Final report for LS21-361
Project Information
The overall aim of this study is to provide research-based information to small organic producers and local nonprofit organizations supporting local production. Specific objectives include to: 1) provide insight on how to increase long-term profitability and customer retention; 2) make available strategies for utilizing the most efficient co-labeling and advertising tactics that build on sustainable values; 3) provide additional information to policy makers and academic professionals on how labeling programs and advertising/communication strategies effect consumer perceptions about farming practices and purchasing decisions.
Over the past 20 years, producers have been innovating in their direct marketing operations (such as farmers’ market, Community Supported Agriculture, and food trucks) drawing on social and environmental values (Low et al., 2015; Woods et al., 2017). Whether promoting local family farms or supporting food security, producers have been adapting to new consumers preferences and community needs. Utilizing mission statements, farm branding, labeling strategies and other lines of communication, small family farms have been successful at building long-term relationship with their communities.
This project proposes to focus on small organic fruit and vegetable producers in Georgia and will assess the relative economic values of co-labeling using several alternatives such as: USDA Certified Organic, Certified Naturally Grown, Georgia Grown, locally grown (with specific derivatives like, Northeast Georgia Grown, Augusta Locally Grown or Athens locally Grown), GMO-free and pesticide-free. This study will evaluate consumers’ intention to purchase and willingness to pay for various combination of labels and different direct marketing channels operations such as farmers markets, CSAs and online. Additional content that farmers use to communicate on their farming practices and sustainable values will also be used to assess consumers’ perception and preferences. This study’s geographical coverage will extend throughout Georgia and contiguous states such as Florida, Alabama, South Carolina, and Tennessee, in order to provide additional empirical support on the marketing effectiveness of the different co-labeling and communication strategies beyond the state’s borders.
On the producers’ side, a net economic valuation (Profit and Loss) study will be performed via a case-study analysis of at least 12 farms located in different regions of Georgia, to ascertain net producer economic benefits that verifies whether the hierarchical ordering of these cost of these programs to producers effectively translates to the same ordering of producer returns under such alternative labeling strategies. This project’s simulation-optimization analysis will help producers discern the ideal combination of labeling strategies for several specialty crops by providing them with indications of net business returns (profitability) and net cashflows (liquidity). Specifically, the model will help producers answer important business questions: whether the addition of one or more marketing labels (compared to marketing products under a single label) will (a) result in significant increases in revenues due to expanded market coverage; (b) bring about revenue increases due to higher price premiums; (c) result in greater cost efficiency (cost savings vis-à-vis potential returns); (d) generate overall improvements in net returns; and (e) lead to better liquidity conditions (net cash flows).
- To estimate consumers’ perceptions, intention to purchase and willingness to pay using several co-labeling strategies and to determine resulting market segments. These scenarios will serve as inputs for analytical approaches in the third objective.
- To evaluate communication content effectiveness in conveying sustainable values for various labels (i.e. Georgia Organics, Georgia Grown and other specific “locally grown” programs), to determine market coverage effectiveness in terms of direct marketing channels accessed (i.e. farmers’ markets, CSAs, and online), and to gauge geographical reach (within Georgia and surrounding states).
- To determine comparative net economic returns that producers may realize under co-labeling strategies and for different produce (entreprise budget, projections and simulations).
Cooperators
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Producer
- - Technical Advisor
- - Technical Advisor
- - Technical Advisor
Research
Objective #1
Goal: To estimate consumers’ perceptions, intention to purchase and willingness to pay using several co-labeling strategies and to determine resulting market segments. These scenarios will serve as inputs for analytical approaches in the third objective.
