• TABLE OF CONTENTS
HIDE
 Front Cover
 Abstract
 Title Page
 Center information
 Foreword
 Acknowledgement
 Table of Contents
 List of Tables
 Summary
 Introduction
 Objectives
 Procedure
 Findings
 Conclusions
 Appendix
 Reference






Group Title: Industry report - University of Florida, Florida Agricultural Market Research Center ; no. 81-5
Title: Farmer to consumer direct marketing of eggs in Florida
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Permanent Link: http://ufdc.ufl.edu/UF00026887/00001
 Material Information
Title: Farmer to consumer direct marketing of eggs in Florida producer and consumer benefits, a report
Series Title: Industry report Florida Agricultural Market Research Center
Physical Description: viii, 38 p. : ; 28 cm.
Language: English
Creator: Degner, Robert L
Rodan, Lance W
Mathis, Kary, 1936-
Publisher: Florida Agricultural Market Research Center, a part of the Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla.
Publication Date: 1981
 Subjects
Subject: Eggs -- Marketing -- Florida   ( lcsh )
Direct selling -- Economic aspects -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 38.
Statement of Responsibility: by Robert L. Degner, Lance W. Rodan, and Kary Mathis.
Funding: FAMRC industry report ;
 Record Information
Bibliographic ID: UF00026887
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000410246
oclc - 10795206
notis - ACF7011

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Table of Contents
    Front Cover
        Front Cover
    Abstract
        Abstract
    Title Page
        Title Page
    Center information
        Page i
    Foreword
        Page ii
    Acknowledgement
        Page iii
    Table of Contents
        Page iv
        Page v
    List of Tables
        Page vi
        Page vii
    Summary
        Page viii
    Introduction
        Page 1
    Objectives
        Page 2
    Procedure
        Page 3
    Findings
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
    Conclusions
        Page 30
    Appendix
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
    Reference
        Page 38
Full Text





Industry Report 81-5.


Farmer to rketing
of

PRODUCER AND S


December 1981













ABSTRACT


Small egg producers in Florida sell all or most of their eggs
directly to consumers, and some large commercial operators realize
considerable additional revenue from direct marketing. Four producer
case studies showed returns of $3.00 to $10.00 per hour of family labor
for small producers, and $14 to $26 per hour for larger producers.
Consumers purchased an average of 4.75 dozen eggs from direct outlets,
spending an average of $2.72. Consumers rated freshness and quality of
eggs from producers significantly higher than those from retail stores.


Key words: Marketing, directing marketing, eggs.























FARMER TO CONSUMER DIRECT MARKETING OF EGGS IN FLORIDA:

PRODUCER AND CONSUMER BENEFITS














a report by

Robert L Degner, Lance W. Rodan, and
Kary Mathis









December 1981




The Florida Agricultural Market Research Center
a part of
The Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


















The Florida Agricultural Market Research Center

A Service of
The Food and Resource Economics Department
of the
Institute of Food and Agricultural Sciences


The purpose of this Center is to provide timely, applied research

on current and emerging marketing problems affecting Florida's agri-

cultural and marine industries. The Center seeks to provide research

and information to production, marketing, and processing firms, groups

and organizations concerned with improving and expanding markets for

Florida agricultural and marine products.

The Center is staffed by a basic group of economists trained in

agriculture and marketing. In addition, cooperating personnel from

other IFAS units provide a wide range of expertise which can be applied

as determined by the requirements of individual projects.

















FOREWORD


Inflationary trends in prices paid by consumers and input prices

paid by farmers have resulted in increased interest in farmer-to-consumer

direct marketing as a means of reducing food cost to consumers and

increasing financial returns to farmers. This increased interest

resulted in the passage of the Farmer to Consumer Direct Marketing Act

of 1976 (PL 94-463). The purpose of this act is to promote the devel-

opment and expansion of direct marketing of agricultural commodities

from farmers to consumers on an economically sustainable basis. The act

required evaluation of direct marketing activities through a series of

research activities.

In 1978, the Florida Agricultural Market Research Center was

selected by USDA-ESCS to conduct case studies of representative direct

marketing methods employed by farmers in Florida and of consumers pa-

tronizing these outlets. Nine agricultural commodities commonly marklet-

ed directly by producers to consumers were selected for the series of

case studies. The commodities included blueberries, grapes, citrus,

tomatoes, snap beans (including pole beans), strawberries, watermelon,

honey, and eggs. Case study findings for each commodity are reported in

separate publications to allow for greater efficiency in disseminatingm

the results.


















ACKNOWLEDGEMENTS


This research was initiated hy a request from the United States

Department of Agriculture, Economics, Statistics, and Cooperative

Service, National Economic Analysis Division (now Economic Research

Service, National Economics Division). A substantial portion of the

funding was provided by USDA-ESCS. Peter L. Henderson, Agricultural

Economist, was particularly helpful in formulating and guiding the

project, and is due our sincere appreciation.

Our appreciation is also expressed to Mr. Gervasio Cubenas, re-

search assistant, Mr. Scott Woolley and Miss Judith King, statisti-

cians, for their help in conducting and analyzing grower and consumer

interviews. We also express our thanks to Ms. Patricia Beville, Mrs.

Lois Schoen and Ms. Alice Bliss for typing this manuscript.




















