Research Project Summary Information
Develop Energy-Efficient Distribution of Farm Products:Agricultural Product Distribution Initiative (ST7260-1)
A meadow-raised meat production and marketing cooperative, and an on-farm meat processing facility, has recently been developed and successfully marketed over $350,000 worth of meats in two years, mostly locally. Although demand around New York State has increased, high distribution costs limit expansion into distant markets.
Average annual farm sales in Central New York are less than $45,000. Cooperative distribution models where farmers pool products in order to provide product diversity and volume are often unsuccessful due to lack of organizational structures, the tendency for farmers to work independently and only make improvements in production rather than distribution, and the paucity of distribution models available for replication. Two area cooperatives, Meadow Raised Meats and Catskill Family Farms, each sell less than $300,000 annually. A third cooperative, Finger Lakes Organic, sells about $110,000 of organic vegetables each season. Collectively, these organizations distribute over $550,000 worth of product annually. By distributing more products collectively, cooperatives and farms can reduce the energy spent on delivering small orders individually. This will result in less labor cost, less fuel usage, and fewer packaging materials.
Cost-effective cooperative distribution of meadow-raised meat and other farm products was the goal of this effort. Specific objectives included: 1) research five distribution system models at three cooperatives; 2) pilot test a comprehensive collection and distribution system for at least $500,000 worth of products; 3) measure the cost and energy savings; and, 4) assist farmers and cooperatives in pooling products for distribution and sales.
The study determined that fuel use is not the primary concern of the farmer, though this could change if fuel prices increase. At current costs, a 50% increase in the price of fuel raises the wholesale price 1.15% and the retail price 1.94%. Transportation labor is the largest product distribution cost, but is not always valued properly when the farmer is also the distributor. This creates problems with product pricing when that farmer expands the business and hires an outside distributor.
This project helped three cooperatives and at least 32 farmers to distribute their products more efficiently, reducing their distribution costs and energy use through collaboration. Distribution costs for farmers of specialty products are often 20% or more of gross sales; this project targeted a reduction in distribution costs to less than 9% of gross sales, a level that was achieved with some distribution options.
As part of the project, the Distribution Manual for Specialty Agricultural Ventures was created to assist farmers and processors in determining how to distribute and market their products. Farmers will be able to use the report to help them understand how to evaluate and compare distribution systems to improve markets, improve sales, lower costs, diversify the customer base, and improve profitability.
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R&D - Environment & Energy Res