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Objectives Develop demand and market valuation models for the produce sector that can be used to evaluate effects of increasingly complex product differentiation schemes (organic, enhanced health claims, biodynamic), trade, commodity marketing programs, labeling programs (local, food miles, Fair Trade), traceability systems, and food safety events in the U.S. produce markets. Analyze the relative benefits and costs, to producers and consumers, of government and industry-led marketing and policy programs (certifications, Leafy Greens marketing order, Country of origin labeling, farmers markets) using both theoretical approaches and empirical evidence from multi-state applied research projects. Assess the changing coordination and supply chain management strategies being implemented in the fruit and vegetable sector and identify strategic organizational and marketing implications for a set of firms that are diverse in terms of commodity, marketing approach and size of operation (including small and mid size farms). Expected Outputs The lists of progress and results we expect to see are listed below. It is important to note that this team is not merely focused on academic channels. In addition to the journal articles and organized sessions commonly expected of a research committee, we expect each team member to present their own, and each other's work at state level meetings of produce associations, retailers, direct marketers, farm organizations and interested consumers. As a team, we hope to engage with one new and relevant stakeholder group each year, with the initial goal being the National Retailers group or the USDA Know your Farmer, Know your Food working group. The deliverables we intend to create, which we believe will be valued by these partners, are categorized below. The outcomes we expect to have from this project include a diverse set of publications (journal articles, case studies, industry contract reports, fact sheets), as well as some decision tools and policy briefs. There may also be some nicely integrated data series and market databases which will provide market assessment and coordination tools for stakeholders. In effect, this will be a very applied and integrated research project.
<p>NON-TECHNICAL SUMMARY:<br/>In recent years, greater concerns with respect to diet and nutrition have led to an increased number of marketing and promotional messages focused on the benefits of eating fresh fruit and vegetables. Both consumers and retailers have responded to the spotlight on fresh produce, resulting in increased purchases, marketing resources and even new legislation to promote Specialty Crop production in the US. Between 1987 and 2000, US per capita consumption of fresh fruits and vegetables rose 15 percent (Govindasamy and Thornsbury, 2006). Retailers have responded by increasing the size and range of produce sold, with the average number of items in fresh produce departments rising from 173 to 350 items between 1987 and 2001 (Progressive Grocer, 2002). The increased popularity of fresh produce represents considerable potential for enhanced marketing
revenues to producers if they can recognize and harness opportunities emerging from changes in food purchases. Meanwhile, producers and consumers need to be informed about the emergence of new business strategies, regulations and policies that may influence their confidence in (consumers) and competitiveness within (producers) this quickly innovating marketing sector. In recent years, increasing numbers of consumers have shown increased interest in foods produced in unique ways, including organic, local, pesticide free, Fair Trade or as functional foods. These individuals and households are also fueling changes in the food system as they seek to purchase their produce through channels as diverse as direct marketing and traditional supermarkets, and with expectations as broad as picking their own produce to highly branded products with 3rd party certifications. This evolution has led a
higher number of farmers to consider new marketing strategies including farmers markets, joining a producer alliance, running a Community Supported Agriculture (CSA), beginning their own value-added ventures or producing new crops and cultivars to gain access to specialty niche markets. Still, the majority of fresh produce is marketed through more conventional, large-scale wholesale and retail partners who are concerned about the efficiencies that such scales brings. And despite the belief that the fruit and vegetable segment of the food market is growing and healthy, little is known about the response of increasingly demanding consumers and food supply chain partners, the changing coordination and supply chain responses of fruit and vegetable enterprises or the response to regulations and policies developed to oversee and guide new innovations in this sector. In short, if this work is
not done, producers, wholesalers and retailers are likely to remain reactionary to domestic and global shifts in consumer behavior and policy may be developed without a full assessment of potential implications for consumers and producers.<p>
APPROACH:<br/>The analysis of coordination and management strategies entails a broad range of empirical methods including semi-structured case studies, descriptive assessments, econometric analysis, and simulation techniques. The particular method chosen will vary depending on the context of the specific issue and the data available. Coordination among researchers in multiple states will provide a richness of detail for comparison that is often not achievable through individual efforts. Outcomes are expected to include assessment of changing agri-food structure on competitiveness of U.S. industries. This information is critical for business success, either directly or indirectly, as the balance of power within the marketplace shifts. Descriptive assessment of current fruit and vegetable market structure and production trends can provide a benchmark for further
evaluation of proposed or enacted change in strategy. Case studies, anecdotal evidence, literature reviews, and statistical analyses are all tools likely to be employed in a descriptive model. Simulation methods may adopt game theoretic techniques to provide an analysis of strategic interaction between agents in an economy. Since even in cases where regulatory policies increase the net welfare of society there may be agents with individual welfare losses, producers, consumers, and policymakers have incentives to act strategically. Game theory allows such interactions to be modeled in a context of imperfect competition and can be used to analyze agents' behavior in domestic, bilateral, or multinational policy setting arenas. Results will contribute to a better understanding of the underlying market structure in fruit and vegetable industries, and may increase the multi-state research
effort of transferring insights to other cases, firms, or industries. Anticipated outcomes would include benchmark comparisons of U.S. firms and industries active in fruit and vegetable markets. For example, one particular project between California and Colorado is focused on developing case studies of Values-Based supply chains where producers are organizing to improve the scale of their operations, but using labels and assurances to secure better returns. Another example is to continue using established networks with the retail community (Colorado and Oregon), MarketMaker team (Colorado, Kentucky, Louisiana, and New York) and USDA Local Food systems network (Colorado, New York, Ohio, USDA-ERS, and West Virginia) to solicit institutional buyer perspectives and feedback on high needs areas for research relevant to those stakeholders. Possible changes in the market structure of the supply
chain and competitiveness ramifications for the stakeholders of the produce industry will be analyzed by California, Georgia, and the USDA using case studies, descriptive assessments, and econometric/game theory frameworks. As consumer preferences evolve and globalization of markets continues, change becomes a certainty for U.S. fruit and vegetable industries, as they must constantly assess strategies for remaining (or becoming) competitive in fluctuating markets.</p><p>
PROGRESS:<br/>2011/10 TO 2012/09<br/>OUTPUTS: Activities - 1. A previously collected data set was analyzed and evaluated to assess interactions of cause-related marketing attributes. Conjoint analysis was used to test interaction terms across similar and dissimilar ""causes"" (i.e., charities), product types and donation commitments made (i.e, ""a portion of proceeds"" vs. $1.00 for every unit purchased); 2. Primary data was collected via personal interviews/interventions with two target populations to capture consumer opinions about ""local"" foods. A means-end chain analysis and word association tests were adapted from the marketing literature to identify underlying motivations for consumer demand for local products; 3. Initial steps were taken to develop an invited paper session for the 2013 SAEA meetings focusing on the links between farm revenue for small scale producers
in the southeastern US and efforts to market locally produced fresh produce. PARTICIPANTS: James Sterns, Investigator Alex Hettinger, Master graduate student Diana-Isis Nyob, Master graduate student European Union-United States Atlantis Program, which provided financial support for Diana-Isis Nybo, as well as interaction and collaboration with two European scholars - Dr. Rainer Hass, Professor, University of Natural Resources and Life Sciences, Vienna, Austria; and Dr. Gianluca Brunori, Professor, University of Pisa, Italy. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.</p>