Changes to the supermarket supply chain over the last few decades have squeezed out local and small farmers in place of more consolidated and global suppliers. As a result, local farmers have turned to more direct-to-consumer markets for farm sales, which capture a higher price point but also bear higher marketing costs.
In a new JAFSCD article, “Assessing the profitability of scaling up for retail access: Lessons from local salad mix in Southeast Michigan,” authors Jennifer Anne Gerhart (the corresponding author) and Philip H. Howard assessed potential strategies for scaling up to regain access to grocery stores, using salad mix in Southeast Michigan as a pilot case. Farmer-generated production costs for four types of production as well as retailer willingness to pay were estimated for commonly recommended scaling-up strategies.
KEY FINDINGS - More efficient harvest technology, central packing, and doubled production would have the greatest positive impacts on profitability.
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The dramatic impact on output price of centralizing processing for groups of small farms make it the most feasible strategy for gaining access to independent grocery stores.
- Price premiums of organic production typically offset the costs of certification for mechanical, no-till, and hoop house farming methods.
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For hydroponic production at smaller scales, it is challenging to break even.
RECOMMENDATIONS FOR POLICY, PRACTICE, AND RESEARCH
Additional research on the break-even costs for centralized processing, distribution, and marketing for fruits and vegetables to be sold to larger grocers, as well as in other regions, is recommended to assist farmers with identifying the most feasible strategies for scaling up. |
Photo above: A garden lettuce mix. Photo by Flickr user FarOutFlora and used under CC BY-NC-ND 2.0 license. |
