• 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. 81-10
Title: Farmer to consumer direct marketing of watermelons in Florida
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Permanent Link: http://ufdc.ufl.edu/UF00026914/00001
 Material Information
Title: Farmer to consumer direct marketing of watermelons in Florida producer and consumer benefits, a report
Series Title: Industry report Florida Agricultural Market Research Center
Physical Description: ix, 37 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 Agricultual Sciences, University of Florida
Place of Publication: Gainesville Fla.
Publication Date: 1981
 Subjects
Subject: Watermelons -- Marketing -- Florida   ( lcsh )
Direct selling -- Economic aspects   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 37.
Statement of Responsibility: by Robert L. Degner, Lance W. Rodan, and Kary Mathis.
 Record Information
Bibliographic ID: UF00026914
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000410251
oclc - 10795310
notis - ACF7016

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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
        Page ix
    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
    Conclusion
        Page 28
    Appendix
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
    Reference
        Page 37
Full Text




Industry Report 81-10.


"keting


PRODUCER AND


December 1981


Farmer t
0 f Wla


ITS


'IML~-















ABSTRACT


Watermelons are a major spring commercial crop in Florida. Prices
often drop below harvest costs late in the season, so many watermelon
growers sell part of their crop directly to consumers, usually through
roadside outlets. Three producers sold from 5 to 15 percent of their
production in this manner, realizing returns of $4 to over $7 per hour
of family labor.

Consumers purchased an average of two melons at $1.00 each from
roadside operations. Compared with prevailing prices in retail food
stores, consumers saved about $1.00 per melon bought. Freshness, price
and quality were the primary reasons consumers bought watermelons from
roadside outlets.


Marketing, direct marketing, watermelons.


Key words:





















FARMER TO CONSUMER DIRECT MARKETING OF WATERMELONS IN FLORIDA:


PRODUCER AND CONSUMER BENEFITS













a report by

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














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 Aqricultural 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

LIST OF APPENDIX TABLES..................... ................ vii

SUMMARY.................. .................................. vi i

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

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

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

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

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

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

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

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

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

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

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

Other Advantages and Disadvantages of Direct
Marketing.......................................... 15

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














Table of Contents--Continued

Page

The Patrons.......................................... 16
Transportation...................................... 20
Patrons' Shopping Patterns ........................... 21
Monetary Benefits........................... ...... 23
Freshness and Quality Comparisons.................... 25
Other Advantages and Disadvantages.................... 26
Suggestions for Improvement .......................... 26

CONCLUSIONS.................................................. 28

APPENDIX..................................................... 29

REFERENCES................................................... 37
















LIST OF TABLES


Table Page

1 Annual costs and returns for Grower A's roadside
watermelon operation......................................... 6

2 Structure and equipment requirements for Grower A's
roadside watermelon operation............................... 7

3 Commercial marketing alternative for Grower A's
watermelon operation...................................... 8

4 Annual costs and returns for Grower B's roadside
watermelon operation......................................... 10

5 Equipment requirements for Grower B's roadside
watermelon operation........................................ 11

6 Commercial marketing alternative for Grower B's
watermelon operation......................................... 12

7 Annual costs and returns for Grower C's roadside
watermelon operation......................................... 14

8 Equipment requirements for Grower C's
roadside watermelon operation................................ 15

9 Demographic and socioeconomic characteristics of
watermelon purchasers at roadside stands..................... 18

10 Travel distances and times for consumers purchasing
watermelons at roadside stands............................... 20

11 Shopping patterns of consumers purchasing watermelons
at roadside stands........................................ 22

12 Consumer expenditures and savings associated with
watermelons purchased at roadside stands..................... 24

13 Consumers' comparisons of freshness and quality of
watermelons bought at roadside stands and retail food
stores.......................................... ......... 25















LIST OF TABLES---Continued

Table Page

14 Respondents' perceived advantages and disadvantages
associated with patronizing watermelon outlets............. 27

15 Watermelon patrons' suggestions for improving the
outlet...................................................... 27




LIST OF APPENDIX TABLES


Table

1 Watermelons: Estimated production costs for commercial
production and commercial marketing for one acre,
north Florida, 1979 ......................................


Page

















SUMMARY


Florida leads the U.S. in watermelon production. Of the 50,000
acres planted in 1979, 43,000 were harvested. Late in the season
prices often fall below harvest costs, so many commercial growers
sell watermelons directly to consumers then, particularly in north
Florida.