TABLE OF CONTENTS


Page

FOREWORD.......................................... ............... ii

ACKNOWLEDGEMENTS................................................. iii

LIST OF TABLES................................................... vi

SUMMARY........................................................... viii

INTRODUCTION.... .......................... .. ................ 1

OBJECTIVES........................ ............................... 2

PROCEDURE......................... ............................... 3

FINDINGS........................ ................................. 4

Producer Benefits of Direct Marketing ........................ 4

Case A........................................................ 4

Revenue.................... ............................. 4
Costs................................................. 6
Net Returns...................................... ......... 7

Case B ................ ...................................... 8

Revenue............................................. 8
Costs................................................ 8
Net Returns ............................................. 8

Case C............... ...................................... 10

Revenue ................................................. 11
Costs................ .................. ........... 11
Net Returns.............................................. 11

Case D.................................................... 14

Revenue........................................... .... 14
Costs.................................................... 14
Net Returns.............................................. 14


















Table of Contents--Continued


Page

Other Advantages and Disadvantages of Direct
Marketing ................................................. 17

Consumer Benefits........................................ 18

The Patrons.......................................... 19
Transportation ...................................... 22
Patrons' Shopping Patterns........................... 22
Monetary Benefits................................. 23
Freshness and Quality Comparisons.................... 27
Other Advantages and Disadvantages................... 27
Suggestions for Improvement.......................... 28

CONCLUSIONS................................................... 30

APPENDIX ..................................................... 31

REFERENCES............... .............................. .......... 38

















LIST OF TABLES


Table Page

1 Annual costs and returns for Producer A's roadside
egg operation...................................................... 5

2 Structure and equipment requirements for Producer
A's roadside egg operation............................... 7

3 Annual costs and returns for Producer B's roadside
egg operation.................. ............ .. .......... 9

4 Annual costs and returns for Producer C's roadside
egg operation............................... .. ........... 12

5 Equipment requirements for Producer C's roadside
egg operation...................................... 13

6 Commercial marketing alternative for Producer C's
egg operation ........................................... 13

7 Annual costs and returns for Producer D's roadside and
farmers' market egg operation ............................. 15

8 Structure and equipment requirements for Producer D's
roadside and farmers' market egg operation.................. 16

9 Conmercial marketing alternative for Producer D's
egg operation............................... ............ 17

10 Demographic and socioeconomic characteristics of consumers
purchasing eggs at roadside stands......................... 20

11 Travel distances and times for consumers purchasing
eggs at roadside stands.................................. 23

12 Shopping patterns of consumers purchasing eggs at
roadside stands.................... ................... 24

13 Consumer expenditures and savings associated with
eggs purchased at roadside stands........................ 26

















LIST OF TABLES--Continued


Table Page

14 Consumers' comparisons of freshness and quality of
eggs bought at roadside stands and retail food stores....... 28

15 Respondents' perceived advantages and disadvantages
associated with patronizing egg outlets.................... 29

16 Patrons' suggestions for improving the egg outlets.......... 29



















SUMMARY


Nearly all the eggs produced in Florida are from large commercial
laying operations and nearly all these eggs are marketed through com-
mercial channels. However, marketing directly to consumers is important
to a number of small egg producers and to commercial laying operations
which sell eggs that do not meet grade standards at reduced prices.

Four egg producers' direct marketing operations are described in
case studies reported here. Two were commercial producers; one sold
over $10,000 and the other almost $46,000 worth of eggs to consumers at
their farms. These sales provided net revenues of $1,900 in the smaller
case and $12,000 in the larger, or over $14 per hour of family labor in
direct marketing or over $26 per hour, respectively.

Two other producers had small laying flocks of 1,000 and 400 hens
each. Total revenues were $15,000 and $b,100, respectively, with a net
return per hour of family labor of $9.90 and over $3.00, respectively.

A sample of 30 consumers was interviewed at the egg farms. Most
patrons were male, over 50 years of age, and came from one- or two-
person households. All were permanent Florida residents.

Over half of the customers stopped at the egg farms as part of
another trip, and 80 percent visited the outlet three or more times
per year. Consumers bought an average of 4.75 dozen eggs; the average
expenditure was $2.72. Consumers overestimated their savings compared
with retail egg prices. Freshness and quality of eggs purchased from
producers were rated significantly higher than eggs from retail stores.


viii














FARMER TO CONSUMER DIRECT MARKETING OF EGGS IN FLORIDA:
PRODUCER AND CONSUMER BENEFITS



Robert L. Degner, Lance W. Rodan, and Kary Mathis



INTRODUCTION


In 1979, Florida egg producers had approximately 12.3 million

laying hens which produced about 3.2 billion eggs. The average whole-

sale price was 49 cents per dozen, resulting in total industry revenues

of $130 million (Florida Crop and Livestock Reporting Service). Most

commercial egg producers in Florida have large flocks of 20,000 hens or

more, and are very efficient. Small, backyard flocks of several hun-

dred hens or less are becoming quite scarce, primarily because they are

less efficient. The major proportion of eggs marketed in Florida,

probably 99 percent or more, pass through commercial channels.

Marketing of eggs directly to consumers is a minor facet of

Florida's egg industry, but it is an important method for many of the

surviving small egg producers. Marketing their eggs directly to

consumers at "retail" rather than wholesale prices is their primary

means of staying in business.




Robert L. Degner is associate professor and Kary Mathis is profes-
sor of food and resource economics, University of Florida. Lance WM
Rodan was research associate in food and resource economics at the
University of Florida, and is now with Farmbank Services, Denver,
Colorado.












Some large, commercial egg producers, particularly those

located near large cities or towns, also sell eggs to the general

public. Many engage in direct marketing to sell eggs that do not

meet grade standards. These culled eggs are fresh and wholesome,

but are usually slightly cracked, oversized, or undersized. Their

only alternative market for these eggs is to sell them to egg pro-

cessors or "breakers." Prices for such eggs from breakers are u-

sually quite low, frequently less than production costs.

Direct marketing is usually done on the farm, but some small

producers had egg routes, delivering directly to customers. Eggs

were at several farmers' markets, but operators contacted there

were reselling eggs bought from producers or wholesale distributors.