Methods: Online surveys will be conducted in each year (4000 total consumers surveyed) using a panel provider. Respondents will be selected in order to align demographically and regionally with the test population. Additionally, two sets of in-person interviews at farmers’ markets (total of 40+ buyers) will also be conducted. In addition to basic statistical analysis, a conjoint analysis will be used to determine the value of co-labeled products. The use of the planned behavior questionnaire approach (Ajzen, 2019) will allow to collect information on intention to purchase according to these different scenarii. A text analysis will be used to evaluate actual correlation between consumers’ perceptions on co-labeling strategies and associated purchasing behavior. Finally, a cluster analysis will be used to identify ideal customer segments with socio-demographics variables.
Outcomes:
- A further understanding of consumers’ perceptions and interpretation of the information conveyed by several co-labeling strategies.
- Increased knowledge about consumers’ intention to purchase attached to these co-labeling strategies.
- The economic value and willingness to pay of consumers for various food labels will be determined.
- Identification of relevant socio-demographic consumer profiles that Georgia producers, especially small organic farmers, could identify as their target market.
Objective #2
Goal: To evaluate communication content effectiveness in conveying sustainable values for various labels (i.e. Georgia Organics, Georgia Grown and other specific “locally grown” programs), to determine market coverage effectiveness in terms of direct marketing channels accessed (i.e. farmers’ markets, CSAs, and online), and to gauge geographical reach (within Georgia and surrounding states).
Methods: Two online surveys conducted each year (total of 4000 respondents using a panel provider). Online surveys will allow testing the relevance and impact of marketing content often associated with sustainable values by producers to communicate with their consumers. Respondents will be asked questions regarding various places in which they shop and interest in non-traditional markets (other than grocery) will be assessed. The respondents will be chosen based on their geographical location (Georgia and surrounding states of Florida, Alabama, South Carolina and Tennessee) and demographic alignment to the general population for that region.
Outcomes:
- Better understanding at marketing content that farmers could use to advertise their sustainable values in order to build long-term relationship with their market.
- Potential marketing opportunities for small organic producers beyond Georgia’s borders will be identified by assessing consumers’ interest in neighborhing states.
Objective #3
Goal: To determine comparative net economic returns that producers may realize under co-labeling strategies and for different produce (entreprise budget, projections and simulations).
Methods: In cooperation with partners, a producer survey and 12 case-studies will be conducted to collect financial and marketing data such as revenue, costs, current labeling choices, actual pricing practices, marketing decisions, marketing expenses, and opinions on labeling. The case studies will allow a comprehensive, holistic analysis of revenues, costs, net returns, and net cash flows under an optimization-simulation framework that identifies the most viable, optimal labeling alternative producing cost-minimizing, profit-maximizing business returns (comparing single versus multiple labeling strategies). Any revenue improvements are isolated into market expansion effects versus isolated price premium effect attributed to labeling strategies alone. Cost savings/efficiency and cash flow effects will also be analyzed.
Outcomes:
Entreprise budget, projections and simulations will be estimated for different crops and under the several identified combinations of co-labeling strategies in order to optimize overall business returns.
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Dissemination of All Project Information and Findings:
Results and recommendations will be disseminated through several sources. In-person or online workshops will be given in conjunction with producers and UGA Extension personnel. The university’s Cooperative Extension Service network will be tapped to assist with eliciting interest and organizing producer workshops. Moreover, partners, commodity and industry group associations, such as the Georgia Organics, Georgia Farmers’ Market Association, Georgia Grown, Augusta Locally Grown and the Georgia and/or the Southeast Fruit and Vegetable Associations can be both organizers and audiences in special workshop sessions and/or presentations at their periodic conferences.
Information will also be distributed via other conference presentations (such as the annual conferences of Georgia Organics and the Georgia Fruit and Vegetable Association, among several possibilities), academic publications (like journal articles in peer-reviewed journals) and extension publications such as outreach bulletins compiling results obtained from the various data collection and analyses methods included in this project proposal. These materials will be distributed either in print or by electronic means.
The project proponents will also be available for popular press media dissemination opportunities. These outlets will include internal networks within the university and Cooperative Extension service (such as newsletters, for example the Sustainable Agriculture newsletter, and college publications, like Southscapes, among others). External media networks, especially those associated with the industry and commodity groups, will be tapped as possible outlets for dissemination.
