Economic Viability of Selling Locally Grown Produce to Local Restaurants

  • Amit Sharma The Pennsylvania State University
  • Catherine Strohbehn Iowa State University
  • Rama B. Radhakrishna The Pennsylvania State University
  • Allan Ortiz University of Costa Rica
Keywords: Cost-benefit Analysis, Economic Viability, Growers, Local Foods, Restaurants

Abstract

The purpose of this study was to conduct a qualitative comparative analysis of growers' costs for inputs related to production, processing, packaging, and distribution of local foods to independent restaurants. Growers have been motivated to sell locally due to the asymmetry in farm-retail price spreads. Yet selling locally direct to restaurants may imply new types of processes, costs, and investments. While local farm-to-retail markets may provide opportunities to reduce these price spreads and maximize benefits for growers, it is unclear whether such efforts are economically viable for growers when all input costs are considered. Interviews with local food producers found that there were clearly higher costs for growers in most of the value chain for directly selling products to restaurants. Specifically, growers expressed a need for increased communication and interaction with restaurant buyers. Such interaction helped growers showcase their products to restaurants, yet required greater time inputs. However, premiums received by growers for these direct market sales were perceived to offset these costs. Local food is gaining popularity as an alternative economic strategy for developing local communities. For it to develop and be adopted progressively, however, clear costs and benefits need to be examined, evaluated, and communicated to producers and consumers.

Metrics

Metrics Loading ...

Author Biographies

Amit Sharma, The Pennsylvania State University
Associate Professor of Hospitality Finance; School of Hospitality Management, The Pennsylvania State University.
Catherine Strohbehn, Iowa State University
Extension Specialist/Adjunct Professor; Apparel, Events, Hospitality Management, Iowa State University.
Rama B. Radhakrishna, The Pennsylvania State University
Professor of Agricultural and Extension Education, The Pennsylvania State University.
Allan Ortiz, University of Costa Rica
Lecturer, University of Costa Rica
Published
2012-12-19
How to Cite
Sharma, A., Strohbehn, C., Radhakrishna, R. B., & Ortiz, A. (2012). Economic Viability of Selling Locally Grown Produce to Local Restaurants. Journal of Agriculture, Food Systems, and Community Development, 3(1), 181-198. https://doi.org/10.5304/jafscd.2012.031.014