Evaluation of Changing Farm-Gate Marketing Strategies to Increase Profits Dr. Gary Graham Ohio State University Extension AM/PIC Natural Resources July 17, 2007

Why this issue? Only.5% (n=3) of producers make a living from a full time maple operation The rest use maple sugaring as a supplemental income Ohio tends to be into the old fashion way of sugaring Most still produce like grandpa did and many continue to sell their products at grandpa's prices

Things to Remember Maple syrup is a cash based enterprise Most only deal in cash when buying equipment and in selling products No credit cards, no checks Most will not tell you how many gallons they produce

Getting Past Grade Discrimination Stuck in the past Producers think Light Amber is best Customers think Dark Amber is best Many stop producing when it turns Medium Amber Light Amber Medium Amber Dark Amber

When asked if producers made money at sugaring…

Current Sales Methods 2004 survey of all known producers (N=620) 68% sold maple syrup The rest are hobbyist and/or self consumed or gave it away 48 (8%) producers indicated their markets are larger than their current production and buy syrup for resale

How Do They Sell Syrup? 64% sell retail Farm-gate or other retail outlets 17% sell wholesale To other producers or outlets 23% sell bulk To packers in and out of state

Problems With Grandpas Prices Between 1993 and 2003 consumer price index had an inflation increase of 19.8% Maple syrup has increased only 4% in same 10 years Producers average response to price per gallon of Medium Amber syrup was: 1993 $26.00 (low <$20, high $48) 2003 $27.00 (low <$20, high $48)

Maybe if… They had the latest equipment like: RO to concentrate sugar & reduce boil time Only 15 in the whole state

Maybe if… Thy had high efficiency evaporators High efficiency units available 6 to 7 years ago Average age was 13 years old

Maybe if… They had the latest in high efficiency tubing systems 68% are on bucket collection systems

Maybe if… Another way to increase production 50% dont know what their production rate is

How Producers Market Syrup 85% dont Other than word of mouth Only 36% advertise farm gate sales Only 4% advertise in local papers Only 2% have web pages Only 11% convert syrup into confections for valued product sales

Hmm… If you dont market your product, then dont say you cant make any money at it…

How Price is Determined ContainerValueValue/Gallon Gallon$27.00 ½ Gallon$13.50$27.00 Quart$6.75$27.00 Many will increase price of smaller units but not enough to off-set labor and materials costs

Cracker Barrel Country Stores® …averages $17 million annually just from sales of 1.7oz bottles of maple syrup that retail for $1.95 each, which equates to maple syrup worth $ per gallon.

Marketing of Value Added or Smaller Units… Pays Big! If consumer thinks $27.00 to $32.00 per gallon is too much they will in turn buy a quart If priced properly you will make more money from 4 quarts than 1 gallon

Strategies We Are Promoting… Start actively marketing syrup Dont wait for customer to come to you Catch up with inflation They produce a luxury, gourmet product Market and promote it as such Produce value added confections Candy, cream, spread, etc.

How to Price Smaller Units Price smaller units at a percentage of the whole gallon stretch the value e.g. sell a ½ gallon as 60% of a gallon cost not 50% of a gallon cost

Old % of GallonValueValue/Gallon Gallon100%$27.00 Quart25%$6.75$27.00 New Gallon100%$34.00 Quart35%$11.90$47.60 Old vs. New Method

Show Me The Money… Production Gallons/year Traditional Gallon $27.00 Traditional Quart $6.75 New Method Gallon $34.00 New Method Quart $11.90 ($47.60/gal) 200$5,400 $6,800$9, $8,100 $10,200$14, $13,500 $17,000$23, $21,600$21,500$27,200$38,080

Potential Income Increases Ohio averages 100,000 gallons of syrup per year If crop was just sold as Quarts only Marketing Method $/UnitValue/G allon Total Annual Crop Value Traditional$6.75$27.00$2.7 million Proposed$11.90$47.60$4.76 million

Making the Transition Fighting deep rooted traditionalism Dealing with Heritage Issues Looking to other states (Vermont) 460,000 gallons/year (reported) Many more not reported Range of $34 to $40/ gallon $13.00/quart

Will it Happen? Average producer age is 53 years old Only 47% indicated they had a next generation in line to take over the operation ???????

Thank You! Dr. Gary W. Graham 1680 Madison Ave. Wooster, Ohio (330)

Ohio Maple News