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






Group Title: Industry report - University of Florida, Florida Agricultural Market Research Center ; no. 81-6
Title: Farmer to consumer direct marketing of honey in Florida
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Permanent Link: http://ufdc.ufl.edu/UF00026890/00001
 Material Information
Title: Farmer to consumer direct marketing of honey in Florida producer and consumer benefits, a report
Series Title: Industry report Florida Agricultural Market Research Center
Physical Description: vii, 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: Honey -- 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.
 Record Information
Bibliographic ID: UF00026890
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000410247
oclc - 10795236
notis - ACF7012

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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
    Summary
        Page vii
    Introduction
        Page 1
    Objectives
        Page 2
    Procedure
        Page 2
        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
    Conclusion
        Page 30
    Appendix
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
    Reference
        Page 38
Full Text




Industry Report 81-6.


Farmer to


rketing


PRODUCER AND (


December 1981


ITS


11MA(C














ABSTRACT


Florida was the leading honey producing state in 1979. Many
beekeepers market their honey directly to consumers through roadside
stands or farmers' markets. Case studies of three operations showed net
returns per hour of family labor in direct marketing of about $0.50 for
two producers with 40 to 60 hives and $8.00 for an operation with 600
hives.
Consumers purchasing honey from producers at a farmers' market
brought an average of 3 1/4 pounds at an average expenditure of $3.05.
Patrons saved about 13 cents per purchase, but rated honey freshness and
quality superior to that in retail stores.


Key words: Marketing, direct marketing, honey.






















FARMER TO CONSUMER DIRECT MARKETING OF HONEY 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 financlal.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 market-

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, watermelons,

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

separate publications to allow for greater efficiency in disseminating

the results.




















ACKNOWLEDGEMENTS


This research was initiated by 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........................................................ vii

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

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

PROCEDURE...................................................... 2

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

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

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

Revenue................................................ 5
Costs............................................... 5
Net Returns............................................ 5

Case B................................................. 9

Revenue................................................ 9
Costs........ ............................ .......... 9
Net Returns...................................... ........ 11

Case C.................................. ................ 12

Revenue............................................. 12
Costs............................................... 13
Net Returns........................................... 13

Consumer Benefits......................................... .. 16

The Patrons........................................... 17
Transportation .......... ....................... ... 220
Patrons' Shopping Patterns........................... 21
Monetary Benefits ..................................... 21
Freshness and Quality Comparisons ..................... 24
Other Advantages and Disadvantages..................... 26
Suggestions for Improvement............................ 27














Table of Contents--Continued

Page

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

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

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
















LIST OF TABLES

Table Page

1 Annual costs and returns for Producer A's
honey operation............ ....................................... 6

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

3 Commercial marketing alternative for Producer A's
honey operation........... .............................. 8

4 Annual costs and returns for Producer B's
honey operation ............................................. 10

5 Structure and equipment requirements for
Producers B's honey operation................................ 11

6 Commercial marketing alternative for Producer B's
honey operation ...................................... 12

7 Annual costs and returns for Producer C's honey
operation................................................... 14

8 Equipment requirements for Producer C's
honey operation ..................................... 15

9 Commercial marketing alternative for Producer C's honey
operation................................................... 15

10 Demographic and socioeconomic characteristics of consumers
purchasing honey at a farmers' market........................ 18

11 Travel distances and times for farmers' market
patrons purchasing honey................................... 20

12 Shopping patterns of consumers purchasing honey at a
farmers' market............................................. 22

13 Consumer expenditures and savings associated with honey
purchased at a farmers' market............................... 25

14 Consumers' comparisons of freshness and quality of honey
bought at farmers' market and retail food stores............. 26

15 Respondents' perceived advantages and disadvantages
associated with patronizing honey outlets.................... 28

16 Honey patrons' suggestions for improving the outlet......... 29















SUMMARY


Florida was the leading honey producing state in the U.S. in 1979.
Many beekeepers have only a few hives and others have several hundred.
Large commercial producers sell most of their honey in bulk to wholesalers.
Direct marketing was very important to medium-sized honey producers.

Three beekeepers were provided information about their honey sales
direct to consumers. One producer was a full time operator with 600
hives. He sold 16,800 pounds of honey to consumers, at an average price
of 85 cents per pound. The other two producers had 40 and 60 hives each
and sold 1,350 and 1,500 pounds, respectively, through roadside stands
or a farmers' market.

