Practices to Enhance Marketing of Fruits and Vegetables

Fruits and vegetables are usually more difficult to market than to produce. There are ready markets available daily or weekly for grain and livestock in almost all areas of the United States. There are few similar markets for fruits and vegetables. Most commodities are produced in abundance and long established market channels may be closed to small scale or new producers.

A producer may need several years to establish a marketing program. The number of produce buyers has decreased rapidly in recent years. One major nationwide supermarket chain has plans to consolidate the number of buying stations for produce to eight in the United States. A grower has little chance of selling to a local store in a supermarket chain as purchases are made through a central warehouse. As the number of buyers has decreased, the number of producers has decreased, but their acreage has increased considerably. There is often a delay of four to six months after shipment in receiving payment in the wholesale market system when selling through a broker. This often presents a cash flow problem for many growers. Wholesale buyers have strict and specific product quality, grade, and packaging requirements. These purchasing practices and price squeezes have eliminated market availability to many producers.

The future shows more promise for large scale producers or small scale producers than for mid sized producers. The large scale producer can afford the large equipment needed for production, and the use of migrant labor. Small scale producers can use smaller equipment, often hand operated, and family or local labor to substitute for other equipment. Large producers are linked through brokers to supply produce over a relatively long season or year round and it is difficult for small scale producers to supply the quantity and quality required over a long period. Both types of producers can be highly successful or can go broke as production and marketing practices are highly volatile. A mid sized producer is less efficient, and often can't economically justify the purchase of needed equipment or substitute labor for equipment.

The small scale producer needs to seek local market channels. There are opportunities, but a producer must work to find them. Direct to the consumer markets bring highest prices to the producer, but also require more producer time in marketing. A diverse group of crops is ideal, since market demand changes rapidly. A commodity may sell well and bring high prices for a long period, but demand and prices may drop drastically over night. Supply and demand has a tremendous effect on marketability and prices of produce.

There are no federal support prices for fruits and vegetables to help the grower when market demand or prices drop. Pick-your-own was a popular practice a few years ago. Society has changed and many people do not have time for harvest. Most consumers would rather buy produce that is harvested, and a popular developing trend is to prepare produce for the market that is as near ready to eat as possible. Precut salads and green beans are good examples of this practice. Shelf life of precut produce is relatively short, and cooling is essential.

There are opportunities for small scale producers for on-farm markets, organized farm markets, locally owned supermarkets, and locally owned fruit and vegetable markets. When selling to any market, and especially to local supermarkets or fruit and vegetable markets, good communication between producer and buyer is essential. A producer needs to know what, when, and how much the buyer can use. The buyer needs to know what is available and when, as he has to keep the shelves stocked. Determining a fair price can be difficult. Daily market prices are available on the internet. County Extension personnel can access this information for producers. Retailers generally double the price paid to account for shrinkage and spoilage.

Crop and variety selection are critical factors in marketing. Buyers are indifferent to the origin of most crops. Locally grown produce is much preferred versus other crops, primarily due to the difference in quality (flavor). Preferences for locally grown fruit and vegetable crops are apparent for sweet corn, tomatoes, strawberries, and peaches. These commodities either are harvested for shipping before top quality is attained, or rapidly lose quality during post harvest handling and shipping.

Different varieties may be used in shipping markets as compared to local markets. The sweet corn shipping market uses mostly supersweet type varieties. Local markets may use supersweet type varieties, but usually prefer SE or SU type varieties. Certain crops or varieties are preferred in specific locations, and a ready local market may exist for a specific item that is not widely available.

A local Crossville, Tennessee market owner recently shared a list of items that he had difficulty in obtaining, and that he needed during the summer season. His list included Half Runner, McCaslan, Caseknife and Greasy beans; pickling cucumbers of 1.5 to 2 inch diameter; fresh highly flavored sweet corn (yellow, white and bicolor); Red Cayanne pepper; colored bell pepper; Kennebec and Yukon Gold potatoes; watermelons (seedy and seedless), strawberries; greenhouse tomatoes (fall, winter, and spring seasons); and highly flavored local tomatoes in the summer season. He had an idea for a tomato festival that included tomato varieties not routinely found in regular market channels. This would include Rutgers, Celebrity, cherry, beefsteak, pink, yellow, yellow and red striped, and pear shaped varieties. Many of these varieties are less productive and have other production problems, but have excellent flavor compared to the standard commercial hybrid varieties. There is a marketing opportunity through this market at Crossville, and similar situations probably exist in most locations in the United States. A producer needs to search for such market opportunities.
The budgets and profitability of crops is another factor in production.

