Vegetable Pricing Policy

Please see the 2013-2014 LFLP Price List for current prices, but to ensure the information is understood in context, you are advised to read the pricing policy below.

The goals of LFLPs pricing policy are to achieve fair prices, financial stability, value for consumers, and support for growers to invest, plan and grow their outfits.

The current method that LFLP uses to price produce is based on pricing data gathered from retailers of Certified Organic and conventionally grown produce around Hobart. This information is used to determine prices that give a fair return to growers while offering subscribers comparable value for money.

The data gathered is used by the coordinator in consultation with LFLP growers to set a “retail value” for each product. This is calculated as somewhere between conventional and organic produce, keeping in mind that the produce has been grown using organic principles, but is not certified and produce has been pre-ordered rather than sold on consignment. That is, there are no losses due to failure to sell.

The LFLP coordinator also tries to take the following challenges into account when appraising a crops value:

  • geographic location
  • micro-climate
  • time
  • effort
  • space
  • infrastructure

It is also acknowledged that some crops are particularly difficult to grow successfully using organic methods and because of this, greater costs may be associated with their production and therefore greater value is attributed to the crop when prices are being set.

Growers are paid 70% of the agreed retail value, with the remaining 30% retained by LFLP to cover costs (salaries, rent, utilities, infrastructure etc). In the event that LFLP made a profit, that money would be returned into the Program.

It is recognised that the price setting process is ongoing and ever-changing, based on some of the challenges outlined in the “Background Information on pricing of produce” document, and needs to be flexible enough to respond to grower demands relating to real world conditions (e.g. fuel prices, agri-supplies, pests and markets).

Prior to each growing season the coordinator releases a price sheet to all growers that sets the pricing intent for each item. The coordinator will arrange a meeting with all member growers in the group in conjunction with the release of the new season’s price sheet. This is an opportunity for everyone to meet and discuss the new seasons growing plans and prices. It is also a good opportunity for everyone to come together face to face and share information. All growers must read and sign off with their agreement of the allocated prices. If a grower would like to apply to have a price reviewed a Price Review form can be completed and lodged with the coordinator. The coordinator will arrange to meet with the lodging grower and the information contained within the completed form will be used to inform any decision to adjust the price if it is deemed necessary.

LFLP has opted for the current pricing method as it is relatively quick and easy to source data to inform the pricing sheet. Although this system is not without fault, it stands as the best start up option available at the time of LFLP’s inception.

It is acknowledged that the current price setting system is still heavily reliant on obtaining its data from the “broader market”. LFLP is considering developing a new price setting system in the future that offers growers greater opportunity to supply growing data into a system that would determine a crops value. This model is based less on historical data from the broader market, focusing instead on an equation that takes into account Time + Effort + Space = Price. This new system is being sought with the intent of providing growers a fairer return for the actual work/costs required to produce a crop, and to avoid gluts in low-effort, high-value crops. This would set a level playing field and would represent the real value of the produce rather than arbitrary market values.

However, it is an ambitious and time consuming process both for the coordinator and for the growers to acquire the data and develop new prices accordingly. LFLP hopes to allocate further resources to the development of improving price setting systems into the future.