Grumpy farmers and the produce racket
This is just a rant. It got me pretty steamed, and none of my friends care about the wholesale value of produce, so.... I thought I'd lay it on you guys.
I got a really interesting call from a farmer today. On my personal cell phone, which irritated me, but that's another matter entirely. He's not someone we've ever worked with before, that I know of. He said he'd been talking with one of the other folks that grow for us, and he was wondering if we needed any asparagus for next week.
I said no, that I had already ordered our asparagus for Tuesday. "What do you charge per pound?", I asked, thinking we could try him the following week.
$4.00/lb. "Ooh, yeah. That's a little high for us. We're paying about $2.50/lb right now." I immediately winced. I knew my boss wouldn't have wanted me to tell him how much we actually paid.
"2.50 a pound? So you're buying it from Kroger and Wal-Mart then."
We're a CSA-alternative local produce subscription company. Of course I'm not buying from freaking Wal-Mart. I couldn't even respond to him. I just kind of let him keep going on about how he couldn't even pay his guys to cut it for that, etc....
Eventually I spoke up and said I could give him the owner's number if he wanted to talk over the price with him. "Oh, no, I'm not going to go through that. I've got a lot coming up like RIGHT NOW...."
"Well, like I said, we've already ordered for this week, so I'm sorry I can't take any of it off your hands. We'll see what happens next week."
I mean, really. Is that how he plans on winning new business? Of COURSE I'll drop my cheaper supplier! Your GREAT CUSTOMER SERVICE is worth the extra money!
I mean, seriously. What am I supposed to retail that for? Even $2.50 is kind of a stretch. When a pound of asparagus is $1.99-$2.99 in the grocery store, you have to be a pretty committed locavore to pay $6.25 a pound.
And actually, that brings me to another question. I know there are a few others around here who work in produce in some capacity. What is the usual markup on produce? I'm supposed to start at 250% and then adjust it as seems reasonable. Before I became the office manager, I thought that was astronomical. Now that I'm keeping track of the books, it seems like even that is barely enough.... But maybe my boss is just really inefficient. I'd be interested to see how it compares.
I used to manage the produce department at an organic market. In season the vast majority of my purchases were local. One farmer who the shop owners were attached to would swing by after the weekly farmers market was over and expect me to pay his retail price for stuff (mainly greens) which had been in the heat all day. Crazy, plus the shelf life was already substantially decreased since he didn't even keep the produce on ice. And it's been picked over so. Unfortunately the owner would often override my decision which simply encouraged the guy. Then I'd get reamed out since sales would be off due to no one being foolish enough to pay top dollar for shopworn goods. Or we would have a hole in the inventory for several days since it got to the point of being unsellable. Part of the reason I left that position...
I don't recall the factor we used - it's been awhile but 250% doesn't seem off. I did a lot of adjusting. Took a loss on somethings (herbs) to stay competitive and build that niche. If I got a great deal on kale I'd use the extra profit to make the some of the other greens more affordable.
Produce is a real tricky department. Prices fluctuate wildly and there is a lot of labor prepping, storing properly, culling frequently to keep everything in good shape. Leave out a step and you can loose your shirt pretty fast.
Lastly, I've dealt with many farmers. There are a fair number of them who really don't understand the business side of their operation and hate dealing with that part of things. Some do have a good understanding of their numbers and realize the difference between wholesale and retail. They are the ones who will make it in the long run. They are the ones who are a pleasure to deal with and support.