Charles R. Hall and Marco A. Palma
Marketing is one of the most important factors in determining the success of any fruit and vegetable farming enterprise. Marketing includes all the operations and decisions made by producers. These decisions range from deter-mining the most marketable crops for production to deciding how to best deliver quality produce to the consumers at a profit. However, contrary to popular belief, marketing does not begin after a crop is produced. Instead, marketing alternatives need to be considered even before production takes place.
Fruit and vegetable growers in Texas have numerous alternatives for marketing fresh produce. Each alternative has characteristics that make them more advantageous for different types of producers. Volume of produce grown, location of the grower, time available for marketing activities and quality of the produce are a few of the important factors to consider when choosing a market or combination of markets to use. Producers may be better able to use or develop more alternatives if they know the major characteristics of each marketing alternative. Fruit and vegetable marketing alternatives may be classified as direct or non-direct markets. Direct markets involve producer interaction with consumers on a one-on-one basis, and include pick-your-own operations, roadside stands, community supported agriculture (CSA) and farmers markets. Non-direct markets involve producer interaction with market intermediaries. The non-direct markets include terminal market firms, shipping point firms, processors, grower cooperatives, brokers, and retail outlets. The following discussion will explain the characteristics, advantages, and disadvantages of the principal direct and non-direct market outlets for fresh produce.
Non-Direct Market Alternatives
As mentioned earlier, fruit and vegetables may be marketed directly by producers to consumers or non-directly through terminal market firms, wholesalers, brokers, processors, cooperatives, private packing facilities or buyers for retail outlets. Important factors to be considered when choosing a non-direct marketing alternative are buyers’ needs, requirements, and the abilities of the producer to meet those needs and requirements. Buyers may desire certain grades and varieties of produce, and they may require that the specific produce be packaged in certain containers. Buyers may demand certain quantity levels of produce for specified time periods. Small acreage producers should be aware of their abilities and shortcomings relative to the needs and requirements of buyers.
Terminal Market Firms
Terminal markets are assembly and distribution centers located in large metropolitan areas. Producers truck their commodities in large amounts to terminal markets where buyers purchase and then redistribute the goods to local markets. Terminal markets in Texas are located in Dallas and Houston.
Terminal market buyers include buyers for chain stores or large wholesalers. Although their requirements may vary slightly, they generally are looking for the following characteristics from their source of supply:
- A large volume from one source is needed, so they do not have to make many small purchases.
- A dependable supply which will be available over a long period of time, so they do not have to keep locating new sources.
- A consistent quality of the product and as high a quality as can be purchased at the market price. They also desire to have a variety of consumer and wholesale packs available from the source, so they can meet the varied demands of their retailers.
- A full line of produce is needed, so they can buy mixed loads. They can then meet their need for a variety of produce without having to contract many different sources.
- A source with an established reputation to minimize the risks of not obtaining the quality and condition desired.
A comparison of the small fruit and vegetable farmer’s situation and the terminal market buyer’s needs suggests that small farms do encounter problems in meeting many of the needs of terminal market produce buyers. They encounter problems in meeting volume, timing, containers, delivery schedules, marketing experience and product quality. Although terminal market buyers do some business with small firms, many have tended to bypass these firms in favor of large producers located in established fruit and vegetable producing areas. This does not suggest that there have not been successful small farm marketing firms. There have been successful firms, but these firms have, through application of marketing arrangements, overcome some of their problems, so they could meet the needs of their terminal market buyers.
Advantages of terminal markets:
- Current market information is usually available at terminal markets.
- Growers have opportunities to contact many potential buyers.
- Growers may sell large quantities fairly quickly.
Disadvantages commonly associated with terminal markets include:
- Buyers usually accept only consistently high quality produce.
- Buyers usually have very strict packaging requirements.
- Prices are based on current retail market prices, so they can fluctuate widely over time.
- Producers must provide transportation to the terminal market for their produce.
- Producers must deliver produce to terminal markets in relatively large quantities (i.e., truckloads).
Shipping Point Firms
Shipping point sales are those made by the farmer to a local shipping point buyer who in turn sells the fruits and vegetables to terminal market buyers. Shipping point buyers may be area packing houses, produce dealers or other handlers such as buying offices for large chain stores. For successful marketing, produce, grading, packing and cooling are required by most buyers. Packing facilities provide these services for growers and also may harvest, manage field operations, supply inputs, deliver to buyers and lease production equipment.
Advantages to dealing with shipping point firms:
- Growers have the ability to market large volumes through pooling, and do not have to establish a terminal market sales program of its own.
- Shipping point buyers may provide guidance on grades, container sizes, etc.
- Produce may be sold to sources not otherwise available to producers.
Disadvantages to dealing with shipping point firms:
- Prices received depend on the facility since the firm has limited information on market prices and conditions.
- The firm does not develop terminal market outlets of its own.
- The bargaining position of the firm is weak, especially if there are a limited number of shipping point firms in the area.
Brokers are individuals or firms who neither take title nor possession of produce, but serve as agents to negotiate sales contracts between buyers and sellers. Some sellers rely on brokers entirely while others use broker services in a supplemental fashion with their own sales and procurement staff. Brokers try to locate the best quality produce at fair prices for both buyers and sellers, and they inform buyers and sellers of terms, conditions and special agreements of proposed contracts. Brokers may also handle invoicing, collections and remittance, but brokers are not responsible for payment if buyers fail to honor a contract.