OBJECTIVES

The basic objective of this study was to determine the nature

and extent of benefits to egg producers and to the consumers who

purchase eggs directly from producers. Specific objectives were

to 1) identify marketing inputs required by the predominant method

of direct marketing; 2) determine marketing costs associated with tIe
prevailing direct marketing activity; 3) determine farmer net re-

turns obtained through direct marketing and 4) estimate returns as-
sociated with each input, with particular emphasis on family labor-

Specific consumer-oriented objectives werp to 1) determine

prices paid by consumers for eggs at representative direct marketing

outlets and compare these prices with those paid at supermarkets;














2) determine consumers' perception of egg quality at direct market-

ing outlets as compared to those obtainable at supermarkets; 3) indenti-

fy additional benefits of direct marketing perceived by consumers

patronizing direct marketing outlets and 4) determine demographic

characteristics of direct marketing outlet patrons.


PROCEDURE


The case study approach was utilized to determine producer bene-

fits. Egg producers were identified and located with the assis-

tance of county agricultural extension agents and state poultry ex-

tension specialists. Specific producers were then selected to reflect

a broad spectrum of direct marketing activity, particularly with re-

spect to size and type of operation. Producers were personally in-

terviewed by the Florida Agricultural Market Research Center staff

during February, March and April, 1979.

Production cost data were obtained from secondary sources

(Kalch) and from producers interviewed. In some cases, total revenues

and costs of marketing inputs were estimated and used to determine

financial returns whenever producers could not or would not provide

primary data. Producers were also questioned about non-monetary

benefits derived from direct marketing activities.

Consumer benefits were ascertained through personal interviews

at direct marketing outlets. Consumers were selected on a non-prob-

ability convenience basis at the egg farms. The customer flow at a11l













outlets was sufficiently slow to allow all patrons to be interview-

ed during surveillance periods. Information relating to consumers'

purchases., demographic characteristics, shopping patterns, and

transportation were obtained in the interviews. Consumers' monetary

savings were determined by comparing prices paid for eggs at direct

outlets with prices prevailing at local grocery stores.


FINDINGS

Producer Benefits of Direct Marketing


Four case studies are presented which depict the direct market-

ing activities for eggs in various parts of the state.

Producers A and B had large scale commercial operations selling

graded and culled eggs, and C and D had small, backyard operations.

As mentioned previously, eggs were sold to consumers at the egg

farms. These are termed "roadside" outlets in keeping with the

other reports in this series.


Case A


Producer A was engaged in several agricultural activities, but

his laying flock, which averaged about 45,000 hens, was his primary

business. His egg farm was located near a city with a population of

approximately 75,000. Approximately 7 percent of Producer A's pro-

duction was sold directly to consumers at his farm.


Revenue


Producer A's egg sales to consumers amounted to nearly $46,000













in 1979 (Table 1). About 30 percent of his revenue came from graded

eggs which he sold at a markup of 6 to 8 cents per dozen over pre-

vailing wholesale prices. The most important element of his direct

marketing activity was sales of cracked or undergrade eggs. Ap-

proximately 70 percent of his roadside sales volume consisted of such

eggs which he sold to consumers at 60 cents per dozen.

Table l.--Annual costs and returns tor Producer A's roadside
egg operation.


Costs or returns

---- Dollars ----


Revenue

Egg sales

Extra large
Large
Medium
Cracked or
undergrade
Total revenue


9,300 dozen @ $0.80
6,439 dozen @ $0.75
2,146 dozen @ $0.70

53,655 dozen @ $0.60


Costs

Opportunity costs

,Extra large 9,300 dozen @ $0.71
Large 6,439 dozen @ $0.69
Medium 2,146 dozen @ $0.62
Cracked or
undergrade 53,655 dozen @ $0.43

Total opportunity costs

Marketing costs

Structures and equipment (Table 2)

Supplies and services
Cardboard flats
Utilities
Miscellaneous
Total, supplies and services


7,440
4,829
1,502

32,193


45,964


6,603
4,443
1,331

18,243


30,620


237


1 ,431
63
20
1,514


Item













Table l.--Annual costs and returns for Producer A's roadside
egg operation--Continued



Item Costs or returns


---- Dollars ---

Hired labor 450 hours @ $3.50 1,575

Total marketing costs 3,326

Net revenue 12,018

Family labor

Marketing 450 hours

Net return per hour of family labor due to direct marketing 26.71


opportunity costs were wholesale prices if eggs sold commercially.


Costs


The producer could not estimate his production costs for eggs.

Therefore, an opportunity cost was calculated, using prevailing whole-

sale or processor prices. Producer A's total opportunity costs were

$30,620, the value of all eggs if sold graded and culled, or to breakers

(Table 1). Other costs connected with the roadside operation were

relatively small. Aportion of buildings and equipment on the farm wa

prorated to the direct outlet, totaling $237 per year (Table 2), supplies

and service amounted to $1,514, and hired labor to $1,575 (Table 1).













Table 2.--Structure and equipment requirements for Producer A's
roadside egg operation.



Depreciable Price/ Total Annual
Description Quantity life unit investment cost


Number Years -------- Dollars ----------

Office building,
237 sq. ft. 1 20 2,370 380b 110b

Office equipment Various 10 --- 190b 19

Refrigerated area,
270 sq. ft. 1 20 2,700 189c 10

Refrigeration unit 1 5 500 35 7

Table 1 5 25 25 5

Signs Various 5 10 10 2

Cash box 1 2 2 2 1

Total investment 831 154

Interest on capital @ 10 percent per annum 83

aStraight line depreciation is calculated for all items, assum-
ing salvage value.
bOffice building and equipment are prorated to reflect their use
in direct marketing. Annual cost for the building includes land rent.
cProrated to reflect the 7 percent portion of eggs marketed
directly.

