Penn State Extension Leads Produce Auction Tours for Buyers
Penn State Extension educators convened first-time auction buyers in August 2021 to provide an in-depth look at how to use auctions for their produce sourcing needs. Participants at the Leola, Oxford, and Kutztown Produce Auction events learned about the history and growth of Pennsylvania produce auctions, the benefits of sourcing through auctions, the importance of auctions as a market outlet for farmers, and the nuts and bolts of the auction process. A mix of chefs, makers of value-added foods (like jams, sauces, and pickles), institutional buyers, and food-system advocates received a tour of the facilities and a demonstration led by an auctioneer.
"We wanted to bring wholesale buyers right into the action," explained Penn State Educator Becky Clawson. "It's one thing to talk about auctions in a classroom, but being there and hearing the auctioneer, seeing and smelling the produce up-close, and explaining everything as it's happening—it really brings the concepts to life and makes it easier for buyers to envision a strategy for their own sourcing."
Mike Snyder is the manager of Leola Produce Auction, the first of its kind in the state, started in 1985. He gave participants a run-through of the bidding process: "First you'll hear the product description and quantity—100-count of broccoli, for example—then the seller number, followed by an opening bid. The auctioneer will increase the price until you only have one person left bidding, and that person is the winner." For larger lots, the winner can take a full or half-lot, and the second-highest bidder can choose to buy the rest at the winning price. Otherwise, the bidding starts over. One critical thing to understand is that the bid price represents the price per piece, for items that are sold in bins (or per dozen, for corn), or per box for items that come in boxes. A buyer who bids on eight boxes of tomatoes at $25 should be prepared to multiply the bidding price by the number of boxes, for a total of $200 for the whole lot.
"The thought of bidding at the auction was intimidating at first, because it seems to move quickly, and I wasn't sure what volume I might be committing to," shared one participant with a canning business. "But it really helped to have someone explain each component of the bidding process. Then watching the process right in front of me and applying what I learned, I really got the hang of it." Several participants, empowered and excited by what they learned, registered as day-bidders and teamed up to bid on (and win) peaches and flowers, dividing the winnings between them.
"We wanted to dispel some myths about produce auctions," stated Penn State Extension Educator Jeffrey Stoltzfus. "Some people say, 'It's not local—you don't know where the produce comes from.' And that's not true. In the vast majority of cases, the seller number you see on the tag represents the farmer that grew that produce." Some auctions are producer-only, while others allow reselling, which can help both sellers and growers access crops in their off-season. "It's no secret," according to Kutztown auctioneer Bill Meck. "You can tell when you see something that's out of its local season or doesn't grow around here, or you can ask anyone here." Additionally, each auction office has the name corresponding to each grower number on file for traceability purposes. "Stick around the auction or come early while growers are dropping off their products, and it's certainly possible to build relationships with the growers," suggested Stoltzfus.
Quality is a priority for most buyers, particularly those who operate retail markets and need to impress shoppers. Extension Program Associate Brian Moyer explained that a seller's number stays with them through their career, and with it, their reputation. "A grower's reputation greatly influences the prices they earn at the auction. Buyers will pay more for produce that they know is consistently good quality. If buyers start complaining," he shared, "well, the auction is a highly social environment, and word travels fast." So, regarding quality, it is in the seller's best interest to sort and grade their produce and only bring the best to auction. Occasionally growers sell their "number two"-graded produce (containing minor imperfections), but those items are labeled accordingly for the buyer.
"Another misunderstanding," according to Clawson, "is that new buyers sometimes assume auction prices are going to be 'a steal'." Sometimes that happens, but auctions follow market supply and demand fluctuations like other wholesale outlets. When the market is flooded with tomatoes, a buyer might pay a few dollars a box. But the first tomatoes of the season often sell for $85 or more per box. "Buyers might save on some items and spend a little more on others, depending on the time of season, weather, and market demand. Going in with a flexible plan, with regard to items and prices, can help a buyer ride out those waves."
The Penn State Extension team is available to work with wholesale buyers and teams who are interested in learning about produce auctions for their sourcing needs. Contact Jeffrey Stoltzfus at jhs3@psu.edu to learn more. New buyers can find more information for getting started at 8 Tips for Buying at the Produce Auction.
This work is supported by a Specialty Crop Block Grant from the Pennsylvania Department of Agriculture.
