe that 0.4% is the ceiling of CSA.

I think CSA farming is so important for farmers and eaters, so I am setting a goal of growing the overall CSA market by 10x, to 5 million households, by 2030.

Even with this exponential growth of CSA, we will still be serving only 1 in 25 households in the United States. That is still a small slice of the population and I believe that is possible for us to get there.

However, what got us to 500,000 CSA members, will not get us to 5 million. We need to reimagine what CSA is to appeal to a much wider demographic and we need to get better at articulating the values of CSA. Your customers and potential customers work hard for their money too, so we must appeal to their values and their interests as we plot a way forward.

While we reimagine CSA, we can’t lose sight of what has made CSA such an impactful concept. I believe that if we simply compete with the grocery stores or the Blue Aprons of the world, we lose. CSA must be about more than a simple box of food.

What will this growth of the CSA market mean for your farm? What will this growth mean for the overall local food market? How do we get there?

I ask these questions, but I don’t have the answers. I have some guesses. However, I believe that reaching this goal it is possible if we all work together on the local, regional, national, and international scale. I want to start the conversation with you because I believe that this growth is essential for a thriving local food economy and, I worry that if don’t radically grow CSA, it will become more niche and eventually wither on the vine.

I firmly believe that when we all do better, we all do better. Your success is my success.

I would love to hear from you: how do you feel about this goal? Is it reasonable? Do you have ideas on how we can get there?

I can be reached at simon@smallfarmcentral.com. We can continue the discussion on the CSA Farmer Discussion group on Facebook (request access here), at winter conferences, and in the fields.

I look forward to growing with you over the next 13 years!

Interested in getting useful information for your CSA sent to your inbox? Click here to get access to the CSA Solutions Hub.

 

Let’s talk business

By Simon Huntley

Originally published on the Small Farm Central blog on 05/24/2017 

In every business, there is some “customer acquisition cost” (CAC from now on) — in other words, how much do you spend to acquire a single customer?

In my experience, for most CSA farmers this number is close to zero and not something you think about.

Even if you are not spending money on traditional advertisements, there are costs to find new customers. There is a website hosting fee, staff or personal time to develop content for the website, Facebook boosted posts, email marketing software like MailChimp, time spent developing content for email marketing, and on and on. So even at a basic level, if you think your cost of customer acquisition is $0, it is not.

I asked farmers on the CSA Farmer Discussion group on Facebook about their CAC and answers ranged from up to $100 to as low as $2.

Here is where it becomes a major blind spot and perhaps a systemic problem within the CSA movement/industry. The meal kit companies like Blue Apron, food hubs, and grocery stores have the economies of scale, the marketing expertise, and cash to spend $100s to acquire a single customer. So they can spend money on Facebook ads, Google Adwords, direct mail and whatever they can figure out to acquire a cost at less than their target CAC.

So if they are able to do this, they take the air out of the room from a marketing perspective and it does start to pull people away from CSAs and towards programs that have better marketing reach. If Blue Apron spends $100 to acquire a customer and the average CSA spends $3 to acquire a customer, that means on average that a potential customer is going to hear about Blue Apron 33 times for every one time they hear about the CSA! Can you blame them for choosing Blue Apron? They almost don’t have a choice!

It is certainly not getting easier. In the early 2000s, a farm could just show up and tack a CSA sign on their website, get some good press, and fill up their membership. People were actively going out and looking to join a CSA farm in these years, so it was relatively easy to find new customers. In this new landscape, where there is a lot of competition from all angles, I believe that we need to get better at marketing in general and starting to think about CAC and the types of channels you can use to reliably generate new customers at a profit will be important.

This is one of the trade-offs in using direct-to-consumer farm marketing: if you sell wholesale or through a food hub, they take care of finding the customers and you will get a lower percentage of the retail dollar. In a CSA, you are getting close to 100% of the retail dollar, but you need to go out and find those customers and finding customers is not free!

