Organic Marketing and Post-Harvest Handling: Challenges and Opportunities

1. Organic Marketing and Post-Harvest Handling: Challenges and Opportunities Enhancing the Adoption of Organic Farming Workshop October 14-15, 2008 Agriculture Technology Facility OSU/OKC Merritt J. Taylor Lane Ag Center

2. Are there too many choices? How do we decide what to do?

3. Fruit & Vegetable marketing is more important than marketing for any other agricultural commodity • When the fruit is ready for sale, it must be sold within a few days. • It is highly recommended that a method of marketing be considered before planting the fruit or vegetable crop.

4. Choosing Outlets for Produce Growers may have numerous alternatives for marketing fresh fruits and vegetables.

5. All of the marketing alternatives have characteristics that make them more advantageous (or disadvantageous) for different types of producers

6. A few of the important factors to consider when choosing a market or combination of markets to use • Volume of produce grown • Location of the grower • Personal time available for marketing • Quality of the produce

7. Marketing alternatives are classified as direct or non-direct markets

8. The Direct Markets involve Producer Interaction with Consumers They include: • Pick-your-own Operations • Roadside Stands • Farmers' Markets.

9. Non-direct outlets involve producer interaction with market intermediaries The non-direct markets include: • Terminal Markets • Grower Cooperatives • Peddling to grocery stores and restaurants • Selling to wholesalers/brokers.

10. Direct Marketing Alternatives

11. Pick-Your-OwnAt a pick-your-own or u-pick outlet, a grower opens a part or all of his fields to consumers who wish to harvest the crop themselves.

12. Pick-your-own opportunities can be open to the general public, or a list of qualified pickers can be used to retain more control over the conduct of pickers.

13. Such (pick-your-own) operations are usually successful when close to large, urban areas.

14. Advantages of pick-your-own marketing • Potentially lower harvesting and transportation costs • Reduced requirement to train and supervise harvesters.

15. Disadvantages of Pick-your-own Marketing • Potential liability for picker accidents • Damage to fields. • Matching volume of produce available for sale with the number of pickers and their needs. It may be important to have family or hired labor available to pick if produce begins to ripen and customer traffic is slow • *** This suggests the usefulness of having two or more marketing alternatives if demand is not sufficient at the primary outlet.

16. Roadside Markets Have proven to be very popular in several areas of the world.

17. Roadside Markets • Are generally operated on a grower's property • Adjacent to well-traveled roadways • Are used to sell locally grown produce • or Produce purchased from growers in adjacent regions

18. Advantages of Roadside Markets • When markets are located near production regions, transportation costs are low. • Producers who are very familiar with the produce distribution system may be successful. • It can be profitable with a good location • Can be profitable with an excellent reputation for high quality produce.

19. Disadvantages of Roadside Markets • Producing fruits or vegetables in or near urban areas can be expensive because of the development potential of the land and/or complications arising from residential/farm conflicts. • Roadside markets may require a broad variety of products to successfully generate sufficient customer traffic and sales volume to justify the expense of running the outlet. • In order to operate for 12 months a roadside market would have to buy produce from other production regions.

20. Farmers’ Market

21. A Farmers’ Market is Organized so Buyers and Sellers can Exchange Produce • Each grower is assessed a fee to sell his or her produce at the market • Buyers are attracted by the variety and volume of fresh produce available from different producers

22. Advantages of Farmers’ Markets • Variety and volume of produce available • Potential for market owners to advertise the market and attract customers • Allowing the products to mature and ripen on the plant, which provides market differentiation between these products and others that have been harvested before maturity for shipping and shelf life purposes.

23. Disadvantages of Farmers’ Markets • 1. Volume of similar produce from several growers may be at the market at the same time • 2. Lack of coordination of growers and customers by the market management • ** Effective management can overcome both problems. • Unless operated in or near large cities, retail farmers' markets will not provide a market for large volumes of produce.

24. Non- Direct Marketing Alternatives

25. Terminal markets are central markets generally located in major cities where several: Brokers, WholesalersDistributorsJobbers are grouped together

26. Terminal Markets:Produce from several production regions is assembled and shipped to:Grocery storesRestaurantsChain-store warehouses

27. Terminal MarketsMerchants at these outlets can supply their customer with less than truckloads of different produce items. These outlets would be direct competition for growers trying to peddle their own produce

28. One of the Largest Terminal Markets in the World is located in: • Mexico City • Large Terminal Markets in the USA: • Dallas • New York • Boston • Miami • Kansas City • Denver • Houston

29. Peddling to:Groceror Restaurant

30. Peddling to restaurants and grocery stores involves the grower transporting produce to various restaurants and stores. This type of marketing can become a consistent outlet once a list of customers is developed.

31. Restaurants' purchases of produce for salad bars have grown tremendously over the last few years. However, many restaurants and grocery stores are chain stores or franchised operations, which sometimes restricts the ability of local managers to deal with independent suppliers.

32. In addition, these outlets require frequent delivery of a variety of products. The volume of products that one grower can produce may not be high enough to justify the delivery costs. Thus, transportation costs per unit may be high, depending on the size and locations of the outlets.

33. For a high quality producer, prices might be high enough to justify the expense of delivering produce directly to stores and other customers.

34. Wholesalers • Wholesalers differ form brokers because they take delivery and assume ownership of the produce. • An individual or business firm that buys large quantities of produce from a grower or another dealer for resale or distribution. • The wholesaler may sell to a retail store, and institutional buyer, or another wholesaler.

35. Broker • An individual or firm that acts as an agent for the buyer and seller. • In Oklahoma, watermelon growers frequently rely on brokers to find buyers for their products.

36. Wholesalers/Brokers • Both have similar advantages and disadvantages. • The major advantage is the volume of produce that the outlets handle.

37. Wholesalers/Brokers • Growers attempting to use the outlets need to be keenly aware of how the produce must be packaged to ensure easy bulk handling. • This may require the grower to obtain particular types of cartons and package goods for efficient handling.

38. Summary • Selecting the best outlets for produce depends not only on the characteristics of the outlets but also on the characteristics of the producer. • The first key to successful produce marketing is, know the buyers needs.

39. Summary (cont) • For both direct and non-direct outlets, knowing the buyer’s quality requirements is extremely important. • Packaging requirements are most important for the non-direct outlets. For many of these outlets, the grower is advised to know the buyers’ requirements prior to making production decision.

40. Summary (cont) • The producer also needs to understand that use of different outlets requires different time commitments. • Many producers may not have the time or expertise to operate their own outlets or to peddle produce on routes. • The producer needs to understand his or her constraints and liabilities.

41. Summary (cont) • The producer may not be producing sufficient volumes to make long hauls efficient. • Quality of produce may restrict users for particular outlets.

42. Summary (cont) • Producers need to match production and marketing abilities with outlet selections. • They may diversify by using more than one type of outlet or more than one outlet of each type. • This may be especially true for producers with a variety of crops or different qualities or sizes of the same crop.

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48. Post Harvest Handling

49. Make Sure that Good Agricultural Practices (GAP) Have Been Practiced During the Production Process. Quality Cannot be Improved After Harvest

50. 2008 Farm Bill Provisions • Organic Conversion Assistance. A new provision to support the transition to organic production is included as part of the Environmental Quality Incentives Program (EQIP). • Support payments may be up to $20,000 per year, but no more than $80,000 over six years, excluding any money given for technical assistance. • Support is also available for technical assistance in making the transition, within the general technical assistance system of the USDA’s conservation programs