This report presents case studies of three growers' roadside
watermelon sales. All were commercial growers, producing from 30
to 60 acres of watermelons. Each of these growers sold from 5 to
15 percent of his season's production directly to consumers
through roadside stands.

In 1979, all three producers sold watermelons for $1.00 each,
realizing total revenues ranging from $1,650 to $4,368. These
growers had no permanent structures for roadside stands, using
awnings and tables or simply pickup trucks for sales locations.
Marketing costs ranged from $60 to $691, with the largest expense
being hired labor in one case.

Family labor use varied considerably, from 120 hours to 360
hours during a two-month season. Family labor is probably over-
stated because the roadside stand did not require the operator's
complete attention during a day. Even though family members had
to remain with the stand, they were free to do other things during
slack periods.

Net return per hour of family labor for direct marketing was
$4 in the lowest case, nearly $4.50 in a second and nearly $7.50
in the third.

The three growers felt they realized a larger return for water-
melons sold directly to consumers than in the commercial market, es-
pecially late in the season. Direct market prices were also more
certain than those in the commercial market. The primary disad-
vantage stated was the amount of time required for the roadside op-
eration.

A sample of watermelon purchasers was interviewed at one of the
stands. Sixty percent of the customers were female, and 70 percent
of all purchasers were 50 years of age or older. Generally consumers
were well-educated, came from small households and had relatively
high incomes.

Most roadside stand customers made a special trip to buy water-
melons, and average distance traveled was about 4 miles. Customers
learned of the outlet from friends or relatives, in most cases.


viii













Consumers purchased an average of almost two melons, ranging
from one to six. Average expenditure was $1.90. Customers' estimates
of savings ranged as high as $9 per transaction, and averaged $2.76.
Actual savings over retail prices were $2.57.

Customers rated freshness and quality of watermelons purchased
from roadside stands significantly higher than those from retail stores.
Along with those advantages, consumers also listed lower price as one
of the major reasons for purchasing watermelons direct from producers.















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



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



INTRODUCTION


In 1979, Florida farmers planted 50,000 acres of watermelons of

which 43,000 acres were harvested. The average yield was 150 hundred-

weight (cwt.) per acre, resulting in statewide production of 6,450,000

cwt. The marketing of watermelons started in May with 29 percent of the

harvest, peaked in June with 62 percent, and ended in July with 9 percent.

At a season average price of $5.00 per cwt., the total value of Florida's

watermelon crop exceeded $32 million (Florida Crop and Livestock Reporting

Service). Prices received by farmers are typically very high during the

beginning of the season and frequently plummet to levels that fail to

cover harvest costs late in the season, resulting in unharvested acreage.

Some watermelon farmers engage in direct marketing throughout the

season, but such activities become more prevalent late in the season

when commercial prices hit seasonal lows. Because of planting and

harvesting patterns, north Florida growing areas are the last to harvest




Robert L. Degner is associate professor and Kary Mathis is professor
of food and resource economics, University ot 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.












usually during periods of lowest prices. It is in north Florida that

the greatest incidence of direct marketing was observed.

The predominant form of direct marketing is the roadside stand,

although some direct marketing of watermelons occurs at Farmers' markets

and, rarely, through Pick-Your-Own (PYO) operations.

Most "roadside stands" for watermelons are of a temporary nature,

although a few are permanent. The temporary stands usually consist of a

simple awning, an area under a shade tree, or simply the tailgate of a

pickup truck. Such stands are usually located at strategic intersections

of major streets or highways where they receive maximum traffic exposure

dnd access.


OBJECTIVES


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

extent of benefits to watermelon producers and to the consumers who

purchase watermelons directly from producers. Specific objectives were

to: 1) identify marketing inputs required by the predominant methods

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 consumer for watermelons at representative direct marketing

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

determine consumers' perception of watermelon quality at direct market-

ing outlets as compared to that obtainable at supermarkets; 3) identify














additional benefits of direct marketing received by consumers patroniz-

ing direct marketing outlets and 4) determine demographic character-

istics of direct marketing outlet patrons.


PROCEDURE


The case study approach was utilized to determine producer benefits.

Watermelon producers were identified and located with the assistance of

county agricultural extension agents and state horticultural extension

specialists. Specific growers 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 June of 1979,

the peak of the harvest season.

