What about wholesaling produce?

Getting started
by Sally Colby
The thought of wholesaling might appeal to any grower who has dealt with erratic auction prices, finicky farmers’ market customers or the ability to sell all of one crop. A group of farmers and wholesale purchasers gathered recently in Leesburg, VA, to share their experiences as wholesale growers and purchasers with potential wholesale growers.
David Giusti, who farms Second Spring Farm in Purcellville, VA, grows seven main vegetable crops for wholesale after a stint selling at farmers’ markets. In addition to selling produce wholesale to D.C. area CSAs, retailers and fermenters, Second Spring Farm has a 90-member CSA.
“No buyer has a shortage of vegetables,” said Giusti. “Say I’m a new farmer, and I want to grow for wholesale. How do I know which vegetables to grow? The assumption is that if I can grow them, someone will buy them because I have great local vegetables and everyone wants local vegetables. But it’s much harder than that in practice, and if you were to ask anyone about what to grow, they all say, we’ll buy anything that’s top quality that you want to grow. But that isn’t helpful.”
When he was learning to farm and selling at farmer’s markets, Giusti says what would have helped him learn about wholesale marketing is having an understanding of the bigger picture of the wholesale world. “Who are the buyers it makes sense for me to work with,” he said, “and who are the ones I shouldn’t even think about?”
Because Giusti’s products are all seasonal, he often has a large supply of one item one week, then the supply diminishes. “I try to prearrange sales for everything,” he said. “I’d better find someone beforehand who will buy it. I find it very risky to try to grow something assuming that someone will like the best bok choy I can grow. I’ll talk with people I already know, and I know that this person will like a certain item at a certain time because of what I know about them. This person will also probably give me a decent price.”
Giusti says some buyers will set prices as a percentage of retail, and some follow a commodity price sheet. The buyers between those extremes are those he trusts the most because he believes they have his best interest in mind. “They also have their own business to run,” he said. “I can ask ‘what’s the going rate on this?’ It’s in my best interest to sell it even if it isn’t the highest price.”
For planning purposes, Giusti explained he can look at the co-op price list and see what the baseline, high-end price is and then determine whether a certain crop makes sense for him, given that’s the most he is likely to be paid for it. Giusti tries not to change prices during the season; instead, he prefers to work with people throughout the entire growing season and possibly future seasons rather than trying to compete with other growers on price within a season.
As far as buying agreements, for most people he works with year after year, Giusti doesn’t have a contract. “I have all the variables (size, harvest date, quantity) in mind, then I can figure out a plan to meet the variables,” he said. “I know people will take up to 300 heads of lettuce on Tuesdays every week of the summer. No one is counting on me for that, but they’d be happy to have it.”
One item Giusti has been selling to a major grocer for several years is heirloom tomatoes. “They’re buying locally grown produce so they can sit at the local table,” he said, describing the buyer. “If the people buying the food are store produce managers, they’re being squeezed by the local and regional farmers. They have to make money on produce, which is a loss leader anyway. They’re having a hard time from all sides, and it’s hard for them to pay attention to the real farmer who wants to sell local foods, even though corporate messaging is ‘we want to buy local food.’”
When it comes to non-specialty items, Giusti says a buyer has many farms to purchase from, and the only reason they purchase from a particular farm is because there are other reasons — not just because that farm has eggplant. It’s because they’ve known the farm and farmer for a while, or like them, or know that farm’s story, or know their customers appreciate the farms that are nearby.
Giusti says the difference between farmers’ market vegetables and commodity or commercial vegetables is big. “It’s been helpful for me to figure out which buyers will take which section of the harvest,” he said. “I might pick squash of different sizes, and while I can sell the slim squash hundreds of pounds at a time, what do I do with the other half of the harvest that’s a little bit out of spec for that one big buyer? I have to have other buyers who don’t care as much about size, or squash doesn’t make sense for me to grow.”
Part of the learning curve for Giusti was gaining an understanding how the market works and understanding why people want to buy from whom they buy. “The offshoot is that as a vegetable grower growing ‘regular’ vegetables is that they’re available from anyone, anywhere,” he said. “It isn’t interesting to buy zucchini, eggplant, cucumbers or tomatoes in the middle of summer because I can’t compete with other farmers. But I can compete on specialty vegetables and storage crops.” Giusti added that his background selling at farmers markets required a major shift in thinking from selling ripe, ready-to-eat tomatoes to under ripe tomatoes for the wholesale market.
Although selling wholesale can mean a lot of unpicked produce is left in the fields, Giusti tries to find a market for everything that would be considered edible food. “It may not be high quality produce,” he said, “but I’ve found people who are interested in purchasing items that don’t meet standards.”
Giusti says anyone who is considering wholesale marketing should start having conversations with potential buyers during winter. “That seemed early when I first started, but now I have a sense of different crops and what I will have,” he said. “I can’t say ‘I have the best eggplant’ because they don’t care about eggplant in January. But I can say to a new buyer, ‘here’s what I grow, here’s why you might be interested in what I have, here are some things that might work well for you.’ Hopefully I have an understanding of what they need.”
For growers interested in wholesale marketing, Giusti says it’s critical to know what can be grown well and reliably on a particular farm. “Whatever I’m really good at growing, that I can reliably produce and know I’ll have a good harvest, there’s someone out there who wants to buy it,” he said. “You need to know what you’re good at growing or what you like to grow.”

2017-11-24T09:46:53+00:00November 24, 2017|Grower East, Grower Midwest, Grower West|0 Comments

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