Final Report for CS07-052
CFA members will expand our institutional buying demonstration project for farmers that represents a successful marketing strategy for rural counties, builds a market for the Agricultural Education and Marketing Center in Bath County, provides fresh local food to Kentucky school children, and provides additional income to local farmers. By developing a diversified and stable market for Kentucky farmers this project will facilitate new entrepreneurial and value added activities.
Kentucky farmers have historically depended on the stable income provided by Burley tobacco, but that crop and the program that made it profitable now belong to a bygone era. CFA members responded to this crisis in 2000 by advocating for the expenditure of tobacco settlement funds for diversification, new farm enterprises and new markets and by advocating for local buying legislation. CFA has been the catalyst for instigating some of the most significant economic development strategies required by the loss of tobacco. While members have been successful on the urban front, rural counties too far way from Lexington and Louisville to do direct marketing are in dire need of successful strategies.
CFA members envisioned and helped write local buying legislation, House Bill 669, which was passed by the Kentucky legislature in 2006, requiring state agencies to purchase local agricultural products, making the State Parks local buying program permanent and broadening the program to other state institutions as well. Especially in rural areas, state parks can give farmers the summer market that school systems do not provide in their off season.
Bath County built a regional marketing and processing center with tobacco settlement funds that includes a community kitchen and processing, cooling and storage facilities for distribution of local products. Four state parks are within 65 miles of the center.
Farmers remote from urban centers need local marketing and value added options to provide a reliable income. A successful demonstration project will help local farmers create new markets in schools and state parks and provide information for farmers in other rural areas to develop similar projects.
Continue and expand the model institutional buying demonstration project to include two county school systems and four state parks. Double the number of farmers to twenty participating in the project, producing quality food for local markets and customers without an intensive investment in the amount of land or capital, and receiving additional income of at least $5,000. The project will combine the State Park local buying program with farm to school markets to create a nine-month market for local farmers utilizing facilities and services at the Bath County Agricultural Education and Marketing Center.
Five new value-added farm product ventures toi provide additional income for farmers and food products for the schools and/or parks.
Create a how to handbook containing the model demonstration project materials and make it available to assist other farmers and communities in creating institutional and farm to school markets.
The model institutional buying demonstration project expansion was begun in early 2008 with farmer recruitment efforts. This included contacts with local farmers by phone, through the mail and a number of meetings called at the Bath County Extension Office. Farmers were presented with the opportunities of selling their produce to the local school system and the state parks. The Bath County School system Food Service Director was also involved in the meetings relative to the systems needs in terms of product types, quantities, qualities,how produce had to be processed and how payment systems were set up. At the same time, CFA began work with the Food Service Director to begin development of a more detailed policy and procedures manual.
Initially, orders from the Bath County School system were faxed to the CFA office where an Organizer evaluated the needs, contacted farmers and coordinated aggregation and delivery of the product. Because of the need to run orders through a third party who didn’t have a day to day knowledge of which farmers had which products readily available that week, it was found that the system was inefficient. Because of this, we developed an alternative plan that we’ found to be much more efficient. The Bath County Marketing Center has an established auction and an auction manager. We approached him about being the farm to school and state park sales coordinator for our program, and he was willing to do it. The key was that he already knew all of the local farmers, their crops and their due dates because of his responsibilities at the auction. Also, because he was on-site, he would be better able to coordinate consolidation and coordination of deliveries. We developed a system whereby he was compensated for his time and efforts and made that part of our overall system.
Contact was also made with school systems in surrounding counties that could efficiently be supplied by product flowing through the Bath County Marketing Center. Surrounding counties did not possess such a facility so washing, grading, packing and storage of product within those counties wasn’t easily achieved. In all, 3 additional counties expressed interest in purchasing locally grown produce for their schools.
Contact was made with local state parks through their Food Service Director. They were reminded that they not only could purchase from local farmers, but that the state legislature had passed House Bill 669 that required them to purchase locally where quality and price met certain guidelines. State Parks in Kentucky establish the prices they are willing to pay for specific items, and we were able to have that, published monthly, transmitted to us and to the new Project Manager described above. That way, farmers were able to know in advance for the month what items were needed and what the parks were willing to pay for the items.
