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PLSC 220.3 (2008) – Marketing Hort Crops

1Marketing

Marketing objectives are to;

1) .............................................................................
2) ............................................................................

Consumers decision to purchase based on percieved “Best Value” Value = Quality/Price

Quality is in the eye of the beholder. Characteristics consumer finds desirable in tomato do not
correspond with the shippers' or growers’ perceptions of quality.
Ideal Tomato for ....
Quality aspects for the customer;
Customer
a) Appearance - most important aspect of quality for fresh market 1)
sales. Appearance represents the only basis for selection in many 2)
situations. 3)
Supermarket
Want the commodity to be the right - size, color, hue, gloss, shape, 1)
uniformity. Also require it to be free from blemishes and abnormalities 2)
ie; bruises, cuts, rots etc. 3)

b) Feel - for some crops may contribute to consumers' decision to

purchase. More importantly .. feel influences quality perception during
consumption. Texture, firmness, stringiness, crunch, density etc.

c) Flavor - for most vegetable crops is the ultimate reason for purchase and consumption, yet often plays
a minimal role in decision to purchase. WHY ? …………………………. Does strongly influence
...................................... Consumers' idea of ideal flavor is highly variable which makes it difficult to
produce a uniformly desirable product.

d) Nutrition - increasingly a significant quality component in consumers decision to buy. Very difficult
to assess based on visual characteristics. Try to correlate with discernable characteristics ie,
...................... + .............................

e) Safety - free from pesticides and natural toxicants. How would you identify pesticide free
Again, very difficult for the customer to identify foods ??
A)
b)

The five P's of Successful Marketing of Horticultural Crops (and just about anything else)

Product - clean, free of disease/deformity right size, right cultivar, color, stage of
maturity etc.

Package - keeps product in good shape

- right size of package
- displays product
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PLSC 220.3 (2008) – Marketing Hort Crops

- provides information (storage, recipes etc)

- doesn’t add excessively to the cost (material, handling and disposal)

Promotion - by grower organization, store or individual

- connects the grower with the consumer
- customer knows your product
- you know the customer's needs

Price - what they will pay vs. what you need to survive as a
grower/retailer
- determined by access to alternatives
- added value = added price

Position - right product, at the right price, in front of the right customer at the
right time

Marketing principles

Must be analysed before growing a crop and again before making any marketing decisions.

1) Know your crop

- total and marketable yields you can achieve and how this compares to ....................
- yield variability ..........year to year as a function of growing conditions, field to field, etc
- maturity date ............. “ ” “ ” “ ”
- quality … is it adequate to meet market requirements ?
- storability = decay, shrinkage and quality. How much will be lost during storage ?

2) Know your market

- total demand and seasonal distribution
- competition = local and imports
- buyers ( who, where, when, how much do they want, can they pay ?)
- price stability and controlling factors.
- how much additional produce can the market bear without depressing prices.

3) Know your economics

- cost of production
- cost transport, storage, handling and marketing (20-50% of the total)
- cost of financing
- risk
- yield on investment of time, effort and capital … is it worthwhile ?

Marketing options

1) Home gardens.
- traditional, great importance in past as food source.
- less today .... but 50% of CDN homeowners have some type of vegetable garden or edible fruit
tree (70% in Saskatoon).
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- for every $ 1 of produce grown in backyards … spend $ 3 to do it = HOBBY !

- average garden 750 sq. ft and produced $250 of produce (retail price) = gross of $0.29/sq ft.

U of S Undergraduate Project – Evaluating Potential Productivity of Home Gardens

Studies costs/returns of intensively managed home garden over 3 years ….

Year 1 …. Return = $ 1.60/sq ft
Year 2 …. Return = $ 2.10/sq ft
Year 3 …. Return = $ 3.00/sqft

140

120

100
Profit ($/m2)

80
2004
60
2005
40
2006
20

0
Vegetables Fruits Herbs
-20

-40
Cr op Catagory

Gardens do represent a source of ; a)

b)

c)
d)

2) Market Gardens
- production for local urban markets (< 100 km away).
- small acreage in production (average = 8 acres), usually grow several crops.
- some grow both fruit and vegetables, but in Saskatchewan most specialize in one or the other.
- privately owned/operated.
- originally designed to supply growing towns. As people move from farms into towns they are
no longer able to grow their own fruit or vegetables.
- compete with commercial growers (retail trade). HOW ? ...................... + ..............................

