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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
Market Direct FM CSA FS Interm Dist. Res. Groc.
% Total 100 75 69 69 75 6 63 25
Market Direct FM CSA FS Interm Dist. Res. Groc.
% Total 92 67 50 33 83 50 50 8
Market Direct FM CSA FS Interm Dist. Res. Groc.
% 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)
25th Percentile Median 75th Percentile
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)
25th Percentile Median 75th Percentile
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
$80.00
Direct (n=101) CSA (n=26) FM (n=43) FS (n=26)
Sa
les
($)
per
La
bo
r H
ou
r
25th Percentile Median 75th Percentile
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
$160.00
Intermediated (n=99) Distributor(n=16) Grocery (n=23) Restaurant (n=31)
Sa
les
($)
per
La
bo
r H
ou
r
25th Percentile Median 75th Percentile
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
$120.00
F (n=83) W (n=53) S (n=64) F-dir. (n=43) W-dir. (n=34) S-dir. (n=24) F-int. (n=40) W-int. (n=19) S-int. (n=40)
Sa
les
($)
per
La
bo
r H
ou
r
25th Percentile Median 75th Percentile
F = Front Range, W = West, S = South
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
$60.00
Direct (n=101) CSA (n=26) FM (n=43) FS (n=26)
Pro
fit
per
La
bo
r H
ou
r ($
/hr.
)
25th Percentile Median 75th Percentile
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
$140.00
Intermediated (n=99) Distributor(n=16) Grocery (n=23) Restaurant (n=31)
Pro
fit
per
La
bo
r H
ou
r ($
/hr.
)
25th Percentile Median 75th Percentile
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
$120.00
F (n=83) W (n=53) S (n=64) F-dir. (n=43) W-dir. (n=34) S-dir. (n=24) F-int. (n=40) W-int. (n=19) S-int. (n=40)
Pro
fit
per
Lab
or
Ho
ur
($/h
r.)
25th Percentile Median 75th Percentile
F = Front Range, W = West, S = South
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
Percentage Distribution of Labor by Marketing Activity, Top (75th Percentile) and Bottom (25th Percentile)
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)
Harvest Process & Pack Travel & Delivery Sales & Bookkeeping
3%
Percentage Distribution of Labor by Marketing Activity, Top (75th Percentile) and Bottom (25th Percentile)
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)
Harvest Process & Pack Travel & Delivery Sales & Bookkeeping
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