Produce Auction Pricing Data and Successful Sales Strategies

Strategies to achieve higher per-unit prices at Southeast PA produce auctions.

Pennsylvania currently has sixteen produce auctions, mostly grower-owned, located across the commonwealth. These auctions serve as wholesale outlets for approximately 5,000 growers and generate more than $50 million dollars in revenue for their vendors annually.

Two auctions in Southeast PA, the Leola Produce Auction, and the Kutztown Produce Auction, generously participated in Penn State Extension research and ongoing education efforts starting in 2020. The primary focus, and audience, for this research, is Vendors - the farmers who grow for wholesale at the auction - and potential Buyers, those sourcing for secondary outlets that include restaurants, schools, hospitals, home-delivery services, meal kits, and value-added producers.

Using data collected from the auction reports of the Leola and Kutztown sites, we are able to map the participating vendor’s sales activity and prices achieved for a variety of produce types, over the course of the 2021 and 2022 seasons. From that data collection and analysis, we are able to observe a variety of strategies as different produce Vendors navigate the growing season and market dynamics.

Here we share three examples from our study that demonstrate successful strategies to increase the per-unit price achieved for several produce types.

Grower J and Tomatoes

Our first example is Grower J.Grower J’s identifying information will be kept anonymous, and for simplicity, they will be referred to with the pseudonym "Jean" from here forward. Jean participated as a produce auction vendor at either the Leola or Kutztown auction house in 2021 and 2022. We found a significant price per unit increase for their Tomatoes sold between 2021 and 2022.

In the chart above, the weeks of the growing season are numbered and arrayed across the X-axis.The price per unit in dollars is outlined on the Y axis. The specific, final sale prices for the units of tomatoes that Jean brought to auction in 2021 and 2022 are detailed at the bottom of the chart in dollars.We see the per unit price for all the Tomatoes that Jean sold in 2021 outlined in Blue. The orange lines show the average per unit prices for Tomatoes sold by Jean in 2022.

While Jean's tomato harvest and sale windows differ across the years of our study (the blue and orange lines only overlap briefly in weeks 23 through 25 of both years), we see that 2022 sales prices, on average, significantly outperform those of 2021. Where they do overlap, 2022 prices for Jean’s tomatoes are 61.6% higher than prices of the corresponding weeks in 2021.Over the full length of the auction seasons, averaged by the number of weeks of sale, we see that Jean received a per unit price of $21.76 per unit of tomatoes in 2021.Jean received a per unit price of $37.74 per unit of tomatoes in 2022, a seasonal increase of 73.4 percent.

"... We see that Jean received a per unit price of $21.76 per unit of tomatoes in 2021. Jean received a per unit price of $37.74 per unit of tomatoes in 2022, a seasonal increase of 73.4 percent."

The key to this significant increase in average price per unit appears to be a combination of season extension and auction participation timing.In 2021, Jean harvested their tomatoes and took them to auction in weeks 23 through 39.That's the beginning of June through the end of September, corresponding roughly with the height of outdoor tomato production in Southeast PA. Based upon vendor interviews and observations of the growing season in 2021, we can surmise that there was significant competition among tomato growers at the auction houses during this time. That supply was likely a significant cause for tomato prices per unit in the range of $10 to $30. Jean achieved a peak sale price of $43 per unit in week 27.

In 2022 however, Jean took a different approach.They extended their planting and harvest calendar both earlier and later in the season, with a period of no tomato sales at all during the peak of tomato season in July and August.This meant there was much less competition (and less satisfied demand) for tomatoes in the months of March through June, and October through December, of 2022. We’ll call March through June ‘Early Season’ and October through December 'Late Season.' Price per unit for tomatoes sold in the weeks of the Early Season (March-June) of 2022 significantly outperforms every average price per unit Jean received during the more traditional, Peak Season weeks of 2021. Only very briefly does the 2021 per unit price for tomatoes compare to Early Season 2022 prices.This happens at the peak of prices in week 27 of 2021, and the relative trough of prices in Week 13 and Week 25 of 2022. For only the fewest of weeks does that peak price received for 2021 tomatoes compare to the lowest price received for 2022 Early Season tomatoes.

Clearly, it is better to be early to auction. The season extension efforts, especially at the beginning of the calendar year returned significantly higher per unit prices. If we isolate and compare Peak Season 2021 versus Early Season 2022 prices, we see that on average, price per unit for the Peak Season tomatoes Jean received in 2021 was $21.77.The price per unit of Early Season tomatoes that Jean sold in 2022 was $51.18 - a difference of 135%.This is the most significant price increase we found in our participating vendor’s sales data in this study.

