Changes to the supermarket supply chain over the last few decades have “squeezed out” local and small farmers in place of more consolidated and global suppliers. As a result, local farmers have turned to more direct to consumer markets for farm sales, which capture a higher price point but also bear higher marketing costs. Previous research has revealed saturation and lack of profitability in this market type. As a result, researchers have explored strategies for “scaling up” local farmers into intermediary supply chains, such as grocery retail, and have tested the profitability of hybrid marketing strategies with positive results. However, none of this research has used production costs to test market feasibility and this component is critical for a small farmer’s willingness to “scale up” into intermediary markets. Using salad mix as a test crop and Southeast Michigan as a sample region, this research uses farmer-generated production costs for four production methods to examine the feasibility of previously identified strategies for scaling up into intermediary supply chains. The data reveal that central processing has the greatest impact on lowering both the farmgate cost of production and the output price for the buyer. In addition, the minimal costs of organic certification for small farmers justifies the price premium received in grocery retail markets. Lastly, hydroponic production was found to be infeasible at a small scale but could potentially meet retailers price preferences at larger scales. Based on these findings, further research on the realistic costs for centralized processing, distribution, and marketing for this crop type to be sold to grocers is recommended.
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