Masters Theses

Date of Award

5-1990

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

John R. Brooker

Committee Members

David B. Eastwood, S. Darrell Mundy

Abstract

Marketing is an integral part of a successful commercial produce enterprise. It also represents a significant challenge to the producers in this industry. Basic information regarding current production and marketing channels is needed by producers and other industry participants to make better use of existing resources and to provide a basis for beneficial change. Knowledge of background details is required to facilitate the marketing process. These details include grower population, types and amounts of production, methods of risk management, grading and standardization procedures, and market outlets used.

This study examined the market structure of the commercial produce industry in a selected study area of Tennessee. Emphasis was placed on the supply-side of the market. Specific objectives were to 1) identify the population of commercial fruit and vegetable growers in the study area, 2) ascertain the diversity and extent of production, 3) analyze producer behavior regarding standardization and grading, market outlets and information, and risk management, and 4) analyze the performance of existing packing facilities and market outlets.

The study area encompassed the Tennessee counties of Bledsoe, Coffee, Franklin, Grundy, Marion, Sequatchie, Van Buren, and Warren. The extension agent of each of county furnished a list of the commercial fruit and vegetable producers in his/her county. From this population, a random sample was drawn for the purpose of conducting a survey. Each grower in the random sample was interviewed personally. The data collected from this survey was coded and entered into a spreadsheet in Lotus 1-2-3. The coded data was transferred to SAS for statistical analysis. A description of the supply-side of the commercial produce market in the study area was derived from the results of this analysis.

In identifying the producer population in the study area, several distinguishing characteristics were observed. These commercial fruit and vegetable growers either received nearly all of their household income or a small amount of their household income from farming. Few of the growers interviewed were in the realm between these two extremes. Nearly 30 percent of the producers surveyed worked at least 40 hours a week at jobs off the farm.

Over one-half of the producers derived 100 percent of their total 1986 farm incomes entirely from their produce enterprises. The majority of the 38 growers received none of their total 1986 farm income from crops other than produce.

Half of the surveyed growers have over 25 years of farming experience. Seventy-five percent have been farming for more than fifteen years. Nearly 70 percent of the producers interviewed were between the ages of 30 and 60 years old. Over 40 percent of the growers did not finish high school.

Over 70 percent of the farm operators said that at least one other family member was involved with their commercial produce enterprise. Sixty percent hired non-family labor which was used primarily in the harvesting stage of production.

Based on the sample of growers interviewed, a wide range of both fruits and vegetables was grown in the study area in both 1986 and 1987. Each producer grew either fruits or vegetables, but not both. Vegetables grown included bell peppers, cabbage, cantaloupe, cucumbers, Indian corn, Irish potatoes, okra, pimento peppers, pumpkins, snapbeans, squash, sweet corn, sweet potatoes, tomatoes, and watermelons. Fruits grown were apples, blueberries, cherries,grapes, nectarines, peaches, plums, raspberries, and strawberries.

Commercial production of fruits and vegetables in the study area was limited by nine different factors. The surveyed growers ranked these factors, naming weather as the most limiting factor. Other significant factors that limit commercial production were prices received, diseases, available labor, and insects. Of particular interest was that only five of the 38 agricultural producers interviewed named debt level as a factor limiting production.

Four methods of risk management were used by the growers who were surveyed -- spreading sales, enterprise diversification, obtaining market information, and production contracts.

Various approaches were used by the growers to prepare their produce for marketing. Only 21 percent of the producers conformed to U.S.D.A. grading standards. Just over a fourth used U.S.D.A. standards to size their produce.

Produce was channeled through at least twelve different market outlets. The growers who were surveyed sold to wholesalers in Atlanta, Knoxville, Nashville, and other regions. Retailer outlets in Chattanooga and other local areas were used, as well as farmers' markets in Atlanta, Chattanooga, and Nashville. Produce was also sold to processors and through other unspecified market outlets.

Producer reaction to prices offered by buyers was varied. The only producers who felt that they must accept the price offered by the buyer were those producers who dealt with wholesalers.

Many agricultural producers feel that they receive below-cost (or unfair) prices for their commodities. However, the majority of the growers who were surveyed felt that they had received fair prices for their most important crops.

The majority of the producers who were interviewed rated the quality of locally grown produce as superior to produce from other origins. The majority were also unaware of the "Pick-Tennessee-Products" logo designed to promote locally grown produce. While only 34.3 percent believed that the logo would actually help them as a producer, 63.2 percent felt that the logo would influence shoppers to buy local produce.

Twenty-four of the surveyed growers believed that a new or improved farmers' market in Chattanooga would increase their- sales to urban customers.

Seventy-four percent of the producers had access to a privately owned packing facility should they choose to use one. Only one grower had ever sold produce through a marketing cooperative. Fewer than half of the growers were interested in forming a marketing cooperative with other producers.

While some of the producers who were interviewed appeared to be satisfied with their present marketing situation, others were interested in change. Producer response to several survey questions implies that there is potential within the study area for market improvements and innovations. Improvements in grading and standardization procedures could increase the appeal of local produce to wholesale markets. The market power of local producers could be augmented if enough growers could be persuaded to join a cooperative. Overall market performance in the study area could be improved if local market facilities were upgraded.

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