Net Returns


After deducting his opportunity costs and direct marketing expenses,

Producer A netted over $12,000. He estimated that he spent slightly over

an hour per day supervising the direct sales activity, which earned him

almost $27 per hour for direct marketing effort (Table 1).














Case B


Producer B's egg farm was located near a small town of about

3,000 population. His flock averaged about 20,000 hens for most of

1979, but he also bought eggs for resale from smaller egg producers

in the area. His sales directly to consumers amounted to approx-

imately 2 percent of his total production. Producer B sold Grade A

large eggs and cracked and undergrade eggs directly to consumers at

his farim.


Revenue


Grade A large eggs were sold to customers at the same price that

Producer B received from his wholesale buyer. Cracked and undergrads

eggs were sold to consumers at 50 cents per dozen. Total revenue

was $10,531 (Table 3).


Costs


Opportunity costs, or the value of eggs sold to consumers at

wholesale prices, were used instead of production costs for Pro-

ducer B, also. These amounted to almost $7,900. Marketing costs

were only $717 (Table 3).


Net Returns


After deducting Producer B's opportunity and direct marketing

costs, he had a net revenue attributable to direct marketing of

$1,916. The amount of personal time spent in supervising and













assisting with direct marketing sales was estimated at less than

one-half hour per day; Producer B's net return per hour of labor

invested in direct marketing was almost $15 (Table 3).


Table 3.--Annual costs and returns for Producer
sales operation.


Item


B's roadside egg


Costs or returns


---- Dollars ---


Revenue

Egg sales

Grade A large
Cracked and
undergrade
Total egg sales


4,875 dozen @ $0.66 3,218

14,625 dozen @ $0.50 7,313


Costs

Opportunity costs

Grade A large 4,875 dozei
Cracked and
undergrade 14,625 dozet
Total opportunity costs

Marketing costs

Structures and equipment
Building
Sign
Interest on capital
Total, structures and equipment

Supplies and services
Cardboard flats

Hired labor 130 hours

Net revenue


n @ $0.66 3,218

n @ $0.32 4,680


@ $3.00


b
10
5
15


312

390


10,531








7,898


717

1,916













Table 3.--Annual costs and returns for Producer B's roadside egg
sales operation.



Item Costs or returns

---- Dollars ----

Family labor

Marketing 130 hours

Net return per hour of family labor due to direct marketing 14.74


aOpportunity costs were wholesale prices if eggs sold commercially.

No building costs were allocated to the direct marketing because
the space requirements were insignificant and incidental to the com-
mercial operation. The only equipment required by the direct marketing
operation was an outdoor sign valued at $50 with a depreciable life of
five years. Interest on capital was figured at 10 percent per annum.


Case C


Producer C had a flock of about 1,000 layers. He retired, and

raised chickens as a hobby and a retirement income supplement. His

egg farm and home were on a major highway on the outskirts of a city

with a population of approximately 35,000. A small sign in his front

yard was the only form of advertising used.

Washed and packaged eggs were put in a refrigerated case in the

carport attached to Producer C's home. The eggs were sold on an honor

basis; customers selected eggs from the refrigerated case and placed

the money in a small receptacle in the case. Producer C and his wife

rarely saw their customers. Only once in the past five years had their

cash receipts failed to correspond to the quantity of eggs sold.













Revenue


Producer C sold his eggs at an average price of 85 cents per

dozen. This was generally higher than prevailing retail prices, but he

was able to sell his entire production at the premium price. His flock

produced an estimated 17,771 dozen eggs in 1979. This was less than

typical commercial production, but he explained that his flock had been

sick for part of the year. His revenue totaled $15,105 (Table 4)

Costs

Production costs totaled $6,G28, and marketing costs $565, made up

of a small equipment charge of $242 (Table 5) and costs for supplies and

services of $323 (Table 4).

Net Returns


After deducting production and marketing costs, Producer C netted

an estimated $7,912. If he had sold the eggs through commercial chan-

nels rather than through his roadside outlet, he would have made $1,737.

The difference between net revenue from the roadside outlet and his

commercial alternative indicated a gain of $6,175 (Table 6). Nearly

$10 per hour of family labor was attributed to the direct marketing
effort (Table 4). However, Producer C did not consider the commercial

market a suitable alternative, and would only sell his eggs through his

roadside operation. Thus, his appraisal of his direct marketing re-

turns used net revenue of $7,912 and total family labor (624 hours).

to calculate a return of $12.68 per hour for his efforts.









12


Table 4.--Annual costs and returns for Producer C's roadside egg
operation.


Item


Costs or returns


---- Dollars ----


Revenue

Egg sales 17,771 dozen @ $0.05

Costs

Production costs

Marketing costs

Equipment (Table 5)

Supplies and services
Flats and containers
Utilities
Total, supplies and services

Total marketing costs

Net revenue

Net return if sold commercially (Table 6)

Net return due to direct marketing

Family labor

Production 520 hours
Marketing 104 hours
Total family labor 624 hours

Net return per hour of family labor due
to direct marketing


15,105



6,628


565

7,912

1,737

6,175


9.90









13



Table 5.--Equipment requirements for Producer C's roadside egg
operation.


Description


Quantity


Number


Depreciable
life


Years


Price/
unit


Total Annual
investment cost


Dollars -------


Referigerated case 1 5 750 750 150

Egg washer 1 5 45 45 9

Sign 1 2 5 5 3

Total investment 800 162

Interest on capital at 10 percent per annum 80

aStraight line depreciation is calculated for all items, assumim
no salvage value.


Table 6.--Commercial marketing alternative for Producer C's egg
operation.


