The University of Georgia

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1 The University of Georgia College of Agricultural and Environmental Sciences WHOLESALER AND DISTRIBUTOR PRELIMINARY OUTLOOK FOR FRUIT AND VEGETABLES PRODUCED IN GEORGIA Kent Wolfe, Greg E. Fonsah, Chris Ferland Introduction Georgia is the fourth largest producer of fresh market vegetables in the country. It is third in harvested acreage and fifth in value (USDA 2002). Georgia produces 33 different vegetable crops and fruit crops (Doherty et. al., 2001a, 2001b). The Foreign Agricultural Service Report indicates that fruits and vegetables are among the fastest growing sector in the consumer-related high value products industry (Sharpless 2001). The Center for Agribusiness and Economic Development (CAED) has conducted a marketing study aimed at understanding the dynamics of the Georgia fruit and vegetable industry. The overall objective of this study was to determine wholesalers and distributors supply sources for fresh produce. Additional points of interest were to: (a) estimate the percentage of fresh produce purchased from Georgia; (b) determine the factors impacting purchase decisions; (c) estimate the percentage of purchase directly from growers; (d) determine the most frequently purchased fresh produce items; (e) determine produce marketing opportunities for Georgia growers; (f) determine whether wholesalers and distributors were satisfied with current suppliers; (g) determine which crops are being processed and re-packed; (h) derive marketing strategies to better serve this market based on the study findings.

2 2 Materials and Method A total of 127 wholesalers and distributors were identified by the Center for Agribusiness and Economic Development. Each of the 127 businesses was mailed a confidential questionnaire and a letter explaining the importance of the study and the beneficial effects. A reminder letter was sent to those businesses that did not respond to the initial mail-out. Approximately 10% of the identified businesses returned a completed survey; the information obtained provided valuable insight into the industry. Results and Discussions (a) Percentage of Fresh Produce Purchased from Georgia There appears to be sufficient demand in Georgia for fresh produce. Unfortunately, Georgia s wholesalers and distributors are purchasing significant quantities of fresh produce from outside Georgia. It appears that southern vegetables and pecans are more likely to be purchased from Georgia while the bulk of the other fresh produce is obtained out-of-state. Table 1. Produce Most Frequently Purchased from Georgia. Item Percentage Pecans 100% Peaches 100% Butter/Lima Beans 100% Spinach 100% Vidalia Onions 100% Collard 80% Mustard 68% Watermelons 51% Sweet Onions 50% Sweet Potatoes 50% Source: 2001 Center for Agribusiness & Economic Development Wholesaler and Distributor Survey (b) Factors Impacting Purchase Decisions Table 2 indicates that quality is the most important factor in wholesalers and distributor s purchasing decision. However, it was interesting that quality and price were ranked higher than reliability. Unfortunately, the origin of fresh produce was ranked last. Wholesalers and distributors consider quality, price, and reliability to be the most important factors in making a purchase. Being Grown in Georgia will not help growers if their produce cannot compete on quality, price, and reliability. These three factors are the minimal requirements needed to enter this market and can be thought of as a baseline from which Grown in Georgia products must be differentiated.

3 3 Table 2. Average Ranking of Wholesalers and Distributors Purchase Decision for Fresh Produce Importance of Specific Factors in Wholesalers and Distributors Purchase Decision for Fresh Produce 1 Being Most Important Factor Average Ranking Quality 1.13 Price 2.00 Reliability 3.63 Quantity 4.13 Convenience 5.00 Transportation 5.25 Origin 6.88 Source: 2001 Center for Agribusiness & Economic Development Wholesaler and Distributor Survey (c) Buying Direct From Growers The data in Table 3 suggests that wholesalers and distributors do buy directly from growers. Three-quarters of all watermelons and two-thirds of cantaloupes and bell peppers are purchased directly from growers. The percentage of direct-from-grower purchases declines drastically for other produce. The most frequently consumed fresh vegetables are less likely to be purchased directly from growers. For example, less than 25% of onions, tomatoes, and carrots are purchased directly from growers. This suggests that there is a significant opportunity for Georgia s growers to market fresh vegetables directly to wholesalers and distributors, thus, eliminating middlemen. If producers want to eliminate wholesalers and distributors, they will become responsible for generating sales, coordinating product transportation and delivery as well as addressing consumer complaints. However, growers are going to have to ensure competitively priced, quality products that can be reliably supplied.