Part of our objectives were to have the Bath County Center utilized more than in the past. Because of the movement towards marketing to the schools and state parks, we were able to do so, although there is still excess capacity, particularly in the area of value-added products. It has been and continues to be used to wash, sort, pack and prepare for sale those items such as tomatoes and cucumbers that need no additional processing. Also, it began to be used for cutting green beans and shucking and cutting corn into 4″ single serve portions as needed by the school system.
Our target was to have 5 new value-added ventures that could utilize the Bath County Marketing Center and provide yet an additional source of income for local farmers.3 local farmers banded together to explore value-added options and discussed possibilities with the Bath County School system. They found that there was a desire for various fruit cobblers made with local fruits and berries. This group did develop a number of products that were well-received , having been run through a series of taste testing panels to fine tune the recipes. Unfortunately, we found that in order to do this, each farmer/processor was required to have a minimum of $1 million in liability insurance. While such policies are available, it was found that the cost of such a policy was prohibitive relative to the return that the farmer would make from processing a value-added product. In some cases, the annual cost of the policy would be as much or greater than the total sales- not profit- of the farmer. Through the end of the project, the value-added portion of our efforts was limited to the processing of green beans and corn as discussed above.
Once we were able to develop and modify the marketing system in terms of ordering, procurement and delivery, we developed a handbook or manual that outlined the entire system for the Bath County School System- and the manual essentially contains the same elements for selling to the state parks. This manual was developed by CFA, reviewed and commented on by the Bath County School Food Service Director, who then adopted it as their manual. This manual was finalized and copies made and made available for distribution to other counties and interested organizations.
Our target was to have sales being made by at least 20 farmers to 3 local school systems and 4 state parks by the end of the project period. Sales were made to the Bath County School system, but not expanded to a second system, although there was interest on their part. This was due primarily to the fact that the original structure of ordering, coordination and delivery of product was inefficient and needed to be restructured to allow for more efficient before further expansion.(Note: Although beyond the end of this reporting period, that expansion is now taking place.)
The target of selling to state parks was limited as well, with sales being made to 2 state parks during the reporting period. Part of the shortfall was due to the administrative restructure discussed above. There was, however, another development that further limited expansion. House Bill 669 mandated that state parks purchase local foods when price and availability are in line with other suppliers.
The state’s Finance and Administration Cabinet issued a directive that all sales to state entities must be accompanied by a signed and notarized affidavit that the vendor has not violated the state’s campaign laws relative to contributions. The directive further stated that this document had to be executed for every separate sale. That meant that a local farmer selling $25 of berries to a state park throughout the summer would have to execute, sign and have notarized some 20+ documents. Because of this, many farmers selling to state parks felt that the burden was greater than the reward and found other sales venues for their products. While this directive is still in place, both CFA and the Department of Agriculture are taking steps to overturn this directive. We hope to have a simple administrative change, but plan to file legislation blocking this if necessary.
On the positive side, though, we were able to exceed our overall goal of expanding the farmer base from 10 to 20 by involving 28 farmers. Sales to institutions were in excess of $21,000. Our goal of achieving $5,000 per farmer in sales was perhaps too optimistic for several reason. First were the hurdles mentioned above relative to revising the administrative/ordering system to be able to expand and the vendor affidavit directive. In addition, though, local farms are relatively small in acreage and few farms in that area would be able to devote sufficient acreage to be able to produce $5,000 worth of product.
3 local farmers did develop value-added recipes- fruit cobblers- that could be sold to both the Bath County School system and through other venues. Since the cost of the liability insurance was prohibitive, these products were not able to be produced. We investigated other ways to make the coverage more affordable. Discussions were held with a local insurance company that has such policies. It appears that if a statewide “co-op” or organization of value-added producers was formed, that entity could then purchase an umbrella type policy that members of the organization could then be covered by and with much less of a premium than purchasing individual policies. This issue was not resolved by the end of the project period, but discussions are continuing.
The operations and sales manual was developed and published. It has been made available to farmers, school systems as well as other institutions. It provides a framework for farmers to understand issues such as quality, processing and reimbursement systems. It provides the buying institution with a system of being able to purchase local foods without having to deal with individual farmers on a weekly basis and coordinating small individual orders and deliveries.
