CoChat
Sign Up
Cited by 1Organic Food and AgricultureAgricultural economics and policiesEconomics of Agriculture and Food Markets

Assessing the profitability of scaling up for retail access: Lessons from local salad mix in Southeast Michigan

Open access
Gerhart, Jennifer, Howard, Philip·2023·Journal of Agriculture, Food Systems, and Community Development
DOI 10.5304/jafscd.2023.124.003
Open this paper in CoChat — free accountOpen PDF

Abstract

Changes to the supermarket supply chain in recent decades have “squeezed out” local and small farmers in exchange for more consolidated and global suppliers. As a result, these small-scale farmers have turned to more direct-to-consumer markets, which capture a higher price point but also bear higher marketing costs. Previous research indicates potential saturation and lack of profita­bility in this market type. Researchers have explored strategies for “scaling up” local farmers into intermediary supply chains, such as grocery retail, and have tested the profitability of hybrid marketing strategies with positive results. However, there are very few studies that utilize production costs to test market feasibility, and even fewer that include retailer willingness-to-pay estimates. To assess strategies from the perspectives of both producers and buyers, this study uses salad mix in Southeast Michigan as a pilot case. Farmer-generated production costs incurred for strategies and production types were estimated in focus groups, and retailer willingness-to-pay estimates were obtained in interviews. The analysis suggests that a combination of more efficient harvest technology and central processing would have the greatest impact on increasing profitability, but the dramatic effect that central processing has on output price makes it the most feasible strategy for small-scale farmers. In addition, the minimal costs of organic certification for small farmers are likely to be justified by the price premium that grocery retailers are willing to pay. Hydroponic production may be challenging to break even at a smaller scale but could potentially meet retailers’ price prefer­ences at larger scales. Pairing production cost estimates with buyer willingness-to-pay estimates may generate more comprehensive assessments of the relative profitability of potential scaling-up strategies. This method could be applied to other crops, regions, and produce buyers by cooperative extension, nonprofit, or local government person­nel working with small farmers on their market development plans.

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Integrity signals

Registry

Crossref · 10.5304/jafscd.2023.124.003

Cites

Statistics

Claims the paper makes

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Claims other papers make about this one

Each is checked against this paper’s own text: does it say what the citing paper says it does?

  • Producers in short food supply chains face barriers including spatial distance, logistical constraints, limited infrastructure, and buyer requirements regarding volume, consistency, and quality.

    “These include spatial distance, logistical constraints, limited infrastructure, and buyer requirements regarding volume, consistency, and quality [8][9][10].”

    From Who Reaches the Consumer? A Network Analysis of Market Reach Factors of Slovakia's Short Food Supply Chains (2026) · cites this paper as [8]

    The Introduction and Literature Review (page not provided) describes distributor infrastructure, specialized harvesting and shipping technology, and the difficulty small farmers face supplying larger buyers. The Results (page not provided) reports delivery costs, order volumes, and some retailer requirements. These passages support logistical, infrastructure, and some buyer-related barriers, but do not identify spatial distance or a general buyer requirement for consistent volume and quality as barriers. (LLM, conf=0.84)

    Experimental — accuracy not yet measured

  • Buyers frequently require minimum quantities, consistent supply, uniform quality, and specific packaging specifications.

    “On the demand side, buyers frequently require minimum quantities, consistent supply, uniform quality, and specific packaging specifications [8,18,37].”

    From Who Reaches the Consumer? A Network Analysis of Market Reach Factors of Slovakia's Short Food Supply Chains (2026) · cites this paper as [8]

    The Results (page unavailable) report weekly order quantities and one grocer’s preference for six-unit cases, supporting the point that quantities and packaging matter to buyers. They do not establish that buyers frequently require minimum quantities, consistent supply, uniform quality, or particular packaging specifications; the reported case-size preference came from one grocer. (LLM, conf=0.82)

    Experimental — accuracy not yet measured

  • While experience is important for successful engagement in SFSCs, it is insufficient to overcome the logistical and organizational barriers that are critical for supplying core markets.

    “This suggests that while experience is important for successful engagement in SFSCs, it is insufficient to overcome the logistical and organizational barriers that are critical for supplying core markets [8,10,11].”