Production costs for honey varied from 22 cents to 54 cents per
pound, and total direct marketing costs were almost $5,400 for the large
producer and about $400 to $470 for the two smaller-operators. The large
operator realized a net return of $8.00 per hour for family labor in
direct marketing but the smaller producers received about $0.50.

Consumers who purchased honey from producers at a large regional
farmers' market were interviewed. The majority of customers were 50
years of age or older, and nearly 80 percent were women. Honey pur-
chasers generally had more education then the Florida average, they
lived in small households and 80 percent were married. Nearly half were
retired, and almost 60 percent had incomes of $15,000 or more per year.
Most customers were permanent Florida residents.

The trip to the farmers' market was planned by all the honey
purchasers, who traveled an average of 89 miles round trip. Most learn-
ed of the outlet through word-of-mouth, and over 70 percent had patronized
that market previously. Almost three-fourths of the customers had one
or more other persons with them.

Consumers' average honey purchase was about 3 1/4 pounds, and the
average expenditure $3.05. Patrons tended to overestimate their savings.
On the average, they felt they were saving $1.34 per transaction, but
compared with prevailing retail prices, they saved only 13 cents. Honey
purchased from producers at the farmers' market was rated significantly
higher in freshness and overall quality than honey usually bought in
retail stores.

Freshness, price and quality were the major advantages consumers
listed for purchasing honey at the farmers' market. Most customers
were pleased with their direct purchase experience.

















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


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


INTRODUCTION

Florida was the leading honey producing state in the nation in

1979. Production exceeded 28 million pounds and was valued at over

$14.8 million. Approximately 360,000 colonies were located statewide,

producing orange blossom, gallberry, Brazilian pepper, wildflower, and

many other types of honey.

Beekeepers' operations varied greatly in size. Many beekeepers had

only one or two hives in their backyards, but others had hundreds in

several locations. Even the smallest operators frequently had more

honey than needed for home consumption, so excess production was given

away or sold to friends or neighbors. Although several of these small

producers were interviewed and were found to engage in direct marketing

to some degree, sales were judged to be of minimal significance.





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
















On the other hand, large commercial producers sold most of their
production in bulk to wholesale honey dealers who processed, packaged,

and distributed to retailers or industrial users. Direct marketing was

found to be very important to beekeepers with medium-sized operations.

OBJECTIVES

The basic objective of this study was to determine the nature and

extent of benefits to honey producers and to the consumers who purchase

honey 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 the prevailing direct
marketing activity; 3) determine farmer net returns obtained through

direct marketing and 4) estimate returns associated with each input,

with particular emphasis on family labor.

Specific consumer-oriented objectives were to 1) determine prices
paid by consumers for honey at representative direct marketing outlets

and compare these prices with those paid at supermarkets; 2) determine

consumers' perception of honey quality at direct marketing outlets as

compared to that obtainable at supermarkets; 3) identify 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 benefits.
Honey producers were identified and located with the assistance of
















On the other hand, large commercial producers sold most of their
production in bulk to wholesale honey dealers who processed, packaged,

and distributed to retailers or industrial users. Direct marketing was

found to be very important to beekeepers with medium-sized operations.

OBJECTIVES

The basic objective of this study was to determine the nature and

extent of benefits to honey producers and to the consumers who purchase

honey 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 the prevailing direct
marketing activity; 3) determine farmer net returns obtained through

direct marketing and 4) estimate returns associated with each input,

with particular emphasis on family labor.

Specific consumer-oriented objectives were to 1) determine prices
paid by consumers for honey at representative direct marketing outlets

and compare these prices with those paid at supermarkets; 2) determine

consumers' perception of honey quality at direct marketing outlets as

compared to that obtainable at supermarkets; 3) identify 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 benefits.
Honey producers were identified and located with the assistance of















county agricultural extension agents and state extension specialists.

Specific producers were then selected to reflect a broad spectrum of

direct marketing activity, particularly with respect to size and type of

operation. Producers were personally interviewed by the Florida

Agricultural Market Research Center staff during April of 1980.

Production cost data were obtained from secondary sources (Westberry)

and modified to reflect production practices used by producers. Pro-

duction practices varied greatly and detailed cost information was

obtained from individual producers wherever possible. 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, on

a non-probability, convenience basis, at a large regional farmers'

market. The customer flow was sufficiently slow to allow all patrons to

be interviewed 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 honey at the farmers'

market with prices prevailing at local grocery stores.