The accomplishments seen from this project went beyond simply the number of farmers impacted directly and the sales made through the end of the project date. While we were developing the system in Bath County, we were making others throughout the state aware of our project and the impact that could make for both the farming community and the diets of school children and the community. We partnered with Partners for a Fit Kentucky, a statewide organization of health professionals to make their members aware of the opportunities of having healthy local foods available in schools and other venues. We found that there was indeed a great interest in expanding our programs into other geographic areas throughout the state. PFK, being comprised of state and county level health professionals such as county health directors, are a powerful ally and voice in promoting these efforts.
While there are scattered instances of local school systems purchasing some local foods throughout the state, we know of no other county or system that has established a formal program with guidelines and systems that make it sustainable. At the same time, the awareness of our project and the overall movement towards a local food system has led the Kentucky Department of Agriculture to appoint a full-time farm to school program employee. This person has been hired to expand farm to school programs throughout the state and we are working in tandem with this person to do just that. Working with this person increases our capacity to make farm to school programs implemented throughout the state.
On the other hand, the expansion of our efforts in Bath County has meant that farmers in other parts of the state are now aware of the program and the benefits that it can have for them and their neighbors. Our efforts would be for naught if we can’t develop the supply of local farms and the right products to sell to schools, parks and other institutions. Collaborating with both PFK and the Department of Agriculture, we can expand our development and recruitment of farmers to grow and sell fruits and vegetables locally to their and the consumers’ benefits.
The potential contributions of such efforts reach across several audiences. With the Tobacco Buyout Settlement, the state’s farmers faced a real threat in terms of viability of their farms. Of the 66,000+ farms that previously grew tobacco, fewer than 7,000 now do so. That means that there is a dire need to develop new markets for alternative products that the state’s small farmers can profitably grow and market. Now that we have a proven method of coordinating sales of local products to schools and state parks, as well as other institutions, we are poised to be able to make a significant expansion of those efforts throughout the state. While not every farm that grew tobacco in the past may be a viable candidate for producing locally grown foods for sale, we can create a positive environment for the thousands that potentially wish to do so.
On the other hand, these efforts also can have significant impact on the consumer side. According to a recent study released by the Robert Woods Johnson Foundation and the Center for Disease Control, Kentucky ranks 7th in the 50 states for adult obesity and 4th for childhood obesity. Overall, 37.1% of the state’s children ages 10-17 are considered to be obese. While Kentucky is primarily a rural state, access to fresh healthy foods is a problem in those areas as well as urban centers. By bringing fresh local fruits and vegetables into the public-and private school systems, we can provide a much healthier diet and begin to directly address the issue of obesity and the attendant health problems such as cancer, heart disease and diabetes that come with that. Those efforts will pay off as we expand our efforts to other areas and counties in the state, particularly with our new relationships with Partners for a Fit Kentucky and the Farm to School effort being launched by the Department of Agriculture.
Several recommendations come from our experience with this project. First, any local buying project must have a dedicated Project Manager to oversee and coordinate the effort on an ongoing basis. For such a program to be self-sustaining, there must be that link between the buying institution and local farmers. Individual farmers attempting to market to school systems or any other institution will find that because of the time needed to coordinate individual purchases, institutional buyers will shy away from doing so. By having an individual that can have a system and be able to effectively and efficiently coordinate the ordering, collection and distribution elements, it makes it simple for the buying institution to support local farms and foods.
The second recommendation comes as a result of the issue with value-added products. Any farmer wishing to produce value-added products will need to do due diligence in investigating the need for and cost of liability or any other insurance before they attempt to develop or sell such products. Such an investigation beforehand would have avoided having farmers expend time, energy and dollars developing products only to find that they are unable to afford the insurance to legally to market them.
Finally, we recommend that any entity wishing to develop a market for local foods or products partner with organizations that have similar or parallel goals. As an example, CFA’s prime mission is to help farmers thrive and prosper, and by doing so we are able to positively impact the diets of school children and others. This, then, creates a convergence with the health professional community, whose prime mission is health. The power of multiple organizations is far greater than the impact of any single one.