Final Report for OS03-014
Project Information
Research evaluated demand for Pick Your Own (PYO) blueberries in Kentucky and consumer response to different blueberry packaging options, including preference for recyclable packaging. Consumers were surveyed at on-farm direct markets, farmers’ markets, and local groceries. Various types of blueberry packaging were test marketed at the Fairview Produce Auction (southwest Kentucky), successfully introducing bulk blueberries as a viable auction item. This project concluded by generating blueberry packaging and marketing recommendations for Kentucky. These are included in “Marketing Fresh Highbush Blueberries in Kentucky,” University of Kentucky Department of Agricultural Economics Extension Publication AEC-EXT 2004-01, available at www.uky.edu/Ag/HortBiz/Pubs.
Introduction
Kentucky’s blueberry plantings have increased from 20 acres in 1997 to approximately 65 acres in 2003. Expansion is ongoing. Primary markets for new plantings are farmers’ markets, on-farm markets (especially Pick Your Own), and local groceries. Recent surveys of farmers selling produce in Kentucky indicate that over 75% of them are selling some of their produce through direct marketing channels. Almost all the product being grown is targeted for the fresh market. Other viable markets are the Fairview Produce Auction and local restaurants/foodservice. Higher wholesale berry prices were observed at the Fairview Produce in 2003; three additional produce auctions are slated to open in Kentucky in 2004.
Kentucky blueberry growers have had little problem marketing blueberries locally. Increased blueberry plantings, notably those financed through county level Agricultural Diversification Program funds from tobacco settlement monies, have caused some concern about the potential for overwhelming local retail demand. Many farmers in Kentucky are looking at developing alternative enterprises on their farm, and the early success some have had with blueberries has captured a lot of attention. Orderly and more sophisticated marketing is a critical requirement for successful and sustainable development of blueberries as a new crop in Kentucky.
This project helped define some characteristics of blueberry consumers in Central and South Central Kentucky and test wholesale demand for blueberries at the Fairview Produce Auction. The project focused especially on consumer willingness to pay for local Pick Your Own (PYO) blueberries and retail packaging preferences.
- Evaluate blueberry consumer characteristics and willingess to pay for PYO blueberries at different direct markets.
Test market various blueberry package types and sizes at Fairview Produce Auction.
Evaluate consumer and producer acceptance of various berry packaging types.
Cooperators
Research
Objectives 1 & 3
The methodology used to measure willingness to pay, container and PYO preferences was through consumer surveys consisting of a single-page paper questionnaire at the Lexington Farmers’ Market, Reed Valley Orchard (Bourbon County) and CB Foods (Edmonton, Metcalfe County). Locations were deliberately chosen that would contrast metropolitan/suburban areas with less populated regions. Consumers were compensated with a $1-$1.50 coupon or gift for their response and a total of 180 surveys were gathered from the various market locations.
Objective 2
Blueberries were marketed at Fairview Produce Auction on nine different dates. Plastic clamshell containers (12-container flats of 1/2-pt. and 1-pt.; six-container flats of 1-qt. clamshells and four-container flats of 2.5-lb clamshells) and bulk corrugated blueberry boxes(5-lb and 10-lb) were tested in separate lots that were bid on by the various buyers. Bidding was observed and prices were tracked by container type to determine initial buyer response to new packaging.
Objective 3
Five blueberry producers were provided with various packages to evaluate producer and consumer acceptance in their operations. These producers sold directly to consumers at farmers’ markets and on-farm retail. Producers were interviewed concerning different packaging options and/or submitted a journal of picking/packing ease and consumer acceptance.
Consumer surveys included questions about packaging preferences and the importance of recyclable containers for consumers. One cooperator also offered various container and/or picking harness options to its PYO customers for anecdotal response.
Objective 1
Consumer willingness to pay for PYO blueberries corroborated strongly with a similar 2002 test. Central Kentucky farmers’ market customers indicated that they would be willing to pay, on average, $2.19 per pint to pick their own berries at a nearby farm. This was over 70% of the retail price paid. In South Central Kentucky, where the retail price was $1.88, willingness to pay for local PYO berries was slightly lower. Local grocery consumers responded that they would be willing to pay an average of $1.19, 63% of the retail grocery price, for local PYO berries. This also corroborated strongly with 2002 results.
