Transcript Marketing Channels and Small Farms

Evaluating Marketing Channel
Options for Small-Scale Fruit
and Vegetable Producers
Matthew LeRoux
Cornell Cooperative Extension, Tompkins County
Opportunity is knocking…
Farmers’ Market
CSA
U-Pick
Grocery
Restaurant
Distributor
Farm Stand
Joe, if you bring your
But,
vegetables
it costs $300
to theper
farmers’
day to
marketsell
the there.
prices are so
high you can sell $500
worth per hour!
That’s great. I
am going to sell
there.
…and its only 1
hour per week...
…and it takes 12
hours to prepare...
…and if it rains no
customers come.
How do you evaluate a market opportunity?
Six interacting factors impact the “performance” of a
marketing channel including:
You can sell $500 worth
per hour!
Price & Profit
It costs $300/day
to sell there.
Associated Costs
…and its only 1
hour per week...
Sales Volume
…and it takes 12
hours to prepare...
…and if it rains no
customers come.
Lifestyle
Preferences
Labor Requirements
Risk
Methodology I
• Case studies of four farms:
• 18-20 acres in production, diverse fruit and
vegetable, in operation for at least 5 years.
• The farms represent participation in 3 wholesale
and 4 direct marketing channels.
Direct Marketing Channels Wholesale Marketing Channels
Farmers’ Market: 3 farms
CSA: 2 farms
Farm Stand: 1 farm
U-pick: 1 farm
Restaurant: 2 farms
Grocery: 3 farms
Distributor: 2 farms
Methodology II
• Collected logs of all marketing labor (from
harvest to sale) for one typical, peak
season week.
• Collected channel specific mileage and
gross sales by channel for the same week.
Why labor logs?
•
•
•
•
Labor the largest marketing expense.
Consistent unit and format.
Operators tell hired help to complete the forms.
Each employee filled out their own sheets.
Labor logs
JOE
2.5 hrs
7/24
kale
Wegmans
Methodology III
• Used group totals & averages for channel
comparisons and ranking by:
– Profit (gross sales - (labor cost + mileage)
– Labor hours needed
– Sales volume
• Also used data from a survey (n=14) to
rank the channels for risk.
Sales Volume by Channel
Profit
Four Farm Average Profit as % of Gross Sales with Owner Labor Valued Versus Not Valued
#5
#4
#2
#3
#2
#1
#1
#3
List the Risks and Challenges
Channel Ranking:
Based on 4 factors.
Channel Combination with prioritized selling maximizes sales of
unpredictable perishable crop yields.
Summary
• Identify your goals and lifestyle preferences.
• Keep marketing cost & returns records, if
only for “snapshot” periods.
• Value your own time to present an accurate
picture of marketing costs.
• Rank and compare opportunities to maximize
profits.
• Combine channels to max sales and reduce
risks.
Practical Application
• Farmers said “do it for us”.
• An evaluation tool has been developed.
• Any farmer can complete one week of
labor logs and we will analyze them.
• Benefit to the producer, a “soil test” for
their marketing efforts. Informed decisions
may result in increased profits and
decrease in labor needs.
The end