Acquisition cost also needs to be paired with your retention rate and the lifetime value of your customer. So if your retention rate is very low, then you cannot afford to spend as much to acquire each customer because you will not be able to spread that cost over multiple seasons. So acquisition cost and retention are intertwined in this way.

I have seen a couple rules of thumb in the larger business world that may help us to think about CAC in the CSA context. One rule of thumb is that a business wants to see CAC paid back within a year of the initial sale, so in the context of a CSA, if your average yearly spend per customer is $500 and you have a gross profit margin (minus marketing spend) on that of 20% then your aim should be to get CAC to be below $100. Assuming you have a fairly good retention rate (>60%), over the long term this will pay back well for you, although you will need to do some more calculations with your own numbers to make this analysis work for your situation.

There are many ways to view this, but the rule of thumb that I am thinking about is to look for a CAC that does not exceed 10% of the first season that the member is with your farm. For example, if your average price is $500/season then a CAC of $50 should be profitable over the long term.

In some ways, I hate to be the guy injecting all of this business terminology into CSA because these are such high-ideals business. However, I think there is a lot to learn from the wider business world that we can apply to CSA programs so you have the freedom to go out and develop your business to impact more people while building a business that supports your family.

In the end, it is all about the goals you have for your farm business. Are you getting the CSA membership numbers you want? What is your most profitable marketing channel? If dealing with these kinds of issues like customer acquisition is not in your skill set, you may need to hire someone with these skills, delegate, or consider pursuing other marketing channels like wholesale that don’t require this kind of work.

How do you think about customer acquisition cost within your CSA? How much are you willing to spend to acquire one customer?

In your corner,

Simon Huntley

Will Blue Apron (and other meal kit delivery) replace CSA farms?

By Simon Huntley

Originally published on the Small Farm Central blog on 07/26/2016

Community Supported Agriculture (CSA) is under pressure throughout the marketplace. When I started working on CSA farms in 2005, in many areas of the country there were few options to buy from local farmers besides farmers markets.

In the intervening 10+ years, the market has changed.

We have Whole Foods, grocery cooperatives, farmers markets every day of the week (9000+ now!), food delivery concepts and much more. The plethora of options is changing the way eaters think about joining a CSA farm and their expectations. If CSA does not work for them, there are a lot of more flexible options out there that may work better for them. There is even a lot of confusion about what CSA is and what CSA is not.

We cannot stick our heads in the sand and pretend that nothing is changing. The CSA model has evolved since it came to the United States in the early 1980s and we’ll need to continue to change to stay relevant. I’ll write more about the future of CSA in the near future.

One of the new concepts that has taken inspiration from CSA are the meal delivery services that deliver pre-apportioned recipes ingredients to your door step. It’s a meal in a box. One of the biggest of these services is called Blue Apron.

Earlier this summer, I signed up for Blue Apron to learn from their model and figure out how we can use their success to improve the CSA model.

One estimate is that 3% of the US population has tried a meal delivery kit service. From the numbers that I see, that is likely higher than the proportion of the US population that has tried CSA.

Blue Apron’s tagline is a “better way to cook”. It has many competitors including Green Chef (https://greenchef.com/home) “deliciously simple”, The Purple Carrot (a vegan concept) https://thepurplecarrot.com, Freshology “Inspired. Healthy. Living.” https://www.freshology.com. There are many others.

Signing up for Blue Apron

I was impressed by the website experience: you sign up for a weekly plan that will auto-bill each week but you can pause deliveries as long as you remember to pause by the right day. I signed up for a weekly plan for a family of 4 which was probably a bit too much because my young boys (1 and 5 years old) don’t eat as much as an adult or teenager. There is some choice in the recipes you receive or you can just accept the default. There is no vegetarian option.

It is not cheap. My plan cost $69.92/week. That is is $8.74 per meal, per person while the average in-home dinner meal costs $4 per person. So this service does not compete with the grocery store: it competes with restaurant eating and it is probably for the higher end of the market. This is not a service for the family with a small grocery budget.

