A direct marketing success story

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FIGURE 1. (LEFT TO RIGHT) DROR BALSHINE, LORRAINE GUARDINO, HARRO WEHRMANN

Wehrmann and his wife Anke farm on 900 acres in southern Bruce and northern Huron Counties, near Ripley, where they grow a wide range of crops, including soybeans, spelt, rye, sunflowers, canola, and black beans. In the late 1980s, they were approached by Sol Cuisine who was looking to source organic soybeans for their tofu production. Over the years, this has grown into a stable and exclusive relationship. Sol Cuisine is a soyfoods processor based in Mississauga that manufactures products like tofu, veggie burgers, falafel and soy yogurts.

“We have been growing certified organic crops since 1987 and as one of the pioneers in this area, we were approached by Sol Cuisine,” says Wehrmann. “We started supplying them off and on as a casual supplier and for the last eight years, we’ve been their sole supplier of soybeans.”

a relationship built on trust
For the Wehrmanns, a partnership like this comes with many benefits. The information exchange is much more direct, the clientele is interesting and the financial pay off is better. But what’s perhaps most telling about the nature of their arrangement is that it is based solely on verbal agreements.

“We have a good relationship with Sol Cuisine and we don’t need a written contract,” Wehrmann says. “They tell us what they need, we set it aside for them and we take that into consideration in our sales planning.”

The relationship is also a positive one for Dror Balshine of Sol Cuisine. He prefers being able to work with a single supplier which results in some constants he can count on when making his business decisions, like product consistency, steady price and control over product and supply.

“Building a connection with the grower is ideal for us; it means there are fewer parties involved and we can go to the field and see how the beans are doing,” he says. “We know the price we are going to be paying for soybeans for the whole year and if there are any issues, we can just pick up the phone and talk to the person who grew them for us.”

Another advantage for Balshine is the special service he receives. Although he commits in advance to buying a certain volume of beans over the course of a year, Wehrmann will store them on-farm and only deliver them to Sol Cuisine when they’re needed as the company is not set up to store large volumes of its ingredients.

“Growers want a regular customer and we want a steady supply. We’ve made the commitment to buy but we aren’t set up to store the product, so this is a great arrangement,” says Balshine.

direct marketing challenges
Wehrmann sees himself less as a supplier and more like a service provider; actions like these are part of their move away from traditional agriculture into more of a supply service. But there are risks to this type of marketing approach as well.

For Sol Cuisine, committing to buy all of their soybeans from only one supplier could spell trouble if Wehrmann has a bad quality or low yielding crop one year. And it would be a blow for Wehrmann if his customer suddenly decided to change product formulations, or if they unexpectedly fell into financial difficulty, leaving him with beans he has to try to re-market.

Payment terms are another drawback. Farmers who sell their crop to a licensed dealer are guaranteed under Ontario’s Grain Financial Protection Program (GFPP) to receive payment within 10 days of delivery, but there is no such assurance for those who sell to customers who aren’t licensed under the program. Farmers who just want to grow beans and receive a quick payment should not go down this road, Wehrmann advises.

For those who do, direct marketing is an option that can be profitable provided certain criteria are met. Wehrmann says the key is building a good rapport with the customer. It also helps to have a product that is different from the commodity crop, and he recommends trying to work with smaller, local companies as opposed to larger ones where a low price is often the most important consideration in buying decisions.

“It was probably easier 20 years ago to start a relationship like this; things are trickier now with more players in the market, but you can still do it,” he says. “You need to have something unique to differentiate yourself. It also helps if you have local product and can work with local manufacturers – they can be more flexible and more willing to try new things. If you get the feeling that you are just interchangeable with your neighbour, don’t do it. A commodity-based relationship will not yield the same benefits.” •