There are two types of brokers involved in the exchange of fruits and vegetables, buyers and sellers. Buying brokers are individuals or firms that arrange sales between terminal markets and local retailers. Selling brokers arrange sales between local growers and terminal market buyers. With modern forms of communication, buying and selling brokers may be located in shipping point or terminal wholesale markets.
Some considerations important to brokers in grower clients are the ability to supply produce over a long season, consistently high quality, large volumes from one source and experience in growing produce. Brokers generally investigate growers’ reputations to see if they have the needed production experience to meet the terminal market buyers’ requirements. Although brokers handle the sale of produce, producers retain responsibility for most of the marketing functions. Producers are still responsible for the production, handling, assembling, grading and packing activities.
Advantages to selling through a broker:
- Growers obtain the services of a professional produce salesman and have access to a large number of buyers.
- Brokers provide needed price information.
- Producers are not responsible for the selling function which reduces personnel overhead for selling.
Disadvantages to selling through a broker:
- Products must be homogeneous and able to be graded, but grades may not represent seller’s quality.
- Producer’s volume may be inadequate, and cost of brokerage sales is high if large volumes are handled.
- Producers remain responsible for product delivery and quality.
Other non-direct marketing options for producers are fruit and vegetable processing plants. These plants have the capacity to process large quantities of produce. Processors compete on a national level by reducing per unit production costs or by locating produce that can increase the receiving or distribution efficiency.
Producers usually contract to provide processing plants with a certain amount of quality produce over a certain period of time. However, processors do not contract for all of their produce. Generally, they contract for about 60 percent, purchase 30 percent on the open market and produce 10 percent of the total needed quantity. This allows processors the freedom to “play” the market and possibly receive the supplies at lower prices.
Good managerial capabilities are essential for a producer to provide the required amounts and qualities of produce for a processing facility. Processors may control the production practices through the contracts and their field representatives.
Producer advantages associated with processor contracts:
- Price and quantity contract agreements assure producers of a market.
- Production expertise is sometimes provided by the processor.
- Processors may provide harvesting assistance.
Producer disadvantages associated with processor contracts:
- Prices received may be lower due to less risk.
- Quality standards may be stringent.
Objectives of produce marketing cooperatives are to secure higher prices, guarantee markets for produce and reduce handling costs for their members. Most fruit and vegetable cooperatives also provide various marketing services for their patrons including harvesting, grading, packing, cooling, storage and transportation services. Cooperatives allow members to bring their produce to one location and pool their produce which allows producers to meet buyer requirements that they often cannot meet by themselves. However, some fruit and vegetable cooperatives also provide purchasing, pooling, processing and bargaining functions for their members.
Benefits rendered by cooperatives:
- Growers gain benefits of large volume marketing.
- Often a sales specialist is available.
- Growers gain benefits of increased bargaining strength.
- Producers may reduce level of market risk.
Disadvantages of fruit and vegetable cooperatives:
- Producers lose some independence by selling through a cooperative.
- Members may only sell through the cooperative when prices are high, and then use other marketing channels which hurt cooperatives’ reputation.
- More experienced, better producers might subsidize inexperienced producers and, therefore, not reach their profit potentials.
Many opportunities exist for small acreage producers who are willing to deliver fresh pro-duce to retail outlets. With the growing popularity of salad bars and the need for dependable high quality produce, some restaurants purchase locally grown fresh fruits and vegetables. Grocery stores are also potential contacts for fresh produce sales. Other potential markets include institutions such as schools, hospitals, prisons and hotels. Selling to these markets requires a truck to transport the merchandise; time to deliver to each location (as several will be needed to make delivery cost efficient); and the ability to deal with several buyers on an individual basis. Buyers and sellers usually negotiate prices and delivery times. These outlets require frequent low volume deliveries of a variety of produce. Institutional markets may purchase lower quality grades and not require specific containers.
Producers need to make contact with potential buyers in the winter months before the growing season in order to identify packing, quality, container, variety requirements and to become acquainted with buyers. Contact should again be made with the buyers prior to harvest in order to deliver samples and place orders. Growers should deliver the amounts and qualities contracted on time. At the end of the season, producers should ask buyers what changes would improve the operation. Consulting with buyers allows them to influence the operation, and makes them more likely to purchase produce next season.
Advantages of dealing with retail outlets:
- Growers may be paid at time of delivery.
- Growers can bargain for price levels.
- Packing costs may decrease and special containers may not be necessary.
- Producers replace middlemen in the marketing process.
Disadvantages of dealing with retail outlets:
- Superior quality produce may be demanded.
- Producers need time and extra planning to develop client contracts and deliver produce.
- There is the possibility of high transportation costs per unit volume.
Direct Market Alternatives
Regardless of its occurrence through pick-your-own operations, roadside stands, or farmers’ markets, direct marketing is an approach which is usually beneficial to both producers and consumers. When producers choose to use a direct market, they want to capture the retail dollar that consumers pay at other markets. If growers expect to receive prices similar to those at retail outlets, they must provide the same value of services as other retailers and wholesalers. Retail store produce price consumers pay generally covers the cost of producing, grading, packing transporting, wholesaling and retailing. In order to receive higher net returns, producers try to provide all the marketing services at a lower cost, provide services which are not available through other markets and eliminate certain unnecessary services. Consumers, on the other hand, purchase from direct markets to buy high quality fresh produce directly from producers at competitive prices. Besides providing a financial exchange arena for both producers and consumers of fresh produce, direct markets also provide social settings for these individuals. Producers have the opportunity to discuss production practices, display ideas, usage of different types of produce and to socialize with friends, neighbors, and consumers. Consumers have the opportunity to visit a local farm and talk with others who share similar interests. Although direct marketing seems to provide an opportunity for producers to receive higher net returns, producers should consider the amount of additional time and effort, the required production knowledge and the needed retail sales experience associated with direct markets. Producers should be aware that direct markets may require them to work long hours, do a variety of work and deal with various types of people in a pleasant manner. Much of the time required to operate a direct market is spent with customers. Producers should talk with customers to promote positive attitudes and goodwill for the market which will hopefully result in repeat sales. The sales time required to operate a direct market may take away from production activities. Many times, other family members are in charge of the retailing portion of the direct marketing operation, so the grower can manage the production activities of the operation.
