There are two ways to sell agricultural produce in the fresh market. One is to sell directly to consumers through roadside stands, farmers’ markets or pick-your-own operations.

Direct marketing: This requires a change in the focus by growers. They have to focus production around their market rather than produce a commodity. The underlying concept is that there is a difference between marketing and selling. It’s possible to add value to products by direct marketing when producers assume the marketing functions traditionally done by others. By doing this, producers become price makers in their market, not price takers. Direct marketing of fruits and vegetables can be done through marketing channels that are available to growers

There are many steps in marketing of fresh fruit and vegetables, including picking, cleaning, packing, transporting, possible broker services, wholesaling, shipping from wholesale to a retail outlet, and retail sales. Typically, the price retailers’ charges for products are at least two to three times higher than what is paid to the producer. Producers can market large quantities of product through this alternative, but their profit margin is very small. Due to fluctuating wholesale prices, at times producers sell their products below break-even prices.

The other way is direct selling to restaurants or retailers eliminate at least two steps in the market channel, which adds to the value the producer receives for the products. A producer often also supplies transportation, which can be looked at as the value-added service. Another feature of marketing directly to restaurants and retailers is that the price received is usually more stable, thus reducing price uncertainty.

Third is farmers’ markets; in this system direct marketing alternative reduces the need for packing, which is a substantial cost reduction for producers. It provides a higher price because producers sell their products as a retailer. Price fluctuations are usually reduced or eliminated. For this marketing alternative, growers provide all of the steps from producer to the consumer, which adds value to their products. Selling through farmers’ markets is flexible and is a good alternative for producers getting started in a suitable agricultural alternative or as an outlet for excess production. Fourth is roadside marketing, this type of marketing alternative eliminates transportation because products are usually sold on the farm where they are produced. Again, growers provide all of the steps from producer to retailer, which increases the price and reduces price fluctuations, thus reducing price uncertainty. Roadside markets also give producers opportunities to further act as retailers by buying products wholesale and selling them retail. This phenomenon also gives roadside marketers an opportunity to expand their market beyond what they grow themselves. Many agricultural roadside markets in developed countries have grown and developed into multi-million-dollar retail business.

Fifth is pick-your-own marketing system, in this marketing consumers drive out to the farm, pick the products themselves, and transport those products back to their homes. The price received at a pick-your-own-operation is often very close to the price consumers would pay for those products at a retail level. Consumers are willing to pay that price because of the freshness of the products and the on-farm experience that goes with it. Costs for the producer are significantly reduced, and the value added by this alternative is highest of all the marketing alternatives.

Indirect marketing: Another way is to sell through indirect market channels where growers and consumers don’t meet. Traditional markets have long been established for many agricultural commodities. Livestock producers can take their animals to livestock auctions, grain growers can sell to local grain elevators, and sugarcane growers can sign a contract with a sugar mills. But it’s not that easy for people who grow fruits and vegetables, especially in regions where the crops are not traditionally grown.

One of the differences between fresh produce and major commodity markets is the perishability of the product. Grain can be stored for long periods and livestock can be kept and fed, but when fruits are ripe they must be marketed fast or they will spoil. Perishability causes another difference: price volatility. Prices for grains are dampened because of grain in storage, but with fresh fruits and vegetables, the storage life is much shorter. Crops such as potatoes, onions, and apples are stored for extended periods, but even these crops are not carried over into the next crop year like grain. Crops such as lettuce and berries cannot be stored at all. Markets for these crops can easily be flooded if many areas are in full harvest at the same time. On the other hand, prices can rise to very profitable levels if only a few areas are harvesting or if weather causes harvest delay.