Costs or returns


---- Dollars ----


Revenue

Egg sales 17,771 dozen @ $0.49

Costs

Production
Marketing
Total cost

Net return, commercial alternative


8,708


6,628
343


6,971

1,737


Item


--


D













Case D


Producer D lived on a small farm on a state highway, about four

miles from a town with a population of approximately 3,000. Producer D

had a part-time job in a larger town, nearby, and spent the remainder of

his time tending his flock of 400 hens and selling eggs.

Revenue

Producer D sold about 65 percent of his eggs directly to consumers,

and the remainder to a commercial egg handler. Of the eggs sold direct-

ly to consumers, about one-third were sold at the farm to friends and

neighbors, one-third were delivered to regular customers in the nearby

small town, and the remaining one-third sold at a farmers' market. In

addition to egg sales, Producer D also sold 100 cull hens during 1979

at $1.50 each. Total revenue was $5,696 (Table 7).

Costs


Producer D had $2,337 in production costs and $2,537 in market-

ing costs, made-up of $2,097 for structures and equipment (Table 8)
and $440 for supplies and services (Table 7). He had no hired labor.

Net Returns


Net revenue was only $822, but Producer D would have lost $1,067

if his eggs and chickens had been sold on the commercial market (Table

9). His total net return due to direct marketing was $1,889, or $3.-0

per hour of family labor (Table 7).














Table 7.--Annual costs and returns for Producer
farmer's market egg operation.


Item


D's roadside and


Costs or returns


---- Dollars ----


Revenue

Egg sales 6,933 dozen @ $0.80
Chicken sales 100 @ $1.50
Total revenue

Costs

Production costs

Marketing costs

Structures and equipment

Supplies and services
Boxes
Utilities
Flats
Cartons
Fees
Total, supplies and services

Total marketing costs

Net revenue

Net return if sold commercially (Table 9)

Net return due to direct marketing


5,546
150


5,696



2,337


2,097


62
48
39
31
260
440


2,537

822

-1,067

1,889


Family labor

Marketing 624 hours

Net return per hour of family labor due to direct marketing 3.03













Table 8.--Structure and equipment requirements for Producer D's
roadside and farmer's market egg operation.


Description


Quantity


Number


Depreciable
life


Years


Price/ Total Annual
unit investment cost

-------- Dollars -------


Building, 150 sq. ft. 1 20 750 750 38

Truck, one-half ton 1 b 5,000 2,500 1,114b

Refrigerator 1 10 200 200 20

Fans 2 5 Variable 43 9

Sink 1 10 20 20 2

Handgrader 1 10 15 15 2

Wire baskets 3 5 10 30 6

Total investment 3,558 1,741

Interest on capital @ 10 percent per annum

aStraight line depreciation is calculated for all items, assuming
no salvage value.
bHalf of truck use for direct marketing. All operating costs
are reflected in a 20 cent-per-mile charge, 8,320 miles @ $0.20.













Table 9.--Commercial marketing alternative for
egg operation.


Producer D's


Item Costs or returns


---- Dollars ----


Revenue

Egg sales 6,933 dozen @ $0.49
Chicken sales 100 @ $1.50
Total revenue

Costs

Production

Marketing

Total

Net return, commercial alternative


3,397
150


3,547


2,337

2,277


4.614

-1,067


Other Advantages and Disadvantages of Direct Marketing


All four producers said the primary advantage from selling their

eggs directly to consumers was the higher average price received. One

operator said there was no appreciable price difference for graded eggs

sold direct compared with commercial wholesale channels, but prices for

cracked and undergrade eggs were significantly higher.

Two other producers said that not incurring costs of delivery to

commercial handlers was an advantage. A disadvantage for direct market-

ing given by one producer was the time required to handle consumer













sales, while another operator said he saw no disadvantages. The

producer who sold his eggs on the honor system had the money box

stolen once. The producer who delivered eggs to customers' homes

cited the time and expense of the delivery route.


Consumer Benefits


Time and resource constraints precluded obtaining a large,

random sample of egg farm patrons. In keeping with the case study

approach prescribed by USDA-ESCS, a relatively small number of

customers was interviewed. A non-probability, convenience sample of

30 patrons was interviewed at three of the egg farms described

previously. All interviews were obtained during weekdays, between

the hours of 9:00 A.M. and 6:00 P.M. In most cases, the customer
traffic flow was sufficiently slow and the questionnaire brief

enough so that all customers could be interviewed during the sur-

veillance periods.

Despite the sample's limitations, it is felt that the inter-

views provide a reasonable representation of customers typically

patronizing roadside outlets. The sample is thought to yield a

valid assessment of the qualitative and quantitative benefits ac-

cruing to customers buying eggs directly from producers.

The following sections describe the demographic composition of
the sample, and patrons' transportation and direct outlet shopping

patterns. Customers' monetary benefits and other perceived shopping

advantages and disadvantages are also discussed, along with customers'

suggestions for improving the egg outlets.














The Patrons


Nearly sixty percent of the patrons were male, and over half

of all patrons were 50 years of age or older. Relatively few young

people were interviewed at the egg farms; none of the customers were

under 25 years of age (Table 10). In general, the customers were

well-educated. Almost half had attended college, compared with about

30 percent of the population of Florida, and 20 percent had attended

college four or more years, compared with 14 percent statewide

(Thompson). However, eight of the respondents had completed less

than twelve years of schooling.

Most roadside stand customers came from small households. Over

50 percent came from one- or two- person households, and 38 percent

came from three- or four- person households. The remaining 10 per-

cent lived in households with more than four persons. Over half of

the interviewees were employed, 33 percent were retired, and three

persons were unemployed. Seventy percent of the respondents were

married (Table 10).