Pick-your-own operations (PYO) are a type of direct marketing outlet where consumers come to the farm and harvest fruits and vegetables themselves. PYO operations are feasible for crops that mature at one time or those which maturity is easily identified. PYO is often preferred by consumers who like to select fresher, higher quality produce at lower prices. Also, many consumers enjoy picking produce themselves as a recreational event or family outing. PYO markets can serve as an additional selling method for producers who use other direct and non-direct marketing alternatives. However, PYO operations require the producer to work very long hours, to do a variety of different jobs and to deal with various types of people pleasantly.
Some areas that are very important to the success of PYO’s are crop diversity, quality and advertising and promotion. PYO operations often are more successful if they provide a variety of produce. This is especially true if there are a large number of similar operations in the area. In order to encourage repeat sales and goodwill, it is important that PYO’s consistently provide high quality produce. Advertising and promotion are critical to PYO success since consumers learn about an operation’s existence and about what produce is available from these efforts. These and other topics are discussed below.
As in any type of direct market, the buying habits, tastes and preferences, distance from the market and income levels of potential customers in the area must be identified and evaluated. The level of competition in the area also can dictate the crops and services producers provide. Producers should identify the number of similar farmers in the area and the type of crops they produce and services offered. Producers often can reduce competition by planting crops at different times. Long season and early season crops can be ideal for PYO operations, especially if there are a large number of operations in a proposed area. Producers can provide several varieties of a particular crop to diversify their operations and increase customer satisfaction. This helps prolong the harvest season and provide a longer period of cash flow. Also, special services or products can be added to an operation to gain market share. Some examples are recipes, plants, flowers, seeds, herbs and homemade crafts.
Field layout is also important to the PYO operator. Field planting should be coordinated, so that the earliest maturing crops are nearest the weigh in station to minimize damage to immature crops. Fruits and vegetables that require the most supervision should be located near the checkout area. The timing of spray applications is also an important issue for PYO operations, since customers may wander to an area of an operation that has been recently sprayed or planted. Also, chemical application for some crops may drift on crops to be harvested that are within the vicinity and cause potential health problems.
High quality produce is essential to the PYO operation. Several PYO surveys have indicated that customers ranked quality as being the most favorable aspect of the PYO operation with price and recreation ranked next, respectively. Quality influences the number of customers that patronize the PYO, the price levels set for the produce and the amount of word-of-mouth advertising generated. Producers should remember that high quality is important to customers, but they also appreciate honesty about the quality of the produce available. Producers may be able to gain credibility and goodwill by honestly representing and explaining the quality level of their produce. The quality level may mean the difference in repeat sales, volume and profit levels for the operation.
Proper advertising is an important part of any business. PYO advertising plans can be as simple as a roadside sign. Probably the best form of advertising and promotion for a PYO market is by word-of-mouth. However, until a PYO has developed a reputation for high quality produce at a convenient location for reasonable prices, other forms of advertising will be required. Local newspapers ads and roadside signs are the most common forms of PYO advertisements. Also, radio spots or direct mailings can be used. The location, business hours, working days, types of produce and any special or unique services that the PYO provides should be included in any advertisements. It is not necessary to include price in the ads unless there is some type of special. Local radio and television spots are especially helpful for advertising produce in season and market specials, but one must plan the ad with the station manager well in advance to reserve a place in their programming. Mailing lists for the market area can be obtained through churches or local social groups if producers do not already have their own listing of customers. Mailings to previous clients are also a good way to inform them that produce is available. A telephone with a taped message might be feasible for larger producers with many clients.
Signs can serve as advertisements as well as information sources for PYO customers. For advertisements, signs should be placed on a busy road near the PYO site. Signs should direct customers to the farm and enhance the customer’s need for the fruits or vegetables that are offered. The most popular crops should be mentioned along with directions to the site. Permanent road signs may be regulated, so it is best to check with local and state officials before they are developed and erected. Once at the PYO site, signs should explain parking, pricing, minimum quantities, hours and days of operation, volume discounts and containers. Both advertisement and site signs should be neat and readable in bright, attractive colors. The use of different colors for key words can emphasize their importance. Also, the use of symbols can make signs easier to read, especially on roadsides. Zoning regulations should be checked concerning roadside signs and also for the PYO access area.
PYOs can be promoted at county fairs or craft shows, or through local media channels. A booth at local events such as county fairs or craft shows can make consumers aware of the PYO operation. Flyers, recipes, free samples and contests can be used for promotion. Contests for various amounts of free produce can be a way to develop a mailing list. News articles, especially in a small town weekly or free advertising newspapers, can be a good promotional tool. Many times, the gardening or agricultural sections of local papers are interested in the human interest aspect of a PYO operation.
