Options to Buy
Perspectives On Line: The Magazine of the College of Agriculture and Life Sciences

NC State University

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Taylor Williams, Richmond County Extension director, (foreground, above) helped form the produce cooperative managed by O'Neill Bennett (background above and forklifting a load of cantaloupes, below), a former tobacco and cotton warehouse manager. (Photos by Sheri D. Thomas)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options to Buy: Fresh approaches to produce marketing include buyer auctions and grower co-ops. --- By Natalie Hampton
Auctioneer Gregg Goins calls for bids at the Oxford produce auction, the only one of its kind in the state.  (Photo by Sheri D. Thomas)

 

ornate letter As tobacco quotas have dropped in recent years, farmers are growing more fresh produce to supplement their incomes. But while tobacco had a ready market through warehouse sales or grower contracts, growers have found that produce is harder to sell. And, unlike tobacco, a load of fresh melons or tomatoes can’t be stored indefinitely until prices are more competitive. Hence, farmers are looking for new ways of marketing their fresh produce.

Some sell through farmers’ markets or roadside stands. Some have formed grower cooperatives to allow them to offer larger quantities of produce to prospective buyers. In Oxford this summer, growers opened a produce auction where buyers came twice weekly to buy fresh produce for small stores, produce stands and restaurants.

Bob Usry, Extension economist and lecturer in the College’s Department of Agricultural and Resource Economics, has worked with agents who have started grower co-ops. While such marketing groups can be helpful, Usry says, growers must carefully weigh the obligations of belonging to a group against the possibilities of marketing on their own.

In Richmond County, eight melon growers joined forces to create a co-op two years ago. During growing season, they store melons in a large rented cooler until they have a full truckload, then contract with a buyer or grower-shipper to purchase the melons.

The group, which Richmond County Extension director Taylor Williams helped organize, has seen some success. Aldi, a grocery store chain new to North Carolina, has bought melons from the co-op. But finding produce buyers willing to take a chance on a new source of melons has been a challenge.

By working together, the co-op growers believe they will have more success finding buyers for their melons, Williams said. For most individual growers, it would take too long to assemble a full truckload of melons to sell.

This season was particularly difficult for growers, Williams said. The state’s drought and excessively hot weather during the critical pollinating period hurt yields.

“We scheduled our production so that, in theory, two to three loads of melons would come to the cooler weekly from June 26 to Aug. 7. Because of the severe drought that depleted our irrigation reserves, the number of loads shipped was less,” he said.

Usry told Williams’ group that they needed to find a niche – a product or service they could provide that would make their produce more attractive to buyers. In a normal summer, this group should be able to get their melons to market a few weeks ahead of out-of-state growers, Usry said. Those few weeks would make their melons valuable to grocery stores and other potential buyers.

Finding such a market niche is key to marketing a perishable commodity like melons, Usry said. For instance, an Eastern North Carolina growers’ co-op started by Extension associate Bill Jester has found tremendous success with its Sprite melon, a product that is unique in the market and meets a market niche.

Though they deal in another food commodity, a Franklin County cooperative has found success in providing goat meat to a growing Hispanic population in North Carolina. Franklin County agent Martha Mobley helped create the meat goat cooperative, which now has 180 producers and 100 more on a waiting list.

“For any co-op or marketing group, the first question to ask is, ‘What problem are we addressing in the marketplace?’” Usry said. “What resources, enterprises or skills give them an advantage in the marketplace?”

Usry calls this strategy “value-added marketing.” Success in value-added marketing requires growers to determine whether they are providing what consumers want.

“Unfortunately, North Carolina agriculture has been transitioning from tobacco, and growers are not always asking what the customer or market needs,” he said. “We’re coming at it from the producer side.”

Ricky DeWitt and Lee Berry are two growers in the melon co-op. They were among about 20 growers who first expressed interested in starting the co-op, but after about 15 meetings, their numbers had dropped to eight. And in their second year as a co-op they are still struggling to turn a profit.

DeWitt joined the co-op, searching for alternatives to tobacco and new markets for selling his produce. He raises some tobacco, less than he once did, along with strawberries, watermelons, cantaloupes, chickens and sweetpotatoes.

“I always said if we could grow it, we could sell it,” DeWitt said. “But this has not been the best year.”

Berry raises a variety of produce, including strawberries, tomatoes, watermelon, squash, blackberries and cantaloupes. He recognizes the benefits of pooling resources to sell produce.

“It’s hard to sell three bins of cantaloupes. But you can sell a tractor-trailer load,” Berry said.

In Oxford, 55 growers and 127 buyers participated in the new produce auction, started by horticulture agent Carl Cantaluppi of Granville and Person counties. The auction, the only one of its kind in North Carolina, had more than $100,000 of sales in its first season.

Horticulture agent Carl Cantaluppi started the Oxford produce auction, which had more than $100,000 in sales in its first season. (Photo by Sheri D. Thomas)

The auction got off to a slow start when organizers learned at the 11th hour that warehouse owner Billy Yeargin would have to obtain a auctioneer’s license in order to hold a non-tobacco auction. Plans for selling to an out-of-state buyer did not materialize. And Cantaluppi acknowledges that starting the auction in a drought year was difficult.

From late July through October, the auction opened two days each week. Growers brought produce to Yeargin’s tobacco warehouse, where it was sold at auction to the highest bidder. When produce supplies began to dwindle, the auction cut back to one day each week.

Most of the buyers were from produce markets and roadside stands, Cantaluppi said. Next year, he says the auction will look to these individuals to carry the market.

In deciding whether to participate in a co-op or other alternative markets, growers must determine if such joint ventures offer them access to markets they could not tap themselves. Joining a co-op may actually cut a grower off from markets where he or she has established relationships, Usry said.

For instance, growers who sell through a co-op may be restricted from making any outside sales. Such a move could hurt growers who already have established relationships with buyers. Members who sell outside the co-op, in effect, are competing with the co-op, he said.

“Historically, co-ops have had trouble getting members to stay within the co-op rules,” Usry said.

Also, members of a co-op must agree to plant crops at intervals to extend the growing season for fruits and vegetables, Usry said. Growers may prefer to determine for themselves when they will plant.

Co-ops sometimes rely on grants to get their operations off the ground. The melon co-op has received a Rural Development Grant from the U.S. Department of Agriculture to help build a new cooling facility. The Oxford Produce Auction has received a small grant for marketing from the N.C. Department of Agriculture and Consumer Services’ Specialty Crops Program.

In Stokes County, a growers’ co-op started in 1999 has received several start-up grants. About 20 producers have been active in the co-op, which sells a wide variety of produce to grocery store chains, including sweetpotatoes, green beans, cucumbers, tomatoes, green peppers, lettuce and watermelons.

This year, members of the Stokes County Growers’ Cooperative opened a new storage facility, built with grant money from the Z. Smith Reynolds Foundation and USDA’s Rural Development program.

Usry says that while grant money is helpful to get a co-op off the ground, it should not be seen as a long-term means of support. After two to three years, co-ops should be self-supporting and able to afford a manager to oversee the operation, he said.

As North Carolina growers look to new crops and business opportunities to sustain them, marketing will become more and more critical, Usry said. He has seen some real success stories, like an Orange County dairy farm that began marketing its products as free of antibiotics and selling milk in reusable glass bottles. The product filled a niche market, and the operation has become successful.

The dairy’s success story illustrates the importance of identifying and meeting consumers’ wants and needs, Usry said.

“The transition to value-added agribusiness is not easy to do,” he said. “The marketplace is unforgiving to those who don’t want to be involved in marketing.”


 


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