In the welcome email, Blue Apron promises “Fresh, Seasonal Ingredients”, sourcing from local farms (local to whom? This just is not true), and cooking tips and techniques.

Perhaps it is pedantic to focus on their promise of “local farms”, but here is what the email says about the producers:

I hope that Blue Apron is supporting a local farm somewhere, but it is not local to me in Pittsburgh. This kind of casual deception is disturbing and I’m sure most eaters can see right through it, but as true local farms, you must push against these deceptions and tell your story to your customers. This is one of your largest advantages, so make sure you are clear on it with customers!

Cooking with Blue Apron

The Blue Apron box showed up on my doorstep delivered by FedEx on the day that Blue Apron promised. An email is sent on the shipment day to announce the meals that will be delivered so you can plan for the week.

Everything looks great when it comes to the doorstep: the box is beautiful with huge ice packs at the bottom of the box. Everything comes in pre-apportioned ingredient packs. For example, 2 ounces of butter in a clamshell container. One of my first thoughts is how wasteful all of this is: the home delivery, the cardboard box that I will throw away, the ice packs, and the tiny containers of cheese. It is hard to imagine dealing with this amount of waste on a weekly basis.

However, it is impressive in a lot of ways. It totally takes the thought out of cooking. Blue Apron provides glossy recipe sheets that describe in detail how to cook each dish. I think we can learn from this in our CSA farms: people don’t know how to cook and there is value in completely spelling it out for them! They are clearly willing to pay more to lose some of the stress of figuring out what to cook and how to cook it.

Here is an example of the recipe cards:

The recipes are not super simple. They take some time to put together. I found in the recipes that my wife and I made, it took about an hour to get food on the table.

I’m a pretty good cook. Ever since my first experience in college of living on my own, when I realized that all I knew how to make was pasta, I have gradually built up my skills in the kitchen. However, one thing I noticed about Blue Apron is that since everything was so spelled out on the cards it made me stupid: I put a whole head of garlic in a small amount of salad dressing which overwhelmed the whole salad and ruined it with way too much raw garlic. And I like garlic.

In hindsight, that was obvious, but since the recipes cards did not exactly spell out the amount of garlic to use, I just put the full head of garlic. So I’m not sure if these meal kits actually help people learn to cook on the fly like a CSA member needs to know how to cook: to look at the ingredients available and put together something that works.

However, the meals were delicious. The quality of produce was outstanding. It took a lot of the thinking out of deciding on meals for the week and shopping for the ingredients. It is hard for me to see someone doing this in the long term, week-after-week based on the waste and the cost so I see long term retention as difficult for these services, but it is a really fun and easy way to cook new dishes.

Do Meal Kits Compete with CSA?

Yes, I think they do. They are changing the expectations that members have for food delivered in a box. There is zero food waste — everything is used in the recipes you are given.

Wasted food in a CSA is a huge problem. It makes members feel bad and they decide to go with more flexible options like farmers markets in the future. So I think the cooking education part of CSA is huge. We need to make sure our members are successful with their boxes and that is not easy!

The produce from Blue Apron is of impeccable quality. If a CSA member gets less than the best quality food in their boxes, they will go elsewhere. To compete over the long term, the product in a CSA box needs to look at least as good as the product in Whole Foods or in a Blue Apron box.

However, on your side as a CSA grower is the story and connection that you have to your customers. I think if we try to compete with the Blue Aprons and the Whole Foods of the world, as small, independent producers we will always lose over the long term.

CSAs need to become more customer centric to react to a changing marketplace — we are not the only game in town any more! — but we also need to be mindful not to lose what has made CSA so successful.

The magic and the way forward will be found in balancing those opposing forces.

I’ve been diving deep into this problem, spending time with the research and with CSA members to better understand their experience. Look for more on this topic in the near future!

I would love your feedback. What kinds of competition are you seeing in your local area?

One Dollar, One Vote

By Simon Huntley

Local farms are an essential part of healthy local economies.