    From Who Reaches the Consumer? A Network Analysis of Market Reach Factors of Slovakia's Short Food Supply Chains (2026) · cites this paper as [8]

    The Discussion and Conclusions (page unavailable) say small farmers face significant challenges supplying retail grocers because specialized, consolidated supply chains make it difficult to compete on price and efficiency. The paper does not assess whether experience is important for SFSC participation or whether experience can overcome those barriers; its findings concern small farmers’ access to grocery markets rather than core markets generally. (LLM, conf=0.83)

    Experimental — accuracy not yet measured

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

The self-check needs the paper’s full text.

Cites

No references could be resolved yet.

Research works printed but not linked: 54

  1. Agbo, M., Rousselière, D., & Salanié, J. (2014). Agricultural marketing cooperatives with direct selling: A cooperative non cooperative game (Working Paper 1438). Groupe d'Analyse et de Théorie Économique Lyon-St Étienne (GATE). https://ssrn.com/abstract=2556117
  2. Ahearn, M. C., Liang, K., & Goetz, S. (2018). Farm business financial performance in local foods value chains. Agricultural Finance Review, 78(4), 470-488. https://doi.org/10.1108/AFR-08-2017-0071 · DOI
  3. Barbosa, G. L., Almeida Gadelha, F. D., Kublik, N., Proctor, A., Reichelm, L., Weissinger, E., Wohlleb, G. M., & Halden R. U. (2015). Comparison of land, water, and energy requirements of lettuce grown using hydroponic vs. conventional agricultural methods. International Journal of Environmental Research and Public Health, 12(6), 6879-6891. https://doi.org/10.3390/ijerph120606879 · DOI · Paper page
  4. Barham, J., Tropp, D., Enterline, K., Farbman, J., Fisk, J., & Kiraly, S. (2012). Regional food hub resource guide. U.S. Department of Agriculture Agriculture Markteting Service (USDA AMS). https://doi.org/10.9752/MS046.04-2012 · DOI
  5. Barrett, C. B., Bachke, M. E., Bellemare, M. F., Michelson, H. C., Narayanan, S., & Walker, T. F. (2012). Smallholder participation in contract farming: Comparative evidence from five countries. World Development, 40(4), 715-730. https://doi.org/10.1016/j.worlddev.2011.09.006 · DOI
  6. Bauman, A., McFadden, D. T., & Jablonski, B. B. R. (2018). The financial performance implications of differential marketing strategies: Exploring farms that pursue local markets as a core competitive advantage. Agricultural and Resource Economics Review, 47(3), 477-504. https://doi.org/10.1017/age.2017. · DOI
  7. Biggeri, M., Burchi, F., Ciani, F., & Herrmann, R. (2018). Linking small-scale farmers to the durum wheat value chain in Ethiopia: Assessing the effects on production and wellbeing. Food Policy, 79, 77-91. https://doi.org/10.1016/j.foodpol.2018.06.001 · DOI
  8. Blay-Palmer, A., Landman, K., Knezevic, I., & Hayhurst, R. (2013). Constructing resilient, transformative communities through sustainable "food hubs." Local Environment, 18(5), 521-528. https://doi.org/10.1080/13549839.2013.797156 · DOI
  9. Bloom, J. D., & Hinrichs, C. C. (2017). The long reach of lean retailing: Firm embeddedness and Wal-Mart's implementation of local produce sourcing in the US. Environment and Planning A, 49(1), 168-185. https://doi.org/10.1177/0308518X16663207 · DOI
  10. Blumenschein, K., Blomquist, G. C., Johannesson, M., Horn, N., & Freeman, P. (2008). Eliciting willingness to pay without bias: Evidence from a field experiment. Economic Journal, 118(525), 114-137. https://doi.org/10.1111/j.1468-0297.2007.02106.x · DOI
  11. Chibanda, M., Ortmann, G. F., & Lyne, M. C. (2009). Institutional and governance factors influencing the performance of selected smallholder agricultural cooperatives in KwaZulu-Natal. Agrekon, 48(3), 293-315. https://doi.org/10.1080/03031853.2009.9523828 · DOI
  12. Clark, J. K., & Inwood, S. M. (2016). Scaling-up regional fruit and vegetable distribution: Potential for adaptive change in the food system. Agriculture and Human Values, 33(3), 503-519. https://doi.org/10.1007/s10460-015-9618-7 · DOI
  13. Cook, R. L. (2011). Fundamental forces affecting U.S. fresh produce growers and marketers. Choices, 26(4). https://doi.org/10.22004/ag.econ.120008 · DOI
  14. Detre, J. D., Uematsu, H., & Mishra, A. K. (2011). The influence of GM crop adoption on the profitability of farms operated by young and beginning farmers. Agricultural Finance Review, 71(1), 41-61. https://doi.org/10.1108/00021461111128156 · DOI
  15. Dillon, C. R. (1993). Advanced breakeven analysis of agricultural enterprise budgets. Agricultural Economics, 9(2), 127-143. https://doi.org/10.1111/j.15740862.1993.tb00262.x · DOI