Patrons' incomes were relatively low compared with those of

the population of the counties where egg farms were located (Sales

and Marketing Management). One-third of the sample with incomes

under $8,000 per year. With respect to race, nearly 90 percent of

the consumers were white and only one of those was Hispanic. Al-

though blacks constituted approximately 17 percent of the pop-

ulation in counties where the egg farms were located, 10 percent

of consumer sample were black (Thompson). All of the customers

were -Florida residents.













Table lO.--Demographic and
purchasing eggs


socioeconomic characteristics
at roadside stands.


of consumers


Characteristic Number Percenta


Sex of purchaser

Male
Female
totals

Age of purchaser


18-24
25-34
35-49
50-64
65 and over
Totals

Years of education

Less than 12
9-12
13-15
16 or more
Totals

Number of persons in household

One
Two
Three
Four
More than four
Totals

Employment

Employed
Retired
Unemployed
Totals












Table 10.--Demographic and socioeconomic characteristics of consumers
purchasing eggs at roadside stands--Continued.



Characteristic Number Percenta


Marital status

Married
Single
Totals

Income

Under $8,000
$8,000-9,999
$10,000-14,999
$15,000-24,999
$25,000 and over
Totals

Race

White (non-Hispanic)
White (Hispanic)
Black (non-Hispanic)
Totals

Residency

Permanent
Temporary
Totals


70
30
100


percentage may not sum to 100 due to rounding.













Transportation


Personal automobiles were the only means of transportation used

by egg roadside stand patrons. Thirteen of the 30 customers made a

special trip to the egg outlet from their residence, while seventeen

shoppers combined other activities with their trip. Customers that

made a special trip from their residence to the egg outlet traveled
an average round trip distance of 12.6 miles. The minimum round trip

distance was 1 mile, and the maximum 40 miles (Table 11). Only one

of the customers that combined other activities with the trip to
the egg outlet said they incurred additional mileage and driving

time.

Patrons' Shopping Patterns


Only 27 percent of the roadside stand customers found the out-

lets from roadside signs. Over one-third discovered the outlets

through friends or relatives, i.e., word-of-mouth, and another 37

percent could not recall now the outlet was discovered (Table 12).

Only one of the interviewees had not previously patronized the out-

let where contacted. Eighty percent said they patronized the outlet

three or more times per year, and 83 percent of the customers said

they did not visit any other egg operation.

Over half of the shoppers came to the egg outlet alone, and

40 percent brought another shopper with them. The trip was planned,

and not an impulse activity (Table 12).













Table ll.--Travel distances and times for
at roadside stands.


consumers purchasing eggs


Type or trip/ Number or Distance or Lime
distance, time required observations Average Minimum Maximum

---- Miles or minutes ----

Special trip from residence
to roadside outlet

Miles traveled 13 12.6 1 40
Driving time 13 31.5 5 80

Combination trip

Miles traveled 17 0.2 0 3
Driving time 17 0.3 0 5

All trips

Miles traveled 30 5.6 0 40
Driving time 30 13.8 0 80

aCombination trips included activities in addition to the road-
side stand visit. The figures reflect patrons' marginal expenditure
of mileage and driving time attributable to the roadside stop. Only
one of the 17 patrons said they incurred additional time or mileage.


Monetary Benefits


Expenditures and savings on egg purchases were calculated for

roadside stand patrons. Each of the 30 customers purchased an av-

erage of 4.75 dozed eggs, with the minimum purchase one dozen and the

maximum 17.5. Expenditures ranged from $0.95 to $8.75. with the av-

erage expenditure $2.72 (Table 13).

The ustLumers were asked to estiiadLe retail prices uf eygs, and

17 of the respondents reported that they expected to pay an average














Table 12.--Shopping patterns of consumers purchasing eggs at
roadside stands.



Questions/responsesa Number Percentb


How did you discover this outlet?

Roadside signs 8 27
Newspaper ads 0 0
Word-of-mouth 11 37
Do not recall 11 37
Totals 30 100

Have you patronized this outlet before?

Yes 28 97
No 1 3
Totals 29 100

How often do you patronize this outlet
each year?

Once 1 5
Twice 1 5
Three 2 10
More than three 16 80
Totals 20 100

How many similar outlets have you
patronized during the past year?

None 25 83
One 0 0
Two 1 3
Three 1 3
More than three 3 10
Totals 30 100












Table 12.--Shopping patterns of consumers purchasing eggs at
roadside stands--Continued.



Question/responsesa Number Percentb


How many shoppers in your party?

One 16 53
Two 12 40
Three 2 7
More than three 0 0
Totals 30 100

Was your egg purchase planned?

Yes 28 93
No 2 7
Totals 30 100

aQuestions about some aspects of shopping behavior have
been abbreviated or paraphrased for inclusion here. See
questionnaire in Appendix.
percentages may not sum to 100 due to rounding.


of $0.77 per dozen for eggs. Expected prices ranged from $0.50

to $1.08 per dozen. Retail prices in stores of two leading super-

market chains during the interview period ranged from $0.68 to

$0.79 per dozen in all stores. Thus, roadside stand customers

tended to overestimate their dollar savings.













Table 13.--Consumer expenditures and savings associated with eggs
purchased at roadside stands.



Number of
Item Unit observations Average Minimum Maximum


Quantity purchased Dozen 30 4.75 1 17.5

Total expenditure Dollars 30 2.72 0.95 8.75

Price per dozen at
roadside stands 5 0.72 0.50a 0.95

Expected retail price
per dozen 17 0.77 0.50 1.08

Observed retail price
per dozen 10 0.68 0.50 0.79

Expected savings per
transaction 17 0.66 -0.42 2.18

Actual savings per
transaction 17 0.35 -1.56 1.80

Hypothetical savingsb
per transaction "-- -0.19 0.86 -1.28

aThe eggs available for 50 cents per dozen were cracked and
undergrade, not Grade A quality.
bHypothetical savings per transaction are based upon the average
quantity purchased by the 30 customers at average, minimum, and
maximum prices observed at roadside stands compared with average ob-
served retail prices.













