Direct Marketing of Specialty Crops by Producers

A Price-Comparison between Farmers' Markets & Grocery Stores in Florida

Author: Jonathan Adam WatsonAdvisor: Dr. Michael Gunderson

University of FloridaCollege of Agricultural and Life SciencesFood & Resource Economics Department

Florida Community Farmers’ Markets

Photos by Liana Rabinovich & Jonathan Adam Watson

Start surveys, questionnaires and interviews in Winter 2008.

Continue research into Summer 2009 semester with mentor.

Compose paper and presentation for the SAEA during the months prior to conference.

Present in Orlando, February 8th, 2010.

Timeline of Study

Little information is available for price relationships between farmers’ markets and grocery stores in the State of Florida.

Prices at farmers’ markets are typically less than those at grocery stores. Seemingly consistent, however further testing is necessary.

Consumers are looking for cheaper substitutes in the face of rising grocery prices.

Introduction

Objective?...To discover pricing trends at farmers’ markets and identify a “typical” producer in Florida.

Proposition?... Are producers aware of the marketing potential of their products?

Purpose?...To enrich the lives of producers as well the consumers with better market information.

Introduction

Farmer’s should be earning a price premium.

Most probably not.

Producers may not be aware of the marketing strategies.

The Issue

The number of farmers’ markets in the United States has increased from 2,746 in 1998 to 4,685 in 2008, an increase of 70.6% (AMS)

Direct marketing, which is especially important for small produce growers, is in part a response to low farm-gate prices and wholesalers who only wish to deal with large volume producers (Eastwood et al. 2004)

Literature Review Synopsis

“Farmers, craftspeople and other small business owners must be convinced that spending a few hours a week at the market is worth their time” (Swisher et al 2003).

WTP for local foods: “60% of the respondents claim they would be likely to purchase these products (Jekanowski et al 2000).

The WTP for the PA Preferred attribute ranged between $0.28 and $0.51, a price premium of between 15% and 30% relative to the range of prices (Rickard 2009).

Literature Review Synopsis

Research Approach

Tallahassee, FL

Anonymous surveys & questionnaires, also price data collection.

Price-Comparison with proximal grocery stores.

Average difference price per pound. Photo by Liana

Rabinovich

25 Markets 14 Counties

◦ Alachua◦ Bradford◦ Columbia◦ Dade◦ Duval◦ Gilchrist◦ Hillsborough◦ Indian River◦ Lee◦ Leon◦ Levy◦ Okeechobee◦ St. Johns◦ Sumter

Community Farmers’ Market Locations

Study Results

0-25 26-36 37-47 48-58 59-69 70 & up0

2

4

6

8

10

12

14

16

18

20

1

5

8

20

7

5

Age of Respondents

Age

Coun

ts

70%

9%

17% 4%

Ethnicity

WhiteHispanicAfrican-AmericanNative AmericanOther

67%

33%

Producer GenderMale Female

Culinary or Medicinal9%

Cut Flowers5%

Flowers and Bedding

7%

Fruits, Citrus19%

Fruits, Deciduous10%

Fruits, Other11%

Fruits, Small10%

Vegetables, Field16%

Vegetables, Greenhouse

11%

Woody Landscape Plants2%

Percent of Total Annual Gross Sales for Operations

Culinary

or Med

icinal

Cut Flo

wers

Flowers

and B

eddin

g

Fruits,

Citrus

Fruits,

Decidu

ous

Fruits,

Other

Fruits,

Small

Vegeta

bles, F

ield

Vegeta

bles, G

reenh

ouse

Woody

Landsc

ape P

lants

0

5

10

15

20

25

30

35

10

35

15

21

12

20

35

6

1

Participating Vendor Areas of Pro-duction

Yes82%

No18%

Are your prices in-fluenced by Grocery

Stores?

Yes68%

No32%

Have you noticed an overall increase in

consumers?

Grow Purchase Neither05

101520253035

Grow or Purchase Household Food

Average Price per PoundFarmers’ Market Grocery Store

$1.81/lb $3.81/lbThat’s a difference of $2.00!!!

159% Higher

Average Price per Pound

Farmers' Market Grocery Store Difference

Culinary or Medicinal Herbs $4.51 $24.23 -$19.72

Fruit, Citrus $1.09 $1.35 -$0.26

Fruit, Deciduous $1.93 $1.75 $0.18

Fruit, Other $1.21 $1.73 -$0.52

Fruit, Small $2.20 $2.20 $0.00

Vegetables, Field $1.39 $2.09 -$0.70

Vegetables, Greenhouse $2.22 $3.56 -$1.34

Product Category Price Comparison

Market RegionsCity County Population Price Difference $/lb.

Ft. Myers Lee 65,394 $(0.75)Gainesville Alachua 114,375 $(0.75)High Springs Alachua 3,863 $(9.72)Jacksonville* Duval 807,815 $(0.60)Lake City Columbia 9,953 $(1.88)Miami Dade 413,201 $(0.30)Okeechobee Okeechobee 5,784 $(0.89)St. Augustine St. John's 12,284 $(3.66)Starke Bradford 5,593 $0.58 Tallahassee Leon 171,922 $0.09 Tampa Hillsborough 340,882 $(0.44)Trenton Gilchrist 1,722 $(0.77)Vero Beach Indian River 16,939 $(1.27)Webster Sumter 805 $(0.67)Williston Levy 2,297 $(0.03)

*All of Duval County is Jacksonville City Limits

How Participants Will Benefit

Producers Consumers

Higher farm-gate prices.

Lower Overhead Costs

Customer Interaction and feedback.

Lower food expenditures.

Fresh Product

Traceability.

Let’s Not Forget the Positive Externalities to Others in the Community!!!

Dr. Michael Gunderson, AdvisorFood & Resource Economics Department

University of Florida, CALS

Ashley Earl, MS Graduate Student

Kathy Green, Liana Rabinovich, Brandon Arrington, Boris Haranki

Southern Agricultural Economics Association

Producers & Market Managers in the State of Florida

Special Thanks

Questions?

Thank You!!