4 4 Table 3. Produce Purchased Directly from Growers Fresh Produce Number of Companies Responding yes Percent that Buy Directly From Growers Watermelons 6 75% Cantaloupe 5 63% Bell Peppers 5 63% Peaches 4 50% Zucchini 4 50% Cucumbers 4 50% Eggplants 3 38% Jalapeno Peppers 3 38% Cabbage 3 38% Yellow Squash 3 38% Pecans 2 25% Blueberries 2 25% Crooked Neck Squash 2 25% Sweet Corn Peppers 2 25% Roma Tomatoes 2 25% Vine Tomatoes 2 25% Okra 2 25% Green Tomatoes 2 25% Turnip Greens 1 13% Carrots 1 13% Mustard Greens 1 13% Green/Snap Beans 1 13% Kale (greens) 1 13% English Peas 1 13% Field/Southern Peas 1 13% Butter/Lima Beans 1 13% Vidalia Onions 1 13% Regular Cut Beans 1 13% Long Hot Peppers 1 13% Collard Greens 1 13% Green Onions 1 13% Cherry Tomatoes 1 13% Source: 2001 Center for Agribusiness & Economic Development Wholesaler and Distributor Survey (d) Frequently Purchased Fresh Produce With the exception of beans, wholesalers and distributors buy a wide variety of fresh produce. The information in Table 4 provides insight into what percentage of wholesalers and distributors purchase specific fresh produce. Watermelons and cantaloupes are very popular produce items and are purchased by 80% or more of the respondents. Excluding bell peppers, about four in ten wholesalers and distributors reported buying different types of peppers.

5 5 Table 4. Georgia Wholesaler and Distributors Purchasing Fresh Produce Fresh Produce Number of Companies Percent Purchasing Responding Fruits Blueberries 5 50% Cantaloupes 8 80% Peaches 6 60% Pecans 3 30% Watermelons 9 90% Vegetables Beans: Reg. Cut 1 10% French Cut 1 10% Butter/Lima 1 10% Green/Snap 3 30% Cabbage 6 60% Carrots 7 70% Cucumbers 8 80% Eggplants 6 60% Greens: Collards 5 50% Kale 4 40% Mustard 3 30% Spinach 5 50% Turnip 5 50% Okra 5 50% Onions: Green 3 30% Sweet 4 40% Vidalia 4 40% Peas: English 2 20% Field/Southern 2 20% Peppers: Bell 7 70% Habenero 1 10% Jalapeno 4 40% Long Hot 3 30% Scotch Bonnet 2 20% Sweet Corn 5 50% Sweet Potatoes 4 40% Tomatoes: Roma 3 30% Vine 6 60% Green 5 50% Cherry 4 40% Yellow Squash 5 50% Straight Neck 2 20% Crooked Neck 4 40% Zucchini 7 70% Source: 2001 Center for Agribusiness & Economic Development Wholesaler and Distributor Survey (e) Produce Needed in Georgia Table 5 indicates the types of fresh produce wholesalers and distributors would like to see more of in Georgia. The results suggest that all bell peppers (red, green, and yellow), cucumbers, zucchini, and watermelon are areas where Georgia s growers could supply additional products.

6 Table 5. Types of Fresh Produce Wholesaler and Distributors Would Like To See More Grown In Georgia Fresh Produce Number of Times Mentioned Percentage of Respondents Red Bell Peppers 6 75% Cucumbers 5 63% Green Bell Peppers 4 50% Yellow Bell Peppers 4 50% Zucchini 4 50% Watermelons 4 50% Crooked Neck Squash 3 38% Yellow Squash Straight Neck 3 38% Cabbage 3 38% Carrots 3 38% Sweet Potatoes 3 38% Vine Tomatoes 3 38% Sweet Corn 3 38% Cantaloupe 3 38% Cherry Tomatoes 3 38% Green Tomatoes 3 38% Sweet Potatoes 3 38% Roma Tomatoes 3 38% Pecans 2 25% Spinach 2 25% Green Onions 2 25% Okra 2 25% Peaches 2 25% Serrano Peppers 2 25% Poblano Peppers 2 25% Habenero Peppers 2 25% Jalapeno Peppers 2 25% Grape Tomatoes (Red and Yellow) 2 25% Anaheim Peppers 1 13% Green/Snap Beans 1 13% Blueberries 1 13% Field/Southern Peas 1 13% English Peas 1 13% Scotch Bonnet Peppers 1 13% Vidalia Onions 1 13% Long Hot Peppers 1 13% Kale 1 13% Collards Greens 1 13% Eggplants 1 13% Yellow Tomatoes 1 13% Pears 1 13% Turnips 1 13% Butter Beans 1 13% Source: 2001 Center for Agribusiness and Economic Development Wholesaler and Distributor Survey 6

