Changing Pricing Strategies at the Farmers Market


It’s hard not to notice the rising cost of produce and everything else on the grocery store shelves.  While farmers market vendors could, at one time, rely on grocery store pricing to help gauge fair values for their own produce, in many places this is no longer the case.

Farmers Market produce vendors in particular run the risk of creating a “veggie thrift store” impression if they underprice, and underpricing and/or “undercutting” is a complaint that more seasoned vendors (especially those who do this for a large part, or all of their living expenses) often level at newbies to the farmers marketplace.  In most cases, this complaint can be addressed and the problem solved by providing guidance to newer vendors on appropriate prices for the items they’re selling.

But appropriate pricing is getting a bit trickier with rising grocery store prices, because in many cases we can no longer really use those prices as a baseline. A few days ago, I checked out grocery store pricing on a few crops that are in-season in Vermillion right now–crops that I am growing and selling at market.  I was flabbergasted to see that slicing cucumbers are now selling for a dollar apiece and Asian cukes are priced at two dollars apiece.  Heads of broccoli and cauliflower were selling for four dollars apiece.

Initially, I thought, “wow!  I can charge that much?” and then quickly realized that my produce wouldn’t sell if I charged that much, and I didn’t have to charge that much! Sure, gas prices are up everywhere, but my produce travels only about 5 miles from the farm to my house in town to the market.  Other prices are up too, but if I can stick with buying locally-produced goods as much as possible (and those local producers are also holding the line against rising prices), then I will not have to substantially raise my prices to meet costs.

On the customer side, maybe some would pay for my produce what they’d be paying in the grocery store now–but many others would pass me by.  They may have wanted a cucumber, but at two dollars, they’d think, “I’ll just get one at the grocery store–it’ll be cheaper.”  By the time they get to the grocery store and realize it’s not cheaper, they’re not going to make another trip back to the market to buy one that’s fresh and local.  As much as we toot the fresh and local horn, the fact remains that price is a bigger factor in a lot of people’s minds than freshness–especially when the price of almost everything is going up.

Back on the producer side, there can be a disturbingly big difference between what I need to charge for, say, a bag of snap beans, and what I can charge and still sell those beans, regardless of their price at the grocery store.

Because beans are a fairly labor-intensive crop to pick, their price should at least partially reflect that additional labor in order for me to keep growing them.  Yet I can’t expect to be paying myself professional wages ($60-$100/hour) for that labor, even if it required professional skill and additional cost to grow them to harvest without them being flooded, dried out, or destroyed by insects.

There are some “loss crops” (like beans) that I will grow, knowing I can’t quite recoup my costs, but also knowing that those crops will bring customers to my stand who will also buy additional higher-return produce like basil or summer squash.  Still, it’s worthwhile for a grower-vendor to consider how many beans they can pick in an hour, calculate what would be a living wage for picking them, and then figure out a price based on that calculation, even if they don’t think they can charge that price.  This practice can help you decide whether or not the “loss crop” is really worth growing for its customer draw (as well as giving your brain something to do when you’re picking beans!).

However, this fair-pricing-on-labor-intensive-crops conundrum is one bright spot of the rising produce price issue–the rise in grocery store prices may finally allow us to sell beans and other labor-intensive vegetables and fruits for what they cost to produce–taking the “loss” out of “loss crops.”

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3 responses to this post.

  1. Thanks for being so transparent about your pricing rationale. I’ve wondered if folks who regularly buyt local and/or organic for most of their food would be somewhat insulated from the recent food price shock because they have been payer higher prices for years.

  2. Posted by flyingtomato on July 23, 2008 at 11:18 pm

    Kelly–

    Thanks for your comment. It may be that pricing strategies are different in other locales. After all, there may be places where the appreciation of the fresh, local, and organic label has come to outweigh price considerations for a majority of consumers.

    That is true of some of our customers, but I think for many of them, price is a major consideration because they are on limited budgets, or are simply not used to paying much of their income for food. After all, grocery store ads usually feature quantity and price first, not quality.

    I think that many local producers may be able to examine their pricing strategy and charge less than the current grocery store prices–though as I say above, we have to be careful to avoid the “cheap” label and charge enough to cover our costs and make a decent living.

    –Rebecca

  3. Rebecca- i appreciate this conversation. it’s incredible to see the increased prices in the stores for not so local produce…i hope i can remember to swing by the market tonight after work!

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