Freshness and Quality Comparisons


Direct outlet customers were asked to rate freshness and over-

all quality of the eggs obtained at the outlets and eggs usually

found at retail grocery stores. Ratings were based on a nine-point

rating scale where one represented "excellent" and nine represented

extremelyy poor." The average ratings for freshness and overall qual-

ity were 1.3 and 1.2, respectively, for the eggs purchased at the

direct outlets, but 4.9 for the same attributes for eggs typically

purchased at retail grocery stores. A paired t-test indicated that

the freshness and overall quality rating differences were statis-

tically significant (Table 14).

Other Advantages and Disadvantages


Customers were also asked to enumerate the advantages and dis-

advantages associated with patronizing egg outlets. Quality was

the primary advantage mentioned by 43 percent of the respond-

ents; in total, 60 percent of those interviewed cited quality as an

advantage. Freshness was the next most frequent first response,

cited by 37 percent of the patrons, with a total of 57 percent of

all responses (Table 15). Price, a pleasant atmosphere and conven-

ience were advantages mentioned by the remaining respondents. Over

90 percent of the respondents cited no disadvantages associated with

patronizing the egg operations. One patron mentioned distance to

travel as a disadvantage, and one customer complained that some eggs

were cracked (Table 15).












Suggestions for Improvement

Respondents were generally pleased with roadside operations.

Twenty-seven of the 30 customers, 90 percent, made no suggestions for

improvement. Three suggestions were made by three different shoppers.

One said the egg producer should provide home deliveries, another

suggested having more outlets in town, and a third wanted the outlet

closer to the highway (Table 16).

Table 14.--Consumers' comparisons of freshness and quality of eggs
bought at roadside stands and retail food stores.


Rating by sourcea
Attribute Roadside stand Retail grocery t-statistic

Freshness 1.3 4.9 5.50

Overall quality 1.2 4.9 6.88

aRatings were based on a nine point scale where 1 = excellent
and 9 = extremely poor.
A paired t test was used to determine whether or not ratings
by source were significantly different. Both were statistically
significant at the 0.01 probability level.













Table 15.--Respondents' perceived advantages and disadvantages
associated with patronizing egg outlets.


Advantages/disadvantages


First response All responses


--------- Percent a


Advantages

Quality
Freshness
Price
Like the people and the outlet
Convenience
Total

Disadvantages

None
Distance
Some eggs cracked
Total


93
3
3
100


percentages were based on 30 observations.

Percentages were not summed because of multiple responses.

There were no other responses.

percentage may not equal 100 due to rounding.


Table 16.--Patrons' suggestions for improving the egg outlets.



Suggestions Number Percent


No improvement necessary 27 90

Have home deliveries 1 3

Have outlets in town 1 3

Move outlet closer to highway 1 3

Total 30 100a

percentage may not equal 100 due to rounding.

















CONCLUSIONS


Marketing of eggs directly to consumers is an important source

of income to some commercial egg producers and to many small producers.

Commercial laying operations near population centers are able to sell

wholesome but undergrade or slightly cracked eggs at prices substantially

above those received from "breakers" i.e., egg processors.

For relatively inefficient small egg producers, direct marketing

may mean the difference between profit and loss. Their eggs are gen-

erally sold at premium prices (compared with supermarket prices). These

premium retail prices are usually considerably above wholesale prices.
Higher prices, coupled with relatively low marketing costs, make

direct marketing an attractive option for large scale operators, and

a means of survival for small egg producers.

Consumers also benefit from direct market sales. On the average,

monetary savings are small. Purchasers of cracked and undergrade eggs

from large laying operations typically save the most money, but many

customers willingly pay a premium for eggs that they feel are fresher

and of higher quality "than those available" through grocery stores.

































APPENDIX











Food and Resource Economics Department
Florida Agricultural Market Research Center
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611
In cooperation with USDA/ESCS
Research Agreement # 58-319W-8-2522X


Form Approved
OMB No. 40-R 4070
Approval expires 6-30-80
Interviewee No.
Date


Consumer Benefits of Direct Marketing Activities

Section I

Description of Direct Marketing Outlet (complete prior to consumer interview.)
(For office use.)

Hello, I'm_. I represent the University of Florida
Market Research Center. We are conducting a research project on farmer-to-
consumer direct marketing. This research is designed to be helpful to both
farmers selling directly to consumers and consumers buying directly from
farmers. In this respect I would like to interview a sample of consumers
patronizing your outlet. Answers to all questions are confidential and
will only be used in summarizing data from this survey. No names will
appear or be related to the questionnaires in any manner. May I ask you a
question or two that will be used in classifying your outlet? Your response
is voluntary and not required by law. (Secure following information when
obtaining permission to interview customers.)


A. Type of outlet (circle one).


1. Roadside stand


2. U-Pick


3. Farmer's Market


For Office
Use


4. Other (specify)


B. Commodities or products sold (list, use back if necessary)









C. Location of above outlet (County) (City)


D. Length of time in business at this location (Years)













Section II

Direct Markctinii Shopping Patterns


Hello I'm __. I represent the University of Florida's
Market Research Center. We are conducting a research project on farmer-to-
consumer direct marketing. May I ask you a few questions about your pur-
chase(s) and your shopping here today? Your response is voluntary and is
not required by law. Answers to all questions are confidential and will be
used in summarizing data from this survey. Your name will not appear or
be related to the questionnaire in any manner. (If yes, proceed, if no,
terminate interview).

