Question

2. Compare and contrast investment, grower liability, pricing, and barriers to entry across pick-your-own, roadside markets, and centralized farmers markets. (5 pts)

Answer 1

Some farmers, such as cash grain farmers or dairy farmers, have large, well-established markets. They can use existing organizations to perform the marketing function for them, or they can band together, form a cooperative, and market their products jointly. Small-scale fruit and vegetable growers generally have more difficulty finding established markets; therefore, they usually develop marketing systems tailored to their unique situations.

Major Markets

Fruits and vegetables are produced seasonally, but the market requires products throughout the year. For many decades, this problem of matching product availability with consumer demand was solved in two ways:

• Selling fresh products during harvest and shortly thereafter
• Processing the rest to meet demand during the rest of the year

As technology improved and consumer incomes increased, it became possible to provide fresh produce year-round. American consumers now expect fresh tomatoes, strawberries, and sweet corn every month of the year. In addition, a strong demand remains for processed fruits and vegetables.

Fresh Markets

Increased consumer incomes and year-round demand for fresh produce force retailers or their representatives to establish buying points both in different growing areas of the United States and in foreign countries. Some retailers contract year-round with fresh fruit and vegetable packers, who may in turn contract with growers. Contracts and large-volume buying practices enable packers to obtain sufficient quantities of individual products.

Large fresh fruit and vegetable packers may contract with growers in several different production regions to ensure that fresh fruits and vegetables are available every week of the year. These packers generally contract only in regions with a large number of growers. Further, they contract mainly with the largest growers, even in concentrated production regions. Some packers ensure supplies by growing commodities themselves. Large retailers and packers are unlikely to purchase products directly from a single, small-scale grower, especially a grower in a remote production area.

As a small-scale fresh fruit and vegetable grower, you may consider selling directly to retailers. Although some chain stores and independent retailers have buy-local programs for fresh produce, such stores and programs are not common. You must develop your own marketing system. In effect, you must become the grower, packer, and wholesaler.

Processing Markets

To stay competitive, processors must keep unit costs low, so large corporations generally do the processing. Many of the smaller local processors have found it difficult to compete with these corporations and have gone out of business. Almost all processors contract with growers for their raw-product needs. Over the past twenty to thirty years, most processors have moved their plants to major production areas. Only a few processing firms are left in the Northeast. Therefore, it may be difficult to locate processors interested in buying from small-scale growers. If a processor does indicate a willingness to buy, insist on a purchase contract with the processor before planting the crop.

You may wish to process your own fruits and vegetables. This is how many of today's processors entered the business decades ago. If you are considering a processing operation, contact your state Department of Agriculture to learn more about food regulations pertaining to the processing, packaging, and labeling of your product. It will probably be impossible for you to process and market produce at costs as low as those incurred by larger processors. As a result, it may be very difficult to compete for sales with your processed fruits and vegetables through conventional retail outlets. Consider processing specialty items with strong local or regional demand where you will be able to charge a "premium" price.

Sometimes a small processor will process fruits or vegetables for a grower on a contract basis, especially if the product being produced does not interfere with its own processing requirements. Of course, its busy time is often when you need to process your product, so this works best for something with an especially early or late processing season.

Selling processed fruits or vegetables may, in addition, increase your exposure to product liability suits. Check with an attorney and an insurance carrier to determine the degree of liability exposure and to secure the proper level of protection.

rate of interest is the main relation with investment, grower liablity ,pricing and barriers.

as my knowledge says that when rate of interest increases the investment from the both market will increases