market channel assessment wrap up...dec 12, 2017 · market direct fm csa fs interm dist. res....

Market Channel Assessment BenchmarksBecca Jablonski, Martha Sullins, and Dawn Thilmany

Ellie Naasz, Jeremy Christensen, Kellie Hirakata

Market Channel AssessmentsUSDA Federal-State Marketing Improvement Program Grant

• Funders and partner organizations include:

Market Channel AssessmentsUSDA Federal-State Marketing Improvement Program Grant: Project overview

Goal improve profitability for Colorado’s Specialty Crop producers through increasing information about market channel selection though:

1. Analyzing individual market channel assessments for participating growers and make recommendation to improve market channel selection and performance;

2. Creating statewide specialty crop benchmarks to help existing, beginning and farmers interested in scaling up to support decision-making;

3. Determining predictors of success in marketing through different outlets.

• Collect logs of all marketing labor (from harvest to sale) for one typical, peak season week.

• Collect gross sales & mileage for the week.

• Collect ranking on lifestyle & risk.

• Collect weights for each ranked category.

Why labor logs?

• Labor is the largest marketing expense.

• Consistent unit and format.

• Operators tell hired help to complete the forms.

• Each employee filled out their own sheets.

Methodology

Labor logs

Note that we start with HARVEST. Assumption that production labor requirements are not market dependents.

Methodology

• Use data to rank and compare channels:

• Profit (gross sales – (labor + mileage cost)

• Labor hours required

• Sales volume

• Also use farmer ranking for :• Risk perception (financial risk, lost sales, etc…)

• Lifestyle preference (enjoyment, stress aversion)

Why participate???

• $100 (in cash!)

• Customized MCAT Report

• 1/2 hour economic

consulting

• Contribution to specialty

crop industry

Producer quotes:

• “This report gives me concrete information on the hours I’m spending, and will be really helpful for developing my business plan.”

• “We know restaurants are not a productive avenue for us, and this report accurately reflected this.”

• “It is good to see that benchmark to help us set a goal to be above that 50th percentile.“

• “This report really got me thinking about why I am selling in certain areas.”

• “What I noticed with the farmers’ market is that it takes a lot more out of me. It makes the day after pretty rough. It is tiring, but it is also rewarding.”

• “The information you’ve given me is helpful to try and sort out differently. It gives me an idea of where I can put more effort and tweak things.”

• “It is pretty enlightening and very interesting. It wasn’t what I expected, and we learned something here.”

• “This will help me think of it [the market] differently or better.”

• “The work you’re doing really validates what we are doing as farmers.”

We are looking for producers!

• Must sell through two or more market channels;

• Farm must be located in CO;

• Currently focused on specialty crops, but open to more diversified operations;

• $100 compensation for participation and an individual market channel assessment report;

• Responses remain confidential.

Included in the report:

• Labor hours required per marketing channel, divided between harvest, processing & pack, travel & delivery, and sales & bookkeeping. • Information is also broken down by

employee to help farmers better understand labor efficiency and allocation.

• Gross sales per market channel compared to total labor cost.

• Marketing profit per market channel.• Sales and gross profit per labor hour by

channel.• Preliminary statewide benchmarks • Final channel rankings integrating the weights

discussed above.• Recommendations to support improved farm

profitability, by market channel.

Overview

• Participants in 2016: 25

• Participants in 2017: 17

• Focused on recruiting through farmers’ markets, Extension agents, research centers, and organizations supporting farms

2016 MCAT Participants

2017 MCAT Participants

All MCAT Participants

Summary Statistics (12/19/17)

N=41 Acres

Max 1,500

Average 90.2

Min 0.1

Market Direct FM CSA FS Interm Dist. Res. Groc.

% Total 92 66 56 59 85 34 51 22

Farm Attributes

Market Channels Used

N=41 Weekly Income

Median $1,742

Average $19,546.46

Summary Statistics by Location (12/19/17)

N=16 Acres

Max 13.00

Average 2.84

Min 0.10

Front Range Farms

Southern

Farms

N=10 Weekly Income

Average $2,992.88

Median $1,810.46

N=12 Acres

Max 15.00

Average 3.40

Min 0.75

Western Slope/Central Rockies Farms

N=10 Weekly Income

Average $4,004.66

Median $2,515.38

N=13 Acres

Max 1,500.00

Average 277.42

Min 0.25

N=13 Weekly Income

Average $54,266.38

Median $633.25

Summary Statistics by Location (12/19/17)

Front Range Farms

Southern Farms

Western Slope/Central Rockies Farms


% Total 100 75 69 69 75 6 63 25


% Total 92 67 50 33 83 50 50 8


% Total 85 54 46 69 100 54 38 31

Profit Margin Percentiles, Direct Channels

6.43%

64.04%

4.92%

12.96%

61.79%

70.97%

37.71%

55.61%

76.13%79.75%

69.90%

76.22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Direct (n=101) CSA (n=26) FM (n=43) FS (n=26)