Tomatoes have consistently been the most profitable crop for Tennessee producers. Greenhouse production is completely different, but is a rapidly growing enterprise in Tennessee. Sweet corn can be profitable, especially if a high plant population is used to provide high yields. We are planting twice the population (23,500 plants/A) than was planted several years ago, and are evaluating spacings for higher populations. Budgets that detail costs of production and likely returns are available for most crops, or a grower can develop their own budget.

Tree fruit production does not fit well into small scale agricultural production. The time between planting a tree and the first economic fruit harvest is relatively long. Large equipment is necessary to apply pesticides 10 to 12 times annually starting at the first bud break. Many pesticides are restricted use, and require special handling procedures. Trees need to be pruned at planting and annually in late winter.

Grapes offer some opportunity, but strawberries and blueberries are small fruit that offer more opportunity for small scale producers. Large fruit are required for successful marketing of strawberries and blueberries. Drip irrigation is needed in most areas for stand establishment and crop production. Overhead sprinkler irrigation is often necessary for frost protection. Strawberry production systems are changing from matted row to annual production. The culture of each system is entirely different.

Harvest of fruit and vegetable crops at the proper maturity is essential. Many crops have a very narrow harvest window, and proper maturity is needed to insure a marketable product. Crops that producers tend to harvest early are sweet corn and bell pepper. Sweet corn that is not fully mature has less flavor, and little usable grain. Immature bell pepper pods wilt rapidly and are not attractive. Crops that can easily be harvested too late are sweet corn, bell pepper, and green beans. Bell pepper may be harvested with some color showing. Most markets want a green or colored pepper pod, and not a partially colored pod. Sweet corn and green beans become tough rapidly is allowed to become overmature. Tomatoes are best harvested in the pink stage and harvesting twice a week may be needed for proper maturity. Pink tomatoes have full flavor. Fruit rot, cracking, and bruising may be less when harvest is at the pink stage.

Packaging of produce is a critical factor in marketing. Containers should protect the product and be attractive. Standard packs vary according to the type of product and the market demand, but many buyers require the use of standard size containers. Some routine container sizes are half bushels, bushels, 1 + 1/9 bushel, standard sweet corn crates to hold 4 ½ dozen ears, and pints or quarts for berries. Many different types of materials are used in containers. Waxed pasteboard cartons are very widely used. Snap bean and sweet corn buyers often prefer wire bound wooden boxes. Melons are often sold in bulk cardboard boxes that hold approximately 250 muskmelon. Many markets may require specific counts and product size. for the container.

Peppers and tomatoes are specific crops sold by uniform size. Peppers are usually boxed as extra large (40 to 50 -pods/1 + 1/9 bushel) to small (70 to 80 pods/1 + 1/9 bu box). This relatively uniform size allows the retail vendor to sell pepper pods by count. Prepacking in small consumer packages such as 3 potatoes or tomatoes is becoming more of a demand at the producer level. Local markets may have more or less stringent packaging requirements.

Product identification can be a useful tool in marketing. Certain areas or growers have developed a name for their product. Some examples are Vidalia onions, Granger County tomatoes, Washington apples, and Idaho potatoes. Product identification can work well for anyone who wants to stress and maintain quality. It should pay in repeat sales and prices received by the grower. We are considering this approach in Tennessee for Tri-X-Shadow seedless watermelon which has exceptional quality. An identification label could be attached to each melon citing the identification (maybe Tennessee Seedless).

Harvested fruits and vegetables are perishable, and quality loss starts immediately after harvest. Rapid marketing to insure freshness is a desirable feature of locally grown produce. Produce, not sold immediately, needs to be stored properly to maintain appearance, flavor, and quality. Time of harvest, cooling, and storing in shaded areas will help retain quality. Produce harvested early in the morning is cooler than if harvest is later in the day.

Quality of products such as green beans, sweet corn, peppers, and peaches benefit from hydrocooling. Hydrocooled produce needs to be kept in a cooler to maintain the proper storage temperature after hydrocooling. Products such as broccoli and sweet corn benefit from storage with ice in the container or placed on ice to maintain a low temperature and to avoid drying of the produce. Produce that has been cooled, should be maintained in cool.

