Win a copy of Straw Bale Building Details this week in the Straw Bale House forum!
  • Post Reply Bookmark Topic Watch Topic
  • New Topic
permaculture forums growies critters building homesteading energy monies kitchen purity ungarbage community wilderness fiber arts art permaculture artisans regional education experiences global resources the cider press projects digital market permies.com private forums all forums
this forum made possible by our volunteer staff, including ...
master stewards:
  • Nicole Alderman
  • r ranson
  • paul wheaton
  • Anne Miller
  • Mike Jay
  • Jocelyn Campbell
stewards:
  • Devaka Cooray
  • Burra Maluca
  • Joseph Lofthouse
garden masters:
  • Dave Burton
  • Greg Martin
gardeners:
  • Mike Barkley
  • Shawn Klassen-Koop
  • Pearl Sutton

Anyone good at Economics?  RSS feed

 
Posts: 57
Location: Savannah, GA
food preservation forest garden hugelkultur
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I'm a little stumped. The situation is a market garden. The question simply how much and how little? Numbers were never my forte so I thought I would ask.

In Savannah, GA there is a booming farmer's market community with many diverse offerings. If I were to grow surplus with the hopes of marketing whatever I couldn't eat. (And this is assuming I can even eat what I assume I can in the first place.) How would one determine the most marketable goods based upon a market that offers most things outside of extremely exotic or rare veggies. (Which there wouldn't be data for, considering I wouldn't even know who to ask. Can you imagine walking up to someone to inquire about their interest in breadfruit? The average person doesn't really know what breadfruit even is!)

Back to the topic at hand, how does one determine how much or how little they can ask for an item?

For instance, one farmer sells his carrots for 2.00, and another sells for 2.50. Will I suppress the market by selling for 1.75?
I'd rather not make it hard for anyone else by pricing too low, but I'd also like to be marketable, otherwise why go through the effort of packing up and going off to sell in the first place?

Thanks in advanced everyone.
 
pollinator
Posts: 2385
Location: Massachusetts, Zone:6/7, AHS:4, Rainfall:48in even Soil:SandyLoam pH6 Flat
122
forest garden solar
  • Likes 1
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I would sell at the going rate.
To start off I might do a 25% off sale price.
Giving away alot of free samples 'meals', recipes and ready cook packages of all ingredients needed to make a meal.

Lets say you are trying to collect 10,000 per year over 5months aka $2,000/month
You will need to collect $500 per week. if the going price is $2/lbs you are going to have to sell 250lbs per week

Total Revenue = $10,000
Total Week = 20
Revenue per week = 10,000/20 = $500
Price per lbs = $2
Lbs/week = Revenue per week / price per lbs = 500/2 = 250lbs

You might say 250lbs is too much, so you might sell mushroom instead of kale at $10/lbs
So you would only need to sell 50lbs per week.
 
pollinator
Posts: 585
Location: Southern Illinois
98
building cat dog fungi rocket stoves transportation trees woodworking writing
  • Likes 2
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
Angelica,

Ah, the strange, dark and mysterious world of economics.  To make an incredibly complicated answer simple, I think what you want to do is charge the market price.  

To make it more complicated, I will try here.  In our example here, meaning for you, the market price is the most you can charge for your carrots before interested buyers turn away because they think it is too expensive.  The flip side, for the consumer, the market price is the least you can offer before a seller says no way, I can't possibly sell for that low a price.  Assuming that there are other sellers out there selling carrots (and really, why wouldn't there be), probably you are all going to be selling for about the same price.  Why?  Customers instinctively have an interest in paying as little as possible.  This creates an incentive for you the seller to lower prices to bring in more customers.  But you the seller naturally want the most money possible for those carrots.  And why not?  After all, you went and bought the land, tilled the earth, planted the seed, watched over it while it was growing, dug it up, packaged it and are willing to sit outside while most customers look at your merchandise but walk away!  That's tough!  You SHOULD get paid the most for what you bring to market.  So the market price is sort of like a bargain or informal agreement between all the buyers and all the sellers.

But what if I drop my price to bring in more customers?  The truth is, you might have to do this simply because you are an unknown factor.  Others will have a sort of name recognition and be trusted.  They may have loyal customers and sometimes even genuine friendships.  You don't have that yet so you might have to sacrifice payment to get established.  But in the end, that is money you did not earn for doing as much if not (more than likely) more work than your "competition."  That's money you can't invest back into your own farm/garden operation.  It is tempting for many would-be entrepreneurs to sell at steep discounts and go the Wal-Mart route, but you are the little guy and don't have the Wal-Mart clout to throw around.  It is also tempting for some to think "I am helping people by offering my produce for less" and to a degree this would be true, but if you were not there to sell your carrots for $1.75, would that customer pay $2.00 or $2.50?  If so, then again this is money lost, and again, this is money you can't re-invest back into your own business (and you the person need to get paid too, after all, you deserve it).  

