Market Channel Assessment Benchmarks Becca Jablonski, Martha Sullins, and Dawn Thilmany Ellie Naasz, Jeremy Christensen, Kellie Hirakata
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