Production cost data were obtained from secondary sources and

slightly modified to reflect general production practices used by most

growers (Brooke, Westberry). Considerable similarity was discovered

with respect to cultural practices. Thus, with the exception of family

labor and expenditures for hired labor, it was assumed that production

costs were similar for all growers. In some cases, total revenues and

costs of marketing inputs were estimated and used to determine financial

returns whenever growers could not or would not provide primary data.

Growers 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 nonprob-

ability, convenience basis, at typical roadside outlets. The cus-

tomer flow at all outlets was sufficiently slow to allow all patrons

to be interviewed during surveillance periods. Information relating

to consumers' purchases, demographic characteristics, shopping pat-

terns, and transportation were obtained in the interviews. Consumers'

monetary savings were determined by comparing prices paid for water-

melons at roadside outlets with prices prevailing at local grocery

stores.


FINDINGS


Producer Benefits of Direct Market


Three typical roadside stand operations are discussed below.

One was permanent and two were temporary. All were located in north

central Florida where considerable direct marketing activity occurs.


Case A


Grower A was a full-time farmer who operated a commercial veg-

etabel farm within five miles of a city of 75,000 persons. In 1979,

he grew 50 acres of watermelons and about 30 acres of assorted veg-

etables including peas, sweet corn, bell peppers, tomatoes, can-

taloupes and squash. Producer A sold about 85 percent of his water-

melon crop commercially and the remainder of his watermelons and all

hib uLher vegetables at a permanent roadside stand which he operated

for about four months of the year. Watermelons were sold for two

months of the period.














Revenue


Grower A sold an estimated 4,095 melons, the production from 7.5

acres, through his roadside stand over an eight-week period. The melons

weighed approximately 27.5 pounds each, and were sold for $1.00 apiece,

for total revenue of $4,095 (Table 1).


Costs


Grower A's production costs were estimated at $417 per acre.

Production and harvest labor were included in this cost. Production

costs also included all fertilizer, pesticides, herbicides and machinery

(Appendix Table 1).

Grower A used an awning over two tables for his stand. He had one

sign on the road. Depreciable life on the awning, sign and tables was

five years. He also used a half-ton truck, for which a mileage charge

was made in calculating costs (Table 2). Total investment was $199,

with an opportunity cost of 10 percent per year.

Liability insurance for the roadside operation, advertising and

utilities were the only supplies and services used, totaling $51. A

part-time worker was hired for the stand, with a total expenditure of

$104 (Table 1).


Net Returns


Total production costs of $3,128 and marketing costs of $389 were

deducted from the $4,095 in revenue, to give $578 in net returns (Table

1). If Grower A had sold those watermelons on the commercial market, he












Table l.--Annual costs and returns for Grower A's roadside watermelon
operation


Costs or returns


---- Dollars ----


Watermelon sales


Costs


Production costs


4,095 @ $1.00



7.5 acres @ $417


Marketing costs

Structures and equipment
Awning
Signs
Table
Truck 1,017 miles @ 204
Interest on capital
Total, structures and equipment

Supplies and services
Liability insurance
Advertising
Utilities
Total, supplies and services


Hired labor


34 hours @ $3.05


Total marketing costs

Net revenue

Net return if watermelons sold commercially (Table 3)

Net return due to direct marketing

Family labor

Marketing 120 hours

Net return per hour of family labor due to direct marketing


Item


Revenue


4,095



3,128


578

-313

891


7.43


aExcept for truck costs, one-seventh of all costs for structures and
equipment and supplies and services were allocated to watermelons because
six other items of equal importance were sold at the stand. See Table 2.












Table 2.--Structure and equipment
watermelon operation.


requirements for Grower A's roadside


Depreciable Price/ Total
Description Quantity lifea unit investment


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

Truck, one-half ton 1 -_c 6,000 143d

Awning 1 5 150 21

Sign 1 5 170 24

Tables 2 5 37 11

Total investment 199

Interest on capital @ 10 percent per annum 20


a
Straight line
no salvage value.


depreciation is calculated for all items, assuming


b
One-seventh of the total cost was allocated to watermelons because
six other items of equal importance were sold at the stand.

c
All operating expenses including depreciation are reflected in the
20 cent-per-mile charge (Table 1 ).

d
One-seventh of the total cost was allocated to watermelons for
two months.













could have realized $2.50 per cwt., or $2,815, for a loss of $313

(Table 3). Adding this as an additional return to direct marketing

to the $578 return gave the grower $891 total (Table 1). The resulting

net return per hour of family labor attributable to direct marketing was

$7.43,


Table 3.--Commercial marketing alternative for Grower A's watermelon
operation.


