By Jimmy Dula, NFU Intern
Pricing has been one of the most difficult ideas in farming for me to wrap my head around. Estimating cost of production can be difficult in a small but highly diversified operation. Most farmers don’t keep track of how many hours were spent weeding and managing rows of carrots versus rows of beets. And to compound the confusion, smaller producers often have several marketing outlets for a product, all at different prices, including farmers markets, wholesale, CSAs, and schools.
For me, it has helped to realize that there is no “correct price” for anything. Pricing is a balance of market demand, individual cost of production, and the going rate for a product. Some plants are easier to grow than others, and typically that means they market for less. But that’s not always the case. We are working on a crop of rhubarb, and in our climate, rhubarb comes back each year at a militaristic pace. Because of this, you might expect that rhubarb has a low market value, but that’s not the case. Almost no one in our region carries rhubarb at the farmers markets, essentially eliminating all competition. Since we will likely be the only producers with large quantities of rhubarb, we can lean towards pricing higher.
Some crops like onions and carrots are available at low prices at grocery stores. To be competitive, we price these products more closely to our grocery store competition. Our profit margin might not be as successful with carrots and onions as it is with rhubarb, but having a variety at the market helps us sell everything we bring, including the fresh salad greens, one of our most profitable crops.
What unique considerations do other producers take into account when pricing their products? How do you handle pricing your product based on competition when your “competition” is your neighbor in your farming community?
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