"Clearly, it is better to be early to auction. The season extension efforts, especially at the beginning of the calendar year returned significantly higher per unit prices."

The price advantage for Late Season tomatoes versus Peak Season tomatoes exists slightly.On average, again, the price per unit for Peak Season 2021 tomatoes was $21.77. The average per unit price for Late Season tomatoes in 2022 was $23.97, a difference of 2%.The best price advantage weeks of the Late Season coincide with the weeks heading into the Thanksgiving and end of December holidays.

Grower P and Tomatoes

Next up is Grower P and their tomatoes. We’ll refer to Grower P pseudonymously as "Pat" going forward. When we look at Pat's vendor sales data from one or the other participating auction houses, we see higher prices, on average, for their tomatoes sold in 2022 versus 2021.While it's difficult to estimate from the image below, the average price per unit of tomatoes that Pat sold in 2022 was 64% higher than the average price per unit they received in 2021.

Again, the blue line corresponds to the per unit price for tomatoes that Pat took to auction in 2021. The orange line shows average per-unit price for tomatoes sold by Pat in 2022.The average prices, per unit, per week, are detailed at the bottom of the chart.

Pat followed a somewhat similar strategy to Grower J ("Jean") in 2022 compared to 2021. In the second year of our data collection, Pat focused solely on Early Season tomato production and sold at auction in the months of May and June (Weeks 18-27). In 2021 they had followed the full length of the traditional Southeast PA tomato harvest and sale calendar - late June through September (Weeks 23-39). Unlike Jean, Pat chose to not sell any successive crops of tomatoes at auction in the second half of 2022. While Pat may have missed out of some of the later peak price days at the auction around the ends of November and December, he also skipped the weeks of annually low-price days in August and September.

The overlapping weeks of price data (Weeks 23-27) between the two years shows a higher average price per unit of $34.14 in 2022 versus an average of $27.11 per unit of tomatoes in 2021. The prices that Pat received in 2022 were 25.9% higher than those he received in 2021 in the corresponding weeks of the calendar years. This suggests other dynamics including supply and/or demand at work, such that Pat earned higher prices for his tomatoes in 2022 compared to 2021 without the Early Season price advantage anyway. That 2021-22 price increase of 25.9% may account for some of the overall price per unit improvements that Pat saw in 2022.Pat’s overall increase though, in average price per unit of tomatoes, from 2021 to 2022, was 64%.

Grower E and Sweet Corn

Finally, Grower E will be referred to as "Emery." We found consistent price increases for the Sweet Corn that Emery sold at one of the Southeastern PA produce auctions studied between 2021 and 2022.

In the chart below, we see the per unit price for the units of Sweet Corn that Emery sold in 2021 outlined in Blue. The orange line shows average per unit prices for Sweet Corn sold by Emery in 2022. The specific, average prices per week are detailed at the bottom of the chart.

The prices at which Emery sold their sweet corn, for the first nine weeks of sales in 2022, are double that of the prices they received in 2021. On average, from Week 28 through Week 36 of 2022, the price per unit of sweet corn is 2.04 times that of the price per unit of sweet corn they brought to auction in 2021.Over the course of the full season, prices for Emery's sweet corn averaged $4.95 per unit in 2022, versus $3.34 in 2021 - a seasonal increase of 48.2 percent.

What accounts for this significant improvement in corresponding week, or year-over-year, price data? We can see that Emery's harvest and auction schedule is roughly the same across the two years. From surveys conducted over the course of our study, Emery shared that they grew roughly the same acreage of sweet corn, that the weather over this time frame was roughly the same, and that they made no significant changes to their production or sales methods between 2021 and 2022. It's difficult to account for this price increase given the parameters of the data we surveyed in this initial study.

We are unable to statistically conclude the cause of the significant price increase for Emery's sweet corn in 2022.Because we only analyzed the individual sales numbers of a select group of growers at each auction, we can’t observe the overall auction supply and demand dynamics, or factors outside the auction that could affect prices.

Conclusion

Analysis of individual vendor's pricing data is insightful. We are able to observe a variety of auction supply strategies and corresponding prices returned per unit that informs successive seasons and other produce vendors. Future research would benefit from more produce vendor participants; the accumulation of more year-over-year auction sales data; other relevant qualitative information from vendors including surveys, interviews, and focus groups; as well as external data sources to use for comparison, correlation, or potential causation.These external data sources could include regional or national data on consumption habits, pricing data from other produce sales channels or wholesale outlets, or national economic statistics for example.

Each season brings new opportunities to gather feedback on areas for improvement, especially those that return higher premiums for the products grown by PA farmers. As one of our research investigators observed, "the greatest success is never achieved in one season. It is grown steadily through experience, observation, and adjustment."