FINDINGS


Producer Benefits of Direct Marketing

Three honey producers' operations are described in case studies

summarized below. Even though direct marketing is important to these

medium-sized producers, all beekeepers interviewed marketed from 10 to

92 percent of their production through commercial channels. Generally,

they sold their lower quality honey commercially and their better honey

through their direct marketing outlets. Direct marketing activities

were varied. Several of the producers sold honey at their homes, and

one sold it at his primary place of business, an automobile repair shop.

In addition to selling honey at their homes, two of the producers sold

their honey at a regional farmers' market and at several annual county

fairs. All three producers lived in northern Florida in small towns

with populations ranging from 1,000 to 2,000 persons. However, all were

located within 15 miles of a city with a population in excess of 75,000.


Case A

Producer A was a full-time honey producer with 600 hives. He also

bought honey from smaller producers. Most of Producer A's honey sales

were made at his home, where a special area was set aside for retail

sales. However, he also sold significant quantities of honey from

rented booths at several fairs. His direct marketing costs were prorated

to reflect the proportion of total direct marketing sales that his own

produced honey represented.














Revenue


In 1979, Producer A marketed approximately 112,000 pounds of honey,

of which 16,800 pounds were produced by his own hives and sold directly

to consumers at an average price of 85 cents per pound. In addition to

his honey sales, Producer A also sold 100 pounds of beeswax at $2.25 per

pound and rented 250 of his hives to vegetable growers for pollination

purposes which netted him $7.50 per hive. Producer A's total revenue

was estimated at $16,380 (Table 1).

Costs


Production costs for Producer A's own honey were $0.22 per pound

or $3,696 total. One of the major elements of marketing costs was

$3,117 for annual costs of structures and equipment. The buildings and

necessary equipment for handling honey represented a total investment

exceeding $19,000 (Table 2). Other marketing costs included $1,518

for supplies and services and $750 for hired labor, for total marketing

costs of $5,385 (Table 1).

Net Returns

After deducting production expenses and marketing costs, Producer

A's net revenue was $7,299 (Table 1). If he had elected to sell his

16,800 pounds of honey and 100 pounds of beeswax to a commercial honey

processor, he estimated that he would have received 50 cents per pound

for his honey and $1.90 per pound for his beeswax. After deducting his

production and commercial marketing costs, Producer A would have netted













Table l.--Annual costs and returns for Producer A's honey operation


Costs or returns


---- Dollars ---


Revenue


Honey sales
Beeswax sales
Crop pollinating
Total revenue


16,800 pounds
100 pounds
250 hives


$0.85
$2.25
$7.50


Costs


Production costs


16,800 pounds @ $0.22


Marketing costs

Structures and equipment (Table 2)

Supplies and services
Utilities
Containers
Pamphlets
Labels
Health permit
Fees
Miscellaneous
Total, supplies and services

Hired labor

Total marketing costs
Net revenue

Net return if honey sold commercially (Table 3)

Net return due to direct marketing

Family labor


Marketing


620 hours


Net return per hour of family labor due to direct marketing


Item


14,280
225
1,875


16,380


3,117


120
690
36
20
2
150
500
1,518

750


5,385

7,299

2,341

4,958


alncludes promotional materials such as posters and pictures used in
sales outlets, cleaning supplies, etc.


8.00












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


Depreciable Price/ Total Annual
Description Quality life unit investment cost


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

Honey house,
2800 sq. ft. 1 20 61,600 9,240 462
Honey room
308 sq.ft. 1 20 5,500 5,500 275
Truck, 1 1/2 ton I --c 20,000 3,000 270
Extractors 2 10 1,600 480 48
Bottling tank, 40 gal. 1 10 150 23 2
Bottling tank, 80 gal. 1 10 400 60 6
Storage tank 1 10 800 120 12
Pumps 2 10 165 25 3
Hand truck 1 10 150 23 2
Decapper 1 10 2,000 300 30
Drums 50 10 15 113 11
Display table 1 10 250 250 25
Folding table 1 5 25 25 5,
Miscellaneous 500 500 --
Total 19,659

Interest on investment @ 10 percent per annum 1,966


aStraight line depreciation is
salvage value.


calculated for all items, assuming no


Prorated to reflect the 15 percent of honey marketed directly to
consumers. Some investments were used exclusively for direct marketing.
cAll operating expenses including depreciation, are included in a
per mile charge of 30 cents, for 900 miles.
Interest on total investment of 10 percent per annum covers annual
cost for this item.















