Why the farm shop works so well in Switzerland

In hardly any other country are farm shops as widespread as in Switzerland – a product of short distances, high purchasing power and mutual trust.

Swiss agriculture is often perceived internationally as the epitome of timeless tradition. But behind this idyllic image, a profound structural change is taking place.

While wholesalers dominate the markets worldwide, Swiss farmers are increasingly focusing on direct marketing: one in five farms sold some of their produce directly from the farm in 2023, according to the Federal Statistical OfficeExternal link (FSO).

In this video, my colleague Alexandra Gföhler summarises the most important facts of the article:

This trend is less an expression of nostalgia than an economic adjustment strategy in a market in which, according to the Agricultural Information ServiceExternal link, farmers often receive only CHF0.30 ($0.38) of every franc spent in the retail trade, compared to CHF0.45 in 1990.

In order to survive, Swiss farms are developing into hybrid companies that combine digital logistics with traditional trust models.

Counting on the honesty of customers

A central feature of Swiss direct marketing is the high level of trust between the producers and their customers.

This is because most farm shops are not serviced. This means that customers pay the total amount they have calculated themselves for the products they have bought unobserved.

Despite the lack of supervision in most farm shops, 95% of goods are paid for correctly in Swiss farm shops, according to a study by the University of BernExternal link. More expensive products such as honey or cheese tend to be stolen.

The closer a farm shop is to the farm or to other houses, the lower the chance of theft, according to the study. If a shop is monitored by video, payment behaviour increases by almost 5%.

However, most farm shops are still based on an implicit social contract, which stands out in an international comparison.

“Farm shops without sales staff are a success story in Switzerland. They have a much higher payment behaviour than, for example, newspaper boxes in Austria or self-cut flowers in Germany,” the three authors of the study said in the St. Galler Tagblatt.

Organic farming drove the development

Organic farms are a driver of farm-gate sales in Switzerland. Data from Swiss agricultural researchExternal link shows that organic farms in canton Bern, for example, are significantly more likely to use direct sales channels than conventional farms.

According to the data, 98% of organic farms in certain Alpine areas of the canton engage in direct marketing, compared to just 7% of non-organic farms in the same zone. However, direct marketing can also include other forms of distribution, such as vegetable box deliveries.

This large difference is related to the required added value: organic farms utilise direct contact with customers in order to better compensate for their higher production costs without intermediaries. Conversely, organic customers are also more in favour of local products and transparent production.

The relationship with customers also plays a greater role for the farm, as direct sales allow them to communicate and monetise their production history.

Digital revolution in the farm shop

Recently, also fuelled by the Covid pandemic and the accompanying trend towards cashless payments, more and more farms are turning to electronic payment optionsExternal link for direct sales.

In remote regions, this technology is also becoming a tool to secure supplies for the population. Where traditional village shops have had to close due to high fixed costs, automated access systems and self-checkout tills enable basic supplies to be provided around the clock – with minimal staffing levels.

Digital platforms now use push notifications to inform customers in real time which seasonal products are available, such as the first cherries. The farm shop is thus transformed from a static point of sale into an interactive component of the digital infrastructure of rural areas.

The digital concept also suits younger, high-earning people for whom availability and flexibility are more important than the lowest price.

For this group, 24-hour vending machines and app-based ordering systems are not a gimmick but a prerequisite for integrating local products into their everyday lives.

It is therefore no coincidence that a further development has been observed in recent years: the farm shop is coming to the cities. More and more farmers are now also offering their products in shops in more frequented locations.

For many, it hardly pays off

However, the widespread idea that direct marketing is the easy way to higher profits is only partially true.

Experts point out that this branch of farming is very labour-intensiveExternal link. Farmers have to take on additional tasks in the areas of logistics, marketing and IT.

“If you want to make a living mainly from direct marketing, you have to fully focus your business on this and work in a highly professional manner,” writes the Swiss Farmers’ UnionExternal link.

Regulatory hurdles

In addition, farm shops often come up against planning and regulatory limits, the Swiss Fair Markets Association points outExternal link.

For example, farmers are allowed to process their grain into flour, but baking bread for the farm shop is categorised as a commercial activity, which can be legally problematic in the agricultural zone.

Such hurdles are also preoccupying politicians: there have been discussions in parliament about strengthening the legal framework for direct marketing and reducing bureaucracy and administration for farm shops. However, proposals to this effect did not find a majority.

Whether the Swiss farm shop concept will be successful in the long term will therefore not only be decided at the till – but whether it is possible to achieve a sustainable balance between trust, technology and the legal framework.

Edited by Balz Rigendinger. Translated from German by AI/ts