Costs or returns


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


Revenue

Watermelon sales

Costs

Production


1,126 cwt. @ $2.50



7.5 acres @ $417a


2,815



3,128


-313


Net return, conuiiercial al Lerrntive


Includes harvest labor. Watermelons are usually sold to truckers
in the field, so no marketing costs other than harvest labor are in-
curred.


Case B


Grower B was a full time, large scale commercial farmer. He

farmed over 2,000 acres of land, primarily in soybeans and corn. He

also grew 30 acres of watermelons of which over 90 percent were market-

ed commercially. In 1979, Grower B experienced tremendous watermelon


Item














yields several times his average. Almost 4,400 melons, the equivalent

of 2.7 acres, were sold through his temporary roadside stand. Grower B

also grew several acres of cantaloupes and peanuts which were sold

exclusively through his roadside stand. The "stand" was simply a 20

year old pickup truck which he parked on a vacant lot near a major

intersection in a town with a population of about 2,000 people. He

hired a high school student to operate the stand on a commission basis,

for 10 percent of gross sales. Grower B supervised the stand and another

family member picked and hauled watermelons to it; together they spent a

total of about three hours per day.


Revenue


Grower B sold 4,368 watermelons at $1.00 each through his roadside

operation, for total revenue of $4,368 (Table 4). As stated earlier,

peanuts and cantaloupes were also sold at the roadside location.


Costs


Production practices and costs were similar to those for Grower A.

Production and harvest labor were included in the $417 per acre cost, as

well as all fertilizer, pesticides, herbicides and machinery (Appendix

Table 1). Total production cost for 2.7 acres was $1,126 (Table 4).

Equipment costs for marketing, consisting mainly of truck mileage,

were $254. Interest on capital amounted to $36 (Table 5). Commission

for the student operating the stand was $437, so total marketing costs

were $691 (Table 4).










Table 4.--Annual costs and returns for Grower B's roadside watermelon
operation.


I tenCsso eun


---- Dollars ----


Revenue

Watermelon sales

Costs

Production costs

Marketing costs

Equipment
Truck
Truck
Interest on capital
Total, equipment

Hired labor (10 percent

Total marketing costs

Net revenue


4,368 @ $1.00



2.7 acres @ $417




392 miles @ 204
960 miles @ 20O



commission)


Net return if watermelons sold commercially (Table 6)

Net return due to direct marketing

Family labor

Marketing 168 hours

Net return per hour of family labor due to direct marketing


4,368



1,126


691

2,551

1,874

677





4.03


aThis truck was used primarily as a sales stand for three products,
so one-third of the daily mileage cost was allocated to watermelons.
See Table 5.


Item


Costs or returns













Table 5.--Equipment requirements for Grower B's
operation.


roadside watermelon


Depreciable Price/ Total
Description Quantity lifea unit investment


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

Truck, one-half ton 1 --c 500 28

Truck, one-half ton 1 -_c 6,000 333

Total investment 361

Interest on capital @ 10 percent per annum 36

aStraight line depreciation is calculated for all items, assuming
no salvage value.
bOne-third of equipment costs were allocated to watermelons be-
cause approximately one-third of the roadside revenue was derived from
them. The total investment was also prorated for the number of months
per year in use for watermelons.

CAll operating expenses, including depreciation, are reflected in
the 20 cent-per-mile charge (Table 4).


Net Returns


With revenue of $4,368 from watermelon sales, deducting production

costs of $1,126 and marketing costs of $691 left $2,551 net revenue

(Table 4). If Grower B had sold those watermelons commercially he

would have realized $3,000, or a net of $1,874 after production costs

were paid (Table 6). The additional $677 due to direct marketing re-

turned $4.03 per hour of family labor, for the 168 hours expended (Table 4).













Table 6.--Commercial marketing alternative for Grower B's watermelon
operation.


Costs or returns


---- Dollars ----


Revenue

Watermelon sales 1,200 cwt. @ $2.50

Costs

Production 2.7 acres @ $417a

Net return, commercial alternative


3,000



1,126

1,874


aIncludes harvest labor. Watermelons are usually sold to truckers
in the field, so no marketing costs are incurred.