They protect farmland from development, they take care of the environment by responsibly growing on their land, they build a rural lifestyle for farm families and their employees, they preserve local food production, and often build a community around their farm.

However, it’s not a glamorous lifestyle. It’s hard being a local farmer.

There are crops to grow, irrigation to run, hail storms to worry about, bills to pay, payroll, equipment to fix, and on and on. It’s a complex small business.

Local farming is demanding work that has benefits we can all agree on. How can we as consumers support farmers in this work?

Buy directly from your local farmer.

Do you know your farmer’s name? Then you are buying from your local farmer.

Have you visited your farmer and have you seen where the crops you are eating are grown? Then you are buying from your local farmer.

There is certainly a government policy aspect to supporting local farms and I respect the political work that many organizations do on behalf of farms. However, what I see lacking for many of the farms I work with are the sales to justify the investments that need to be made on the farm to compete in the competitive local food marketplace. The tractors that need to be bought, the post-harvest handling facility that needs to be built, the multitude of systems that need to developed on the farm, let alone the marketing expertise that is needed; all of this is expensive!

In a democracy, you get to vote once or twice a year, however with your food choices, you are voting three times a day. One dollar, one vote.

Vote for local farms. Buy farm direct.

It’s up to us in the local farm community to develop better ways for you to access quality local food. We need to make sure that this food is convenient, cost-effective, and high quality. That’s why Harvie exists.

However, at a certain point, we all need to pull out our wallets and vote for local food production if we want these farms to thrive.

Thank you for supporting local farms!

CSA: We Have a Path Forward

By Simon Huntley

Last August of 2016, I wrote an article entitled CSA: We Have a Problem detailing my research into the struggles of CSA farmers to retain existing members and attract new ones. If you have not read that article yet, I suggest you go back and read that first. It still feels very relevant over a year later.

A lot has happened since:

Elizabeth Henderson spearheaded the development of the CSA Charter laying out our common values.

The 4th annual CSA Day brought together 1500 CSA farmers.

Amazon bought Whole Foods to form what I am calling Whole Amazon.

I called for 5 million CSA shares by 2030.

Blue Apron went public and is in a lot of trouble.

For our fledgling industry, the signs are not positive. CSA still serves just 0.4% of U.S. households. Blue Apron and the 100 other copy-cat meal delivery services have taken the food-in-a-box model and reduced it the absurd level of shipping to your door a tablespoon of butter or a single egg in a carton. Growth of CSA farms within our data set has leveled off. Whole Amazon is in a price war with the grocery industry. Wal-mart is advertising local food.

So why am I optimistic about the survival and growth of CSA?

For one thing, look at all of the competition in this market! The fact that big business wants in tells us that we really have something here.

Listen to the Blue Apron ads. What is the first thing out of their mouths? They claim to support local farms, which is an obviously false claim (at least exaggerated) since they put together the meal kits in centralized factories and ship them throughout the country. So by definition, they are not supporting farms local to their consumers. However, with their millions spent on advertising agencies and analytics, they still feel like “local farm sourced” is their strongest lede.

The difference is, in CSA, we actually are farm direct. 

CSA will not be exactly the same model as the one that thrived from the 1990s to the early 2010s. Almost every industry has changed radically since 1990 and ours has too. I believe that the “classic CSA share” is becoming a relic of the past.

I believe we need to understand our members better. Even more importantly, we need to understand our non-members better. What is it going to take to get the next 5% of the population to consider joining a CSA? It likely needs to be a different “CSA product” package and different marketing message.

As I look towards the future, I am aware that the CSA model has been remarkably successful since it was introduced in the United States in 1986 and we must not lose the essence of CSA as we innovate. If we try to compete with grocery stores, aggregators, or Whole Amazon, we will lose. We cannot compete on price, variety, or convenience, though we do need to consider those factors. We can compete on relationship, taste, quality, and freshness. Blue Apron can’t compete with that. Wal-mart can’t compete with that. Whole Amazon is no longer interested in competing on anything other than price and convenience.

