Direct Food Marketing at Farm Level and Its Impacts on Rural Development

As a consequence of the tough competition in the market, the strict conditions set up by the concentrated commercial sector, and the policies of the European Union which subsidises most larger producers, the number of agricultural producers decreases. In many developed economies, processing, transportation and marketing may account for as much as 80 percent of the cost of food paid by the consumer. This indicates that the average farmer now receives only 20 percent of the retail food price. To reverse this tendency, measures must be taken to facilitate the process of food production and distribution by farmers. Such corrective action may increase farm income through direct sales.


Introduction
As a consequence of the tough competition in the market, the strict conditions set up by the concentrated commercial sector, and the policies of the European Union which subsidises most larger producers, the number of agricultural producers decreases.In many developed economies, processing, transportation and marketing may account for as much as 80 percent of the cost of food paid by the consumer.This indicates that the average farmer now receives only 20 percent of the retail food price.To reverse this tendency, measures must be taken to facilitate the process of food production and distribution by farmers.Such corrective action may increase farm income through direct sales.
In many countries farmers sell their products directly, with many of these countries having their own regulations and practices concerning direct sales.Such regulation also exists in Hungary, but the actual rules are not sufficiently practical and it is quite expensive to meet these regulations.The modification of rules concerning direct sales would allow direct distribution to local shops and restaurants.This could potentially boost rural communities and would also be likely to lead to an environmental advantage, since the transportation distance of products would be reduced.Marketing of the local products directly from producer to consumer is a form of 'guarantee', with the added bonus of conviviality and interpersonal exchange.

Direct sales practice
In the case of economies which have been in major transition, like Hungary, the market organizations in the food chains are still not fully established in each sector.The lack of these organizations poses numerous difficulties, primarily in coordination.The wellorganized nature of large, multinational companies eliminates many of these difficulties.A large majority of agricultural producers are more likely to face market uncertainty without possessing technical knowledge of risk management.This generally applies to small, fragmented farms and the fruit and vegetable production sectors.(Picture: 1.) Selling directly to consumers can be very advantageous to both small farms and fruit and vegetable producers.Direct sales allow farmers, to sell continuously at a premium; thus, leading to income gains.Furthermore, it is important for these farmers to improve consumer opinion of food producers by selling quality goods.Selling direct to consumers is one The farmers who will benefit the most from direct sales are primarily those who possess the necessary labour force, capacity and knowledge.Further, direct sales are more conducive to an environment in which consumers are welcome, and also where the producers are located near the targeted consumers.In these cases, it is important for agricultural and rural development advisers to acquaint farmers with related subsidy opportunities, as well as to help them combine their labour forces and take part in continuing training.Primarily small and medium-sized producers prefer direct sales techniques.By taking on the role of direct seller, they must compete with an increasing number of hypermarkets, supermarkets and wholesale markets.
In performing direct sales, it is very important to abide by the set rules and regulations, to produce products of superior quality, and to 'awake' consumers purchasing behaviour by introducing the products.It is also very important to possess the managerial abilities that reenforce successful retail sales.(Picture: 2,3,4,) Picture 2. Several farmers cooperatively built a local shop for selling fresh and processed food products.Picture 3. A young organic agricultural producer showing and selling her own products in her shop on the farm When talking about direct sales, it means that farmers sell their products directly to customers.There are more options: (i) sale in their own shop of farm, (ii) through a catalogue and (iii) delivery directly to restaurants and shops.Picture 4. In many cases, farmers have created their own small retail shops for receiving buyers and presenting local products according to the seasons.
Advisers are also helping farmers select the right sales channels to diversify their marketing activities.Until now, we have little credible statistical data on the direct sale of farmers' own produced and processed products.The rural development programs can provide a lot of assistance to help farmers' develop strategies for direct sales.However, specialized advisers are needed to provide farmers with continuing professional education so they can implement the strict food safety regulations and controls.
In the field of direct sales, numerous cases studies are known in the EU, and applying them would be useful, in regulations and practice.The existing key factors are the importance of professional training and the ability to change consumer consciousness and to encourage new forms of cooperation.For example in France, the Markets of local farmers (The Marchés des Producteurs de Pays) reserved exclusively for farm producers or artisans, are places for farmers and of colourful welcome.They are regulated by a charter which requires that products on the market come directly and exclusively from local farms.Based on 2011 figures, 29 departments are participating in the process, with 370 places of markets and 2 000 markets held throughout the year and 2500 country producers (www.marchesproducteures.com).
The primary key to successful direct selling is the same as the key to all successful marketing.The producer must recognize that the consumer is "king".The wants and desires of the consumer, not the producer, must dominate the marketing strategy.Thus, the producer must find a reason as to why consumers will prefer direct sales to hypermarket sales.Part of the reason might reside with a desire for what the consumer feels is a higher quality or fresher product.Consumers may also be looking to combine the buying experience with a pleasant drive away from the crowded city and into the slower pace of the countryside, or to search for organic or natural products.Another reason maybe to locate non-traditional products, such as hog meat from the traditional breeds or eggs from free range chickens.
It may not be sufficient to simply offer a high quality product.Often other characteristics of the buying experience are just as important in attracting customers to direct sales.Another aspect of successful direct farmer to consumer marketing is the buying experience itself.The consumer often receives additional satisfaction by speaking to the farmer, or a member of his or her family.Some consumers feel this puts them in touch with their roots and reminds them of their childhood.Salespeople dressed in traditional costumes, who display products in buildings of the old-time or traditional design, might add to the ambience of the direct sales buying process for consumers.In order for direct farm to consumer sales to be successful, the consumer must enjoy the buying experience, which involves not only a high quality product but also a high quality interaction with the salesperson.A farm to consumer marketing strategy should not overlook the training of salespeople.