Objective 1: To estimate consumers’ perceptions, intention to purchase and willingness to pay using several co-labeling strategies and to determine resulting market segments.
Our main results point out:
- Price or an indication of origin predominantly guides nearly half of our southern buyers’ choices.
- We find that most buyers substitute organic and CNG while a few would consistently choose the same production practice option.
- The premium for CNG is slightly superior to the organic one.
- Buyers’ preference on a combination of farm reputation, indication of “local” origin and a well-known production practice certification such as CNG or USDA Organic.
- Younger generations favor a combination of local over country origin with a production practice certification, primarily with CNG then USDA Organic.
- Older respondents and respondents with a higher degree of education value produce grown within their state over neighboring states and more distant origins.
Objective 2: To evaluate communication content effectiveness in conveying sustainable values for various labels (i.e. Georgia Organics, Georgia Grown and other specific “locally grown” programs), to determine market coverage effectiveness in terms of direct marketing channels accessed (i.e. farmers’ markets, CSAs, and online), and to gauge geographical reach (within Georgia and surrounding states).
Our results point out the importance of:
- More information on the attributes of origin and production practices when selling directly to buyers (farmers’ market, a CSA share or through an online farmers’ market).
- Greater interactions with content related to Production Process and Event Opportunities. This means content with readily useful information about the products and the farmers’ practices. Event opportunities would include sales, cooking with fresh vegetable classes, field trips for local students, and home gardening workshops.
- A preference to interact with pictures over other types of posts. Capturing pictures for content development requires the least amount of time when compared to other types of posts. Also, pictures serve as a simple way to share information compared to live video streams and discussions.
- Diversifying the social media platforms. Tik-Tok, Snapshat and Twitter seem to be underutilized as a part of farmers promotional tools. The online survey suggests that younger buyers more actively use these for most type of content.
- Evaluating consumers preferences on social and environmental attributes derived from organic and CNG standards. Our findings show that locally grown gets better rating for the 8 social and environmental values tested than USDA Organic and CNG. The comparison of labels highlights a consistent higher rating for locally grown compared to production practices. A combination of indication of origin in addition to each production practice gets overall better rating than individual label rating, especially for USDA Certified Organic.
Objective 3: To determine comparative net economic returns that producers may realize under co-labeling strategies and for different produce (enterprise budget, projections and simulations).
Our analysis was constrained by the lack of historical production costs that should be related to the estimated revenues -- determined stochastically by accounting for historical returns and variances of prices and yields. As a result, some mean returns are understandably negative since more current cost figures are expectedly higher relative to historic, stochastic revenue estimates.
Based on price data and budget collected for 3 crops blueberries, cucumber, and bell pepper, the price premium calculated for USDA organic, Certified Naturally Grown and State grown labeling, stochastic budget scenarios highlight:
- Notwithstanding the incongruent pairing of historical, stochastic revenues (yield and prices) with current costs, the results suggest that the introduction of organic product labels has led to the following percentage increases in net returns when compared to the base (no labels) for the three crops: blueberries with 104% increase, cucumbers with 490% increase, and bell peppers with 117% increase.
- The adoption of the Georgia Grown label has led to scattered increases in net returns for the three crops. Blueberries increased by 13.5% when comparing the Georgia Grown label to the base (no label). Cucumbers increased by 271%. Bell peppers increased by 87%.
- Double labeling (combining organic and Georgia Grown labels for each product) yields the most benefit in terms of increased returns. Specifically, blueberries increased by 117% when using the double labeling compared to the base (no labels). Cucumbers increased by 759%. Bell peppers increased by 200%.
Educational & Outreach Activities
Participation Summary:
Learning Outcomes
Reported change of labeling practices more focused on what matters for their customers in order to build trust and loyalty.
Reported improving their social media advertising strategy with more detailed content on their production practices.