  16. Dries, L., & Swinnen, J. F. M. (2004). Foreign direct investment, vertical integration, and local suppliers: Evidence from the Polish dairy sector. World Development, 32(9), 1525-1544. https://doi.org/10.1016/j.worlddev.2004.05.004 · DOI
  17. Dunning, R. (2016). Collaboration and commitment in a regional supermarket supply chain. Journal of Agriculture, Food Systems, and Community Development, 6(4), 21-39. https://doi.org/10.5304/jafscd.2016.064.008 · DOI
  18. Estes, E. A., Kleese, T., & Lauffer, L. (2003). North Carolina organic vegetable production cost study (ARE Report No. 31). North Carolina State University, Department of Agricultural and Resource Economics. https://doi.org/10.22004/ag.econ.59213 · DOI
  19. Fan, X., Gómez, M. I., & Coles, P. S. (2019). Willingness to pay, quality perception, and local foods: The case of broccoli. Agricultural and Resource Economics Review, 48(Suppl. 3), 414-432. https://doi.org/10.1017/age.2019. · DOI
  20. Feldmann, C., & Hamm, U. (2015). Consumers' perceptions and preferences for local food: A review. Food Quality and Preference, 40(Part A), 152-164. https://doi.org/10.1016/j.foodqual.2014.09.014 · DOI
  21. Fischer, E., & Qaim, M. (2014). Smallholder farmers and collective action: What determines the intensity of participation? Journal of Agricultural Economics, 65(3), 683-702. https://doi.org/10.1111/1477-9552.12060 · DOI
  22. Fischer, M., Pirog, R., & Hamm, M. W. (2015). Food hubs: Definitions, expectations, and realities. Journal of Hunger and Environmental Nutrition, 10(1), 92-99. https://doi.org/10.1080/19320248.2015.1004215 · DOI
  23. Fonsah, E. G., Krewer, G., Smith, J. E., Stannaland, D., & Massonnat, J. (2011). Economic analysis of rabbiteye blueberry production in Georgia using enterprise budgets. Journal of Food Distribution Research, 42(1), 54-58. https://doi.org/10.22004/ag.econ.139311 · DOI
  24. Friedmann, H. (2007). Scaling up: Bringing public institutions and food service corporations into the project for a local, sustainable food system in Ontario. Agriculture and Human Values, 24(3), 389-398. https://doi.org/10.1007/s10460-006-9040-2 · DOI
  25. Galinato, S. P., & Miles, C. A. (2013). Economic profitability of producing tomato and lettuce in Western Washington under open-field and high-tunnel production systems. HortTechnology, 23, 353. https://doi.org/10.17660/actahortic.2015.1085. · DOI
  26. Goodman, D., DuPuis, E. M., & Goodman, M. K. (2012). Alternative food networks: Knowledge, practice, and politics. Routledge.
  27. Grashuis, J., & Su, Y. (2019). A review of the empirical literature on farmer cooperatives: Performance, ownership and governance, finance, and member attitude. Annals of Public and Cooperative Economics, 90(1), 77-102. https://doi.org/10.1111/apce.12205 · DOI
  28. Gupta, C., & Jablonski, B. B. R. (2016). Farm impacts of farm-to-grocer sales: The case of Hawai'i. Journal of Food Distribution Research, 47(3). https://doi.org/10.22004/ag.econ.250000 · DOI
  29. Guptill, A., & Wilkins, J. L. (2002). Buying into the food system: Trends in food retailing in the US and implications for local foods. Agriculture and Human Values, 19(1), 39-51. https://doi.org/10.1023/A:1015024827047 · DOI
  30. Guthman, J. (2003). Fast food/organic food: Reflexive tastes and the making of "yuppie chow." Social and Cultural Geography, 4(1), 45-58. https://doi.org/10.1080/1464936032000049306 · DOI
  31. Hardesty, S. D., & Leff, P. (2010). Determining marketing costs and returns in alternative marketing channels. Renewable Agriculture and Food Systems, 25(1), 24-34. https://doi.org/10.1017/S1742170509990196 · DOI
  32. Harrison, G. W., & Rutström, E. E. (2008). Experimental evidence on the existence of hypothetical bias in value elicitation methods. In C. R. Plott & V. L. Smith (Eds.), Handbook of Experimental Economics Results, Volume 1 (pp. 752-767). Elsevier. https://doi.org/10.1016/S1574-0722(07)00081-9 · DOI
  33. Hoken, H., & Su, Q. (2018). Measuring the effect of agricultural cooperatives on household income: Case study of a rice-producing cooperative in China. Agribusiness, 34(4), 831-846. https://doi.org/10.1002/agr.21554 · DOI
  34. Howard, P. H. (2016). Concentration and power in the food system: Who controls what we eat? Bloomsbury Academic. https://doi.org/https://doi.org/10.5040/9781474264365 · DOI
  35. Ito, J., Bao, Z., & Su, Q. (2012). Distributional effects of agricultural cooperatives in China: Exclusion of smallholders and potential gains on participation. Food Policy, 37(6), 700-709. https://doi.org/10.1016/j.foodpol.2012.07.009 Journal of Agriculture, Food Systems, and Community Development ISSN: 2152-0801 online https://foodsystemsjournal.org · DOI
  36. Jablonski, B. B. R., Hadrich, J., Bauman, A., Sullins, M., & Thilmany, D. (2022). The profitability implications of sales through local food markets for beginning farmers and ranchers. Agricultural Finance Review, 82(3) 559-576. https://doi.org/10.1108/AFR-05-2021-0056 · DOI