$2,341 (Table 3). By selling his honey and beeswax directly to con-

sumers, however, he realized an additional $4,958 for his efforts.

Producer A estimated that he and his family spent about 10 hours per

week selling honey at home and approximately 100 hours per year at

fairs. Thus, on an hourly basis, they received about $8.00 per hour for

their direct marketing efforts (Table 1).


Table 3.--Commercial marketing alternative for Producer A's honey
operation.


Item


Costs or return


--- Dollars ---


Revenue

Honey sales 16,800 pou
Beeswax 100 pou
Crop pollinating 250 hives
Total

Costs

Production 16,800 pou
Marketing
Total

Net return, commercial alternative


inds @ $0.50
nds @ $1.90
@ $7.50


inds @ $0.22


8,400
190
1,875




3,696
4,428


10,465





8,124

2,341


--














Case B


Producer B engaged in honey production on a part-time basis, with

60 hives of bees. In addition, he bought from other beekeepers ap-

proximately four times as much honey as he produced for resale. His

costs and returns were prorated to reflect only honey he produced.

Producer B sold his honey at a regional farmers' market, and at his home

from a small self-service stand, where payment was on an honor basis.

This mode of operation was observed in several locations throughout the

state.


Revenue


Producer B sold 1,500 pounds of his own honey at an average price

of 75 cents per pound, resulting in total revenues of $1,125 (Table 4).

His own honey represented 21 percent of his retail sales, which were

55 percent of his total honey sales.


Costs


Production costs were $0.35 per pound, totaling $525 for the

1,500 pounds of Producer B's own honey that he sold direct to consumers.

Costs for structures and equipment amounted to $299 (Table 5) and

supplies and services cost $168 (Table 4). Total marketing costs were

thus $467.













Table 4.--Annual costs and returns for Producer B's honey marketed
directly to consumers.


Item


Costs or returns


---- Dollars ----


Revenue

Honey sales 1,500 pounds @ $0.75

Costs

Production costsb 1,500 pounds @ $0.35

Marketing costs

Structures and equipment (Table 5) 299

Supplies and services
Containers 102
Market fees 36
Maintenance supplies 2
Utilities 10
Labels and price lists 18
Total, supplies and services 168

Total marketing costs

Net revenue

Net return if honey sold commercially (Table 6)

Net return due to direct marketing

Family labor

Marketing 131 hours

Net return per hour of family labor due to direct marketing


1,125


525


467

133

66

67


0.51


aCosts and returns represent 21 percent of retail sales, Producer B's
own production.
production costs include hives and exclude labor.













Table 5.--Structure and equipment requirements for Producer B's honey
operation.


Depreciable Price/ Total Annual
Description Quality life unit investment cost

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

Shed, 240 sq. ft. 1 15 716 100b 7
Extractor 1 10 300 93c 9
Bottling tank 1 10 200 42d 4
Truck, one-half ton 1 -e 750 87e 239e
Signs 3 5 5 15 3
Miscellaneous --- 5 12 12 2

Total investment 349 264

Interest on capital @ 10 percent per annum 35


aStraight line
salvage value.


depreciation is calculated for all items, assuming no


Producer B's honey was 14 percent of all honey processed in the shed.

CExtractor was used for 4,300 pounds of Producer A's honey, of which
31 percent or 1,500 pounds was marketed directly to consumers.

dTotal investment prorated to reflect 21 percent of retail sales that
was Producer A's own honey.
eAll operating expenses, including depreciation and annual costs, are
included in a per mile charge of 20 cents, for 1,197 miles. Total investment
is prorated to reflect the proportion of honey sold at retail (55 percent) of
which 21 percent was from his own production (55x21 = 11.6% x $750 = $87).


Net Returns

Producer B's net revenue was $133. If he had sold his honey to a com-

mercial honey house, he would have received $0.45 per pound, for a net


return in the commercial market of $66 (Table 6).








12





Thus, his total net return due to direct marketing amounted to $67. A

total of 131 hours of labor were expended on direct marketing by Pro-

ducer B, resulting in a net return per hour of family labor of $0.51

(Table 4).