Gained a better understanding on which social media platform to use when targeting specific consumers based on their socio-demographic characteristics.
Gained knowledge on consumers preferences and willingness to pay for co-labeling strategies associating indication of origin and production practice .
Gained knowledge on specialty crops enterprise budget and associated labeling strategies.
Project Outcomes
Short-term outcomes
Farmers (N=20+) and professionals (N=500+) within the fruits and vegetables industry gained awareness about buyers’ preferences and willingness to pay for a production practice certification versus or in addition to indication of origin. Academic faculty (N=80+) also gained knowledge on additional detailed information about consumers preferences on origin, and their willingness to pay for a production practice combined with origin.
Farmers (N=20+) and professionals (N=500+) gained knowledge about digital advertising strategies based on sustainable and social attributes derived from their production practices. They also gained knowledge on consumers profiles and preferences on advertising tool and content.
County Extension agents (N=21) have gained knowledge of how small agribusinesses can better attract and retain their customers using co-labeling strategies.
Buyers, final consumers (N=3820) gained awareness of different labels related to production practices and origin. They also gained awareness on different social and environmental attributes associated with these labels.
Long-term outcomes
Partnering farmers have reported a change of practice regarding their labeling strategy, and advertising of their production practice in order to focus more on what matters for their customers, increase their knowledge, and build trust.
Indirect outcomes:
- Partnering farmers reinforced their partnership in creating a cooperative (Brown’s and Adderson’s).
- Partnering non-profit organizations reinforced their partnership in delivering training to farmers: Rebecca van Loenen from Augusta Locally Grown spoke to attendees at the Organic Growers Farmer Field Day about the sales outlets available through the Augusta Locally Grown organization.
- Paul Sorah, partnering farmer (Hearts of Harvest) is now Georgia Organics’ Climate Smart Agricultural Specialist.
This information on indirect outcomes is available on this webpage: https://thedirt.georgiaorganics.org/stories/organic-growers-farmer-field-day-collective-organic-purchasing-amp-accessing-organic-markets.
New collaboration
In Her Shoe, Inc. has been providing resources in the area of education, technical assistance and support for 5 years through USDA funded programs. The director, Ms. Marquitrice Mangham reached out to collaborate on a grant proposal titled “Small Farm Business Expansion and Market Integration” that has been awarded by the USDA Beginning Farmer and Rancher Development Program in March 2023. A total of 6 workshops were organized between March 2023 and March 2024, and reached a total of 116 farmers located in different southern states. Workshops focused on value-added pricing strategies, DYO market research, and Design YO marketing strategy incorporating results from this research on co-labeling strategies. Additionally, another project (2024-2025) aiming at evaluating the feasibility of a new processing plant in Mississippi has been awarded by In Her Shoe, Inc. to Vanessa Shonkwiler.
Information Products
- Targeted Social Media Strategies: The Study of Family Farms in Georgia
- Linking Southern Buyers' Attributes with Labeling Preferences for Local Fresh Produce
- Linking Buyers' Attributes with Labeling Preferences for Georgia's Local Fresh Produce
- Southern Buyers' Preferences for Fresh Produce: Focus on Organic
- Southern vegetable buyers’ preferences for cherry tomatoes based on production practice and detailed information on location of production
- Southern vegetable buyers’ preferences for cherry tomatoes based on production practice and detailed information on location of production
- RGR Farms - Organic Awareness
- Byne Blueberry Farm - Original Organic
- Southern Buyers’ Social Media Preferences
- Southern Vegetable Buyers’ Perceptions of the Social and Environmental Attributes Associated with Organic, Certified Naturally Grown and Locally Grown Labels
- Assessing Stochastic Budget Scenarios for Georgia Family Farms: The Case of Blueberries
- Exploring Co-labeling Strategies in Local Food Markets: Insights from a Choice Experiment on Southern Buyers' Preferences for Cherry Tomatoes