  37. Konefal, J., Bain, C., Mascarenhas, M., & Busch, L. (2007). Supermarkets and supply chains in North America. In D. Burch & G. Lawrence (Eds.), Supermarkets and agri-food supply chains (pp. 268-288).
  38. LeRoux, M. N., Schmit, T. M., Roth, M., & Streeter, D. H. (2010). Evaluating marketing channel options for small-scale fruit and vegetable producers. Renewable Agriculture and Food Systems, 25(1), 16-23. https://doi.org/https://doi.org/10.1017/S1742170509990275 · DOI
  39. Lev, L., & Stevenson, G. W. (2011). Acting collectively to develop midscale food value chains. Journal of Agriculture, Food Systems, and Community Development, 1(4), 119-128. https://doi.org/10.5304/jafscd.2011.014.014 · DOI
  40. Loomis, J. B. (1990). Comparative reliability of the dichotomous choice and open-ended contingent valuation techniques. Journal of Environmental Economics and Management, 18(1), 78-85. https://doi.org/10.1016/0095-0696(90)90053-2 · DOI
  41. Lugg, J., Shim, M. E., & Zilberman, D. (2017). Establishing supply chain for an innovation: The case of prepackaged salad. ARE Update, 20(6), 5-8. https://s.giannini.ucop.edu/uploads/giannini_public/04/ac/04acc853-dd8a-45d6-a4dd-bf2ac9c5f392/v21n1_2.pdf
  42. Michigan Municipal League. (2014). Michigan farmers markets. http://placemaking.mml.org/wp-content/uploads/2014/09/casestudy-farmers-market.pdf Organisation for Economic Co-operation and Development. (2020). Agricultural policy monitoring and evaluation 2020. https://doi.org/10.1787/928181a8-en · DOI
  43. Park, T. (2015). Direct marketing and the structure of farm sales: An unconditional quantile regression approach. Journal of Agricultural and Resource Economics, 40(2), 266-284. https://www.jstor.org/stable/44131861
  44. Portney, P. R. (1994). The contingent valuation debate: Why economists should care. Journal of Economic Perspectives, 8(4), 481-495. https://doi.org/10.1257/jep.8.4.3 · DOI
  45. Rakocy, J. E., Bailey, D. S., Shultz, K. A., & Cole, W. M. (1997). Economic analysis of a commercial-scale aquaponic system for the production of tilapia and lettuce. In K. Fitzsimmons (Ed.), Proceedings from the Fourth International Symposium on Tilapia in Aquaculture, Vol. 1 (pp. 357-372). Northeast Regional Agricultural Engineering Service (NRAES), Cooperative Extension.
  46. Reardon, T., Barrett, C. B., Berdegué, J. A., & Swinnen, J. F. M. (2009). Agrifood industry transformation and small farmers in developing countries. World Development, 37(11), 1717-1727. https://doi.org/10.1016/j.worlddev.2008.08.023 · DOI
  47. Reardon, T., Timmer, C. P., & Minten, B. (2012). Supermarket revolution in Asia and emerging development strategies to include small farmers. Proceedings of the National Academy of Sciences of the United States of America, 109(31), 12332- 12337. https://doi.org/10.1073/pnas.1003160108 Journal of Agriculture, Food Systems, and Community Development ISSN: 2152-0801 online https://foodsystemsjournal.org · DOI · Paper page
  48. Ruml, A., & Qaim, M. (2020). Effects of marketing contracts and resource-providing contracts in the African small farm sector: Insights from oil palm production in Ghana. World Development, 136, Article 105110. https://doi.org/10.1016/j.worlddev.2020.105110 · DOI
  49. Schmit, T. M., Jablonski, B. B. R., & Laughton, C. (2019). Comparing farm financial performance across local foods market channels. Journal of Extension, 57(2), Article 12. https://doi.org/10.34068/joe.57.02.12 · DOI
  50. Silva, E., Dong, F., Mitchell, P., & Hendrickson, J. (2015). Impact of marketing channels on perceptions of quality of life and profitability for Wisconsin's organic vegetable farmers. Renewable Agriculture and Food Systems, 30(5), 428-438. https://doi.org/10.1017/S1742170514000155 · DOI
  51. Starr, L., Greenberg, J., & Rowell, J. (2017). Farming muskoxen for Qiviut in Alaska: A feasibility study. Arctic, 70(1), 77- 85. https://doi.org/10.14430/arctic4626 · DOI
  52. Stevenson, G. W., & Pirog, R. (2008). Values-based supply chains: Strategies for agrifood enterprises of the middle. In W. Stevenson & R. Welsh (Eds.), Food and the mid-level farm: Renewing an agriculture of the middle (pp. 119-143). https://doi.org/https://doi.org/10.7551/mitpress/9780262122993.003.0007 · DOI
  53. Thompson, J. J., & Gaskin, J. (2018). An extension specialist's reflections from the field: Discovering ag of the middle in the shift from direct sale to wholesale vegetable production. Culture, Agriculture, Food and Environment, 40(2), 124-129. https://doi.org/10.1111/cuag.12220 · DOI
  54. Verhofstadt, E., & Maertens, M. (2013). Processes of modernization in horticulture food value chains in Rwanda. Outlook on Agriculture, 42(4), 273-283. https://doi.org/10.5367/oa.2013.0145 · DOI