Table 6.--Commercial marketing alternative for Producer B's honey
operation.


Costs or returns


--- Dollars ---


Revenue

Honey sales


1,500 pounds @ $0.45


Costs


Production 1,500 pounds @ $0.35 525
Marketing 84
Total

Net return, commercial alternative


609

66


Case C

Producer C's primary source of income was an automobile repair

business. He engaged in beekeeping as a hobby, and he sold most of

his honey at his repair shop.


Revenue

Due to unfavorable weather conditions, Producer C's hives pro-

duced only about 1,500 pounds of honey in 1979. Producer C sold 90


Item













percent or 1,350 pounds directly to consumers at an average price of

85 cents per pound. He sold the rest to a small local food retailer.

Additional revenue of $80 came from the sale of 40 queen bees, for total

direct sales of $1,228 (Table 7).

Costs


Producer C figured his production costs were 54.3 cents per

pound, a total of $733 for the honey sold directly to consumers

(Table 7). Marketing costs were $20 for one-eighth of his repair
shop rent and $141 for other equipment (Table 8). Supplies and

services amounted to $235, for total marketing costs of $396

(Table 7). There was no hired labor.





Net Returns


After deducting production and direct marketing costs, Producer C's

net revenue was $99. If Producer C had sold his honey to a commercial
honey processor, he would have lost $217 (Table 9). The absolute net

return due to direct marketing was $316, or about 55 cents per hour. If

the potential loss associated with his commercial alternative is ignored

and his net revenue is examined, he earned only 17 cents per hour for

his efforts. Producer C realized that his monetary returns were insignif-

icant, but he stressed that beekeeping was an enjoyable hobby, and making

money was not his primary objective.














Table 7.--Annual costs and returns for Producer C's honey operation



Item Costs or returns


---- Dollars ----
Revenue

Honey sales 1,350 pounds @ $0.85 1,148
Queen bee sales 40 @ $2.00 80
Total revenue 1,228

Costs

Production costs 1,350 pounds @ $0.543 733

Marketing costs

Structures and equipment
Building rent 20
Other (Table 8) 141
Total, structures and equipment 161

Supplies and services
Containers 158
Health permit 23
Advertising 42
Labels 2
Signs 10
Total, supplies and services 235

Total marketing costs 396

Net revenue 99

Net return if honey sold commercially (Table 9) -217

Net return due to direct marketing 316

Family labor

Marketing 572 hours

Net return per hour of family labor due to direct marketing 0.55

aExcludes labor.













Table 8.--Equipment requirements for Producer C's honey operation.



Depreciable Price/ Total Annual
Description Quantity lifea unit investment cost


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

Extractors 2 10 138 248 25
Storage containers 2 2 35 63 32
Electric knife 1 5 33 30 6
Drills 2 1 15 27 27
Calculator 1 5 35 16c 3
Drums 2 5 8 16 3
Hive monitor 1 5 12 11 2
Bucket 1 1 2 2 2

Total investment 413 100

Interest on capital @ 10 percent per annum 41

aStraight line depreciation is calculated for all items, assuming no
salvage value.
bTotal investment is prorated to reflect the 90 percent of honey sales
through the roadside outlet.
CReflects one-half use in the honey operation.


Table 9.--Commercial marketing alternative for Producer C's honey operation.


Item Cost or returns

---- Dollars ---

Revenue

Honey sales 1,350 pounds @ $0.50 675

Costs

Production 1,350 pounds @ $0.35 473
Marketing 419
Total 892

Net return, commercial alternative -217
















Consumer Benefits


Time and resource constraints precluded obtaining a large, random

sample of honey outlet patrons. In keeping with the case study approach

prescribed by USDA-ESCS, a relatively small number of customers was

interviewed. Customer traffic flow at producers' home operations was

very low and unpredictable, so all consumer interviews were conducted

at a large regional farmers' market which operated one day per week.

A non-probability, convenience.sample of 14 persons was interviewed

at that farmers' market. All interviews were obtained on weekdays,

between the hours of 9:00 A.M. and 6:00 P.M. In most cases, customer

traffic was sufficiently slow and the questionnaire brief enough so that

all customers could be interviewed during the surveillance periods.

