20 Apr How do I go about setting vegetable prices for restaurant and wholesale markets?
Answer: Pricing is one of the most challenging aspects of farming. Checking the regional market prices is a good place to start. Rodale Institute has a good online tool that gives conventional and certified organic prices on many crops based on the terminal markets across the country. Tomatoes are listed at $21.00 for a 20-pound box of certified organic, while conventional is listed at $14. This is a wholesale price for tomatoes. Tomatoes sold in canning quantities would generally be discounted a bit, but they can be “seconds” that would not do well at a retail market. You can find this pricing tool at http://rodaleinstitute.org/farm/organic-price-report-tool/.Generally, restaurants sales prices are not quite wholesale, and not quite retail. Many restaurants want great product at close to wholesale prices, but farm to table establishments will be willing to pay higher than wholesale prices. However, because of the higher quantities restaurants might commit to ordering, they deserve to pay less than what you would want to get in other direct sales outlets like farmers markets.Ideally, you should know what your costs are to produce a unit of any given crop on your farm. This is determined by looking at all the inputs to produce a certain crop, including variable costs like seed, soil amendments, labor for planting and weeding, and harvest time, as well as fixed cost like tools and equipment, irrigation, cost of the land, etc. When you determine what it cost you to produce a unit of tomatoes, then you can add a percentage to that cost of production (20 to 30% isn’t unreasonable) to come up with a price per unit. This way, you aren’t pricing below cost of production and losing money.For more information, check out the ATTRA publication Understanding Organic Pricing and Costs of Production. This publication provides resources to compare organic and conventional agricultural prices, discusses organic production costs, and offers tips on how to set organic crop prices. There are also several case studies included that summarize insights gained from successful organic farmers and ranchers. It’s available at https://attra.ncat.org/attra-pub/summaries/summary.php?pub=419.In addition, the ATTRA tipsheet Tips for Selling to Restaurants is a brief but informative publication that highlights the advantages, considerations, and key questions you should ask yourself when considering selling to a restaurant. You can access it at https://attra.ncat.org/attra-pub/summaries/summary.php?pub=388.You might also be interested in the ATTRA online tutorial Scaling Up for Regional Markets. This tutorial provides lessons and information for farmers who have success in smaller and more direct marketing channels and who are interested in expanding their operations to meet a growing demand for local food. It’s available at https://attra.ncat.org/tutorials/scalingup/.