Data from a survey of North Carolina independent garden center customers in Fall 1996 were used to determine the price responsiveness of mums and pansies. A survey was conducted of four garden centers in the Raleigh, N.C., area and four garden centers operating in the Triad marketing area (Greensboro, Winston-Salem, and High Point, N.C.). Information collected on 1608 consumers included various socioeconomic and demographic variables (age, value of residence, type of residence, number of years in the residence, housing tenure, and employment status) as well as plant purchase information (plant price, plant types, and plant sizes). Price responsiveness of consumers was estimated by analyzing how customers' responses change as prices varied from one store to another and from one location to another. Measures of price responsiveness indicated statistically significant price elasticities of demand of -0.76 for mums and -0.80 for pansies. These elasticities can be used to indicate how industry sales would respond to a change to the industry that affects all firms in the same way—such as the response to an increase in energy costs. The paper shows how to use the elasticities to develop particular pricing strategies under different circumstances facing firms in the industry.
Michael K. Wohlgenant, Charles D. Safley, and Anthony N. Rezitis
Carlos E. Carpio, Charles D. Safley, and E. Barclay Poling
This study estimates and compares the production costs and profitability of muscadine grape (Vitis rotundifilia) production under the single-wire (SW) and the Geneva double curtain (GDC) trellis systems with and without drip irrigation. Profitability analysis revealed that muscadine grape production can be a profitable venture. Irrigated muscadine grape vineyards were shown to be more profitable than nonirrigated vineyards. The comparison of the GDC trellis system and the SW trellis system indicates that the GDC trellis system is more profitable. Returns to land and management from muscadine grapes grown under the GDC system were found to be less sensitive to changes in prices and yields than the returns from muscadine grapes grown under the SW trellis system. Net returns from irrigated systems were also found to be less sensitive to variations in prices and yields than nonirrigated systems. The estimated total costs of establishing (Years 0–3) a muscadine grape vineyard were between $9783/acre and $15,065/acre depending on the production system used. For the GDC production system, which was the most profitable production system, the estimated return to land and management was $447/acre. Cash flow analysis demonstrated that the payback period for this system can be achieved in the 10th year, whereas the net present value of the investment was estimated at $4484 and the internal rate of return was estimated at 9.6%.
Charles D. Safley, Otilia Boldea, and Gina E. Fernandez
This study identified the costs associated with growing, harvesting, and marketing blackberries (Rubus subgenus Rubus) and estimated the revenues and breakeven yields for various combinations of pick-your-own (PYO) and wholesale blackberry prices. The total cost of producing, harvesting, and marketing the blackberries was estimated to be $15,514/acre if the marketable yield was 10,000 lb/acre in the second year of production, and $19,561/acre if the yield was 12,500 lb/acre. Labor was the greatest expense category after the planting started producing fruit, totaling $13,739/acre, or 70% of the total costs, when full production was reached in the third year. Net revenues for varying combinations of PYO and wholesale market prices and yields were estimated, assuming that half of the marketable fruit would be sold at a PYO operation and the remaining half sold to wholesale markets. This analysis showed that if growers received $1.25 and $2.50/lb for PYO and wholesale fruit, respectively, they would have to sell a minimum of 10,066 lb/acre to cover the estimated costs for the third through the ninth years. A return to land and management of $3876/acre would be realized if growers received $1.25/lb for PYO and $2.50/lb wholesale with yields of 12,500 lb/acre. Profitability analysis reveals that blackberry production using recommended practices can be a profitable venture. The annual net cash flow is positive after the planting is established and enough revenues are projected to be generated to cover start-up expenses in the fifth year.
Bridget Behe, Robert Nelson, Susan Barton, Charles Hall, Charles D. Safley, and Steven Turner
Researchers often investigate consumer preferences by examining variables consecutively, rather than simultaneously. Conjoint analysis facilitates simultaneous investigation of multiple variables. Cluster analysis facilitates development of actionable market segments. Our objective was to identify relative importance and consumer preferences for flower color, leaf variegation, and price of geraniums (Pelargonium ×hortorum L.H. Bail.) and to identify several actionable market segments. We also evaluated the desirability of a hypothetical blue geranium. Photographic images were digitized and manipulated to produce plants similar in flower area, but varying in flower color (red, lavender, pink, white, and blue), leaf variegation (plain green, dark green zone, and white zone), and price ($1.39 to $2.79). Conjoint analysis revealed that flower color was the primary consideration in the purchase decision, followed by leaf variegation and price. A cluster analysis that excluded blue geraniums yielded four actionable consumer segments. When preferences for the blue geranium were included, six consumer segments were identified.
