- Author: Leda McDaniel
Why does lettuce cost $2.50? How do grocery stores set their prices? How much of that money goes to the farmer?
To answer these questions, I turned to two experts in their respective fields:
Cia Harden, lead produce buyer for BriarPatch Co-op in Grass Valley, CA
Jim Muck, owner of Jim's Produce, a family farm in Wheatland, CA
How much money goes to the farmer?
The difference between retail price and wholesale price
There are two key prices in our discussion: the price the farmer receives (wholesale price) and the price the consumer pays (retail price).
Jim explains his wholesale price setting this way:
“The simple approach I took was to discount my farmers' market price by 25%. This price was still too high for most buyers. So, I give an additional discount for the purchase of a case of produce.”
Jim has learned that his wholesale price needs to cover his costs of production, but still be affordable to produce managers.
How do grocery stores set their prices?
The store purchases produce at wholesale prices from a farmer or distributor. Then, they add on the cost of doing business, and this is the retail price.
How much they need to add is often calculated as a margin. Margin is the proportion of profit to selling price. Margin is a helpful number for produce buyers to set profit goals. According to Cia, BriarPatch Co-op is looking for a specific margin on most produce. But, The BriarPatch is also interested in promoting local agriculture and buying from local farmers.
As Cia explains, “We are very flexible with local pricing. Often, we are very tight with the distributor margin in order to have this greater flexibility for local produce. Particularly if the distributor prices are all over the place or seem too low, I'll ask the farmers what they'd like to get for their product.”
Jim says that wholesale pricing is more flexible than he first realized. He was surprised at this and gave this example, “I was actually told last year by a produce distributor to raise my prices. There is some flexibility there, but it all depends on the buyer.”
As you can see, prices may be higher for higher quality produce.
Cia comments on this, saying, “I almost always pay the local farms a higher price than what a distributor is selling to us, starting with using a different basic margin for local. I often go beyond this different margin and pay even more, thinking about what price we could sell the item for that would still be attractive to the customer. Price also depends on quantity supplied and the quality of the produce.”
If you are interested in how gross margin is calculated, check out this online calculator:
http://www.calculatorsoup.com/calculators/financial/margin-calculator.php
As an example, let's say a store buys lettuce at a wholesale price of $1.50/head (enter 1.50 into the field marked, “Cost”). Let's say that the head of lettuce is sold at a retail price of $2.50 (enter 2.50 into the field marked, “Revenue”). What is the gross margin the store will receive? What is the gross profit?
Gross Margin = 40%
Gross Profit = $1.00
Why does lettuce cost $2.50?
It's complicated
Well, as we saw above, there are market forces working from many directions. Most simply, the farmer and grocery store need to make money on the head of lettuce, and you (as the consumer) need to value the head of lettuce enough to pay the asking price.
Clearly, there is negotiation from the farmer and the grocery store for a fair wholesale price. Also, higher quality produce can command a higher price.
That's why lettuce costs $2.50.
Interview content reprinted with the permission of Cia Harden and Jim Muck.
- Author: Leda McDaniel
Check out our first video cooking demonstration and learn how to make Massaged Kale Salad:
https://www.youtube.com/
- Author: Dan Macon
You can't pick up a paper, listen to the radio or turn on the television news in recent weeks without hearing about California's historic drought. This year is shaping up to be the driest in recorded history - and even if we get rain in the 6-7 weeks that remain of our typical rainy season, we're headed into the summer months without much stored water (in the form of snow pack and reservoir storage). While the media has finally figured out that we're in the midst of a dry year, local farmers and ranchers have been dealing with (and planning for) dry conditions for some time now.
Most vegetable farmers begin planning for the coming growing season in November and December. By now, they've ordered seeds and may be starting plants in the greenhouse for transplanting later this spring. As the local water districts (Placer County Water Agency and the Nevada Irrigation District) consider reductions in summer water deliveries, growers are faced with hard decisions about what and how much to actually plant - should they plant their normal acreage given the risk that they may not be able to irrigate all of it? Both irrigation districts sell water by the miner's inch (a remnant of our Gold Rush days) - one miner's inch is generally enough to irrigate one acre of vegetables in the hottest months of the summer. If irrigation deliveries are reduced, many vegetable growers will be forced to reduce production.
