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Produce Auction Shows Promise

Farm Business Management Update, April/May 2005

By Tom Stanley, Extension Agent, Farm Business Management, Northwest District

Since February 2004, a group of farmers in Rockingham County, Virginia have been exploring the feasibility of starting a produce auction in their area. Extension Agents Eric Bendfeldt and Tom Stanley have worked closely with these farmers to determine what was involved in conducting regular "out-cry" auctions for wholesale quantities of high-value products such as hand-picked vegetables and bedding plants.

The farmers elected a steering committee to investigate various aspects of the business and present the group with recommendations. The steering committee made several trips to Pennsylvania produce auctions and interviewed the managers of more than six produce auctions.

Successful produce auctions have certain characteristics. In virtually all cases, they have been established where the majority of growers were members of "plain" communities (Amish, Mennonite, and other Anabaptist denominations). They start with between 20 and 75 growers representing 50 to 100 acres of produce. The auctions do not co-mingle product. Growers are identified with a number and their products are identified as they are auctioned. Sale lots vary widely in size and quantity and often consist of more than one product. Virtually all produce auctions welcome, and even rely-on, product from out-of-state to provide the variety buyers need. Buyers are most often roadside produce stands, independent grocery stores (IGA, Red Front, Natural Food Stores) and other local retail markets. Typically, the auction facilities do not refrigerate any product. The product is picked and boxed at the farm the night before or early on the morning of the sale. The sales are held in the morning and last three to four hours. By noon the buyers have loaded their purchases and are gone.

All the produce auction managers interviewed stress that the growers must be committed to the auction through market lows as well as the highs. Across all the successful produce auctions examined, a strong sense of community and a belief that commitment to the auction will in the end "create a market" where none before existed.

We have had the opportunity to interview numerous farmers in Pennsylvania and Maryland who are growing for their local produce auctions. Several had successfully phased-out their small dairy herds completely and were now relying on produce as their primary source of income. Virtually all the farm operators interviewed shared the following characteristics. They had extended families and neighbors who were helping on the farm and the farm operators' in-turn helped them on theirs. They all were cultivating less than 20 acres, and all had at least one greenhouse unit. They all viewed the auction as their primary outlet for product, but many sold product retail at their own roadside stand or at a local farmers' market.

At this point, the Shenandoah Valley Produce Auction has formed a Limited Liability Corporation, adopted a set of bylaws, collected start-up capital, and intends to hold its first auction in May. The Mennonite communities in the Shenandoah Valley appear to be well-suited for establishing this type of produce auction that has been successful in similar communities elsewhere in the country. Commitment by a united community of farmers to a lifestyle conducive to labor-intensive agriculture will be essential for the success of the Shenandoah Valley Produce Auction, LLC.

Buyers & Growers follow the sale, Cumberland Valley Produce Auction, Shippensburg PA, May 2004

Hanging Basket ready for auction. Cumberland Valley Produce Auction, Shippensburg PA, May 2004

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