Supply Chain Management : Sounds Geekish, but is very much commonsense

Have you heard of Just-in-time, TQM, The rise of Toyota as a powerful global player in the automotive industry, even surpassing the gaping mouths of the big three in the United states? You would have certainly come across the term 'Supply Chain Management' - It sounds like jargon, doesn't it? Well, it isn't so difficult to understand and it is something most manufacturing ( even services!) industries indulge in today. Supply Chain management basically means that the process of managing the whole process of finding a suitable raw material, processing it and converting it into something valuable or useful that could be sold to the market. The better a company is in managing its resources, the process of locating its raw materials, processing them, working on them, the entire production process, the out put, the packaging and even the labelling might constitute a simple supply chain management case study. According to the CIO Magazine, Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM. Supply Chain Management has a lot of visible and also invisible elements to it. The glamorous parts might probably be the vendor management and the like. It is the invisible parts of the supply chain that attain the status of primary importance. Things like labor management, procurement, warehouse management, Order processing, fulfillment and delivery. The importance of supply chain management has been growing steadily over the recent years and more so because of the fact that the companies have been growing larger and larger in size.Due to this enormous increase in size, the companies gain more cost efficiency when they outsource some of the functions that they ought to do themselves to other specialized service companies that do the needful. This enables the larger companies to be more flexible, focus more on their core competencies and create more value for their customers, while retaining profits by reducing costs at the same time. The ubiquitous, simple to use, nature of the Internet has made it possible to automate some of its supply chain management elements with the help of robust supply chain management software ( Though it is always not so easy to do the implementation and execution part!). The extended supply chain - the vendors and their vendors network, has always become a critical link in the new era of Modern supply management theory and has taken it to another realm where everything boils down to cost cutting such that the whole process can create value for the customer.

Cold Chain- A Way Forward

A consumer revolution is taking place in India as people change their eating habits and shopping patterns. While fresh foods have long been a staple, more people are putting a premium on speed and convenience. Supermarkets and shopping malls are cropping up everywhere, and sales of consumer-ready frozen foods are burgeoning, from ice cream and frozen entrees, to vegetables, fruits, sea foods and meats.

To meet this rising demand, manufactures and retailers of temperature sensitive products must move their perishable foods quickly, while emphasizing quality, safety, reliability, and traceability. This is a real challenge in a country where the cold-chain infrastructure still needs a lot of work to be done. India’s cold chain infrastructure is fragmented, under funded, and scrambling to keep up with soaring demand. The need of the hour is to address these concerns immediately.

The frozen food distribution is still not stabilized as most of the companies are still finding it difficult for service and are adopting the most rudimentary method of delivery of frozen/chilled foods to the trade. This, basically means that the integrity of the cold chain is being compromised. However, at this moment, the focus seems to be on survival and most of the companies are first interested in building volumes before they can provide high-class facilities for distribution of frozen/chilled products.

We at SNOWMAN, are now looking at expanding our network in terms of scale and reach if we are to compete at the domestic or international level. Our focus is to provide every requisite cold chain related solution to the customers but seeing the opportunity in F&V sector, definitely our focus would be more towards fruits and vegetables sector in the days to come along with new avenues like temperature controlled pharmaceutical products etc.

We are eagerly watching the prospects of large corporate like Reliance, Bharti, Aditya Birla Group, Mahindra & Mahindra , TATA and ITC etc to formulate and implement their retailing plan which will immensely benefit the cold chain industry. In my opinion, the cold chain industry will automatically grow as soon as the organized retail starts fully in place. All other difficulties will get resolved in due course of time. However basically what we need, is the consumer walking into a retail store and looking for chilled/frozen food products. This is the day when the cold chain industry will start moving forward and we have already seen the glimpse of it.

Understanding Post-harvesting technology

When it comes to processing perishable crops, what is done to the crops the moment they are uprooted from the ground determines the final quality of the said crop, to a very large extent. As the name suggests, the act of processing the crop ( Dusting, sorting, cleaning and packing the crops) after the harvest, is called Post harvesting. It becomes a critical part in processing perishable food crops because these crops have a tendency to deteriorate from the moment they are uprooted from the farms. Processed food items, fresh farm produce or whatever it is that the crop ought to be sold for, the out put of the post harvesting technology largely determines the caliber of the processed food crop.

Though it might seem like an obvious thing to do post harvesting the crop, it is still a difficult task to be achieved either due to lack of awareness or due to the lack of infrastructure. Post harvest usually consists of cleaning up of the crops, removing moisture and bringing down the pace of the chemical reactions that usually occur then. These chemical reactions can also occur, in some cases, when two crops are stored together, given a particular temperature. To avoid this and also to streamline the post harvesting operations a lot of expensive equipment has to be put in place like complicated sorting, packing, storing and facilities for moving perishable crops about in storage areas are duly put in place, more so,if we are talking about a fully functional industrial size which comes equipped with conveyor belts for moving these crops around, cold-storage facilities,atmosphere-controllable storage equipment and advanced sorting and harvesting machinery.

The above mentioned sophisticated equipment, coupled with state-of-the-art technology managed efficiently with superbly trained staff should be able to battle with the time constrained challenge of being able to produce the best quality output, especially with regards to the perishable food crops and hence becomes an important element in the food processing chain.

Be it your home garden which delivers some kind of perishables or an industrial unit, a few things have to be considered carefully and attended to. Firstly, the crops need to be culled (removal of damaged crop elements). Secondly, the perishables need to be cooled immediately and maintained at that temperature to avoid further possible degradation of crops and finally, the crops have to be handled expertly and with care.