Pricing is a difficult decision for most farmers starting a PYO market. Most producers use competitors’ prices as a yardstick for setting their own prices, including other PYO operations, local grocery stores, farmers’ markets, roadside stands or wholesalers. Price levels should reflect quality of produce, picking conditions, distance to the market, services offered and other advantages and disadvantages that the operation offers. However, in order to make a profit, producers should also consider their production costs and yields when setting price levels. Produce may be sold by weight, volume or count. The simplest method for calculating prices is to sell by volume. However, producers must provide the containers for the customers, so correct volumes can be measured. Even with the specific containers, correct volumes are not guaranteed, and some pickers will overfill the containers which may result in a significant amount of fruit obtained at no charge. Pricing by weight can eliminate the container problem, but it requires more time and labor. When pricing by weight, the containers must first be weighed prior to picking and the weight recorded. Filled containers must be weighed after picking and the produce weight calculated. A scale, pen, and roll of masking tape should be all of the equipment needed for this process. Even with a weight pricing system, it may be necessary to provide some containers since all consumers will not bring their own. Charges for containers are appropriate in these instances. Count pricing is a simple method that prices produce on a per item basis. However, count pricing obviously cannot be used for all types of fresh produce. No matter what pricing method is selected, it is recommended that the price be rounded to the nearest nickel or dime for easy price calculation and to maintain the “farm” image. Also, the pricing method should be mentioned on signs and other forms of advertising. It is best to start the price too high than too low because it is much easier to lower prices than to raise them. Successful PYO operations seldom lower their prices directly in order to attract enough customers to move the produce as fast as it matures. Instead, the grower may advertise quantity sales or specials.
Adequate, convenient parking facilities are a must for PYO operations. If at all possible, parking should be within reasonable walking distance of the production site for customers of all ages. If parking is not available near the site, then safe transportation should be provided to the picking areas. Signs should instruct drivers how to park their vehicles. Many times signs alone are not enough to direct orderly parking at PYOs, particularly on high customer traffic days. Therefore, parking attendants may be needed to direct customers and assist them to the check in area and answer general questions about the operation. A general rule for lot space is 20 cars at a sixty degree angle per every 1,000 square feet. In the same area, 30 cars may be parked at a ninety degree angle. If the area can be entered at one end and exited at the other, or if it is wide enough to have two aisles (130-140 feet), it may be designed for angle parking and one way traffic aisles or for perpendicular parking and two way traffic aisles. If the area is narrow (60-70 feet) with only one access point, then the design is limited to two way aisles and ninety degree parking.
The check station should be located so it can be seen from the parking area. The station should separate the parking area from the fields in order to discourage pilferage. If possible, it should be located where people must pass by on the way to and from the fields. A picnic table placed in the shade may suffice for a small acreage, but for a large operation, a portable shed with solid awnings could be constructed to open on two or more sides to accommodate a larger number of customers for checkout. The check station should serve as an area to instruct customers, to collect money and to sell harvested produce. It also serves as a storage area for customers’ produce while they are still picking in the fields. Field supervisors can write the customer’s last name on the filled containers and take them to the check station where they can be stored in alphabetical order until the customer is finished picking. Rules of the operation should be posted at the check station, as well as information on the location of the picking sites and about whether or not transportation is provided to the site. The check station’s attendants should provide information on what areas of the field are available to pick and what crop varieties are available.
Optional facilities can increase the goodwill of the firm. The facilities could help differentiate one PYO from another and increase the competitive edge. Some optional facilities that can be provided are clean restrooms, play areas for children, designated picking areas for children, picnic tables, water coolers and shady resting areas.
Harvesting containers are needed and can be supplied by the customer, the farmer or sold to the customer by the farmer. Producers need to supply a variety of containers that are appropriate for the produce they have for sale. Some producers design their own specialized containers. The containers selected should be sturdy, avoid bruising the produce and should not hold such large quantities that consumers cannot easily carry them. The PYO name, logo and map to the farm can be printed on the containers for a minimal charge. The printed information encourages repeat sales, and a discount could be offered to consumers if the boxes are used repeatedly or returned.
If consumers bring their own container, a greater amount of time is spent with each customer weighing in the containers and then weighing the produce after picking. Therefore, the check in and checkout process is slowed down, but it provides a fair pricing system for producer and consumer. Also, some consumers will not bring containers with them, and it will be necessary for the PYO operator to have some type of containers available for their use. No matter what container system is chosen, a sign and any advertisements should explain the container policy.
The amount of labor needed for the PYO operation depends on the services offered, length of growing season, distance to the picking site and type of containers. Most operations will need people for field supervisors and check station operators. If the farm offers only one crop throughout the growing season, then two or three people could supervise the entire operation. If the operation offers more crops or services, then other employees may be necessary. Besides the field supervisors and check station operators, baby sitters or play ground helpers, container distributors and transportation operators might be needed. Often, high school students can provide the supplemental labor that is needed for a PYO. The amount of labor will vary with the services provided.
If possible, it is a good idea that employees wear some type of similar clothing to identify them as workers. Some examples are T-shirts, caps, or bandannas with the PYO logo or farm name on them. Identifying attire can help customers easily recognize the employees and receive the needed assistance.
Even though it is expected that most of the produce will be harvested by the customers, some harvesting may have to be done by the operator. Some customers will not be able to pick the produce for various reasons, so some harvested produce may be made available to sell to these customers at a higher price. Also, a sufficient number of customers may not come to pick the entire crop when it is ripe, so some of it may need to be sold through other market channels. A field supervisor or driver, who picks while also helping customers, may be all the harvest labor requires.