Another difference between fresh produce and major commodities comes from what must be done to prepare the food for the consumer. Wheat must be processed into bakery products and livestock into meat products, but fruit can literally be eaten off the vine. It is as simple as that if you run a pick-your-own operation. However, if you don’t market directly, you must make packing and shipping arrangements to enter various indirect market channels

While produce in the fresh market is not “processed,” it must still be prepared for consumers. Preparations include washing, sorting, grading, and packaging. Some product lines also include drying, cooling, and waxing. The firms that do these things are called packers, and their facilities are usually called packing sheds.

Some growers are also packers, but the expensive equipment required for packing some fruits and vegetables puts packing beyond the reach of many individual growers. As a result, packing and marketing cooperatives are common in some fruit and vegetable growing regions. Since fresh fruit and vegetable prices are volatile, cooperatives need to have clearly written rules regarding the pricing of members’ products. For example, a member would not want the entire product sold when prices are low

If you do not have your own packing shed or belong to a cooperative, you have two other options. sell to a packer or hire a packer. When you sell to a packer, you are usually quoted a flat price for a given quantity or a variable price based on quality. It is the packer who bears the risk of price decline before the final product is sold. On the other hand, the packer, rather than the grower, benefits from price increases. There are packers who are willing to shift the price risks and opportunities to the growers. They will pack the product for a fee, usually a certain amount per pound, hundredweight, or kilograms. Under this arrangement the packer’s interest is volume rather than selling for top prices.

After the product is packed it must be shipped to the next part of the marketing chain. This involves assembling loads and selling them. The people who do this are called shippers. Shippers are usually located where the product is grown. Most packers are also shippers, but some growers who pack still rely on a shipper to handle the assembling and selling functions. Some growers do all three functions such as growing, packing and shipping. Shippers have several market outlets as described below. Even if growers are not involved in selling the packed product, they should still be aware of where shippers are sending their product

Wholesalers: Wholesale produce terminal markets are located in large cities, near the consumer rather than the grower. The two largest cities, Karachi and Rawalpindi, make up 16 per cent of the total wholesale market for fresh fruit and vegetables in the country. Terminal markets can be owned by the state, city, or private companies. The purpose of terminal markets is to provide a distribution facility. Shippers send truckloads of produce from the growing areas to the terminal. The people or firms at the terminal markets are called receivers. They are also known as the wholesalers, distributors, or jobbers (small lot buyers).

Wholesalers usually buy truckloads of fresh fruits and vegetables; unload them at terminal markets, then make up new, mixed loads for sale to retailers, institutional buyers, or other wholesalers. In the past many shipments were sent to the terminal markets unpriced and auctioned or sold after the arrival. The current trend is for shippers to sell to wholesalers before transport to the terminal market.

Retailers: Next logical step is for the wholesalers to sell to the retailers, and this has been the traditional pattern in the industry. Not long ago there were not many super stores that could not handle large loads of fruits, vegetables, or other food. Wholesalers performed a vital function for them by delivering small, mixed loads of the products needed by these super stores. The retail industry has changed. Now there are large retail chains that can handle large quantities of produce. Many even have their own distribution systems. Some of these retailers have little need for the traditional wholesalers; many fresh fruit and vegetable shippers sell directly to large retailers.

Individual retail stores close to production areas can also be important markets. Local branches of some super store chains are often willing to buy local produce. The keys to breaking into these markets are to provide consistent high quality for long periods at a reasonable cost. Retail buyers need a good reason to buy local rather than through their chain’s distribution system. Producers can provide as a local shipper for less time in transit and higher quality (fresher) produce.

Recently eating trend is changing, people in developed countries are eating more and more meals away from home. In early 1990s they were spending nearly half of their food income for meals away from home. If the trend continues it will soon be more than half. These meals, are eaten not only in restaurants, but also in schools, hospitals, military bases, hotels, prisons, and nursing homes. This institutional market is also known as the food service market.

The smaller institutional buyers deal with the wholesalers. As with the retailers, there is an increasing number of large institutional buyers; some of the largest are the fast food chains. These large firms are also increasingly buying direct from shippers rather than from wholesalers.