7 7 (f) Satisfaction with Current Supplier Overall, the majority of the wholesalers and distributors appear to be satisfied with their current suppliers, quality, delivery, quantity, and seasonal supply of fresh produce they are able to provide. There are some areas where wholesalers are less than satisfied, for example, the quality and delivery of cantaloupes in the fresh fruit category and onions, tomatoes, cucumbers, and cabbage in the fresh vegetable category. Satisfaction with current suppliers makes market entry more difficult. If the data had suggested that wholesalers and distributors were dissatisfied with their current suppliers, then the opportunity to market to these organizations is greater than a situation where supplier satisfaction is not an issue. (g) Processing and Re-Packing Carrots, cucumbers, and bell peppers are to be the most frequently processed fresh produce. Approximately 50% of the wholesalers and distributors indicated they process carrots. Tomatoes and zucchini were the most frequently mentioned re-packed produce. (h) Policy Implications Table 6 indicates Georgia produces more fruits and vegetables than actually consumed in Georgia. It further indicates a surplus productivity of onions, watermelons, cabbage, cucumbers, bell pepper, peaches, snap beans, eggplants, pecans, and lima beans. Table Georgia s Market Potential vs. Production for Selected Fruits and Vegetables. Per Capita Consumption (Ibs) Ga 2001 Population (millions) Georgia Market Potential (million Ibs) Georgia Production (million lbs) Excess Ga Supply (million lbs) Item Onions Tomatoes Watermelons Carrots Cabbage Cucumbers Bell Pepper Peaches Snap Beans Eggplant Pecans Lima Beans Source: Georgia Market Potential for Select Produce, Center for Agribusiness and Economic Development One method of addressing the issue of excess supply could be to increase per capita consumption through an advertising campaign to encourage Georgians to purchase locally grown produce over out-of-state produce. Further developing regional and export market is necessary to move surplus fresh produce in order to maintain price levels. However, the fact that wholesalers and distributors are currently satisfied with their current suppliers makes it difficult for new entry if aggressive marketing strategies are not implemented.

8 8 Conclusion This study reveals that Georgia wholesalers and distributors are purchasing a significant quantity of their fresh produce outside of the state. This is not necessarily a problem as vegetable production travels up the Atlantic states as the seasons change. However, during Georgia s production window, it is important to better market fresh produce to wholesalers and distributors. According to the study results, quality, price, and reliable supply are the most important factors influencing wholesalers and distributors purchasing decisions. An appreciable number of fresh produce such as watermelons, cantaloupe, bell peppers peaches, zucchini, cucumbers, and eggplants, were bought directly from Georgia growers. Fresh produce in high demand included blueberries, cantaloupes, peaches, pecans, watermelons, cabbage, carrots, cucumbers, eggplant, zucchini, and tomatoes (vine and green). Since this is a preliminary study, a more detailed follow-up investigation is recommended. Authors Dr. Kent Wolfe is a Marketing and Finance Specialist in the Center for Agribusiness and Economic Development, Department of Agricultural and Applied Economics, University of Georgia, Athens, Georgia, Dr. Greg E. Fonsah is an Assistant Professor and Extension Economist, specializing in fruits, vegetables, and pecans, University of Georgia, Tifton, Georgia Chris Ferland is a Finance and Marketing Specialist in the Center for Agribusiness and Economic Development. Senior authorship is shared. Acknowledgement We are indebted to Dr. John McKissick, Dr. Dick Schermerhorn, Mr. Chris Ferland and Ms. Teresa Byrd who assisted in compiling and editing the survey questionnaires. REFERENCES Doherty, B., N. Dykes, and J.C. McKissick (2001a) 2000 Georgia Farm Gate Value Report. College of Agricultural and Environmental Sciences, The University of Georgia, Center for Agribusiness and Economic Development, SR Doherty, B. and W.O. Mizelle. (2001b) Vegetable Acreage and Value Estimates College of Agricultural and Environmental Sciences, The University of Georgia, Center for Agribusiness and Economic Development, SR Sharpless, R. Mattie (2001) Status of the U.S. Agricultural Export Situation, the U.S. Department of Agriculture s (USDA) Strategy for Expanding Overseas Sales, and How Coming Policy Decisions can Benefit our Food and Agricultural Sector. Speech delivered before the Senate Agriculture Committee, the Subcommittee on Production and Price Competitiveness, Washington, DC, August 1 (FAS online). USDA, (2002) Vegetables Annual Summary (PVG-BB). Foreign Agricultural Statistics Board, NASS, USDA.

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