Case C


Grower C was also a full-time, commercial farmer. He grew 60 acres

of watermelons, and an undertermined acreage of field corn. His farm

was on a major state highway, approximately one-half mile from a town

with 1,500 inhabitants. Grower C's roadside operation was quite simple.

His house was adjacent to the highway, so he simply stacked watermelons

in his front yard and erected several handmade signs.


Item













Revenue


Grower C sold less than 5 percent of his total production at

roadside, an estimated 1,650 melons, at $1 each. Virtually all of the

watermelons sold could be classified as "salvage" or surplus. The

grower's major emphasis was on commercial sales, and his roadside stand

provided an outlet for small quantities of melons remaining after

harvesting by commercial crews.

Costs


Since Grower C's roadside sales were salvage melons, no production

costs were charged to his roadside operation. His only marketing expenses

were for transporting the melons from the field to his house and for the

two signs. Interest on the truck investment represented the major part

of the $60 marketing cost (Tables 7 and 8). The roadside sales did

require that one of the family members be around. Grower C estimated

that someone had to be available for about 12 hours per day for the 30

day period during which they sold melons at roadside.


Net Returns


Grower C realized $1,590 in net revenue from roadside watermelon

sales. An estimated 360 hours of family labor were used in marketing.

This estimate of family labor is overstated because family members had

time between customers to do other things. However, Grower C and his

family earned about $4.42 per hour for their direct marketing efforts

(Table 7).













Table 7.--Annual costs and returns for Grower C's roadside watermelon
operation.



Item Costs or returns


---- Dollars ---

Revenue

Watermelon sales 1,650 @ $1.00 1,650

Costs

Production costs 0

Marketing costs

Equipment
Truck 30 miles @ $0.20 6
Signs 3
Interest on investment 51
Total, equipment 60

Total marketing costs 60

Net revenue 1 590

Family labor

Marketing 360 hours

Net return per hour of family labor due to direct marketing 4.42

production costs are assumed to be zero because watermelons could
not be sold through commercial channels, since the marketing season was
over.













Table 8.--Equipment requirements for Grower C's roadside watermelon
operation.



Depreciable Price/ Total
Description Quantity life unit investment


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

Truck, one-half tonb 1 _c 6,000 500

Signs 2 3 5 10

Total investment 510

Interest on capital @ 10 percent per annum 51

aStraight line depreciation is calculated for all items, assuming
no salvage value.
One-twelfth of the total investment was allocated to watermelons
because the marketing season lasted one month.
CAll operating expenses, including depreciation, are reflected in
the 20 cent-per-mile charge (Table 7).



Other Advantages and Disadvantages of Direct Marketing


All three growers felt that the most important advantage asso-

ciated with selling their watermelons directly to consumers was the

greater monetary return, at least for part of the season. One grower

felt that selling directly to consumers assured him of a market for

part of his crop whereas the commercial market was uncertain near the

end of the season. Another said that direct marketing gave him the

opportunity to visit with many of his friends and neighbors. The

primary disadvantage associated with direct marketing, mentioned by

all three growers, was the amount of time required.













Consumer Benefits


Time and resource constraints precluded obtaining a large,

random sample of watermelon stand patrons. In keeping with the

case study approach prescribed by USDA-ESCS, a relatively small

number of customers was interviewed. A non-probability, con-

venience sample of 10 patrons was interviewed at one of the water-

melon operations 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 surveillance periods.

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

provide a reasonable representation of customers typically patron-

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

assessment of the qualitative and quantitative benefits accruing to

customers of roadside watermelon outlets.

The following sections describe the demographic composition

of the sample, and patrons' transportation and roadside outlet shop-

ping advantages and disadvantages are also discussed, along with cus-

tomers' suggestions for imporving the watermelon outlets.

The Patrons


Four of the patrons were male and six were female, and 70 percent

were 50 years of age or older. Few young people were interviewed at















the watermelon stands; only one of the customers was under 35 years of

age (Table 9). In general, the customers were well educated. Over half

had attended college four or more years, compared with about 14 percent

of the population statewide (Thompson). Only two of the responsents

had completed less than twelve years of schooling (Table 9).

Most roadside customers came from small households. Forty percent

came from two-person households, and twenty percent from three-person

households. The remaining 40 percent were equally divided between four-

person households and those that contained more than four persons.