Forms of direct sales
In many countries farmers sell their products directly, with many of these countries having their own regulations and practices concerning direct sales.Such regulation also exists in Hungary, but the actual rules are not sufficiently practical and it is quite expensive to meet these regulations.The modification of rules concerning direct sales would allow direct distribution to local shops and restaurants.This could potentially boost rural communities economies and would also likely lead to an environmental advantage, since the transportation distance of products could be reduced.
In the case of economies which have been in transition, like Hungary, the market organizations in the food chains have not yet been fully established in each sector.The lack of these organizations poses numerous difficulties, primarily in coordination.A large majority of agricultural producers are more likely to face market uncertainty without possessing technical knowledge of risk management.This generally applies to small, fragmented farms.
Direct sales allow farmers to sell continuously at a premium; thus, leading to income gains.Furthermore, it is important for these farmers to improve consumer opinion of food producers by selling quality goods.Selling to direct consumers is one opportunity for farmers to increase their share of consumer prices and to cut some intermediaries from the distribution chain for these products.In summary, direct sales is a distribution or commercial activity undertaken by local farmers who utilise communication skills that make the purchasing experience of the consumers enjoyable and memorable.
In performing direct sales, it is very important to abide by the set rules and regulations, to produce products of superior quality, and to 'awake' consumers buying behaviour by introducing the products.It is also very important to possess the managerial abilities that reenforce successful retail sales.
In the field of direct sales numerous cases studies are known in the EU, and applying them would be useful including in terms of meeting regulations in practice.The existing key factors are the importance of professional training and the ability to change consumer consciousness and to encourage new forms of cooperation.
Farmers have many options in developing a direct sales form.They may sell the product in their own shop, through a catalogue, and/or deliver to restaurants and shops.Direct sales channels, beyond those already mentioned include: on-farm sales, wayside stands, and in local markets where they sell their own products of the given season.In recent years, more and more organic markets play an important role in the direct sales market segment.
Direct sales to customers is most widely found in fruit production.This type of operation is commonly known as "u-pick," where it is the customers who pick and transport the fruit.Another version of direct sales is when farmers use "mobile shops" to sell their products, so producers transport products to the customers in the city.(Picture:6.) The hyper-and supermarkets also recognize the marketing possibilities in product differentiation.This is why there are more and more customer buying options, such as ordering products via 'phone or through the internet at the beginning of the week.(Picture:5.)Producers then transport them directly to the retailer in a refrigerated van and avoid many distribution platforms.Recently, restaurants and hotels have also come forward with a higher demand for delivery services from the producer.(Hajdú-Lakner 1999) The more recent development of IT tools has facilitated the launch of electronic means of direct sales, called "internet marketing."This form of marketing provides a new opportunity to develop direct sales patterns.For example, traditional direct sales methods in wine production can be complemented with internet sales.
Several wine producers use electronic marketing successfully as a response to the increasing number of online wine trading societies.This will continue to be a growing and important marketing method for wine producers as more affluent consumers continue to purchase computers (Rouzet, Seguin 2003).Advisers are also helping farmers to choose the right sales channels to diversify their marketing activities.

