1. SELLING METHODS

2. Once a product is available there are many ways it can be sold to the general public. Each method has its place depending on:- The product The quantity produced The season of production The demand for the product The end use of the product The consumer’s location The value of the product The producer’s interests.

3. Some of the methods that we will look at are:- Gate sales Auctions Contract sales Co-operatives Bartering

4. Gate Sales Producers of small quantities of produce can often sell their product directly to the public at roadside stalls or at Farmer’s markets. The stalls may be seasonal, for products such as feijoas, or permanent, for vegetables produced year round. To be viable the producer must be located on a busy road and produce something that is reasonably cheap and used often.

5. Advantages A steady cash flow for the producer A good price for product The produce is fresher than in the shops Lower transport and packaging costs Change of work for the producer or more work available locally It is easy to know what the consumer wants ( can alter production to suit market)

6. Disadvantages A need to be in a suitable location The need for suitable sales staff Most stalls have only a small range of produce With seasonal produce (such as apples) it is not clear when the stall will be open Extra costs of the stall such as advertising and local body charges such as rates and licences.

7. Questions 1.Which of these items would be suitable for gate sales? i.Meatii. Vegetables iii.Imported fruit iv. Cheese v.Applesvi. Fence posts vii.Ice creamviii. Cars, trucks ix. Booksx. newspapers 2. Imagine you are a keen water skier and you have a market garden producing seasonal vegetables (e.g. pumpkins, potatoes and peas). What would the disadvantages of a roadside stall for you?

8. 3. What are three likely advertising methods for a roadside stall? A farmer’s market? 4. What would three disadvantages for an apple grower in selling some apples at a roadside stall?

9. AUCTIONS This occurs when there is a large number of sellers with limited quantities of produce and a large number of buyers. An example of this is wool sales. The buyers can compare the available produce before they decide on an acceptable price. The seller can set a reserve price so that the auctioneer will not sell the produce at a very low price.

10. ADVANTAGES For seasonal products e.g.wool, the seller does not need to keep in touch with many possible buyers or to advertise Buyers can see and compare the whole range of goods on sale When goods are in short supply the market price will go up to reward the producer.

11. DISADVANTAGES Prices can fluctuate so the returns may not cover the costs of production Producers don’t know the buyers and may not be able to quickly pick up changes in the market needs There can be delays in payment of the producer as there is a ‘middleman’ in the system If a big buyer drops out of the market (e.g. China for wool) there may be a big price drop.

12. QUESTIONS 1.If you produce one major product e.g. wool once a year, would a Farmer’s Market or an Auction be your best sales method? Why? 2.Wool auctions are held in Napier and Chch. The wool bales don’t actually travel to these centres but a sample and a wool test certificate are available there. How does this help the buyers? 3.For auctions, do the sellers need to promote or advertise their products?

13. CONTRACT SALES Many large supermarket chains contract a producer of fruit or vegetables to provide certain products on a definite date and in definite quantities. The price is often ‘fixed’ before the crop is planted, but it maybe flexible at the delivery date. CMP has contracts with farmers so that they can supply Waitrose and Tesco in the UK.

14. ADVANTAGES The producer knows the products are going to sell (but at a set price) The buyer knows there is a fixed supply (the producer may need to plant more than needed to give the contracted crop and the excess, if the crop grows well, will be sold on the open market or may be taken by the contract buyer at a lower price) The buyer may offer technical help to the grower The producer can plan/budget more readily knowing the price in advance.

15. DISADVANTAGES If the market price goes up, the seller might not get the best possible price If the producer can’t deliver the produce on time or in sufficient quantity, there maybe a penalty in the contract. But with production methods such as hydroponics, many crops can be grown to mature on a fixed date by controlling the temperature, light and mineral levels around the crop. Large consumers in a small market may dominate the market and force down prices (especially if there are alternative sources) e.g. milling wheat. If there is a large capital investment in plant and equipment the grower may not be able to change crops easily.

16. CO-OPERATIVES E.g. Fonterra. This is where the producers group together to fix the prices they will accept or to give to each of the producers. The main producer boards tend to market the produce overseas and decide the best mix of products to suit the markets.

17. ADVANTAGES Reduces competition in the overseas markets Enable small producers to trade in large markets Ensure more regular supply of product on to the markets Enable specialist marketing staff to be employed Small producers have a say in their industry Enables specialist production advice to be made available to small producers

18. DISADVANTAGES Loss of individual choice of product produced and how it is solved Capital needs to be found for manufacturing, storing, marketing and stockpiling in hard times.

19. BARTERING This is the small scale exchange of goods and services produced by one person for goods or services produced by another. On a small scale, no money changes hand and no tax or bookkeeping is involved. When the scale increases, the value of the goods and services may become taxable.