August 2020 Impact Assessment
About Produce Auctions
Produce Auctions are–as their name implies –auction-based market channels for produce and other specialty crops such as nursery crops and ornamentals. There are a number of these markets located throughout Kentucky, Ohio, Illinois, Pennsylvania and other states in the region. These auctions are highly diverse, with very different sizes, ownership structures, buyers, and sellers. Members of Amish and Mennonite communities manage many of these auctions. Some auctions emphasize certain products more than others. Some function as a place for large buyers to purchase specialty crops, while others offer products appealing to direct to market resellers. Variables such as units, varieties, quality, and credence attributes can vary widely as well. Nevertheless, some of these auctions grossed millions of dollars in sales in recent years and play an important role in the specialty crop market.
Impacts of COVID-19
Prices and sales volumes (in dollars) have generally been very high in 2020. Some larger institutional buyers (representing schools and restaurants) have completely stopped buying. Some auctions struggled early and had to delay opening.
Obstacles to Sector Response
Obstacles for auctions are partly linked to geography: not all states declared agriculture businesses essential, there was some variability in relationships with local health departments, etc., but one of the biggest obstacles was buyer/attendee acceptance and compliance with health mandates (masks, social distancing, limited attendance, etc.)
Successful Marketing Adaptations in Response to COVID-19
Expansion of order-buying (buyers call in orders and auction employees purchase as their proxy) allowed for reduction in crowds and the convenience actually improved the relationship with some buyers who had not used the service before. Some auctions offered fee-based delivery to their buyers as well.
Economic Impact on Sector
Some larger institutional buyers have not been buying this year, but auctions have seen an increase in the number of buyers who have small retail resale stands. There seems to be a general increase in local purchasing and local food in general. Overall, this has translated into higher prices, and higher overall sales volume in dollars even with some auctions seeing decreases in the volume of units sold. Practices like order buying and delivery require more labor, but most of this is recovered via buyer fees.
Impact on Sector Members
Smaller auctions, auctions with limited/poor relationship with local health departments, and auctions in states where agricultural businesses or auctions were considered “non-essential” all were impacted more negatively by the pandemic. Many auctions are operated by Plain Communities who do not use computers or the internet, so outreach exclusively offered via the internet did not reach them.
Desired Data and Technical Assistance
Price/sales reports like those available from the Center for Crop Diversification will be important to understanding how auctions in 2020 (and 2021 and beyond) have changed. Ongoing interviews and conversations with auction managers, growers, and buyers may provide additional insight. Projections about potential future purchasing from institutional buyers may also be useful.
Technical Assistance:
Existing support from Cooperative Extension and local health departments has been crucial so far. Auctions have expressed interest in ongoing price and market analysis.
Contact Information for Produce Auctions:
Brett Wolff brett.wolff@uky.edu