For permanent crops (that is, crops like fruit trees, cane berries and grapes), a reduction in water may force farmers to sacrifice specific blocks of trees or vines. In other words, farmers will need to decide which trees to keep alive with irrigation water during the summer - and which to allow to die. In some cases, this may be an opportunity to take older, less productive trees or vines out of production. In the short term, however, reduced production presents cash flow problems for growers.
So what does all of this mean for those of us who enjoy our locally grown bounty? The laws of supply and demand suggest that prices may rise if production falls due to the drought. Perhaps more importantly, it means that some small growers may not remain in business. Others may take on off-farm work to address their cash flow needs. In the long run, the drought will help us all better understand the importance of reliable water to our local food system.
In the meantime, what can we all do to alleviate the water shortage? Simple things, like taking shorter showers, capturing rainwater and planting drought-tolerant landscaping, can help. Perhaps we should consider establishing a community-focused funding source that can help local farmers adopt water conservation technology and practices. Most importantly, I think we can talk - simply acknowledging that our local farmers are dealing with difficult conditions can help make these conditions more bearable!
- Author: Leda McDaniel
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Eat Local Placer Nevada will open its 2014 Farmers' Market tasting season this weekend with samples of our Cabbage Citrus Slaw. Many of the ingredients are locally available now, including the cabbage, carrots, garlic, and cilantro as well as navel oranges, mandarins, and Meyer lemons.
Join us at the Foothill Farmers' Market in Auburn this Saturday for a taste of Cabbage Citrus Slaw. The market is open year round from 8am-Noon and is located in the Old Town Courthouse parking lot.
Cabbage Citrus Slaw
½ head of cabbage (5 cups), finely shredded
2 carrots, grated
½ bunch cilantro, finely chopped
1 navel orange, segmented
½ grapefruit, segmented
Juice from 1 lemon
Juice from 1 mandarin
1 clove garlic, minced
¼ cup + 1 tsp. olive oil
Salt and black pepper to taste
1 tsp. crushed red pepper (optional)
Cut orange and grapefruit segments in to chunks and mix in a large bowl with cabbage, carrots, and cilantro. In a separate bowl, whisk together olive oil, lemon juice, mandarin juice, garlic, salt and pepper and red pepper if desired. Then, toss vegetables with dressing. Let sit in the refrigerator for 1 hour. Serve chilled.
- Author: Leda McDaniel
If you think that winter squash is just for soups and stews, you are wrong! I am here to tell you that there are many other dishes that can be made with this phenomenal vegetable (not that the soups are bad, try these two amazing butternut soup recipes: Butternut Squash Soup with Almond Butter or Curried Butternut Squash with Mandarin and Cumin).
I love winter squashes because they double as decorations. Most varieties keep well, so in the fall and winter I’ll buy a few and keep them on my counter until I’m ready to use them. It classes up my kitchen and provides me with a go-to ingredient at a moment’s notice.
The beauty of winter squash is that there are so many varieties to choose from and many are amazingly versatile ingredients. Varieties of winter squash include acorn, butternut, kabocha, delicata, spaghetti, and buttercup (My favorite this year has become giant pink banana squash, amazing pureed with a little butter and salt!). Winter Squash can be used in many creative ways other than the standard preparations. For example: have you tried butternut squash as a pizza sauce replacement? Yep, one of the biggest hits that I have ever had when cooking for my family was this simple recipe:
Butternut Squash Pizza
1 medium butternut squash (peeled and cut into 1” cubes)
2 T dried herbs of your choice (rosemary, thyme, oregano, sage)
olive oil
Sea salt to taste
1 pizza crust
1 Cup of grated Mozzarella cheese
½ Cup walnuts (toasted and chopped)
Toss butternut squash with olive oil to coat then sprinkle with sea salt and your choice of dried herbs (I like rosemary and thyme). Spread squash on a baking sheet and bake at 350 degrees until tender (about 40-60 minutes). Let cool and puree squash with about 3 T of additional olive oil, or until desired consistency. Spread this puree on your favorite pizza crust like you would marinara sauce. Top with grated mozzarella or gruyere cheese and sprinkle toasted walnuts over the top. Bake at 425 degrees until cheese is bubbly (about 25-35 minutes). Let cool, slice, serve and watch people go wild over this!
Winter squash is also a very nutritious find for winter vegetables. Just one cup of cooked winter squash provides these percentages of the USDA recommended daily values: 214% of Vitamin A, 33% of Vitamin C, and 23% of Dietary Fiber. It also provides 2 grams of protein. What unique uses do you have for winter squash?