An example of direct sales
An example of direct sales is one action of the Chamber of Agriculture of Bács-Kiskun County called the "Cellar-tour" or " Kamra túra" ("Pantry-tour").The"Cellar-tour" is a website for farmers to practice direct distribution, where farmers adhere to the conditions of the website offer their products.The website is an opportunity for farmers producing vegetables, fruits, organic products, milk, dairy products, honey, pork meat, poultry, rabbits, eggs, fish, pickles, wild products, and mushrooms to widen their market.The website helps consumers find farmers, from whom they can purchase the products desired.Parts of the website provide an introduction to the farms, their place and their activities.However, their products cannot be purchased through the internet. (www.kamra-tura-hu) The website represents 95 farmers with 129 products.Most of the farmers joining the programme are leaders in ecological production.Some of the farmers sell fresh vegetables and fruits, others offer prepared products such as marmalade, dried fruits, etc.The program was designed to increase rural tourism, because these activities can serve as complements to one another.On this particular market both products and leisure services are supplied.(Picture: 7.) Picture 7. 30-40% price advantages can be reached by using an automatic milk dispenser in the town.
As part of the programme, common marketing promotion and communication actions have been set up for the participating farmers.
One of the most successful elements of this programme is that farmers become familiar with quality assurance and the rules of food safety during training sessions.A significant part of the consumer-focused approach is that it provides opportunity for the consumer to get to know the origin of the food he/she purchased.In the instance of agri-tourism based farms, the consumer can check the source of the food during a visit if he/she so desires.
According to the new regulations, farmers -once the required license is acquired  have the opportunity to produce and process "basic agricultural raw material goods" in small quantities.For instance, small producers can slaughter and process poultry and rabbit on their own farms.Larger livestock for resale are only allowed to be slaughtered in authorized slaughterhouses.However, farmers can cut, pack process and sell the processed meat products themselves.The rules are simpler for fruit and vegetables.
It is also important to mention the new direct-from-farm on-line food sale networks, that are already running in many EU countries.This is part of the popular rural tourism, where the customer can get to know the conditions of food production, and meet the producer in person.(Picture: 8.) Picture 8.In a French village market tourists are the main clients during the Summer season.
The the local government supports the functioning of the market.
According to international and Hungarian experiences, consumers increasingly prefer food purchased directly from the producer and they are becoming more interested in organic products.Producers should recognize the opportunities of this trend, and create the conditions for direct sales and gain the confidence of consumers.Even though the legal conditions of direct sales are specified, it is still important to gain consumers' confidence.This requires a marketing plan and communication designed to reassure consumers that locally produced products are of high quality.
Despite the fact that agricultural producers do not have the appropriate facilities for retail or processing of foodstuffs, they are obliged to respect the basic rules related to food-sale.
(Picture:9.)For instance, if the producer sells the basic product (poultry, rabbit meat) to a local retailer or catering facility, the producer should give the certified copy of the official veterinary document to his business counterpart.In the case of packed goods, the so-called small producer ID, or in the case of honey, the producer ID should be indicated.
Picture 9. A goat cheese processing unit on a farm is strictly regulated and must maintain hygienic conditions in accordance with high standards.
Moreover, a special law specifies the necessary marks and information on the packed product.In the case of unpacked basic products, the small producer's name, address or the farm's address, the name of the product, the best before date or guaranteed storage period, storage temperature, etc. have to be indicated at the place of sale.
Retailing is not normally one of the main commercial activities at farm level.In many circumstances, markets provide the dominant form of retail facility and are a major land use.In understanding the context of markets, therefore, it is also necessary to comprehend their relationship to the process of urbanization.The critical issues to be examined when considering interventions in the rural marketing system are the relationship of the market facilities to the pattern of rural settlements, the location and nature of agricultural production areas, and how the regional road system is evolving. www.intechopen.com