Although small farmers are exempt from federal regulations on minimum wages, maximum hours and overtime pay, Texas labor regulations need to be considered (it may not be clear whether the PYO operation is considered an agricultural or a retail enterprise). Failure to comply with the law could shut down the business. A summary of labor regulations relating to farm labor is included in the Texas Farm Labor Handbook, which may be obtained from the Texas Agricultural Extension Service.
Producers increase their liability by inviting the public to come on their property to pick produce. Generally, producers should be concerned about the safety of children and older people who are more likely to be involved in an accident. It is a good idea to post a sign, “Not Responsible for Accidents”, but this does not free the owner from liability. Insurance is important to any business to reduce these risks to a tolerable level.
Producers should contact their insurance agent when they consider a PYO operation and have their policy appropriately adjusted. The liability policy should cover liability judgments, expenses in supplying relief at the time of an accident, costs of defending against lawsuits, the owner’s expense in the investigation, defense, or settlements and costs of court bonds or interest on judgments delayed by appeals. Producers can also take their own measures to insure customer safety and reduce liability by fencing dangerous areas, keeping chemicals and machinery locked up or away from the public area and keeping animals tied or penned away from production sites.
General advantages of PYO operations for producers:
- The requirements for harvest labor are reduced.
- Grading, packing, and storage costs are eliminated.
- Producers receive payments for the produce directly, eliminating middlemen.
- Container costs are reduced if the customer provides them.
- Price variability risks are reduced, and producer has more input into final price.
Potential disadvantages to the producer:
- Producer assumes liability for any accidents.
- PYO operations require long hours during the harvest season.
- Producers must assume retailer services and responsibilities.
- Bad weather or lack of customers may adversely affect returns.
- Customers must be attracted to the picking site.
Roadside stands or markets are a type of direct marketing system where a grower establishes a selling place (stand) near a roadway and sells produce directly to consumers. Roadside markets vary from small units selling one or two products on a seasonal basis to firms selling a diversified product mix. The roadside stand usually is located on or near the farm or orchard. Produce sold in a roadside stand may be grown exclusively on the farm, or it may be purchased from outside sources. A roadside stand may be open only during the harvest season or throughout the year, depending on the type of produce marketed and supply sources. Facilities may elaborate permanent structures or mobile units such as trucks or trailers. Generally, a permanent, year round roadside produce business is referred to as a roadside market.
Producers use roadside stands to help supplement their income, provide employment for family members, and dispose of extra produce. Besides possible financial benefits from establishing an outlet for produce, producers also may enjoy the customer exchange process, receive a sense of personal pride and independence from the operation and gain satisfaction from growing and selling quality fruit and vegetables.
Consumers shop at roadside stands in order to purchase fresh, flavorful, high quality produce in a convenient, friendly atmosphere at a reasonable price. Besides quality and price, other factors that draw people to roadside stands are convenience, advertising and recreation. Some problems consumers experience shopping at roadside markets are the distance to the market, heavy traffic, variable quality, and inconvenience caused by out-of-stock produce. If producers can solve or minimize these problems, then repeat customers may be established for a market.
When producers consider the sales potential for their stand, they should consider the number of potential customers, the competing businesses in the area and the traffic flow. Some population factors that growers should consider include age, income levels, family size, and ethnic or racial mix. Some common characteristics of roadside stand patrons include:
- They usually travel less than 15 miles to the market.
- They shop at the market at least twice a month.
- The average shopper is middle aged and from a two person, middle income household.
- Shoppers usually learn about a stand from driving by or from satisfied customers.
Producers should consider the number of similar businesses in the area, and how they compare to their operations. In addition, they should consider the level of customer interest and whether it is sufficient to support several stands. Often several markets can benefit from the competition and operate profitably in the same approximate area. In order for several stands to operate in close proximity, there must be considerable traffic flow. As long as traffic moves slowly, sales may increase as the number of cars that pass the stand increase. However, there is an inverse relationship between sales and the speed of the passing traffic.
Hours of Operation
The business hours that a roadside stand keeps greatly depends on the operator and the amount of produce that is available for direct sale. Some roadside stands operate seven days per week for 8 to 10 hours per day, year round. However, some stands are only open Friday, Saturday and Sunday for 5 to 8 hours from June to late October. The highest customer traffic occurs on weekends, particularly on Saturdays.
The location of a roadside stand can greatly influence its profitability. There will probably be very few market locations that will be ideally suited. Some variables to consider when evaluating sites are traffic count, population density and composition, zoning regulations, distance from customers and competitors as well as the type of produce offered. The more successful stand sites are located near customers and are easily visible from the road. Normally, a level stretch on the right hand side of the road heading toward town has the most promise as a market location. If a stand is close to a city, then the average weekly sales may be higher than if the stand was in a more rural area, especially if the road is a busy, main thoroughfare to and from the city or town. However, in higher population areas, consumers will travel a shorter distance to a stand (approximately a 15 minute boundary for travel time to the market). Roadside stands generally are more successful, if the average highway speed is 45 miles per hour or less.
Availability of parking is another important factor that should be considered in selecting a location for the roadside market. Off road parking is essential for the safety of customers and users of the highway. A frontage road is not necessary, but the stand should have a safe, easy entrance that is visible from the road. The parking lot should be a well drained grassy or graveled area. If the stand is generating a large amount of traffic, then traffic flow directions may be needed to assist in orderly parking.