Thirty percent of the interviewees were retired, sixty percent were

employed, and one person was unemployed. Eighty percent of the respond-

were married (Table 9).

Patrons' incomes were relatively high compared to those reported

for the population of the counties in which the watermelon farms were

located. The sample contained no households with under $8,000 income

per year, and four times as many households with incomes in excess of

$25,000 (Sales and Marketing Management).

With respect to race, the sample contained a disproportionately

large number of whites. Although whites constituted approximately 82

percent of the population in the counties where the roadside operations

were located, whites made up 90 percent of the sample. Only one of the

10 customers was black. Most of the customers were Florida residents,

although two persons, or 20 percent, were visitors or temporary residents.












Table 9.--Demographic and socioeconomic characteristics of watermelon
purchasers at roadside stands.


Number


Characteristic


Sex of purchaser


Percent


Male
Female
Totals


Age of purchaser

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

Years of education

Less than 12
12
13-15
16 or more
Totals


Number of persons in household

One
Two
Three
Four
More than four
Totals


0
40
20
20
20
Th


Employment

Employed
Retired
Uneiiipluyed
Totals

Marital status

Married
Single
Totals











Table 9.--Demographic and socioeconomic characteristics of watermelon
purchasers at roadside stands -- Continued.



Characteristic Number Percent


Income

Under $8,000 0 0
$8,000-9,999 1 10
$10,000-14,999 0 0
$15,000-24,999 3 30
$25,000 and over 6 60
Totals 10 100

Race

White (non-Hispanic) 9 90
White (Hispanic) 0 0
Black (non-Hispanic) 1 10
Totals TI T

Residency

Permanent 8 80
Temporary 2 20
Totals TD TT












Transportation


Personal automobiles were the only means of transportation used by

watermelon purchasers. Most of the customers, 6 of the 10, indicated

that the trip to the stand was a special trip from their residence; no

other activities were conducted in conjunction with the trip. Four

customers combined other activities with their trip to the watermelon

stand. Customers that made a special trip from their residence to the

watermelon outlet traveled an average round trip distance of 6 miles.

The minimum round trip distance was 3 miles, and the maximum 8 miles

(Table 10).


Table 10.--Travel distances and times for consumers purchasing water-
melons at roadside stands.



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


--- Miles or minutes ----

Special Lrip fruim
residence to roadside outlet

Miles traveled 6 6 3 8
Driving time 6 9 5 12

Combination tripa

Miles traveled 4 0.3 0 1
Driving time 4 0.5 0 2

All trips

Miles traveled 10 3.7 0 8
Driving time 10 5.6 0 12

aCombination trips included activities in addition to roadside stand
visit. The figures reflect patrons' marginal expenditure of mileage and
driving time attributable to the roadside stop.













For those customers that combined other activities with their

trip to the PYO outlet, marginal expenditures of mileage and driving

time attributable to the roadside stop were minimal. The average

round trip distance traveled by all customers was 3.7 miles, re-

quiring an average of 5.6 minutes.


Patrons' Shopping Patterns


The majority of the customers, 60 percent, discovered the out-

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

all outlets used roadside signs for advertising, none of the patrons

credited them with their introduction to the outlet. One outlet where

interviews were conducted engaged in limited newspaper advertising,

and one customer said he discovered the outlet through newspaper ad-

vertisements. Three persons could not recall how they learned about

the outlet (Table 11).

None of the interviewees had previously patronized the outlet

where contacted. Half said they patronized the stand only once each

year, while twenty percent said they visited it more than three times

per season. Forty percent of the customers said they typically visit

at least one other roadside watermelon stand during the harvest season.

Four of the 10 shoppers come to the watermelon outlet alone, three

brought three or more additional customers with them. Seventy percent

of the patrons planned the trip to the watermelon stand (Table 11).











Table ll.--Shopping patterns of consumers purchasing watermelons
at roadside stands.



Question/responsesa Number Percent


How did you discover this outlet?

Roadside signs 0 0
Newspaper ads 1 10
Word-of-mouth 6 60
Do not recall 3 30
Totals 10 100

Have you patronized this outlet before?

Yes 9 90
No 1 10
Totals TI TOT

How often do you patronize this outlet
each year?

