WHOLESALE PRODUCE AUCTIONS

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A produce auction is a marketing cooperative organized as a limited liability corporation or general partnership. Each auction has shareholders, usually growers, who provide start-up capital for the auction. Produce auctions enable grower-members the opportunity to wholesale market large volumes of produce in a centralized facility to a diverse group of buyers. Grower-members are expected to grade and package their produce in standardized containers before the auction. Each auction has specific guidelines for grading and packaging produce items. The auction often sells containers or boxes to grower-members.

Growers transport the produce to the auction building the morning of the auction, and by midmorning, the auction commences. Growers are responsible for boxing, unloading, stacking and labelling their produce items. The auction is conducted in an open-air shed with wide floor space for loading and unloading produce. The produce items can be auctioned in lots positioned on carts on the floor or in a drive-through for bulk wagons or trailers

Each lot of produce has an index card that identifies the type, quantity, grade and, sometimes, variety of vegetable or fruit in the lot. This card is the consignment sheet and is read aloud by the manager or auctioneer before auctioning the lot. Each tag has a number that identifies the grower or consigner. Each lot is systematically auctioned to the highest bidder. The auction is designed for wholesale marketing, but small lots of produce items are sold at retail prices in a separate section of the auction. Since most buyers want larger volumes of produce, most auctions sell the small lots — less than three boxes of any item — last

This card is the consignment sheet and is read aloud by the manager or auctioneer before auctioning the lot. Each tag has a number that identifies the grower or consigner. Each lot is systematically auctioned to the highest bidder. The auction is designed for wholesale marketing, but small lots of produce items are sold at retail prices in a separate section of the auction.

Produce auctions are an efficient market outlet for growers who feel they don’t have time to market their produce. Both top-and lower-grade produce can be sold at the auction. Transaction costs are lowered because the produce is transported to a central facility for market. Most produce auctions will sell only produce grown within a 100-mile radius of the auction facility. Produce grown in regions outside the 100-mileradius is considered “shipped or imported produce” and is usually auctioned after the local produce.

Average seasonal prices for produce at most produce auctions are usually above wholesale terminal market prices or prices received from supermarket contracts. Growers should use the auction system throughout the growing season to obtain the full benefits of this market outlet.

Wholesale produce auctions bring buyers and sellers together for a short period of time, several times each week. Most buyers are purchasing for small supermarkets, roadside stands or restaurants. The auction does not perform any post-harvest handling or store any produce item, because every lot is sold regardless of price at the day of the auction. Most auctions have a “no, no-sale” policy. However, some auctions choose to set a price floor or minimum acceptable price for each lot of produce. A commission of 9 to 12 percent is deducted from the sale price of each lot to fund operating costs of the auction and salaries of the market manager, clerks and other workers in the auction.

Growers who wish to sell produce grown more than 100 miles away should contact the market manager before bringing the produce to the auction. During the peak growing-season, most produce auctions have three sales per week. Often, special auction events are conducted for items such as flowers, bedding plants, small animals, hay or straw, or crafts. The auction system is well suited for relatively non-perishable vegetables and fruits. Given the nature of the auction system, prices are often erratic. However, an auction with low prices is often followed by auctions with high prices.