Organized traffic patterns can make a big difference in the number of cars that can park at any given time. Three main steps an operator can take to fully use parking lot space include setting up definite entrances and exits, setting up one way traffic flow and marking off distinct parking spaces for cars. Following these steps improves safety as customers enter, move through and leave the lot. It also eliminates con-fusion in the lot and allows for more parking spaces. However, the cost of setting up traffic patterns and marking off spaces needs to be considered. Signs will be required to direct traffic, and materials will be needed to mark off parking spaces.
Facilities, Buildings, and Equipment
The facilities used to house a roadside stand do not need to be elaborate, but should serve operational needs. Essential facilities for the market are a sales area, adequate parking and roadway access. The facilities should provide protection for produce, employees and customers. Some optional facilities are a cool storage area, restrooms, playground and a picnic area.
Buildings used for a market may be new or converted. The buildings or stands must be neat, attractive and large enough for adequate displays with plenty of room for walking, and, should always be in good repair and freshly painted with conservative colors. The floor can be of wood, concrete, clean shavings or sawdust. The roof should be sufficiently high to avoid radiation. The main purpose of the building is to protect the produce and customers from the weather. When building a structure, producers should consider the expected sales levels, the length of the season and types of produce to be sold. From these factors, growers can determine the size of the building, the appropriate building design and needed construction materials.
After evaluating their market expectations, growers may find that no permanent roadside stand structure is needed. If the grower has one or two items to sell, a temporary stand or a simple pole shed might be quite adequate. Regardless of the structure used, it is important to keep the rural image with a colorful creative stand.
The amount of equipment needed also varies with the type of stand. The only necessary pieces of equipment for a roadside stand are a money box or a cash register and a produce display. Other types of equipment that might be included are scales, an ice machine, a cold storage unit, and accent lighting fixtures. Some specialized equipment might be needed, depending on the market type and services offered.
Source of Produce
The source of produce depends on the type of market. Growers may specialize in one product or sell a variety of goods. The produce may be entirely grown by the roadside marketer, purchased from other area growers or purchased from wholesalers. Some markets sell one superior quality product during the harvest season. However, some growers, who specialize in a single product, do sell small volumes of other products. Multiple produce stands expose consumers to more produce which can result in increased sales. In either type of stand, consistent, high quality produce is necessary to establish repeat sales.
Attractive displays give your market a good image. Producers should handle and display their fruits and vegetables to generate impulse purchases and to maintain produce quality. The stand’s design and layout can greatly influence display methods. Location of produce can influence the sales level of all products, since many sales are impulsive. High demand, popular produce should be placed so customers walk past other produce. Some general practices to help maintain produce quality and create attractive displays are:
- Avoid direct sunlight and excess air movement.
- Keep leafy vegetables moist by spraying or displaying on a bed of ice.
- Keep displays full and at an easy-to-reach level.
The type of display also can have an influence on the quality of the produce. Produce may be displayed in bulk or in pre-packaged form. Most on-farm customers prefer bulk rather than pre-packaged fruits and vegetable displays because it allows them to choose their own items and buy in volume. The problem with bulk displays is produce may become damaged with continuous customer handling, which may create mixed produce quality. Inconsistent quality or bruised produce can decrease sales volume and price. Pre-packaged produce maintains freshness and reduces shrinkage, allows advance preparation, enhances appearance, allows for quicker shopping and maintains neater displays. However, pre-packaged produce may impair the farm image of the roadside stand and deprive customers of their selection process.
Produce at roadside stands may be priced by weight, count or volume with competitors’ prices used as guidelines. If produce is sold by weight, then state inspected and approved scales are needed to verify the weight of produce sold. Selling by weight assures consumers and producers that they receive full dollar value for the produce. For some types of produce, such as sweet corn, the count price system is more practical and easier to control. The volume system works well for crops that lend themselves to packaging such as small fruit and vegetables or items sold in large volume. Producers should use signs with the prices listed in units so customers are charged the same amount for their produce. It is a good idea to price produce with 5 and 10 cent intervals to maintain the farm image and ease of calculation.
Advertising and Promotion
Many veteran roadside market operators would be quick to tell you that good service, courtesy, quality produce and reasonable prices cause positive word-of-mouth advertising, and this type of advertising is the most effective method of all. However, it takes time to build up a satisfied clientele, and other forms of advertising may be required until the stand has a large number of satisfied customers. Other advertising forms include signs, newspapers, radio and TV ads, mail out materials and bumper stickers. Regardless of the form used, advertising is basically done to inform the public of certain key factors concerning the market operation, including what produce is available, the hours of business operation and the location of the stand.
Signs are the most commonly used form of advertising by roadside stand operators. According to a Georgia study, signs were used by 81 percent of the roadside markets. Roadside stand operators who had no signs on roads approaching the market had been prohibited from displaying signs by zoning regulations. Road signs usually give the first impression of the market, so it is important for signs to be appealing, neat and attractive. Signs should be placed far enough from the stand that drivers have time to make the turn into the market. Usually, signs are placed at the market site and also at least 2,500 feet from the stand in either direction. The potential customer must make a decision as to whether to stop at the market after seeing the initial sign. Thus, the signs should be simple and easy to read with only a few words in bright colors. The farm name, distance to the market and perhaps a picture of the produce may be the only information needed on signs. For better reading ease, letters used on signs should be 1/5 as wide as they are high. There are many things to remember when designing road signs. The size used will depend on the type of customers to be targeted, the amount of information to be conveyed, the number of signs chosen, advertising by competitors, zoning regulations and the cost of the signs.
Newspaper advertising is always a good way to reach the public, but may only be necessary when sales levels are low and more customers are needed to move produce; when the stand opens; or when new produce comes in season. Ads can be run in the classified section or in a display format. The classified ads generally are less expensive and reach consumers who use produce for canning or freezing. Display advertisements often are used to catch the customer’s attention and announce special events at the stand.