Regressive and subservient consumer trends in direct sales
Numerous factors constrain spreading the popularity of direct sales in Central Europe.A major issue is the ruling consumer behaviour which basically influences the way consumer channels choice of food trade.Currently, it appears that consumers consider buying food a leisure activity.To meet these expectations hyper-and supermarkets respond with large floor areas, but 'hard' discounts are also popular because of their low prices.These retail chains (aside from the discounts) have a great variety of goods and offer favourable prices for customers, who value highly being able to buy everything in one place.Present tendencies show that most customers stick to these traditional, nondirect methods of trade.
Although convenience is key, in recent years trends have shown that some factors have decreased consumer trust in mass-produced goods.Reasons for this distrust include the lack of transparency in the food supply chain, the growing number of food scandals (dangerous spices, paprika case of toxin, dioxin-polluted poultry, BSE), and new technologies alarming consumers.
In response, today's consumers are searching for food that:  is safe to consume and aren't harmful to one's health,  is of proven origin, and their producer is authentic,  the consumption of which is delightful,  and the production of which suits the growing aspects of the environment and animal welfare (Berke, Szakály Z., 2004).
Both inland and international trends show that consumers increasingly associate these preferences with regional (traditional and country-character) and organic (bio-) products.

Links between rural development and direct sales
Diversification of farm activities contributes to the well-being of local people in rural areas.These activities contribute to increased employment and to the development of manufacturing and service activities of complementary/ outside worker jobs, in commerce, and tourism.Such activities may also foster cooperation among many other sectors of the economy.
Many nations still prefer that rural economies in the future should remain in agriculture and sylviculture production, through continued processing, services, commerce and a better infrastructure.One of the possibilities to diversify one's activities is to build up a direct sales system.The other possibility is to produce local specialities (product diversification) to increase value-added.The aims and priorities of the local and EU rural development programs are shown in Table 1 below (Fehér and Koródi 2008).
This grouping presented in Table 1 can be useful in analysing the impacts of diversification.The effects that these measures have on rural society and the economy confirm their integrative role.
The table above shows that value-added also participates in the development of the direct sale system and fosters multifunctional agriculture.It must be mentioned that the There is no standard or official definition for specialty local products that includes all the possible factors.Efforts of marketing and rural development experts are needed to identify and market these specialty products to the appropriate target consumer groups.
Meanwhile, it is noticable, mainly in Europe, that the definition and the possibilities of product regulation concerning geographical origin, are clearly defined and well-known.However, the "protection of geographical origin" is not the same as the "specialty local products" mentioned above.In a wider sense, these can be described from the marketing point of view as "local products" or "common products," that interconnect and integrate villages, people and approaches, but are not regulated and protected legally.These products mentioned above reach the consumer in relatively small quantities, through direct sales, and they are often attached to the services of rural tourism.The local products are also developed to ensure high quality products for the consumer or to attract tourists.People can be proud of them since they are unique to that particular location (Lengyel 2011).(Picture: 10.) Picture 10. 4-5 farmers work together at a common market on a farm, where once a week they sell their products to regular buyers and tourist as well.The number of buyers can reach 80-100 persons.
In any rural development programme there will be a clear need to coordinate the upgrading of rural markets at farm level with that of associated infrastructure and services if the maximum benefits to agricultural production are to be obtained.This may include upgrading extension services and the improvement of feeder and access roads as well.It should also be noted that directly serving direct marketing at farm's levels may also be critical links in the transport system.