The city of Lexington is a major population base surrounded by relatively rural communities. Lexington consumers (n=102) were more willing to drive further to pick berries at their named price; 37 percent were willing to drive 20 miles or more to pick blueberries. This may bode well for potential producers more than 20 miles from the Lexington area. In Metcalfe County, a much more rural community, 25 percent of respondents said they were willing to drive 20 miles or more to pick blueberries. Metcalfe County consumers are within 10 miles of several PYO blueberry locations.
Objective 2
Test marketing of blueberries in different container sizes at the Fairview Produce Auction resulted in identifying different auction buyer preference and willingness to pay per pound of blueberries. The first week of testing determined that auction buyers were not at all interested in ½-pt clamshell containers when also presented with 1-pt. containers; price per pound for the ½-pt size was only 75 percent of the 1-pt. size. A similarly lukewarm reception was given to 2.5-lb. plastic clamshells, an emerging option for blueberries.
Flats of 1-pt. and 1-qt. clamshells, as well as 5-lb. and 10-lb. bulk boxes, all sold competitively at the auction. These packages generated gross returns ranging from $1.20-$2.86/lb. after packaging costs. These are excellent prices for wholesale blueberries, well above estimated breakeven prices, and suggest the west Kentucky produce auction as a viable small-scale wholesale market for producers within a 100-mile radius.
Objective 3
Consumers at all markets reported overwhelmingly that it was “Very Important” or “Important” that the containers they purchased berries in were recyclable. Additionally, 88 percent of the on-farm retail consumers (n=51) surveyed, 85 percent (n=102) of farmers’ market customers surveyed and 67 percent (n=27) of grocery consumers surveyed at random responded that recyclable berry containers were important or very important to them. Adoption of easily-recyclable berry containers (#1PETE clamshell, fiber pulp, fiberboard, corrugated) appears to be important for producer consideration no matter the market.
Producers found the fiberpulp containers easiest to harvest berries directly into. The clamshell containers were rated as essential for wholesale to groceries, while the 5# and 10# corrugated containers were preferred for on-farm bulk and restaurant sales.
White/brown paperboard containers were preferred by on-farm retail customers. However, berries in paperboard containers were found to settle after overnight refrigeration. Farmers’ market customers were willing to pay that day’s market price per pint for berries in 1/8-peck wooden baskets with handles (3 pints). Point of purchase information (which included recipes tied onto the baskets) was deemed critical to increasing overall sales.
Educational & Outreach Activities
Participation Summary:
A variety of outreach methods were used to report this project. These included field days, seminars, research publications and Extension publications.
Field Days/Seminars
“Managing Production Costs in Blueberries” Seminar by Matt Ernst at the 2003 Robinson Research Station Field Day Small Fruits Program, July 17, 2003, in Eastern Kentucky. 70 producers attending.
“Blueberry Packaging Options.” Seminar by Matt Ernst at the 2004 Kentucky Fruit and Vegetable Meetings, Jan. 6, 2004, in Lexington, KY. 50 producers attending.
Research presented in summary of Kentucky blueberry research in seminar by John Strang, University of Kentucky Extension Professor of Horticulture, Missouri Small Fruit and Vegetable Conference, Feb. 17, 2004. 75 people attending.
Producers visited on-farm test sites in Metcalfe (South Central) and Bourbon (Central) counties. Summer, 2004. 10 attendees.
Publications
The primary publication reporting the results of this research:
Ernst, Matt and Tim Woods. “Marketing Fresh Highbush Blueberries in Kentucky.” University of Kentucky Department of Agricultural Economics Extension Publication 2004-01, www.uky.edu/Ag/HortBiz/Pubs.
Data were also cited in the following:
Ernst, Matt and Tim Woods. “Kentucky Blueberry Markets Bursting—Consumer Survey Shows Continued Strong Demand.” In 2003 New Crop Oppportunities Research Report. University of Kentucky Extension publication PR-483, pgs. 55-57.
Ernst, Matt and Tim Woods. “2003 Berry Packaging and Consumer Evaluations.” In 2003 Fruit and Vegetable Crops Research Report, University of Kentucky Extension publication PR-488, http://www.ca.uky.edu/agc/pubs/pr/pr488/3%20small.HTM.
Project Outcomes
An obvious impact of this project was verification of demand for bulk blueberries at the Fairview Produce Auction. Five and ten pound corrugated bulk boxes are now familiar to auction buyers and potential sellers. These containers also generated considerable interest from producers at seminars, who recognize the lower cost and easier packing associated with corrugated material.