So my suggestion is to find out what the approximate average is for your carrots and sell them for that average or maybe just a bit lower in order to get established and then maybe raise them slowly and gradually over time.  And by over time I mean that I personally would not change the price at all that first season.  If I survived the first season and thought I was up for a second season, I would think about raising the price of the carrots up to the average or market price.

About depressing the markets:  You are not going to suppress anything by pricing your carrots too low.  You will somewhat depress simply by being another source of carrots.  Are you certain you are going to sell every last carrot with which you came to market?  Will someone set up a stand right next to you and sell what look like the same carrots for the same price.  The price does not depress a market, the supply does and while selling carrots may be a good way to enter farmer's market, the breadfruit is what will keep you in the market.  Find ways to specialize.  Make your carrots better.  Tout them as not only being organic but being "regenerative" (using the term from Gabe Brown video--I don't think it is copyrighted).  Make your business stand out.  Make a name for yourself.  I think you get the idea.

I know this is a lot to think about and if you ever need someone with whom to bounce an idea around, don't hesitate to ask.

Eric
 
gardener
Posts: 536
Location: SoCal USA
88
bike cat composting toilet dog solar trees wofati
  • Likes 2
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I would walk around a couple of the days at the market towards the end to see what is still sitting in boxes to go at reduced rates, so you know what is already overpriced.

Could you provide options that are out of season or not normally available if you grew in a walipini or Oehler greenhouse to extend your season or change your USDA growing zone?

Will you offer organic items, and will you have to be certified organic which can involve a lot of monthly paperwork and a good deal of cost, making it not worth it unless you scale much larger?
 
pollinator
Posts: 1366
Location: Big Island, Hawaii (2300' elevation, 60" avg. annual rainfall, temp range 55-80 degrees F)
351
books forest garden rabbit solar tiny house woodworking
  • Likes 5
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
People can, and do, write books abut marketing strategy. So I can't give you a simple answer, but I can tell you how I sell my produce at my own farmers market. I use to regularly sell several years ago, and this past year I've just gotten back into being at our farmers market again. So I'm using my "improved" marketing skills now.

1- I check our local supermarkets to see what the going prices are. And if my product is organic, then I check the natural good store too. I can do this online since the stores frequently post their prices, at least their sale prices.
2- I check to see what the going price is among the regular vendors.
3- I watch to see what product sells well, and what sells slowly. And check those prices.
4- I check to see how the product is prepared and presented. In plastic bags? Little baskets? Paper bags? Bulk?
This gives me a feel for the market.

I seldom ever underprice my products. I discovered quickly that if I did that, people either thought my products must be inferior or old, even though some buyers still bought them, tiwn gossip had it that there something wrong with my veggies because they were cheap. Plus they expected to make even better deals all the time. They tried to get me lower. Heaven forbid that I raised my price to the going rate! They complained. So I quickly stopped doing that.

Next....... I try to make my product looked as good or better than my competitors. I use a misting spray bottle of water to keep the veggies moist and shining, but not dripping wet. I use crushed ice to lay out the veggies that tend to wilt. I display individually cut kale, chard, etc in a mason jar of water, like using a vase. (The jars set in a tray with holes to keep the jars stationary.)  I line up my display when possible.....a line of pumpkins is more eye pleasing than a jumble in a cardboard box.

Second..... I try to always offer a couple of  unusual things along with the old standards. Perhaps some yellow beets, purple greenbeans, cylindrical radishes. Customers often will stop by to see what oddities I have. They seldom buy them, but usually buy other things.

Third..... Instead of cheaper prices, I offer bulk sale discount. For example : $3 per bag, 2 for $5, 5 for $10. That's my standard approach. A lot of people buy those extra bags because of the price incentive.

Fourth... I'll throw in extras when a customer is hesitate (or buys a lot). NOT extras of the same product, but for instance, they buy a pack of green beans, I'll throw in a free bag of purple ones and ask them to review it fir me. Or maybe a bundle of yellow beets. Or another veggie they aren't buying that happens to be my excess that day. I've had customers buy 3-4 pumpkins so I'll throw in a couple bundles of green onions to go with it.

Fifth.... I try to promote my products points of interest, that is ---
...organic
...fresh picked
...direct from the farm
...chemical free
...first of the season
...variety grown for its flavor

Marketing is a challenge. But I find it to be fun and frustrating.
 