For office use
A. Have you patronized this particular outlet before? (circle one)

1. Yes (If yes,) how many times in the past year?

2. No (If no, skip to item C)


B. How often, on the average, do you patronize this outlet? (circle one)

1. Once per year 2. Once per month 3. 2-3 times per month

4. Once per week 5. More than once per week


C. How many similar outlets, if any, have you patronized during the
past year? (number)

D. How did you get to this location? (circle one)

1. Car 2. Walk 3. Public transportation (taxi, bus)

4. Other (bicycle, motorcycle, etc.) Specify


E. Was your visit to this market outlet today (circle one)


1. A special trip directly from your residence? (if checked, go to F)

2. Combined with other local shopping or similar activities?
( If yes, go to H & I)

3. Just passing hy outlet? (tourist, joy riding, etc.)

I. O her (spreci y)
(Go to H F, I)










For office
Use
F. How many miles is it from here to your residence? (mi.)

G. How much time does it take to come here from your residence? (min)
(Go to J)

H. How many miles out of your way was your visit here? (miles)


I. How much additional travel time did your visit here require? (min)


J. From your standpoint, what are the most important advantages to you
for buying food products here? (probe for 3)

1. 2. 3.


K. Are there any disadvantages to you for buying food products here?
Yes. No (circle one). If yes, specify disadvantages.

1. 2. 3.


L. How could this particular type of outlet be improved ? (probe)








Section III

Consumer Purchases of Specific Commodities

(Please use the following codes for the respective fruits, vegetables, and
other products. Code from observation whenever possible.)

Oranges = 0 Honey = H Blueberries = BB
Grapefruit = GF Milk = M Tomatoes = T
Snap beans = B Strawberries = S Eggs = E
Grapes = G Watermelons = W Other (Specify)


A. I see that you have bought some When you stopped here
today, had you planned to buy ?
(code)
(circle one) 1. Yes

2. No













B. How many (units) of


-(code)


did you purchase here today?


(specify quantity and units)


C. What was the total amount you spent for


?c


D. From your standpoint, what are your most important reasons
for buying here? (probe for 3)
(code)

1.

2.

3.


E. Have you bought at a
(code)
during this time of the year?

(circle one) 1. Yes 2. No


local grocery store or supermarket



(If no, do not ask F, H and J)


F. What would you estimate the total cost of these (this)
(code)
would be if purchased at a local grocery store or


supermarket?


S


G. On a rating scale from 1 to 9, where l=excellent and 9=poor,
how would you rate the freshness of the you bought today?
(code)

Rating


H. Using the same rating scale (repeat) how would you rate the fresh-
ness of bought at the supermarket at this time of the year?
(code)

Rating


I. Again, usinii lhe rating scale from 1 to 9 where 1-excellent and
9-poor, how would you rate the overall quality or the
you bought today? (cude)


Rating


For office
Use











For office
use
J. Using the same rating scale (repeat) how would you rate the
overall quality of bought at a supermarket at this time
of year? (code)

Rating

(Repeat Section III for each commodity purchased)
Section IV

Consumer Demographics

A. Respondent (circle one) 1. Female 2. Male

B. What is the age of the head of the household?

C. How many people living in your household are 18 years of
age or above? Number

D. How many people living in your household are under 18 years of
age? Number

E. In school, what is the highest grade you have completed?
(circle number of years)

1. Elementary (grade school 01 02 03 04 05 06 )
2. Junior high 07 08
3. High school 09 10 11 12
4. College 13 14 15 16
5. Graduate school 17 18 19 20 21

F. What is the occupation of the head of your household?
(circle appropriate classification, if in doubt of proper cldssi-
fication, write answer in Item 6.) (If not employed, skip to G)

1. Administrative, engineering, scientific, teaching and related
occupations, including creative artists.

2. Technical, clerical, sale and related occupations.

3. Service occupations including military occupations.

4. Farming, forestry, fishing and hunting occupations.

5. Production occupations including construction, extractive,
transport, and related occupations.

6. Other

G. Is Lhe hand ol the household retired or unemployed ? circler onp)










For office
use
H. Are you married or not married? (circle one)

If respondent is married and:

1. Male, ask, Is wife employed? No Yes

2. Female, ask, Are you employed outside your home?
Yes No (circle proper answer)


I. Please tell me which of the following income categories most
closely describes your total family income in 1978 before
taxes, including wages and all other income. Is it--

(show card A; circle response)

1. Under $8,000
2. $8,000-9,999
3. $10,000-14,999
4. $15,000-24,999
5. $25,000 and over



J. (Complete by observation except when in doubt; then turn the
card to side B.) Please tell me how would you classify your-
self with the following racial or ethnic groups? (circle one)

1. White (not Hispanic origin)
2. White (Hispanic origin)
3. Black (tlot Hispanic origin)
4. Black (Hispanic origin)
5. American Indian or Alaskan native
6. Asian or Pacific Islander

K. How did you learn about this outlet?

1. Road signs 2. Newpaper 3. Friends or relatives

4. Known for years 5. Other (specify)


Number of shoppers in your party?

Residencey:


Permanent area resident.

Temporary or visitor
















REFERENCES


Florida Crop and Livestock Reporting Service. Florida Agricultural
Statistics: Poultry Summary, Orlando.

Kalch, L.W. "Cost of Producing Broilers and Eggs in Small Back-
yard Flocks", Florida Cooperative Extension Service Poultry
Science Information Series 80-2, IFAS, University of Florida.

Sales and Marketing Management. Survey of Buying Power, Vol. 125,
No. 2, July 28, 1980.

Thompson, Ralph B., ed. Florida Statistical Abstract. Bureau of Eco-
nomic and Business Research, University of Florida, Gainesville:
University of Florida Press, 1980.




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