Producer Inventory Management for Fresh Fruit and Vegetable Sales to Retail Outlets

2011 Annual Report for CNE11-090

Project Type: Sustainable Community Innovation
Funds awarded in 2011: $15,000.00
Projected End Date: 12/31/2012
Grant Recipient: University of Maryland Extension
Region: Northeast
State: Maryland
Project Leader:
Willie Lantz
University of Maryland Extension

Producer Inventory Management for Fresh Fruit and Vegetable Sales to Retail Outlets

Summary

Expanding markets for local fruits and vegetables can be challenging. Farmers need an efficient system to market fresh local fruits and vegetables through existing retail markets while maintaining a high percentage of the retail dollar. This project proposes to set up a system based on producer inventory management similar to that which is done with bakery items. Fresh fruits and vegetables will be delivered on a daily basis and placed in the sales area. Non-fresh items will be removed from the display and the business will be given a credit for these items. This method will return a greater portion of the retail dollar to the farmers as the grocery store does not have to deal with waste and reducing the prices for older, inferior produce. The community will benefit from a greater number of retail establishments offering local fresh fruits and vegetables. Consumers will be educated as to what produce in the store is produced locally, and why purchasing these products is important through point of sale advertising

Objectives/Performance Targets

The goal for the first year will be:
-10 farmers to market fresh fruits and vegetables to two retail outlets
-Farmers to increase fruit and vegetable sales by 25%

At the end of the season farmers will be asked to complete a survey which will gather information about their sales, satisfaction with the program, and suggestions for improvements. The retail businesses owners/managers will also be surveyed to determine their satisfaction with the producer inventory management process and local product point of sale advertizing. At least three times during the summer at each of the retail location, customers will be asked to complete a survey to determine the benefit of having local produce at established retail businesses. These surveys will be reviewed by the producer group for improvements to the business plan for year two.

During year two of this project, the goal will be to increase the number of farmers involved to 15 and the retail businesses to four. The goal will also be to increase sales by 25% over the previous year.

Accomplishments/Milestones

In December of 2010, local fruit and vegetable producers were invited to a meeting to discuss opportunities to expand production and marketing of local fruits and vegetables. Many models were discussed such as CSAs, food buying clubs, produce auctions, etc. The farmers were most interested in selling their produce in a way that would require less time and involvement in the marketing process. The group agreed to explore the idea of forming a cooperative to market their produce. Since little options exist to sell excess produce, the group decided to take the approach of matching the buyers needs to what they produced. Four outlets were targeted as potential buyers for local products. The outlets included: two traditional small chain grocery stores, one high end pizzeria and coffee shop and a local owned convenience store. These outlets were selected based on past interest in local products and interaction with farmers purchasing local products. While some of these outlets had purchased local products from farmers in the past, it was a very small part of the farmers and outlets fresh produce business. The outlets were surveyed in person by a committee selected by the farmers. The surveys included questions about deliveries, produce packaging, volumes, etc. From the surveys, the farmers together planned their production to meet the demands of the outlets.

The outlets were asked about the idea of providing a service of placing the fruits and vegetable in displays and removing produce that was no longer of quality to sell. The grocery stores were not interested in such a system as they had a produce manager and needed to keep displays and pricing consistent with other produce items. The convenience store was very interested in the idea that we would place the produce and return not saleable items. The convenience store did not previously sell fresh fruits and vegetables.

The grant hired a marketing coordinator to work with the local outlets and the group of farmers. The marketing coordinator communicated buyers needs with the products farmers had available. For this first year the coordinator contacted farmers about available produce, collected orders from the outlets, delivered produce and worked with outlet owners and employees to display produce with point of sale local advertising.

The group of farmers decided in the early spring to form an agriculture cooperative, however due to a lack of local lawyers’ knowledge of forming a cooperative and the prevailing produce season the cooperative was put on hold until the fall. In the fall, the group engaged the Keystone Development Center for assistance with forming the agriculture help. With their help the group filed articles of incorporation as an agriculture cooperative in December of 2011. The group has since completed and passed their bylaws, elected a board of directors and has taken in official members. The new business is known as Garrett Growers Cooperative.

The farmers are currently engaged in developing plans for the 2012 growing season. The group is exploring the possibilities of using an on-line inventory and purchasing system. While not all of the growers have access to the internet, the marketing coordinator would be responsible for entering available produce for the farmers and working with the outlets on orders. The group has also been working on a spreadsheet matching up outlet needs with the farmer’s potential production. Being able to predict demand is allowing the group to be able to determine what type of production is needed. The use of high tunnels and other techniques for early production will help satisfy the outlets demands throughout the summer and fall.

Impacts and Contributions/Outcomes

Of the original group of farmers that attended the first meeting in December of 2010, eleven farmers marketed produce through the efforts of the project in 2011. Total sales for the farmers were in excess of $13,000. A majority (9 of the 11) of the farmers were already producing fruits and vegetables and selling at the local tailgate market and/or on farm stands. All 11 of the farmers that marketed produce through the project have joined the cooperative and are engaged in planning for the 2012 market season.

The four market outlets were also surveyed about their satisfaction of the produce and services in 2011. All four were very satisfied with the quality of the local produce they received. All four were interested in working with the cooperative in 2012 and increasing the volume of produce from the local farmers. Two additional outlets have been surveyed and are very interested in purchasing fresh fruits and vegetable from the cooperative.

One key issue in marketing larger volumes of local produce is having produce available more weeks of the year. Garrett County has more demand at restaurants and grocery stores during the summer (from May 30th to early September) due to the large volume of summer tourism. Being able to meet the demands for produce in early summer is a challenge. With the use of hydroponics and high tunnels, the group was able to market local produce from the end of May until the middle of October or a total of 20 weeks. Expansion of high tunnels and other early markets will be a key to the success of local marketing.

Collaborators:

Cheryl DeBerry

cdeberry@garrettcounty.org
Collaborator
Garrett County Economic Development
1916 Maryland Highway
Mt. Lake Park, MD 21550
Office Phone: 3013346960
Kiley Royce

Owner – Collaborator
Get N Go
507 E. Oak Street
Oakland, MD 21550
Office Phone: 3023343266
Website: http://getngo.net/getngo2.htm
Charles DeBerry

cdeberry@garrettcounty.org
Farmer – Collaborator
DeBerry Farms Fresh Produce
4288 Broadford Road
Oakland
MD, MD 21550
Office Phone: 3015331026
Website: http://www.deberryfarm.com/