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

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

After attaining incorporated status as an agriculture cooperative in December 2011, Garrett Grower’s members began planning for 2012. The four outlets that purchased produce in 2011 were surveyed to determine their satisfaction and plans for purchases in 2012. From the information that was gathered members created a chart displaying the amount of each type of produce needed weekly. From this information the producers determined the amount of each type of produce each producer would sell through the cooperative. Producers were encouraged to plant additional produce to sell to additional outlets. To assist with inventory management and sales, members explored online web based inventory management and sales software. While the software was impressive it would require major modifications to meet the needs of the cooperative. The cooperative decided to use Quickbooks to manage inventory and sales. One of the major components of the inventory and sales management was creating uniform product codes. Another important aspect that was developed in 2011 was product labeling that included a trace back system that allowed for any given product to be traced back to the individual producer. The cooperative members also agreed to pursue a new Good Agriculture Practices (GAP) program developed by Maryland Department of Agriculture for producers who direct market. The members attended a GAP training and wrote a GAP plan for their farm. The members are planning to complete the final phase of the certification in 2013 which requires an on farm audit.

In 2012, the total number of outlets that sold local fruits and vegetables through Garrett Growers increased to twelve (12). With the new outlets, the cooperative provided fresh fruits and vegetables to three grocery stores, one fast food restaurant, one convenience store, six restaurants and a caterer. The cooperative also provided local foods for a Garrett County Health Department project to provide local foods for six weeks to three head start programs. The cooperative increased local sales of fresh fruits and vegetables over 100% with gross sales of over $28,000 in 2012.

Impacts and Contributions/Outcomes

A survey was conducted with 7 of the cooperative members prior to the end of 2012. 86% of the farmers indicated they had increased the percentage of farm income from fruit and vegetables in the past two years. The farmers were asked to report the amount of fruit and vegetables sold to various outlets. Before the beginning of the SARE Grant only one producer sold 10% of their produce to wholesale outlets (restaurants and grocery stores). After participating in the project, the farms averaged 44% of their produce sold to wholesale outlets. 86% of the farms also indicated they had increased their sales of fruits and vegetables with two farms indicating they had greatly (over 50%) increased their sales. All of the participants indicated they were satisfied or very satisfied with marketing their fruits and vegetables through the cooperative. All of the participants indicated that marketing fruits and vegetables through the cooperative was important or very important to the success of sustaining or increasing profitability on their farm. Producers were also asked to rate from less important to very important eight functions of the cooperative. The two highest ranked functions were “Produce picked up and delivered to the customer” and “Having a person to contact and work with potential buyers”. The least important to the participants were “Focusing on producing larger volumes of a few vegetable types rather than producing a wide variety of vegetables” and “Marketing under one brand rather than developing your own brand”. While 43% of the producers in the future planned to increase production and 43% planned to remain the same, 86% indicated that they planned to increase sales to the cooperative in the future.

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