Marketing options for produce from Market Gardens

Farm gate sales - grower sells directly to public at farm gate. Grower picks sufficient produce to meet
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daily demand, may display at roadside in conjunction with sign advertising location, prices
Advantages - adapted to entry level growers = don’t require large volumes of
produce.
- minimal equipment or storage requirements
- prices better than commercial as eliminate middlemen.
Disadvantages - labor intensive sales
- must be people oriented as you are making the sale – see Joan
Merril at Robertson Valley Farms
- must be located near major population centre, tourist attraction.
Requires good road access.
- must grow a wide range of crops.

P.Y.O. - grower produces crop and at appropriate time allows public to pick. Consumer gets a
recreational opportunity and is given access to very fresh produce, at the desired size, color or stage of
maturity. Grower is saved the cost of harvesting, grading and marketing the product. Grower keeps track
of area picked, amount picked and what part of crop being picked.

Advantages - adapted to entry level growers

- opportunity to deal with public
- minimal equipment, storage requirements. Provide scales, picking
baskets, restrooms etc.
- prices good
Disadvantages - must attract pickers at right time = ...................................
- must deal with public
- limited range of crops adapted to P.Y.O. WHY ?
- must train public how to pick without ....................................... Also
must carry additional insurance to cover added liability once public begins to
"work" on farm.

P.Y.O. experienced a significant jump in popularity during

How to sell at PYO ... by weight or
the late 1970's and early 1980's. However, interest has more volume ?
recently declined - WHY ?
Volume based sales
- convenient = no scales
Increasing emphasis being placed on P.Y.O. as a part of a required
complete family-oriented entertainment - buyer knows cost before cash
experience ie; rides, petting farm, crafts, restaurants register
combined with P.Y.O. = “agritainment”
Downside
- limits size choice of customer
- temptation to overfill volume
containers

Farmers' markets - market set-up in urban centres, many growers, each with own stall. Growers rent
stall space from market organizers. May move from location to location during week if population centre
is sufficiently large. Provides public with readily available, fresh produce, allows price and quality
comparison.
Advantages - suited to entry level or backyard growers as well as commercial
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growers.
- no requirement for road access
- advertising handled by organizers
- good price relative to wholesale
Disadvantages - limited volume sales
- limited period of sales
- set-up/take down time
- competition with other growers
Farmers markets are increasing in popularity in Saskatchewan; presently they represent the major
sales outlet for small scale vegetable producers.

Bottom Line – Market gardens have a long tradition in Hort and are doing well in Saskatchewan …
especially well recently with consumer focus on locally grown food.

3) Sale to Wholesalers - grower sells washed, graded and packaged produce to wholesaler who sells to
major retailers (supermarket chains) as well as smaller stores.
- Nationwide an increasing proportion of the total horticulture commodities are handled by a few
large wholesalers.
- Consolidation of wholesalers facilitates supply management, transport and marketing. Also
provides wholesalers with tremendous leverage over price and quality.

In Canada, over 80% of the fruit and vegetables are handled by just 3 wholesalers

Advantages of selling to a wholesaler

- large volume sales to single buyer = efficient

Disadvantages
- limited number of customers
- expense of washing and packaging - labor and equipment.

Saskatchewan (CDN ?) growers are having increasing difficulty selling to wholesalers. Any or all of the
following may limit access to this market;

1) dependability of supply - wholesaler relies on dependable supply of product. Growers must be able to
guarantee the availability of produce, in the specified amount, at the specified time, otherwise wholesaler
must look for more dependable source.

2) equivalent quality - local growers must guarantee that their produce will be as good or better quality
than competition.

3) competitive price - local produce must be priced competitively. Local advantage = low transport costs.
But imports usually have advantage of scale of production and may have access to low cost labor.

4) sufficient supply period - local growers must be able to supply top quality, competitively priced
produce for sufficient period to make it worthwhile for wholesalers to cancel agreements with other
suppliers. Requires large scale local production coupled to good storage facilities. This is very tough to
do with highly perishable seasonal crops like melons or saskatoons.
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Manitoba Vegetable Marketing Board - A Success Story

- Government of MB creates MVMB as a legal entity in 1982.

- controls acreages planted of potatoes, carrots, onions, parsnips and rutabagas on quota system. All board
crops must be marketed through board unless producing less than 4 acres.
- Any new quota is offered to existing board members before it is made available to any new growers.
- Board controls delivery timing and sets selling price = single desk marketing.
SBoard operates central washing, grading and packaging facility for all board crops = efficient and allows strict
quality control.
SAll board produce is marketed under one label - "Peak of the Market" or "Peak Sales".
SBoard employs production, storage and marketing experts to answer any problems experienced by growers.
Board also employs two advertizing/public relations people.
SAll Board activities (grower support, marketing, promotion etc) financed through a check-off system (2-3% of
crop value).
SNon-board crops - not compulsory to channel through MVMB, but may be advantageous. Board establishes
price and handles marketing. Cost to growers based on services rendered.
SBoard now handles 85% of provincial vegetable production.
** Voted one of Canada’s “Best Small Businesses” in 2003.
**Continuing success of Manitoba’s Vegetable industry is largely attributed to the Board
**Success comes with a price a)
b)
c)

Processing

Convert the product into another form ….