Instrument of rural development in the service of direct sale
The appropriation made by budget of the Ministry of Agriculture and Rural Development for rural development, funded purely from national sources, played a significant role in the foundations of Hungarian rural development.Of this, HUF 16.9 billion was appropriated for tendering support in 2000-2003, including investments of small plants, distilleries, bakeries, wine bottling facilities, etc. that processed traditional agricultural products, collected in the HÍR (Traditions, Tastes, Regions) Program.Support was similarly granted to establish and expand local markets and acquisition depots.In the frame of the axes I and III of the New Hungary Rural Development Programme (ÚMVP) the opportunity exists for farmers to collect subsidies that can help generate an increase of direct sales.The aim of these subsidies is to improve rural and agricultural tourism, to develop economic safety nets, and to increase quality and value added in agriculture.

Legal regulation of direct sales
In EC regulations 852/2004/EC and 853/2004/EC, the hygienic conditions of producing and distributing foods are presented.These regulations provide members states with the opportunity to create their own regulations concerning directly and locally distributed food, according to the EU-principle of tradition and flexibility.This national regulation is 14/2006.( I I . 1 6 .) M i n i s t r y o f A g r i c u l t u r e a n d R u r a l Development-concerning terms of food production and distribution.
According to this regulation, farmers have the opportunity to sell products made on the farm at certain places in a certain amount.The regulation is aimed at providing a more enabling environment for direct sales.Farmers can sell products produced, collected and harvested by themselves.Farmers must report beginning, changing, pausing and ending of farming activity to the local agricultural authorities.In the case of animal food products, the local veterinerarian inspects the health of animals and the hygienic conditions at the facility.
If farmers want to produce food, at least one chamber must be provided.This place can be in homes, but it may only be used for private functions only apart from the production period.
Under these regulations, farmers are allowed to produce 5000 kg of honey, 6000 kg of fish and 20 000 kg of vegetables and fruit in a year, to slaughter at most 4 swine, 1 cow, 4 sheep or 4 goats weekly on their own or at an official slaughterhouse.This meat can be prepared by the farmers and they may produce meat-products from it, and then it can be sold directly by them.The fresh meat of these animals must not be sold by farmers.
Weekly, farmers are allowed to slaughter 200 hens or 100 ducks, geese, or 50 rabbits.The meat must not be separated into parts and sold this way (apart from the liver of geese and ducks).Farmers are allowed to sell 50 kg of meat, 360 eggs, 100 kg of pickles, 20 kg of vegetable products, 100 kg of mushrooms, 50 kg of collected wild fruit and vegetables per week; daily they are allowed to sell 200 litres of milk or 40 kg of dairy-products with local restrictions.
Goods must not be sold to retail or catering units by farmers.A constraint limiting the spread of farmer shops and country shops and for the development of rural tourism is that prepared goods are only allowed to be sold locally.They are not allowed to be sold in shops (www.elotiszaert.hu).
Civil society organizations interested in the improvement of the conditions for farmers decided to address the important issue of the legal environment and launched efforts to improve the regulation, so that it would better serve the intentions of the regulator.
Civil society organizations suggestions are the following:  Prepared farmer products -marmalade, sausage, cheese -now cannot reach local shops and restaurants.They consider this an unnecessary restriction, that is against the aims of rural development and tourism, as according to the current regulation the benefit of preparation does not go to the farmer, and the supply of local shops remains poor without these products. New categories in the regulation are needed to help farmers appear on the market: farmers' fairs, village days and festivals could be enhanced with a new AGORA, this way products such as house-baked bread could be sold at farmers' fairs.


The recent regulation refers to "local" shops concerning direct sale, and allows it only up to the border of the locality.For example, in a village of 200 inhabitants the local market is too small, so expansion is suggested up to a circle of 50 km.


That farmers should be tax-exempt up to a revenue of 400.000HUF (about 2000 euro) concerning non-prepared goods and additionally 400.000Ft concerning prepared goods.