Despite the sample's limitations, it is felt that the interviews

provide a reasonable representation of customers typically patronizing

this type of outlet. The sample is thought to yield a valid assessment

of the qualitative and quantitative benefits accruing to customers

purchasing honey directly from producers.

The following sections describe the demographic composition of the

sample, and patrons' transportation and farmers' market shopping patterns.

Customers' monetary benefits and other perceived shopping advantages and

disadvantages are also discussed, along with customers' suggestions for

improving the outlet.















The Patrons


Eleven of the 14 patrons were women, and 65 percent of all customers

were 50 years of age or older (Table 10). Few young people were in-

terviewed at the farmers' market; none of the customers was under 25

years of age and three were under 35. In general, the customers were

well-educated. Over half had attended college, compared with about 30

percent of the population of Florida, and 14 percent had attended

college four or more years, the same percentage as the state population

as a whole (Thompson). Only two of the respondents had completed less

than twelve years of schooling (Table 10).

Most farmers' market customers came from small households. Over

one-third came from two-person households, and another 36 percent came

from three-person households. There was one customer each from one-and

four-person households, and two respondents lived in a household which

contained more than four persons. Slightly less than half of the inter-

viewees were retired and slightly over half were employed. Nearly 80

percent of the respondents were married.

The distribution of patrons' household incomes was very similar to

that for the state as a whole. Twenty-three percent of farmers' market

purchasers of honey had incomes under $8,000 compared with 26 percent in

Florida. None of the customers reported incomes in the $8,000 $9,999

category, while seven percent of Florida households are in this bracket.

Fifteen percent of the patrons and 17 percent of Florida citizens had

incomes of $10,000 to $14,999, and 23 percent and 27 percent, respectively,













Table 10.--Demographic and socioeconomic characteristics of consumers
purchasing honey at a farmers' market.



Characteristic Number Percenta


Sex of purchaser

Male 3 21
Female 11 79
Totals 14 100

Age of purchaser

18-24 0 0
25-34 3 21
35-49 2 14
50-64 4 29
65 and over 5 36
Totals 14 100

Years of education

Less than 12 2 14
12 4 29
13-15 6 43
16 or more 2 14
Totals 14 100

Number of persons in household

One 1 7
Two 5 36
Three 5 36
Four 1 7
More than four 2 14
Totals 14 100

Employment

Employed 8 57
Retired 6 43
Unemployed 0 0
Totals 14 100

Marital status

Married 11 79
Single 3 21
Totals 14 100













Table l0.--Demographic and socioeconomic characteristics of consumers
purchasing honey at a farmers' market -- Continued.



Characteristics Number Percenta

Income

Under $8,000 3 23
$8,000-9,999 0 0
$10,000-14,999 2 15
$15,000-24,999 3 23
$25,000 and over 5 38
Totals 13 100

Race

White (non-Hispanic) 12 86
White (Hispanic) 1 7
Black (non-Hispanic) 1 7
Totals 14 100

Residency

Permanent 11 79
Temporary 3 21
Totals 14 100

percentage may not sum to 100 due to rounding.


were in the $15,000 to $24,999 range. However, more honey purchasers,

38 percent, had incomes of $25,000 and over than did state residents as

a whole, at 23 percent (Table 10).

All but one of the honey purchasers were white, with only one black

customer. Most of the customers were Florida residents, although three

persons, or 21 percent, were visitors or temporary residents.















Transportation


Personal automobiles were the only means of transportation used by

honey patrons. All of the customers indicated that the trip to the

farmers' market was a special trip from their residence, and no other

activities were conducted in conjunction with the trip. Patrons' round-

trip mileage to and from the farmers' market was 89 miles and required

two hours of driving time. Customers traveled from only 8 miles to 160

miles, spending from 20 minutes to four hours (Table 11).


Table ll.--Travel distances and times for farmers' market patrons
purchasing honey.


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

--- Miles or minutes ----

Special trip from residence
to farmers' market

Miles traveled 13 89 8 160
Driving time 13 120 20 240

Combination trip 0 0 0 0

aCombination trips included activities in addition to the farmers'
market visit. The figures reflect patrons' marginal expenditure of
mileage and driving time attributable to the farmers' market activity.
