Agriculture should not be a State subject

CII today organized a Seminar on Reforms in the APMC (Agricultural Produce Market Committee) Act , and its impact in the Southern States. This is an initiative of the Agri Business Sub-Committee, CII-Southern Region.

Speaking at the occasion, Mr. Shankarlal Guru, Chairman-International Society for Agricultural Marketing said Agricultural sector is in urgent need of reforms by the respective State governments to help drive the economy to a higher growth rate that is expected by the policy makers, but a comprehensive agenda for reforms in this crucial sector is yet to emerge. Hence, the need for Agriculture to be made a central subject and not a state subject, thus alienating it from politics, said Mr. Guru. Contract farming should be encouraged as it will help bring technology and modern practices into the agriculture sector - opined Mr. Guru.

The APMC Act in each state of India requires all agricultural products to be sold only in government - regulated markets. These markets impose substantial taxes on buyers, in addition to commissions and fees taken by middlemen, but typically provide little service in areas such as price discovery, grading or inspection. A key impact of this regulation is the inability of private sector processors and retailers to integrate their enterprises directly with farmers or other sellers, eliminating middlemen in the process. Farmers also are unable to legally enter into contracts with buyers. This leaves no incentives for farmers to upgrade, and inhibits private and foreign investments in the food process sector.

Also addressing the audience was Mr. Sivakumar, Chairman Agri Business Sub-Committee, CII-Southern Region and Chief Executive - Agri, ITC Ltd. Said that Agri business in India is at a transition point. Having sailed through the shortage economy to an economy with surplus in grains, it is important that Governments at the Centre and State recognize the need for inclusive growth to take agriculture forward in India. Setting the context for the day's discussion, Mr. Sivakumar emphasized that in spite of employing about 57% of the population of the country, agriculture on contributes 27% to the GDP of India. This distortion makes agriculture  not a lucrative employment generator and hence, keeping with the global view, India needs to carve out opportunities in agri-exports sector. Contract farming and direct marketing to retail chains and processing units are the need of the hour he said. Regulations to keep pace with these needs are required, which need alternative marketing mechanisms. Hence, reforms in the APMC Act are recommended in various fields, he added.

Making a presentation on "Aligning State Policies with emerging new marketing models", Prof. S Raghunath from the Indian Institute of Management-Bangalore, emphasized the need for an effective and efficient distribution system for agri-produce and provision for supply-demand transparency. Since the main objective of the APMC Act was to prevent exploitation of farmers by various intermediaries, reforms were required in the Act, with changing face of agriculture and the agricultural supply chain, opined Prof Raghunath. India is the largest producer of vegetable in the world, with a total share of 15% of global produce. 8% of world's fruits are produced in India, ranking it second in the world market. In spite of this, there is a high cumulative wastage of 40% in India, informed Prof. Raghunath. Inadequate infrastructure and lack of organized supply chain were the main cause for such a disparity, he said. Thus, reforms in this sector need to catch up with the pace of development in the economy and dis-intermediation and participation of organized players in the sector will remove the lacunae, opined Prof. Raghunath.

Centre asks states to amend APMC Act

In a move to allow farmers to directly sell their produce to industry, contract farming and setting up of competitive markets in private and cooperative sector, the Centre has asked the state government to amend the Agricultural Produce Marketing Act.

Under the present Act, the processing industry cannot buy directly from farmers. The farmer is also restricted from entering into direct contract with any manufacturer because the produce is required to be canalised through regulated markets. These restrictions are acting as a disincentive to farmers, trade and industries.

The government has recently approved a central sector scheme titled “Development/strengthening of agricultural marketing infrastructure, grading and standardisation.”

Under the scheme, credit linked investment subsidy shall be provided on the capital cost of general or commodity specific infrastructure for marketing of agricultural commodities and for strengthening and modernisation of existing agricultural markets, wholesale, rural periodic or in tribal areas.

The scheme is linked to reforms in state law dealing with agricultural markets (APMC Act). Assistance under the new scheme will be provided in those states that amend the APMC Act.

The Centre has asked the state governments to inform as to whether necessary amendments to the APMC Act have been carried out, in order to notify the reforming states for applicability of the scheme.

Along with the Centre, the industry is also interested in the amendment to the APMC Act as it restricts the growth of trade in agricultural commodities.

“The policy regime pertaining to internal trade is particularly restrictive. The agricultural sector continues to be hamstrung by a plethora of controls, which were introduced during the era of shortages,” said the PHDCCI.

Meanwhile, a decentralised system of procuring wheat and rice would make the Public Distribution System more cost effective, the government has said.