Once 5 56
Twice 1 11
Three 1 11
More than three 2 22
Totals -9 TTOM

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

None 6 60
One 3 30
Two 0 0
Three 0 0
More than three 1 10
Totals T 100

How many shoppers in your party?

One 4 40
Two 3 30
Three 2 20
More than three 1 10
Totals TT- TME













Table 11.--Shopping patterns of consumers purchasing watermelons
at roadside stands -- Continued.



Question/responsesa Number Percent


Was your watermelon purchase planned?

Yes 7 70
No 3 30
Totals TO T

aQuestions about some aspects of shopping behavior have been
abbreviated or paraphrased for inclusion here. See questionnaire
in Appendix.


Monetary Benefits


Average purchase per customer was almost two melons, with numbers

ranging from one to six. All outlets charged $1.00 per melon and no

quantity discounts were offered. Purchase amounts ranged from $1.00

to $6.00 with the average expenditure $1.90 (Table 12).

The customers were asked to estimate retail prices for watermelons.

Forty percent of the respondents had purchased watermelons in retail

stores during the current season, and those respondents expected to

pay an average of $1.99 each for them. The expected prices ranged from

$1.00 to $3.00 per melon. Retail prices observed in stores of two

leading super market chains during the interview period averaged $2.07

per melon, ranging from $1.29 to $3.00 (Table 12). Thus, direct out-

let customers tended to overestimate their dollar savings.

On the average the patrons estimated that they saved $2.76 per trans-

action, while at prevailing prices they saved an average of $2.57 Der














transaction. These "actual" savings ranged from nothing to $9.00

per transaction. The average difference between the roadside out-

let price and the prevailing retail price for all 10 customers

amounted to hypothetical savings of $2.03 per transaction.

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

thetical "savings" discussed here do not take into account transportation

expenditures or time spent in driving to the roadside stand.


Table 12.--Consumer expenditures and savings
purchased at roadside stands.


associated with watermelons


Number of
Item Unit observations Average Minimum Maximum


Quantity purchased Melons 10 1.9 1 6

Total expenditure Dollars 10 1.90 1.00 6.00

Price each at
roadside stands 6 1.00 1.00 1.00

Expected retail price 5 1.99 1.00 3.00

Observed retail price 23 2.07 1.29 3.00

Expected savings per
transaction 5 2.76 0.00 9.00

Actual savings per
transaction 5 2.57 1.07 6.42

Hypothetical savings
per transaction -2.03 2.03 2.03


aHypothetical savings per transaction are based upon the average
quantity purchased by the 10 customers at average, minimum, and maximum
prices observed at roadside stands compared with average observed retail
prices.














Freshness and Quality Comparisons


Roadside stand customers were asked to rate freshness and overall

quality of the watermelons from the outlet and watermelons 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 2.2

and 1.8 respectively for the watermelons purchased at the roadside

outlets, but only 4.2 and 4.3 for watermelons typically purchased at

retail grocery stores. A paired t-test indicated that the freshness and

overall quality rating differences were statistically significant (Table

13).



Table 13.--Consumers' comparisons cf freshness and quality of watermelons
bought at roadside stands and retail food stores.


Rating by source
Attribute Roadside stand Retail grocery t-statisticb



Freshness 2.2 4.2 2.74

Overall quality 1.8 4.3 2.82


a
Ratings were based on a nine point scale where 1 = excellent and
9 = extremely poor.

b
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 patronizing roadside watermelon outlets.

Freshness was the primary advantage mentioned by half of the respondents;

in total, 80 percent of those interviewed cited freshness as an advantage

(Table 14). Price was the next most frequently mentioned advantage,

cited by a total of 50 percent of the respondents. Quality was mentioned

by 40 percent of the respondents. Eight of the 10 respondents could

cite no disadvantages associated with patronizing the roadside watermelon

operation. One respondent mentioned the time or effort required to pick

through the melons as a disadvantage, and one customer complained of the

lack of selection (Table 14). No respondent mentioned more than one

disadvantage.


Suggestions for Improvement


Respondents were generally pleased with the roadside operation.
Seven of the 10 customers made no suggestions for improvement. Three

suggestions were made by three different shoppers. One said the PYO

operator should lower watermelon prices, another suggested making the

roadside entrance more convenient, and a third suggested more variety

in melons offered (Table 15).












Table 14.--Respondents' perceived advantages and disadvantages
associated with patronizing watermelon outlets.



