Pricing

As the marketing and cropping season gets into full swing, there are always questions about product pricing, marketing costs, and decision on what to produce. In the pricing module I use to teach the “Food for Profit” classes, we approach pricing by looking at both fixed and variable costs. These are terms most business folks are very familiar with but don’t often set down and really pencil out for their operation.

A lot has happened on the farm marketing scene since March 2020. Farmers, processors, and other small businesses have quickly adapted to stay in business in a constantly changing environment of pivoting markets, processing bottlenecks, and government support programs.

As we move through the realities the Covid-19 protocols, many are experiencing first hand its effect on their business’s viability. Whether you are dealing with a constricted or delayed Farmers Market, an unprecedented spike in your online and delivery orders, or sympathizing with your restaurant buyers whose sales have been restricted to pick-up and curbside options only. It is an unpredictable time and with so much information flying around, it’s hard to pause and consider what your business might look like when these restriction ends. There are no clear answers at this time, but that doesn’t mean there aren’t actions you can take to affect the outcomes. We just know things will won’t be going back to the way they were before Covid-19.

December is often a “Slam” month for most direct marketers. Holiday sales, year-end inventories to conduct, annual profit projections, and the final push of multiple last quarter marketing initiatives that were often launched even before Halloween. The major goal is to end the year in the financial black. Other goals now take a back seat.

A shift was already underway to ordering food online in America, prior to the arrival of the coronavirus pandemic. U.S. online grocery sales grew 22% in 2019 and, propelled by high demand from nationwide COVID-19 lockdowns, stands to surge about 40% this year, according to the Coresight Research U.S. Online Grocery Survey 2020. Shopping for food online has become normal, if not the “new normal”. Farmers who direct market their products and craft food entrepreneurs can also implement the online tools necessary to capture these profitable food and beverage sales.

Selling in quantity to a buyer who then resells the product. Most agricultural products in the US are sold through wholesale channels. Small farmers may sell wholesale directly to local grocery stores, natural food stores, food service establishments, and food buying co-ops or to buyers who then serve as the middle man in the marketing chain.

Since distribution is the means of getting your product into the hands of your customers, first look at how your competitors’ products are sold. Make a list of any competitors in your marketing area that could compete directly with you for the same list of customers. This list should then be divided into different distribution channels. For example, direct farm markets, farmers’ markets, Internet sales, business-to-business, specialty stores, or niche markets.

Processing For Profits-An Assessment tool and guide for small-scale on-farm food processors This publication addresses product development, manufacturing, understanding the food safety system, labeling, acidified food, FAQs about Maryland’s food regulations, specific Maryland processed farm products, business planning, and marketing for specialty food producers and processors. Any producer interested in the potential and pitfalls of on-farm and value-added food processing will find this new resource helpful in their planning and implementation process.

With increased direct-to-customer sales, and changes to farmers' markets, some farmers have been asking about how to accept SNAP/EBT and WIC food payments (previously called “food stamps”).

The first issue (July 2020) of the "Maryland Retail Products Producer News & Notes". In this issue Ginger shares the results of a survey that was conducted.