Patrons' Shopping Patterns


The majority of the customers, over 70 percent, discovered the

outlet through friends or relatives, i.e., word-of-mouth. Although

the farmers' market used roadside signs for advertising, none of the

patrons credited them with their introduction to the outlet, nor did

any of the customers discover the outlet through newspaper advertise-

ments. Four persons could not recall how the outlet was discovered

(Table 12).

Over 70 percent of the interviewees had previously patronized the

farmers' market. Almost half said they patronized the outlet only once

each year, but almost one-third said they visited it two or three times

per season. Over 60 percent of the customers said they typically do not

visit any other farmers' market. Three of the 11 shoppers who responded,

or 27 percent came to the farmers' market alone. Another 27 percent

brought another shopper with them, and 45 percent brought three or more

additional customers with them. Thus it appears that the trip to the

farmers' market was a social activity for most patrons. The purchase of

honey had been planned by less than half the respondents; it appeared

that honey purchased at the farmers' market was done on impulse by a

sizeable proportion of the customers. (Table 12).


Monetary Benefits


Each of the 14 customers purchased an average of about 3 1/4

pounds of honey. The minimum purchase was 0.75 pounds and the maximum

6 pounds. Average honey price was $0.86 per pound, with prices ranging














Table 12.--Shopping patterns of consumers purchasing honey at a
farmers' market.



Question/responsesa Number Percentb


How did you discover this outlet?

Roadside signs 0 0
Newspaper ads 0 0
Word-of-mouth 10 71
Do not recall 4 29
Totals 14 100

Have patronized this outlet before?

Yes 10 71
No 4 29
Totals 14 100

How often do you patronize this outlet
each year?

Once 6 46
Twice 3 23
Three 1 8
More than three 3 23
Totals 13 100

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

None 7 64
One 2 18
Two 2 18
Three 0 0
More than three 0 0
Totals 11 100

How many shoppers in your party?

One 3 27
Two 3 27
Three 3 27
More than three 2 18
Totals 11 100













Table 12.--Shopping patterns of consumers purchasing honey at a
farmers' market.--Continued.



Question/responsesa Number Percentb


Was your honey purchase planned?

Yes 6 43
No 8 57
Totals 14 100


questions about some aspects of shopping
abbreviated or paraphrased for inclusion here.
in Appendix.


behavior have been
See questionnaire


percentage may not sum to 100 due to rounding.















The farmers' market customers were asked to estimate retail prices

for honey. The 13 respondents expected to pay an average of $1.47 per

pound, with expected prices ranging from $1.00 to $2.00 per pound. The

average retail price observed in stores of two leading supermarket

chains during the interview period was 99 cents per pound in all stores.
Thus, farmers' market customers tended to overestimate their dollar

savings on honey purchases.

On the average the patrons estimated that they saved $1.34 per

transaction, but compared with prevailing prices they saved only 13 cents.

These "actual" savings ranged from $1.50 more than retail to $1.14

savings per transaction. The average difference between the farmers'

market price for honey and the prevailing retail price for all 14

customers amounted to hypothetical savings of 33 cents per transaction

(Table 13).

It is important to note, however, that the "actual" and hypothet-

ical "savings" discussed here do not take into account costs or time

spent in driving to the farmers' market or time spent there.

Freshness and Quality Comparisons


Farmers' market customers were asked to rate freshness and overall

quality of the honey purchased there and honey usually found at retail

grocery stores. Ratings were based on a nine-point rating scale where

one represented "excellent" and nine represented "extremely poor". The

average ratings for freshness and overall quality were 1.4 and 1.6,

respectively, for the honey purchased at the farmers' market, but 3.1













Table 13.--Consumer expenditures and savings associated with honey
purchased at a farmers' market.


Number of
Item Unit observations Average Minimum Maximum


Quantity purchased Pounds 14 3.27 0.75 6.00

Total expenditure Dollars 14 3.05 1.00 7.25

Price per pound
at farmers' market 6 0.86 0.70 1.15

Expected retail price 13 1.47 1.00 2.00

Observed retail price 6 0.96 0.84 1.04

Expected savings per
transaction 13 1.34 0 4.74

Actual savings per
transaction 13 0.13 -1.50 1.14

Hypothetical savings
per transaction "- 0.33 0.85 -0.62

aThe price per pound reported for farmers' market is a weighted
average price for all types and sizes of containers.
bBecause retail honey prices vary widely by type of honey and type
and size of container, the "observed retail price" is a simple average
of all types and sizes observed in six retail stores.