Cited by

Sorted by citations

Authors
Gerhart, J., & Howard, P.
Affiliations
Michigan State University (US)
ORCID
Venue
Journal of Agriculture, Food Systems, and Community Development
Publisher
Lyson Center for Civic Agriculture and Food Systems
Published
2023-08-01
Pages
1-18
ISSN
  • 2152-0798 (ISSN-L)
  • 2152-0801
DOI
10.5304/jafscd.2023.124.003
OpenAlex
W4385450820
Cited by
1
References
0
Citations by year
2025: 1
FWCI
0.16
Type
journal article
Language
en
Open access
Licence
cc-by
Locations
  • Journal of Agriculture Food Systems and Community Development (publishedVersion, cc-by)
  • AgEcon Search (University of Minnesota, USA) (submittedVersion)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
Funders
  • Michigan State University
  • College of Engineering, Michigan State University
Topics
  • Life Sciences › Agricultural and Biological Sciences › Plant Science › Organic Food and Agriculture
  • Social Sciences › Safety Research › Agricultural economics and policies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economics of Agriculture and Food Markets
Keywords
scale-up, local food marketing, smallholder farmers, supermarket supply chain, production costs, central processing, organic certification, profitability, Southeast Michigan

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

Are you an author, or do you see a problem with this page? Request a review