Direct mailings, such as catalogs or coupons, are also beneficial. An inexpensive book for visitors to sign, which gives their name, address and particular interest, can supply roadside marketers with a mailing list and knowledge of the customers’ interests.
Promotion techniques for roadside stands can be individually or community based planned activities. Producers can use friendly, courteous service, volume price discounts or superior quality produce to establish goodwill. Some planned community activities that can help promote a stand are tours, bulletins and leaflets, produce or monetary donations, distribution of discount coupons at community service organization activities (i.e., barbecues, ice cream socials), exhibits at craft shows and fairs and sponsorship of community events.
Labor and Personnel Management
The manager of a roadside stand should be able to plan, organize and control the entire operation and its employees. Managers need to possess some merchandising and customer relations skills in order to have a successful roadside stand. Principal labor sources for most roadside stands are growers and their families. Seasonal, sales positions are the type of additional labor needed to operate a stand generally is. Hired individuals do not need to be professionally trained sales people, but they should be friendly, helpful, alert and courteous. A friendly, helpful atmosphere is one of the most important characteristics that a roadside stand must possess to gain repeat customers. Workers should be courteous and helpful to the customers when they first arrive at the stand. They should be able to distinguish the differences between the stand’s various fruits and vegetables, intelligently discuss produce varieties and be honest about produce quality.
There are many legal regulations and restrictions with which a roadside stand operator may need to comply. At the state level, health permits, licenses, sales taxes, weight and measure requirements, sanitary requirements, and zoning and right-of-way regulations need to be checked for each individual operation. These same legal considerations should be checked at the local level. Roadside marketers should also consider insurance requirements that will be necessary for the stand to cover accident and product liability.
Farmers’ markets are an increasingly popular form of direct marketing. Farmers’ markets are a type of direct market where producers come to a designated place to sell their products directly to consumers. Farmers’ markets differ from other direct marketing operations in that growers share insurance, advertising and other marketing costs. Successful farmers’ markets are very helpful in increasing the incomes of small farmers who participate in them.
Farmers’ markets range from large permanent facilities such as the Dallas farmers’ market open seven days a week to a tent in a parking lot open for a specific time period seasonally or throughout the year. A market may be operated by a grower organization, community development groups or state and local governments. Consumers come to farmers’ markets for a variety of reasons which generally include:
- They wish to take advantage of lower prices.
- They prefer fresher, higher quality produce.
- Farmers’ markets offer a wide variety of produce to choose from.
- Produce is available in large quantities for canning and preserving purposes.
- They enjoy the market atmosphere and conversing with produce growers.
- They like to support local agriculture.
Producers who utilize farmers’ markets usually fit into three categories: commercial (fulltime) growers, part time farmers or hobby gardeners. Fulltime growers use the market as an alternative market or, in the case of the part-time or hobby farmer, as a viable market outlet. In order to participate in a farmers’ market, producers need several items for setting up their stalls: a variety of quality produce, transportation to market site, selling tables, cash box or register with change, sales and tax record book, produce and price display signs, various containers, certified scales or other measuring devices, and sales people. In order to be successful at a farmers’ market, producers need to attract customers to their stalls. Some ideas to help lure customers are to talk with people as they approach the stall, be friendly and courteous, guarantee produce, use honest weights and measures, offer volume discounts and use business cards with the operation’s name and location.
Producers should carefully plan production for crops that are to be sold at farmers’ markets. As a group, producers should try to grow a wide variety of crops for availability as early in the season as possible. Growers also should try to have crops throughout the season that are normally found at only specific times, so more customers will be attracted to the market and to their stall. If a grower consistently supplies desired produce before other growers, then consumers will more likely select that stall to purchase their needed produce.
To meet expectations of consumers, producers need to provide fresh, high quality produce. Be sure the produce is clean and free from defects such as insect damage. Harvest timing and postharvest handling are two important factors affecting the quality of the produce. Many producers harvest crops in the late evening before the market day or early morning on the market day. When determining harvesting time, producers should consider each individual crop. In some cases, postharvest deterioration poses significant quality problems for evening harvested produce. For many of these crops, however, evening is the grower’s only practical harvest time. Cold storage can assist in maintaining produce quality. Some produce should be harvested when it is not completely ripened, since it may mature more at the market.
After the crops are harvested, they should be graded according to size and quality and held under the best conditions of available quality. Sometimes smaller and second quality produce (if properly identified at the market) may be happily accepted by buyers because it is quite adequate for canning or immediate fresh use. However, producers should not sell any produce that they would not use themselves. It is probably better for the seller to take any picked over residual “junk” produce home than move it at bargain basement prices. This price cutting may cause ill will between the seller and the buyer and between the price cutter and other sellers. A reputation for price cutting will soon develop, and patrons will try to bargain even for first quality items. Also, severe price cutting late in the selling day will soon cause a group to develop that tries to wait out the seller in anticipation of price cutting.
Attractive displays are a great aid in selling produce. Producers should try to display their produce in an attractive manner which will draw customers to their stalls. If at all possible, produce should be kept in the shade to help maintain quality and provide a pleasant shopping environment. The display should be off the ground, so that customers do not have to bend over to inspect the produce. Tables, platforms or truck tail gates may be used to display the produce. A good rule of thumb to use for proper display height is elbow to eye level. It is important to keep the display containers full at all times because abundant displays attract attention. When only a small amount of produce is offered, it is important to use the total amount of space provided to create the illusion of more produce.