Eric Hanson
pollinator
Posts: 585
Location: Southern Illinois
98
building cat dog fungi rocket stoves transportation trees woodworking writing
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I think Su Ba has made some very sound points.
 
Posts: 133
5
  • Likes 3
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator

Angelica Harris wrote:I'm a little stumped. The situation is a market garden. The question simply how much and how little? Numbers were never my forte so I thought I would ask.



Angelica,

Benji provided the rough paper napkin calculations. Here is what is equally important -- Can you sell what you produce?:

* Go to the market in the morning right as they open. Notice what the vendors are selling and the associated prices. Leave.
* Return to the same market just before closing and see what those same vendors are selling now and their prices. What did they sell out of? What were dogs?

The difference in the two prices will give you a fair shot of the price range of produce. It should also provide an idea of what are the best sellers and which are not. But it is only a snap shot for that part of the season. You would really have to repeat this for 15-20 weeks to understand the dynamics of the market as it relates to seasonal pricing.

* Get a copy of the market rules. Some markets require you to commit to a whole season which might be a show stopper.
* If the market permits wholesalers pass on that market. You are competing against conventional AG and won't be able to beat their pricing.
* Based on the rules, define your minimum volume to break even.

It is useful to know what your bottom dollar pricing might be. A good place to start is the USDA retail market reports --
https://www.ams.usda.gov/market-news/retail . These reports are published weekly and broken down by regions.

If you get good at a particular crop you might consider contract growing. I buy all my tomatoes that I can from a lady who just has the 'knack'. (She puts me to shame, snif). I put down a deposit based on how many #s I want. When they are ready I go to pick them up and pay my balance. Any excess she sells as a U-pick deal first come basis. Its not a CSA, more like a kickstarter kind of arrangement.

Good luck and hoping for your success.






 
pollinator
Posts: 1170
Location: Los Angeles, CA
218
books chicken food preservation forest garden hugelkultur urban
  • Likes 2
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I'd charge $3 for those carrots.  If they don't all sell, next week charge $4 and they'll be gone by noon.

Don't undersell the market --- all you'll do is shortchange yourself and piss off everyone else.  You can charge the going rate, but then be generous -- give them a smile and a wink and throw in a couple of extra carrots for good measure.  


Go out there and make mistakes, learn, try, experiment, and see what happens.  
 
pollinator
Posts: 3001
591
books cat chicken duck rabbit transportation trees woodworking
  • Likes 3
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
Not to be a pair of smelly socks in a load of freshly washed laundry, but ANYTHING only has value if you are allowed to sell it. Have you checked to see if you can join the local Farmers Market's? A lot of people just assume that they can, but that is not the case at all. In fact, around here the market is kind of saturated, with Farmers Markets in every town. The most popular ones are not taking new farmers , and the farmers markets that are, typically are in mon-popular locations which is why they had a late-start, and are now competing against more popular farmers markets. Finally even the farmers markets that are taking new farmers, the founders often dictate what they can grow so the problem mentioned; the under-cutting of existing farmers prices, does not happen.

My sheep shearer tried to do this, and raise a few vegtables and sell at the farmers market. They would let her in, but because she could not sell what others were growing, she could only sell Egg Plant. There is no way she would ever make it worth her time to babysit a parkinglot all day trying to sell nothing but egg plant.

But a person has to check. Just because it is that way where I live, does not mean it is that way where you live.
 
Posts: 71
Location: Cape Town
16
  • Likes 3
  • Mark post as helpful
  • send pies
  • Quote
  • Report post to moderator
I would say process.  Unless you are very skilled and./ or lucky it is hard to make good money on fresh veg. The rate of spoilage is high, and there is the irritating factor that in the same area the same things grow well and ripen at the same time so a glut drives prices down just as you harvest. Indeed niche crops if you can, herbs are often a good choice, but if nobody else has tried to sell it,  it's a gamble.  I've tried out of season crops which can double your profits but it is a lot of work so the margins are not as great as they seem. A few weeks early or a few weeks later than main crop is more doable than extreme out of season like strawberries in winter.   But usually the answer is to process   This keeps much more of the profit on-farm. Dry, chop, mix, jam, pickle, bottle, ferment, can, distill.. That also lets you wait to  sell until the price is good and makes it easier to find a niche. I have olives which I pickle, and make soap from herbs which I grow on farm. Current favourite is dandelion  soap. Now I could not see myself selling fresh dandelions at market 😁
 
No holds barred. And no bars holed. Except this tiny ad:
2019 PDC for Scientists, Engineers, Educators and experienced Permies
https://permies.com/wiki/100059/PDC-Scientists-Engineers-Educators-experienced
  • Post Reply Bookmark Topic Watch Topic
  • New Topic
Boost this thread!