Options ………
Objectives …….

Benefits of processing ….
Extends potential shelf life = …………………………………………
Adds value = …………………………………………………………
Allows use of culls = …………………………………………………

Key to successful processing = a) access to affordable/dependable supplies of raw material

+
b) access to affordable/dependable supplies of labor
+
c) access to a large market that wants and can pay for your processed product
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Bottom line – because of problems with a and/or b and/or c …. processing of hort crops is limited in
Canada … and is virtually non-existant in SK.

Marketing Assistance in the Hort Sector

Many growers of Hort commodities will tell you “

Growing is the Easy Part ... it’s Marketing that’s Tough”

Some potential methods to assist in marketing ....

Grower co-ops - join physical, financial and human resources of a group of growers to facilitate
production and/or marketing. Represent a response to the difficulties encountered by individuals
attempting to produce and market vegetables in markets dominated by large scale producers and buyers.

Advantage - 1)..........................................................
2) ..........................................................
Problems - 1) ........................................................
2)
..........................................................

Grower co-operatives have been effective in aiding in the production and marketing of cereal grains on
the Prairies. SK hort growers are aware of the advantages, just need the incentives and will to co-operate.
Marketing Boards - legally mandated marketing boards control production and marketing of
commodity in specific region. See previous page for “Peak of the Market” success story

Grower Support in Saskatchewan

Saskatchewan Vegetable Growers Association
Saskatchewan Seed Potato Growers Association
Saskatchewan Fruit Growers Association - www.saskfruit.com
Saskatchewan Greenhouse Growers Association
Saskatchewan Nursery Trades Association

These organizations primarily focus on providing growers with production and marketing information.
They may do some generic promotion and government lobbying. Membership in these organizations is
voluntary.

Transportation

Horticultural commodities place very diverse demands on the transportation network;

1) Year-round demand for fresh produce necessitates long distance transport. Even though the production
area may be several thousand miles away from the eventual market, consumers expect affordable, good
quality produce.

2) Many Hort commodities are highly perishable necessitating careful handling, special temperature
regulated containers and rapid transport, yet the relatively low value of these commodities necessitates
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low cost transport.

3) Movement of commodities from region to region is highly seasonal, necessitating flexibility in the
transport system.

Rail - was at one time the dominant method of transporting hort commodities. Provides economical
shipment of large amounts of produce over long distances. Commodity cars are fully climate
controlled = temperature, R.H. and atmosphere. Pickup and delivery points limited to areas with
rail service. Otherwise must truck to and from terminus = cost and handling damage. Once
underway trains are faster than trucks, however, delays in loading, shunting etc. often negate
shorter running time. Rail is more fuel efficient than truck. In the last 30 years, rail has lost
most of the Fruit and Vegetable trade to trucking. However, that trend is starting to change
due to; a) b)

Trucking - best adapted to short haul, smaller loads, but presently also dominates long-distance
transport. More flexible than trains; can supply door to door delivery. Cost
competitiveness sensitive to fluctuations in fuel prices. Trucks equipped with fully
controlled environments = keep product in good condition despite extended shipping
time.

Air - traditionally only used for high value, extremely perishable items. As availability of temperature
controlled hold area has increased, air transport of Hort commodities has become more important.
Still limited to highest value imports (flowers, exotic fruit).

Ship - limited use; as most perishable Hort commodities are not suited to transport by water - too slow
and wet. Exception = commodities which store well;
seed potatoes (Holland, PEI and NB), bananas (Central America) and apples (BC, WA and NZ)

Transportation costs

Initially borne by grower or broker but eventually passed onto consumer. Transportation costs may
significantly effect cost competitiveness (and environmental impact) of imported produce = natural
advantage of local growers.

Transportation costs function of;

1) method of transport - ship < truck=rail < air
2) distance
3) required speed ... fast movement required by perishable commodities costs $
4) required conditions - more artificial and carefully controlled = big $
5) availability of backhauls .... as they reduce the overall cost of the trip
6) accessibility of production and consumption areas
7) subsidies .... fuel taxes, good roads
8) barriers - borders to cross, weather conditions and road quality