What is a CSA?

If we are going to innovate, we need to know what a CSA actually is. The CSA Charter released in February of this year goes a long way to describing that. In my article “CSA: We Have a Problem” I listed the following characteristics that are essential for me:

Direct connection between one farmer and the member.

The majority (> 75%?) of the share is grown on the farm. Any off-farm produce is clearly labeled as such.

The customer commits for the season and pays some amount ahead of time.

The customer is flexible about what is in the box each week based on what is harvested from the farm.

This framework allows us innovate to make CSA more customer friendly without forgetting what has made this model successful.

Based on my research here are some innovations on the “classic CSA model” that make CSA more customer friendly and will help us reach the next 5% of households:

Box choice: the standard box just doesn’t work for people, and in the era of choice and convenience, a standard box is no longer good enough. This is the big one based on my research.

Flexible weeks: every-other-week options, switch delivery days and locations based on vacation or other factors.

Flexible share sizes: smaller shares for single person households

Keep the farm front-and-center: how do you get people to know you? Members form the relationship with the farmer and that is what keeps them long term.

Payment plans: reduce up-front cost, take payments throughout the season to decrease sticker shock and open CSA up to more people. Emphasize the weekly cost over the seasonal cost.

Online payment: if you are not taking credit cards, you are losing customers, especially young people.

Cooking education: connect the dots between the box and dinner table. If the member does not get food on the table, nothing else matters.

Delivery convenience: work into people’s lives. That could mean home delivery (though I’ve found that members are often not willing to pay the extra price for this), workplace drop off, grocery store drop-off, or simply more drop-off locations.

Communication: make sure the member knows everything they need to know to be successful with their share. Give a weekly farm update, consider video. 

CSA is not expensive: the average CSA shares costs $25/wk or $100/month. That’s less than most people’s cell phone bill or cable bill. It’s less than buying a latte at Starbucks every day. One month of CSA is less than cost of one single meal for the whole family at a quality restaurant. We need to find a way to change the conversation around price of CSA and put it into the proper context.

In addition, there is a general problem that CSA by-and-large serves a very thin slice of the population: 30-50 year old, educated, white women (see Ryan Galt’s data). How do we grow beyond this demographic? How do we pull millennials into this? How do we serve less well-educated, less affluent populations? How do we make non-whites feel welcome in CSA programs? I think it is a huge gap that we need to overcome. In fact, in terms of health outcomes of CSA membership, the biggest gains are to be found among people with negative health indicators, who least likely to join a CSA currently (source Tim Walls from University of Kentucky).

Marketing and customer acquisition

Blue Apron is willing to spend $144 to acquire a single customer. I’m not suggesting that you should do this, but most CSA farms are spending $0 on customer acquisition and relying on word of mouth to bring in customers. With so much competition for these food dollars, that’s not going to be enough. Right now is the time to start working on a marketing plan for 2018. You are almost certainly not investing enough time and money on marketing.

Over the past year, we have been working on a new platform to address these issues and help our farms thrive over the next 10 years. We piloted this platform with 8 farms and 500 end consumers, delivering over 10,000 boxes this season. Look out for an email soon with further details.

Whether you decide to join us or tackle these issues on their own, this off-season is the time to get to work. These problems will not fix themselves. CSA is a genuine connection between a farmer and consumer and is more than the sum of its parts for both farmers and consumers. I want to see more consumers be able to take advantage of the health and well-being advantages of being a CSA member. I want your farm to be economically successful with the high-margin sales of CSA memberships so you can take care of your land, your family, and increase your quality of life. I want you to farm for the long term and not burn out. I want your kids to be excited to join your farm some day.

I know many farmers shy away from the intricacies of marketing and business. You likely did not expect that your work as a farmer would be as deeply tied to spreadsheets and advertising campaigns as it is to soil health. To serve your land, your customers, and your family well you need a solid business. That’s no easy task.

-Simon Huntley

Founder, Small Farm Central