Color contrast in the display attracts the customer’s attention. For example, displaying red apples beside golden apples, red peppers beside zucchini, corn beside carrots and bell peppers beside yellow squash sets off the variety of produce available. Also, the containers should be attractive and clean (wooden baskets generally are used), but they do not need to be given to customers after the sale. Paper sacks with the farm or market association name and logo can serve as a container for transport from the market and also as an advertisement. A good way to attract customers to the stall is to offer unusual items besides the normal fruits and vegetables. Some possible items are cut flowers and plants, herbs, ice water, a sign or T-shirt with the farmer’s logo and recipes or preparation ideas.
It is a good policy for each seller to post prices for their major items. Many people feel embarrassed to ask prices because they might be unacceptably high, and a “nice” seller might be hurt by their refusal to buy. Price levels of grocery stores, area wholesale prices and prices asked by other growers at the market may be used as guidelines. After comparing these prices and produce quality levels, then the produce can be priced. Harvest time can greatly affect produce pricing levels. Usually, early or late season crops are worth more than crops harvested at the peak supply or normal time. An effective means to determine if price levels are reasonable is if produce sells very quickly, then prices may be too low, or, if produce is not selling, then prices may be too high. However, it is easier to lower prices than to raise prices. Most sellers price their produce below retail but above wholesale prices.
Prices should be written neatly on cards. If possible, information on variety names, cooking instructions and growing tips should be displayed. It is a good idea to price produce in 5 or 10 cent intervals for easy calculation. The produce may be priced on a weight, count or volume basis. The weight system guarantees that consumers and producers receive the full value of the product. However, an inspected and approved scale must be used to price produce on a weight basis. When count pricing, produce is sold by the piece or group. Producers may also want to use multiple pricing ($1.50/dozen ears for sweet corn) to move more produce under a count pricing system. The volume pricing system requires producers to pre-pack produce for display in uniform containers. If desired, sold produce may be transferred to a less durable container for the consumer to reduce the container’s costs. The volume system is not for all types of produce and is best used when selling small fruit and vegetables. Regardless of which pricing system is used, it is important to realize customers generally will buy more produce if they think they are receiving a bargain. Therefore, it may be advantageous to discount prices for large volume sales.
When selling at a farmer’s market one should be especially careful not to engage in price wars with each other. They should each establish a fair price and stick with it because price cutters will sell out (at little profit) and go home. Then, fairly priced produce will sell. Some markets try to establish uniform prices among sellers. However, quality differences are hard to handle.
Advertising and Promotion
Farmers’ markets can help producers reduce the advertising and promotion costs which would be incurred if they sold their produce through another type of direct market. Farmers’ markets can use the same types of advertisements as other direct markets which include newspapers, radio, signs, and flyers. Flyers placed in high traffic areas in the community, such as store bulletin boards, can be a very effective form of advertising. Generally, the market manager is responsible for organizing the advertising campaign for the market. A good way to promote a market is to keep area media (newspaper, radio, and television stations) informed of the market happenings. Perhaps the market’s grand opening and other special events can be covered as a public interest story by the local media. Food and garden sections in local newspapers often are interested in these types of stories and in farmers’ markets in general. Also, the market can design its own special logo for advertisements and sellers displays. These promotion methods can increase the number of customers patronizing the market.
Laws and Regulations
The laws that apply to farmers’ markets vary from state to state. Areas that generally need to be checked to determine if the market is operating within the law include: weight and measure specifications, animal product regulations, labeling requirements, sales tax reporting, vehicle permits, food stamp and Woman, Infants, and Children (WIC) provisions. It is very important that the market check state health regulations to see what types of products may be sold at the farmers’ market. Generally, various forms of processed food may not be sold. Sales tax requirements also should be investigated. It may be the case that each individual producer should have a tax number, or the market organization may have a tax number and file the sales tax for its membership as a whole. In either case, producers must keep a record of the sales made and the sales tax that is collected and display a sign that explains to customers the sales tax charges. Liability insurance for accidents at the market or for product liability also is needed, but can be very expensive for a market organization to purchase. Often, individual producers may be able to purchase the product insurance at a more reasonable rate than the organization.
Major advantages to producers who sell at farmers’ markets:
- Producers have limited liability for customers since they are not on the farmer’s premises.
- Parking space, restrooms, and other facilities are not the farmer’s responsibilities. Public facilities are provided by the market.
- Attracting customers is a function of the market and farmers do not have to worry about advertising individually.
- Since a number of producers (usually more than ten) sell on the same market, continuous supplies by an individual producer are not so critical.
Major disadvantages to producers who sell at farmers markets:
- Time required to transport and sell on the market takes away from the farm operation.
- Producers may have to rent a stall for the year when they need it only a few weeks. On most markets, the producer can sell only produce grown on his farm.
- Market hours are controlled by the policies set for the farmers’ market which may not be ideal for producers; advertising, or lack of it, is controlled by the market.
- Markets that are poorly located may not attract consumers and peddlers may operate to depress price. This situation is particularly prevalent in the larger and older city markets.
Careful evaluation of potential buyer needs before making production decisions can aid vegetable producers in choosing non-direct marketing methods that may benefit their marketing plans and overall operation. Producers need to know quality, quantity, packaging and delivery requirements. Producers’ abilities and limitations also are important. For example, more time is required to deliver to several stores than to sell to one wholesaler. Also, producers’ volumes and qualities may dictate what non-direct marketing options to choose and should be considered carefully when making marketing decisions.