Charles D. Safley, E. Barclay Poling, Michael K. Wohlgenant, Olga Sydorovych, and Ross F. Williams
The costs associated with growing, harvesting and marketing strawberries (Fragaria × ananassa) using the plasticulture production system were estimated to be $13,540/acre ($33,457/ha). Net revenue analysis showed that growers would have to charge at least $0.85 and $1.40/lb ($1.87 to $3.09/kg) for pick-your-own (PYO) and prepicked fruit, respectively, and sell 12,000 lb of berries per acre (13,449.9 kg·ha-1) to cover this expense. Break-even analysis indicated that growers would have to charge a PYO price of $0.65/lb ($1.43/kg) and $1.20/lb ($2.64/kg) for prepick berries and sell a minimum of 15,041 lb/acre (16,858.4 kg·ha-1) to cover the projected expenses. However, if a grower received $0.95 and $1.50/lb ($2.09 and $3.31/kg) for the PYO and prepicked fruit, respectively, he/she would only have to sell 10,622 lb of berries per acre (11,905.4 kg·ha-1) to break even. It was assumed that an average of 11.6 lb (5.26 kg) of fruit would be sold to PYO customers and an average of 7.1 lb (3.22 kg) would be sold to customers who visited the fruit stand. Under these assumptions, the breakeven yield of 14,724 lb/acre translates into a requirement to sell fruit to at least 1,539 customers per acre (3,802.8 customers/ha) at the lowest combination of prices while a yield of 10,398 lb/acre converts to a minimum of 1,087 customers per acre (2,685.9 customers/ha) at the higher prices. Customers were also surveyed at direct market operations in Spring 1999 to gain insight into consumer demographic characteristics, why customers select a specific PYO or prepick direct market strawberry outlet, average expenditures per customer, typical driving distances to direct market strawberry operations, and the effectiveness of advertising. Middle age, middle-income customers living within 10 miles (16.1 km) of the farm comprised the largest percentage of customers surveyed at the PYO operations, while middle age, high-income individuals who also live within 10 miles of the fruit stand were the largest group of respondents at the fruit stands. PYO customers spent an average of $10.30, and prepick consumers spent an average of $9.40 per visit. Less than 23% of all the respondents said that advertising influenced their shopping decision while >77% indicated that any type of advertisement did not influence their decision. Overall, convenient location was easily the major reason that customers decided to patronize a specific direct market outlet while personal referrals were second.
Olha Sydorovych, Charles D. Safley, Rob M. Welker, Lisa M. Ferguson, David W. Monks, Katie Jennings, Jim Driver, and Frank J. Louws
Partial budget analysis was used to evaluate soil treatment alternatives to methyl bromide (MeBr) based on their efficacy and cost-effectiveness in the production of tomato (Solanum lycopersicum). The analysis was conducted for the mountain tomato production region based on 6 years of field test data collected in Fletcher, NC. Fumigation alternatives evaluated included 61.1% 1,3-dichloropropene + 34.7% chloropicrin (Telone-C35™), 60.8% 1,3-dichloropropene + 33.3% chloropicrin (InLine), 99% chloropicrin (Chlor-o-pic), 94% chloropicrin (TriClor EC), 42% metam sodium (4.26 lb/gal a.i., Vapam), and 50% iodomethane + 50% chloropicrin (Midas). The MeBr formulation was 67% methyl bromide and 33% chloropicrin (Terr-O-Gas). Chloropicrin applied at 15 gal/acre provided the greatest returns with an additional return of $907/acre relative to MeBr. Telone-C35 provided an additional return of $848/acre and drip-applied metam sodium provided an additional return of $137/acre. The return associated with broadcast applied metam sodium was about equal to the estimated return a grower would receive when applying MeBr. Fumigating with a combination of chloropicrin and metam sodium; shank-applied chloropicrin at 8 gal/acre; drip-applied chloropicrin, Midas, or InLine; and the nonfumigated soil treatment all resulted in projected losses of $156/acre, $233/acre, $422/acre, $425/acre, $604/acre, and $2133/acre, respectively, relative to MeBr. Although technical issues currently associated with some of the MeBr alternatives may exist, results indicate that there are economically feasible fumigation alternatives to MeBr for production of tomatoes in North Carolina.
Olha Sydorovych, Charles D. Safley, Lisa M. Ferguson, E. Barclay Poling, Gina E. Fernandez, Phil M. Brannen, David M. Monks, and Frank J. Louws
Partial budget analysis was used to evaluate soil treatment alternatives to methyl bromide (MeBr) based on their cost-effectiveness in the production of strawberries (Fragaria ×ananassa). The analysis was conducted for two geographical areas: the piedmont and coastal plain area (including North Carolina and Georgia) and the mountain area of western North Carolina, based on 7 years of field test data. The fumigation alternatives evaluated were Telone-C35 (1,3-dichloropropene 61.1% + chloropicrin 34.7%), Telone II (1,3-dichloropropene 94%), chloropicrin (Chlor-o-pic 99% and TriClor EC), InLine (1,3-dichloropropene 60.8% + chloropicrin 33.3%), and metam sodium (Vapam or Sectagon 42, 42% sodium methyldithiocarbamate). The MeBr formulation was 67% MeBr and 33% chloropicrin (Terr-O-Gas) with the exception of the earlier trials where a 98:2 ratio was used. In the piedmont and coastal plain area, the soil treated with chloropicrin showed the best results with an additional return of $1670/acre relative to MeBr, followed by Telone-C35 with an additional return of $277/acre. The projected return associated with shank-applied metam sodium was approximately equal to the estimated return a grower would receive when applying MeBr. Fumigating with drip-applied metam sodium, InLine, and Telone II as well as the nonfumigated soil treatment resulted in projected losses of $2182, $2233, $4179, and $6450 per acre, respectively, relative to MeBr. In the mountain area, all of the alternatives resulted in a projected increase in net returns relative to MeBr. The largest projected increase was $1320/acre for the InLine treatment, while the added returns for the TriClor and Telone-C35 applications were estimated to be $509 and $339 per acre, respectively. The drip-applied metam sodium application resulted in an additional return of $40/acre, and the added revenue for the nonfumigated soil treatment was $24/acre more than MeBr treatment. Although technical issues currently associated with some of the alternatives may persist, results indicate that there are economically feasible fumigation alternatives to MeBr in the production of strawberries in the southeastern U.S.