Pro

fit

Ma

rgin

(p

rofi

t/g

ross

sa

les)

25th Percentile Median 75th Percentile

Profit Margin Percentiles, Intermediated Channels

44.75%

64.87%

49.75%

9.38%

66.88%

80.20%82.85%

45.16%

85.44%90.10% 92.45%

70.03%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Intermediated (n=99) Distributor(n=16) Grocery (n=23) Restaurant (n=31)

Pro

fit

Ma

rgin

(p

rofi

t/g

ross

sa

les)


Profit Margin Percentiles, By Region

11.49%

48.47%

15.10% 13.92%

34.09%

-22.73%

10.54%

55.65%50.85%

58.71%

69.88%

61.52% 61.00%

68.91%

11.69%

57.06%

72.24% 71.21%77.34% 76.85%

85.52%

78.63% 76.27%70.16%

74.50%80.58%

92.31%

-40%

-20%

0%

20%

40%

60%

80%

100%

F (n=83) W (n=53) S (n=64) F-dir. (n=43) W-dir. (n=34) S-dir. (n=24) F-int. (n=40) W-int. (n=19) S-int. (n=40)

Pro

fit

Ma

rgin

(p

rofi

t/g

ross

sa

les)


F = Front Range, W = West, S = South

Sales per Labor Hour Percentiles, Direct Channels

$14.73

$33.12

$12.78 $14.02

$32.46

$39.46

$25.68 $25.69

$62.81

$70.30

$47.32

$70.43

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00


Sa

les

($)

per

La

bo

r H

ou

r


Sales per Labor Hour Percentiles, Intermediated Channels

$23.86$30.26 $29.31

$19.74

$43.29

$68.22$64.64

$39.12

$92.44

$108.47

$145.21

$55.38

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00


Sa

les

($)

per

La

bo

r H

ou

r


Sales per Labor Hour Percentiles, By Region

$18.14

$30.91

$18.19 $18.76

$26.32

$10.54

$17.62

$37.35

$28.01

$34.62

$42.32

$34.82 $34.54 $35.72

$14.12

$37.50

$48.40

$58.02

$68.34

$74.25 $75.89

$70.56

$64.57

$28.93

$57.44

$86.14

$113.07

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00


Sa

les

($)

per

La

bo

r H

ou

r



Profit per Labor Hour Percentiles, Direct Channels

$0.82

$21.93

$0.50$2.45

$18.72

$29.07

$9.68

$14.28

$44.66

$54.13

$34.24

$55.25

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00


Pro

fit

per

La

bo

r H

ou

r ($

/hr.

)


Profit per Labor Hour Percentiles, Intermediated Channels

$10.59

$19.98$14.94

$1.86

$27.94

$54.66 $53.55

$13.28

$79.75

$97.05

$132.58

$37.28

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00


Pro

fit

per

La

bo

r H

ou

r ($

/hr.

)


Profit per Labor Hour Percentiles, By Region

$1.92

$12.83

$2.86 $2.66

$10.85

-$2.21$1.71

$21.68

$14.95

$21.94

$28.71

$20.32$17.51

$25.64

$1.96

$22.78

$34.05$39.60

$52.63$57.75

$64.93

$57.39

$46.16

$21.43

$37.99

$70.67

$105.07

-$20.00

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00


Pro

fit

per

Lab

or

Ho

ur

($/h

r.)



Percentage Distribution of Labor by Marketing Activity, Top (75th Percentile) and Bottom (25th Percentile)

Performing Channels, All Channels

30%

51%

44%

57%

17%

22%

25%

22%

11%

8%

16%

10%

42%

19%

14%

11%

Direct, Bottom Performers (n=25)

Direct, Top Performers (n=25)

Intermediated, Bottom Performers (n=25)

Intermediated, Top Performers (n=25)

Harvest Process & Pack Travel & Delivery Sales & Bookkeeping


Performing Channels, Direct Channels

36%

66%

36%

39%

34%

52%

25%

18%

10%

15%

11%

39%

15%

8%

12%

10%

13%

6%

29%

9%

41%

35%

43%

CSA, Bottom Performers (N=7)

CSA, Top Performer (N=7)

FM, Bottom Performer (N=11)

FM, Top Performer (N=11)

FS, Bottom Performer (N=7)

FS, Top Performer (N=7)


3%


Performing Channels, Intermediated Channels

60%

86%

36%

49%

40%

40%

25%

11%

31%

17%

22%

29%

11%

1%

17%

0%

19%

23%

3%

1%

16%

34%

19%

8%

Distributor, Bottom Performer (N=4)

Distributor, Top Performer (N=4)

Grocery, Bottom Performer (N=6)

Grocery, Top Performer (N=6)

Restaurant, Bottom Performer (N=8)

Restaurant, Top Performer (N=8)


market channel assessment wrap up...dec 12, 2017 · market direct fm csa fs interm dist. res....

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