CHypothetical savings are based on the overall average quantity
purchased by the 14 customers at average, minimum, and maximum prices
observed at farmers' markets compared with average observed retail
prices.
















and 3.8 for honey typically purchased at retail grocery stores. A

paired t-test indicated that the freshness and overall quality rating

differences were statistically significant (Table 14).


Table 14.--Consumers' comparisons of freshness and quality of honey
bought at farmers' market and retail food stores.


Rating by source
Attribute Farmers' market Retail grocery t-statistic

Freshness 1.4 3.1 2.82

Overall quality 1.6 3.8 3.19

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 0.05 probability level.


Other Advantages and Disadvantages


Customers were also asked to enumerate the advantages and dis-

advantages associated with purchasing honey in farmers' markets.

Freshness was the primary advantage mentioned by over 40 percent of

the respondents; in total, 50 percent of those interviewed cited

freshness as an advantage (Table 15). Price and quality were the

next most frequently mentioned advantages, with each cited by 36

percent of the respondents. Recreation and a varied selection were












mentioned by a total of 28 and 21 percent of the respondents re-

spectively. Sixty-four percent of the respondents cited no dis-

advantages associated with patronizing the honey outlet. About

one-third of the patrons cited disadvantages, but most were as-

sociated with the farmers' market in general, such as overcrowd-

ing and lack of parking. Only one honey purchaser made a neg-

ative comment about the honey; the customer lacked assurance that

it was unadulterated (Table 15).

Suggestions for Improvement

Respondents were generally pleased with the farmers' market.

Nine of the 14 customers, 64 percent, made no suggestions for im-

provement. Most of the suggestions were directed toward the gen-

eral operation of the farmers' market rather than the honey booth

in particular. However, one purchaser did suggest that the honey

be more accurately identified with respect to the plant source

(Table 16).













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



Advantages/disadvantages First response All responses

---------- Percenta ----------

Advantages

Freshness 43 50
Price 14 36
Quality 0 36
Recreation 14 28
Varied selection 14 21
Convenient location 7 7
None 7 7
Total T10" -

Disadvantages

None 64 _d
Too crowded 7
Located too far 7
Inconvenient to carry purchases 7
Honey may not be pure 7
Too little parking 7
Total 100

percentages were based on 14 observations.

bPercentage may not equal 100 due to rounding.

CPercentages not summed due to multiple responses.

dNo additional responses made.













Table 16.--Honey patrons' suggestions for improving the outlet.


Suggestions Number Percent

No improvement necessary 9 64

Better product identification 1 7

Place more of the booths under the roof 1 7

Offer a larger variety 1 7

Clean up the farmers' market area 1 7

Open the market more frequently 1 7

Total 14 100a

percentage does not sum to 100 due to rounding.


















CONCLUSIONS


Many producers market honey directly to consumers. Relatively

large producers (such as Producer A) with an established clientele

can realize favorable returns for their direct marketing efforts.

Smaller producers with relatively high production and marketing costs

did not fare as well. Their direct marketing efforts yielded very

low returns on their personal labor, but their commercial alternative

would have resulted in even lower returns or losses.

Beekeeping and direct marketing were viewed as a hobby by many

small producers. Consumers' savings on honey purchased directly from

producers were minimal, but freshness and high quality were important

reasons for buying directly. In conclusion, producers and consumers were

generally pleased with their direct marketing experiences.



































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 Marketing Shopping Patterns


Hello I'min. 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 by outlet? (tourist, joy riding, etc.)

4. Other (specify)
(Go to H & 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 = R Strawberries = S Eggs = E
Grapes = G Watermelons = W Other (Specify)


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

2. No













B. How many (units) of


(Fcode)


did you purchase here today?


(specify quantity and units)


C. What was the total amount you spent for


___o? $__
(code)


D. From your standpoint, what are your most important reasons
for buying c___ 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? $_


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


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 classi-
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 the head of the household retired or unemployed ? (circle one)











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 (Not 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 relative.

4. Known for years 5. Other (specify)


Number of shoppers in your party?

Residencey:

1. Permanent area resident.


7? Temporary or visitor

















REFERENCES


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

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

Westberry, George 0. "Estimated Cost and Returns for a 500 Colony
Honey Bee Operation, North Florida, 1978, "Food and Resource
Economics Department, IFAS, University of Florida, mimeo.




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