Any serious farmer wants to get the best and most out of every production unit. Here 3 of marketing choices for a fresh produce farmer.
Marketing fruit and vege¬tables is a bit like going to school… you have to start at the bottom and work your way up to “qualify” to write final exams. Marketing fresh produce is no different. Most farmers entering the sector for the first time have to start at the bottom and climb up the “marketing ladder”.
Marketing is such a critical part of the farmer’s operations that it cannot be left to chance. It needs to be done properly through good management, high quality standards, and ensuring a continuous supply of fresh produce to the chosen market(s).
What is the use of spending all that time, money and effort producing a crop only to throw it away through bad marketing?
If you ignore marketing, you’ll pay the price. On the other hand, if you follow sound marketing principles, you will make good money. Let’s look at a farmer’s options for marketing his fruit and vegetables.
FARM GATE SALES
This is your most basic form of marketing. There are even commercial farmers who have a facility like a shed or their own market right next to the main road where buyers have easy access to the products. This is a viable marketing option but it must be done properly.
- Buyers come to your farm so you have no transport costs.
- Usually, you pack produce in lug boxes which you would tip into buyers’ boxes or loose into their bakkies or trucks. So you have no packaging costs.
- Some farmers allow the buyer to pick his own selection. There are no – or very low – labour costs.
- Payment is cash; no commissions or other marketing costs.
- Your overall marketing risk is low.
- Buyers can be erratic, especially if they get a better deal somewhere else. This means you could be left with part of your crop in the fields.
- When you allow them to pick their own fruit or veg, they can mess up your fields; and they will always try to take only the best, leaving you with the lower quality still to sell.
- Payment might be cash, but prices are low and you never really know if you are saving money on commissions etc.
- Beware the buyer who starts asking for credit, “Just until next week when I’ll come and pay you”! You can easily lose any benefits you thought you had if just one buyer doesn’t pay you.
- Your marketing risk might be low but so are your returns. That’s how it works in business.
Farm gate sales are a good option for a new farmer, especially if resources are limited. But if that farmer intends to become a serious commercial farmer one day, this option should be seen simply as a stepping stone to the next level.
LOCAL AREA SALES
Now you’re lifting your marketing to the next level, as you start supplying local businesses in the nearest town and in the district. This means that you will have to have your own transport, or at least the benefit of somebody reliable who can help you deliver to your customer(s).
The sort of businesses you might supply would include the local supermarket-type store or other retailers, a fruit and veg shop and street vendors (hawkers).
Now you will start experiencing the basics of marketing in the form of packaging, grading, quality control, delivery times, price negotiations and payment terms.
You’ll appreciate the saying, “The customer is king”, because now clients will be telling you what they want, when, how and how much.
- It raises your farming standards as you have to meet customers’ requirements.
- It introduces you to the serious side of marketing at a relatively low cost.
- Transport costs are still low, as are packaging costs, and there are no commissions to be paid.
- If you negotiate a good deal you can be paid on delivery, or perhaps weekly. But you should not have to wait too long for your money.
- You will begin to appreciate the importance of good quality, good packaging and good service to your customers.
- Your prices should be better because you are supplying better quality.
- Your overall marketing risk is still relatively low.
- The potential to grow your farming based on local area sales is limited by the size of the community in which you live.
- If you’re not a serious farmer who wants to grow his business, this is probably as far as you’ll go.
- Your commercial risk goes up as you start supplying a range of customers, and there is always the danger of not being paid by one of them.
- Your income should be better now but it is still not what it could be.
This is a good option. Your contract with the factory will show a price – usually per ton – so you know what to expect, so you can budget and manage your finances better.
Many commercial farmers who grow mainly for other marketing channels will also allocate a percentage of their farming land to a factory contract.
- You have price stability. If it does change it is not as severe as other options can be.
- If you have the land and the water, it is a good idea to allocate a portion of your crop to factory contracts.
- A fixed income makes planning and control easier.
- Some factories help with production inputs.
- There are usually technical advisors to assist you.
- The better you farm, the better your yields, and the better your income.
- The factory takes the whole crop; it does not select quality – but obviously it won’t take rotten produce.
- The factory either supplies transport or your price includes this component.
- There are no other marketing costs such as packaging, commissions etc.
- Your overall marketing risk is low.
- Your price is low compared to other options.
- You are not rewarded for better quality.
- You have no other choices; you are tied into a contract so you have to take the good with the bad.
- You don’t have the same challenges to improve and grow as farmer, which some other marketing possibilities offer you.
- This article was written by Michael Cordes and first appeared in Farming SA.