MARKETING OPPORTUNITIES FOR FRUIT & VEGETABLE GROWERS

BY WENDIAM SAWADGO

As we near the halfway point of 2023, farmers market season is in full swing. The past couple of years have posed several challenges for farmers, especially fruit and vegetable growers, in the way of high input prices. However, produce demand has remained strong since the onset of the COVID-19 pandemic. Furthermore, producers have several opportunities for increasing revenues for their products through their marketing efforts, for instance branding through the Sweet Grown Alabama program.

Prices farmers paid for inputs across all U.S. farms increased by 10% in 2022, driven by large increases in fertilizer and

Prices Paid Index for Chemicals, Fertilizer and Fuels by Year

Source:

USDA-NASS; Updated February 28, 2023

Note: 2011 Prices = 100 chemical prices. As shown in the figure above, input prices started to decline in the latter half of the year into early 2023, but they still remain much higher than they were before 2021. Fruit and vegetable producers have faced the additional challenge of rising labor costs, as labor makes up 20-30% of their expenses. As of the last quarter of 2022, the nationwide average wage rate for field workers increased by 6% over the past year, from $15.92 to $16.90 per hour. The Southeastern U.S. saw even larger jumps, with farm wages increasing from $11.75 to $13.94 per hour over that same period.

Increased commodity prices are one factor that has kept farmers afloat amid these rising input prices. Prices received for all farm products increased by 11.4% over the past year, as of January 2023. This increase amounted to 15.3% for fruit and tree nuts and 31% for vegetables and melons. Since the onset of the COVID-19 pandemic, retail-level expenditures on produce have increased, at first due to increased quantities of produce items purchased. In 2022, the quantity of produce purchased declined due to inflation, but produce expenditures increased nonetheless due to the higher prices that consumers paid. While prices received for produce items have increased, farmers can still take advantage of marketing opportunities to obtain a higher price for their products. One option is participating in marketing programs that promote local food, for example Sweet Grown Alabama – our state’s program that promotes Alabama-grown food and agricultural products. Consumers tend to be willing to pay more for local food, and this interest in local food increased further during the summer of 2020.

A recent study by Auburn University’s Department of Agricultural Economics and Rural Sociology members Julia Holley, Dr. Joshua Duke, Dr. Wendiam Sawadgo, Dr. Samir Huseynov, Dr. Adam Rabinowitz, and Jose Garcia Gamez evaluated consumer preferences for local products, including those with the Sweet Grown Alabama label. The study, which took place at farmers markets across Alabama, measured consumer willingness to pay for sweet potatoes of different origins. Participants were willing to pay $1.60 more for a basket of five sweet potatoes that came from a farm in Alabama compared to a basket of sweet potatoes that came from a U.S. farm located outside of Alabama, on average. This shows the strong demand for local food among Alabama farmers market attendees. Among in-state products, the participants were willing to pay $1.01 more per basket for sweet potatoes that were from a Sweet Grown Alabama farm compared to sweet potatoes from a farm in Alabama without the Sweet Grown Alabama label, on average, suggesting the appeal of Sweet Grown Alabama to consumers.

With the high input prices, increasing the prices received for commodities sold is crucial for farmers to be profitable. While commodity prices have been strong, it remains important to market in ways to increase prices received. The Sweet Grown Alabama branding initiative is one marketing method farmers can use to potentially increase revenues, as research shows that consumers are willing to pay more for produce marketed under the program. For information on agricultural marketing, the Alabama Cooperative Extension System Farm and Agribusiness Management team is always there to help!

This article was written by Wendiam Sawadgo, a member of the Alabama Cooperative Extension System’s Farm and Agribusiness Management team. This team seeks to collaborate with and provide leadership to agricultural producers, allied industries and local communities to increase knowledge, skills and economic decision‐making abilities designed to improve risk management, enhance resource allocation, and boost economic growth. For more information, please visit https://www.aces.edu/ or contact your local extension office.