Advantages/disadvantages First response All responses

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

Advantages

Freshness 50 80
Price 10 50
Quality 30 40
Pleasant atmosphere 0 10
Convenient location 10 10b
Total Tug --

Disadvantages

None 80 80
Have to pick through melons 10 10
Not enough selection 10 10
Total TOU TDU

percentages were based on 10 observations.

percentages were not summed because of multiple responses.


Table 15.--Watermelon patrons' suggestions for improving the outlet.



Suggestions Number Percent


No improvements necessary 7 70

Lower the price 1 10

Redo the entrance 1 10

Provide more variety 10

Total 10 100

















CONCLUSIONS


Marketing watermelons directly to consumers is an important

source of income for some north Florida commercial growers and for

smaller producers who grow several items for roadside markets. Com-

mercial growers realized additional income from salvage PYO operations

and, often, employment for family members who operated roadside out-

lets. Growers with full-time direct marketing operations realized

significant proportions of their incomes from watermelon sales. Since

commercial market prices drop drastically late in the season, many

watermelons would go unharvested if not sold directly to consumers.

Consumers benefited from direct purchases in several ways. Even

though most consumers overestimated their monetary savings, they did

save in comparison with retail purchases. Consumers also felt that

watermelons bought directly were fresher and of higher quality than

those typically available in grocery stores.


































APPENDIX












Appendix Table l.--Watermelons: Estimated costs for commercial production
and commercial marketing for one acre, North Florida, 1979.



Item Unit Quantity Price Value


---- Dollars ---


Cash expenses


Seed
Fertilizer
10-10-10 (spread)
15-0-15 (bag)
Lime
Fungicide (Bravo)
Insecticide (Lannate)
Tractor (125 hp)
Tractor (40 hp)
Truck (pickup)
Equipment
Labor
Operator
Field (preharvest)
Harvest
Land rent
Interest on cash
expense
Total cash expenses

Fixed costs
Tractor (125 hp)
Tractor (40 hp)
Truck (pickup)
Equipment
Total fixed costs

Total costs


Pounds

Cwt.
Cwt.
Ton
Gallunsr
Pounds
Hour
Hour
Mile
Hour

Hour
Hour
Acre
Acre


2.00

15.00
2.00
.33
0.80
1.00
1.00
2.65
20.00
3.65

4.20
14.00
1.00
1.00


Dollars 369.53


Hour
Hour
Mile
Hour


1.00
2.65
20.00
3.65


Source: Adapted from Westberry.


6.00

5.15
8.00
16.00
28.75
16.00
5.10
1.63
0.07
1.35

3.25
2.90
125.00
25.00

0.06



7.79
2.49
0.10
2.42


12.00

77.25
16.00
5.28
23.00
16.00
5.10
4.32
1.40
4.93

13.65
40.60
125.00
25.00

22.17
391.70


7.79
6.60
2.00
8.83
25.22

416.92










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


a (Years)











Section II

Direct Marketing 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
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 (speci y)
(Go to H & I)








For office
Use
F. How.many miles is it from here to yuur 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.

7. 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 ?(c
(code)
(circle one) 1. Yes

2. No







For office
Use


8. How many (units) of


did you purchase here today?
(code)


(specify quantity and units)


C. What was the total amount you spent for


(code)


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

I.

2.

3.


E. Have you bought o___ 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)
(c odT-
would be if purchased at a local grocery store or

supermarket? $


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, using i:he rntinq scale from I to 9 where 1-excellent and
9=poor, how would you rate the overall quality of the


you bought today?


(code)


Rating








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 relatives

4. Known for years 5. Other (specify)


Number of shoppers in your party?

Residencey:

1. Permanent area resident.


2. Temporary or visitor















REFERENCES


Brooke, D.L. Costs and Returns from Vegetable Crops in Florida,
Season 1978-79 with Comparisons, Economic Information Report
127, Food and Resource Economics Department, IFAS, University
of Florida, 1980.

Florida Cooperative Extension Service. Watermelon Production Guide
for Commercial Growers, Circular 96, IFAS, University of Florida,
1977.


Florida Crop and Livestock Reporting Service.
Statistics: Vegetable Summary, 1980.


Florida Agricultural


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
Watermelons, North Florida,
Economics Department, IFAS,


Costs of Producing One Acre of
1979," mimeo, Food and Resource
University of Florida.




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