An unexpected result of this marketing project was interest from the Fairview Produce Auction in generating an auction price report. The auction has the potential to attract many different kinds of buyers for blueberries and their other products. These buyers each have different needs and preferences regarding packaging. Some buyers are highly cost sensitive and want the lowest packaging cost possible (bulk and food service), while others are looking to buy product that they can immediately put out in attractive packages for retail sale. Future price reports would ideally provide on-going prices for blueberries that would be sold in each of the different container types. With the advent of three new produce auctions starting in Kentucky in 2004, the state could benefit from such reports.
The demand and pricing information gathered from the various market channels was valuable in establishing benchmark recommendations for on-farm and PYO blueberry pricing in Central Kentucky. The consumer willingness-to-pay determined in this research for PYO price being 60-70 percent of on-farm retail price was applied by at least one cooperating producer who raised other berry prices with their PYO operation, with little perceived impact on demand. Few producers have had any meaningful objective data on which to base their on-farm PYO pricing. While demand for PYO may be different in other geographic markets, a simple survey methodology to gauge willingness-to-pay was employed here that could be used by producers in any locale.
Consumer responses, producer observations, and observed auction buyer willingness to pay helped generate packaging recommendation for blueberries being sold through a variety of marketing channels in Kentucky. These recommendations are contained in a table in the publication “Marketing Highbush Blueberries in Kentucky,” www.uky.edu/Ag/HortBiz/pubs.
Economic Analysis
The difference in producer returns for blueberries sold wholesale on the Fairview Produce Auction can vary considerably by package type and size. Gross returns per pound of blueberries (one pint=0.75 pounds) after the cost of packaging in this season’s trial were as follows:
½ pint plastic clamshell $1.09/lb
1-pint plastic clamshell $1.46-$2.86/lb
1-qt plastic clamshell $1.83-$2.14/lb
2.5-lb clamshell $1.30-$1.60/lb
5-lb corrugated $1.20-$1.90/lb
10-lb corrugated $1.42-$1.90/lb
There is strong demand for direct marketed blueberries from consumers in Kentucky. Not only are consumers willing to pay well above producer breakeven prices for blueberries, many surveyed were willing to drive well outside of town to pick their berries. This was especially true of Lexington consumers; more than half of those interested in picking their own blueberries were willing to drive 15 or more miles to do so.
Farmer Adoption
This project generated interest among many of Kentucky’s blueberry producers. There are four specific examples of this research being adopted thus far:
1. The cooperating vendor at the farmers’ market had been purchasing blueberries produced nearby to retail. After seeing consumer willingness to pay, he decided to establish his own blueberry plantings for sale at the farmers’ market and PYO.
2. Two producers in western Kentucky are considering the Fairview Produce Auction for small-scale wholesale marketing in 2004. This is an ideal role for this market channel.
3. The cooperating on-farm market restructured their berry pricing strategy with success in 2003. They also used zip code information obtained on the consumer packaging preference survey to retarget their fall advertising efforts.
4. A bulk order of blueberry plants in the fall of 2003 and plans to cooperatively purchase packaging supplies in 2004 were made among central Kentucky small fruit producers. They cite the introduction of new packaging materials, and the consumer response to these materials, as a strong influencer on their decision.
5. Numerous requests from producers have been made for information on obtaining small fruit packaging from various vendors.
Areas needing additional study
This project quantified consumer demand, pricing spreads, and packaging preferences for blueberries. Additional blueberry direct marketing research should focus on the following:
--Consumer willingness to pay for certified organic blueberries
--Berry packaging solution for direct sales to foodservice
--Producer alliances for bulk packaging purchases
--Documenting and demonstrating cost and labor savings of bulk packaging for production economics.
Matt Ernst and Tim Woods, University of Kentucky Department of Agricultural Economics, would like to thank those who graciously cooperated with this project:
Bluegrass Blueberries, Metcalfe County
Fairview Produce Auction, Christian County
Joyce Price & Family, Metcalfe County
Reed Valley Orchard, Bourbon County
Robert Stone, Bourbon County
Roland McIntosh, Powell County
Dwight Wolfe and Joe Masabni, University of Kentucky Department of Horticulture, Research and Education Center, Princeton, KY