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Using Computers in Marketing

Several communities in the Southeast have targeted vegetables as a new enterprise for introduction into their area. Over the past twenty years, and with increasing frequency, marketing cooperatives have been formed to grade, pack, and ship and sell the vegetables from these communities. These marketing cooperatives have met with varying degrees of success, ranging from those that have been very successful to those that have quickly failed. All have had to deal with a wide array of management, operational, production and marketing problems. In a self-help effort to deal with these problems more efficiently, leaders of several of the marketing cooperatives began to meet under the sponsorship of Tennessee Valley Authority (TVA) and Agricultural Cooperative Service (ACS) during the late 1970s. In October, 1983, these leaders organized the Horticultural Producers Federation (HPF), a federated organization of local cooperatives with representatives from North Carolina, Virginia, Tennessee and Kentucky.

During the fall of 1983, 30 vegetable marketing cooperatives in the Southeast region were interviewed as the initial step in identifying the services the federation could provide to local cooperatives that would be most beneficial to them. Interest was expressed in HPF providing services relating to market information, record keeping, communications, accounting and planning, joint purchasing and centralized marketing. Our project staff determined that the introduction of microcomputers into the individual cooperatives, which could be tied together be effective in addressing the market information, record keeping, communications, accounting and planning needs. During the past three years the Horticultural Producers Federation has grown from 5 to 16 members. Programs have been initiated for the member cooperatives in five areas:  (1) Educational programs, (2) joint purchasing, (3) centralized marketing, (4) microcomputer services and (5) market information.

Educational programs - Six major workshops or tours have been sponsored over the past three years. Workshops on microcomputer programs, tours of marketing facilities and other programs have been held. The communication among directors, managers and staffs of the participating marketing cooperatives growing out of these educational programs has been one of the major benefits resulting from the federation effort.

Joint purchasing - The member cooperatives feel that economics can be obtained through joint purchasing of containers and other materials. Representatives of each firm met with several representatives of container firms at least year's annual meeting as an initial step toward joint purchasing. The divergence in the types of containers used among the member cooperatives was found to be a major barrier to joint purchasing and a HPF committee was recently established to work on standardization of containers.

Centralized marketing - Centralized marketing is a service which has the greatest potential to benefit the cooperatives, yet is one that may be most difficult to implement. During the past marketing season, the federation operated a market analysis and pricing committee to provide the individual cooperatives with assistance in their marketing. This effort which could be a first step to centralized marketing was successful and proved to be very helpful to local managers in understanding market conditions. Plans to initiate centralized marketing for the member cooperatives during the 1987 marketing season are currently being considered.

Microcomputer services - During the spring of 1984, IBM PC's, printers, communications modems and software were installed in six of the marketing cooperatives as a pilot project. Training was provided to the local staffs on the operations of the computers and the software. Some software, such as the packinghouse record-keeping program and the market information program, was written for use of the cooperatives. Commercial software, such as accounting and payroll, was used for other applications.


Market information and communications - Three different methods of delivering market information and providing for communications between the cooperatives were tested.  Market information and communications were delivered during the first year through a microcomputer network with a host microcomputer at Virginia Tech serving as the hub for delivery of market information from AMS and to the communications network. The second year a commercial time-sharing network was used in place of the host microcomputer at Virginia Tech. AMS market information and communications producers were similar to the first year. The third year it was decided to test the use of ProNet, a commercial market information system. The AMS market information was helpful but most cooperatives felt more complete marketing information was needed. The participating cooperatives have access to ProNet through a joining subscription arrangement with HPF.

Spreadsheets - The marketing cooperatives have access to Supercalc for use in their business. Programs have been developed for grower inventory of containers, calculating patronage refunds, calculating packinghouse breakeven analysis and for some other applications. The Supercalc spreadsheets have been used some, but not to the extent anticipated. Further training on writing spreadsheets among the participating cooperatives is needed to encourage the writing of individual applications.

Accounting and payroll - Rather than write programs in accounting and payroll, it was decided to work with the cooperatives to purchase the commercial Red Wing software system. Several of the participating cooperatives have purchased the accounting and payroll programs and are finding them most useful. Since the marketing cooperatives employ large numbers of workers for a fairly short season, the payroll program which can calculate salaries, hourly wages, piece rate or some combination of the three, has been valuable. The program also calculates employee deductions for FICA, federal and state taxes, print payroll checks and W-2 forms and separates employee expenditures into projects for better cost analysis. Most of the cooperatives have purchased the payroll program and several have purchased and are using the general ledger program.

Word processing - A couple of firms are using a commercial word processing system and find it useful. As the financial and accounting applications become established, expanded use of word processing among the other cooperatives can be expected. As a result of this work, we have concluded that the use of a microcomputer by a marketing cooperative can greatly benefit them and, in my judgment, will be essential if a marketing firm is to remain competitive in the future. The computer has proven to be an effective tool in helping the office staffs handle the large number of records associated with this seasonal business. As the users gain experience new applications can also be expected.

This article was written by James B. Bell, 1986 -Reprinted with permission from Successful Farming; Copyright 1986    All Rights Reserved   

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