Lessons to learn
In the case of economies which have been in transition, such as in Hungary, the market organisations in the food chains have still not yet been fully established in each field.The lack of these organisations poses numerous difficulties, mainly in coordination.The wellorganized nature of large multinational companies eliminates many of these difficulties.A large majority of agricultural producers are more likely to face market uncertainty without possessing the technical knowledge about risk management.This applies especially to small, fragmented farms and the fruit and vegetable sectors.
Why do these agricultural producers want to sell directly to consumers?First of all, they intend to sell continuously and at a higher price, and gain additional income.Furthermore, it is important for them to improve consumer's opinion of food producers by selling quality goods.
One may ask, which farmers should diversify into direct sales?Mainly those who possess the necessary labour force capacity and knowledge, and where consumers are welcomed, and also where the producers are located close to consumers.In these cases, it is an important task for advisers to acquaint farmers with related subsidy opportunities, as well as help them combine their forces and take part in continuing training.Therefore, the training and the motivation of advisers is crucial.
It is frequently asked, what are the main principles in connection with direct trade?First of all, one should respect the appropriate rules and laws, produce a high quality basic commodity, raise buying interest by advertising the goods, and also have the ability to develop a successful marketing strategy that fulfills the needs of the consumer.
Picture 11.Meat products must be refrigerated and kept in accordance with the hygienic standards.Mobile butcher trucks or trailers are one solution.
Picture 12. Grading and packaging at the farm is very important and requires the help of all members of the family.
The defining feature is that farmers sell their products directly to the final consumer, bypassing the conventional channels of trade and distribution.Vast positive EU experience in the field of direct sales can prove useful when regulations are applied.Furthermore, specialized education, the intention to change consumer behaviour, and the introduction of successful forms of cooperation are of key importance.(Picture: 11.)

Conclusions
Due to the price-squeezing nature of food-trading chains as a consequence of the strong competition between them; to the non-inflation matching increase of agricultural product prices; to drops in prices because of hard competition -producers focus increasingly on direct sales.
The direct sales of agricultural products plays an important role in the diversification of the activities of the rural population and helps to develop the rural areas.On the one hand this form ensures the provision of healthy food for consumers, while on the other hand, it provides increased income to farmers, allowing farmers to remain in the countryside.To achieve increases in direct sales marketing, changes in both producer and consumer consciousness are necessary.
To sum up, direct sales is a selling and trading activity performed by a local resident who is involved in primary agricultural production, or a joint or cooperative holding that does not have legal commercial status, and obligations or financial regulations of that nature do not apply to them.
Educational efforts are aimed at helping both sides clearly see that direct sales are a possible way of achieving sustainability.Direct sales are not widespread in Central Europe, as they are in some other European countries.One of the main problems for example within Hungary is that current regulation constrains direct sales into a narrow frame.To ease these problems legal regulations are being modified.Through these modifications, it is likely that this means of production and distribution will increase.
www.intechopen.comDirectFood Marketing at Farm Level and Its Impacts on Rural Development 343 Picture 5. Shopping in hypermarkets is very common in the larger towns.Consumers like to shop twice a month, buying large quantities from the large assortment of choices available.Picture 6.When the buyers pick and transport the fruits themselves, children can actively participate and have their first food selection experience.
During 2000-2004, these bidding possibilities were offered in SAPARD (Special Accession Programme for Agriculture and Rural Development), and after the accession among the ARDOP (Agricultural and Rural Development Operational Program).Currently, the priorities of agriculture and rural development for the development period 2007-2013 are as follows:  Improvement of the competitiveness in the agricultural, forestry and food conversion sectors and forcing of structural changes;  Initiation of the human conditions of competitive agriculture, especially concerning innovation and market-oriented aspects;  Enhancing the guarantees of sustainable farming;  Easing the employment concerns in rural area, broadening income opportunities; improving life quality, relieving admittance to services;  Developing local communities.

Table 1 .
Links between development measures and integrated rural development development of specialty local products means the products represent a common local value and are principally those that can be associated with a specific village or territorial place due to their historical heritage or tradition.