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1-31-06
FARMERS HAVE NEW TOOL TO HELP DETERMINE PROFITABILITY
AMES, Iowa -- Demand for locally grown foods is on the rise and thanks to
research funded by the Leopold Center for Sustainable Agriculture, Iowa food
crop producers and restaurateurs have a better understanding of how to maximize
their working relationship. An on-line calculator will even help Iowa farmers
determine the profitability of various food crops.
Recently-completed work studied the costs and decision-making processes of
independent restaurateurs, local food producers, and restaurant patrons.
Increased understanding of these attitudes may help expand the availability of
locally grown foods in Iowa restaurants.
A free Produce Profitability Calculator, on the web at
www.iastatelocalfoods.org/calculator,
helps producers create scenarios to help make decisions about what and how much
to plant as well as sales decisions such as how, where, when and setting a
price. The tool was developed as part of a Leopold Center competitive grant to
the Hotel, Restaurant and Institution Management (HRIM) program at ISU. A user's
manual for the calculator is at:
www.leopold.iastate.edu/research/marketing_files/profitability_0108.pdf.
Researchers found that managers and chefs consider freshness of the food,
reliability of the supply, quality of product, sanitary handling of products,
and appropriate packaging of meat and poultry products to be most important when
considering purchasing local foods. Currently, restaurants require more time to
source local products, and preparation and delivery time also is greater.
Initial results of the project show that actual food costs may be competitive,
although farmers may need to fine-tune how they price their products.
The producers who were interviewed for the project saw some benefits and costs
associated with selling to local restaurants versus other outlets such as direct
sales to consumers at farmers’ markets. Most of the producers thought that their
prices to restaurants could be higher, and most were interested in continuing to
sell to restaurants.
One of the challenges identified by producers wishing to continue sales was
development of purchase agreements and information based on the needs of
restaurants. Improved communication between producers and restaurants and more
sophisticated decision-making tools are needed, the study found.
Through its research and education programs, the Leopold Center supports the
development of profitable farming systems that conserve natural resources.
Center funding comes from state appropriations and from fees on nitrogen
fertilizer and pesticides, as established by the 1987 Iowa Groundwater
Protection Act.
For more information,
contact:
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