Southern Litchfield County's first regional locally-grown produce distribution facility

Southern Litchfield County's first regional locally-grown produce distribution facility

Summary

The Town of New Milford was awarded a SARE Sustainable Community Innovation grant to conduct a feasibility and capacity study on locally-grown produce distribution within Southern Litchfield County, Connecticut. The study’s goals are to better understand (i) the current and potential supply and demand of locally-grown farm products, (ii)whether aggregation, storage and distribution bottlenecks interfere with maximum distribution, (iii) what business models of distribution might be appropriate to Southern Litchfield County, and (iv) who the likely leaders of a new business effort might be. The elements of the study include literature review, environmental scan, cross-case comparative analyses via surveys and interviews, focus groups and a community symposium. An interdisciplinary team of farmers, economic development officials, farmland preservation advocates, and institutional buyers forms the study’s Steering Committee, which is assisted in research and administrative compilation and recordkeeping by two project consultants.

Objectives/Performance Targets

• Conduct quantitative, comprehensive analysis of, and outreach to regional farmers, measure existing capacity, understand expansion potential and do a gap analysis for accurate planning
  Conduct quantitative analysis of, and outreach to institutional buyers in the region; measure capacity and understand purchasing requirements
  Ascertain marketing, expansion planning and business management skills regional farmers say they need and create an inventory of CT and New England agri-training resources that can provide the necessary technical assistance. Where this is unavailable or inconvenient, propose local on-site training alternatives
  Expand best-practices research begun by Plow To Plate and NMFP on the different kinds of distribution centers operating with varying degrees of success throughout the US: structured supply networks managed by farmers (coops) or by not-for-profits, community coalition-supported food brokering, companies owned by farmers and private entrepreneurial ventures – learn from them and create a matrix of useful lessons that can be shared widely
  Leverage existing opportunities, such as community kitchen facilities for value-added products, or a stand-alone cold storage facility to expand off-season marketing opportunities for small-scale farms
  Identify emerging leaders and form the farmer-community coalition-implementation group to implement Phase II project if indicated by study results.

Accomplishments/Milestones

The literature and environmental scan demonstrate that public awareness of food security issues and the local foods movement is increasing, with data showing the importance of local foods to regional economies, personal health, and the environment. Throughout the country local foods marketing through different retail and wholesale channels is increasing, as are public and private investments in projects capitalizing on this trend. The Steering Committee concluded that sufficient evidence of successful ventures exists to warrant closer investigation of models for local-foods distribution that might be replicated in New Milford or elsewhere in Southern Litchfield County. The Committee also observed that other alternative models of local-produce marketing, including an enhanced farmers’ market (larger footprint, greater # of vendors, increased offerings including entertainment, wintertime hours, etc.), additional community share models such as traditional and corporate CSAs and Community-Supported Markets, agritourism models such as creameries and Pick-Your-Own farms, would be viable additions to the New Milford area’s current agricultural economy.

Our interviews of persons involved in successful distribution projects elsewhere in the country yielded several lessons learned. Models studied included: (i) farmer-owned cooperative with non-farm location and institutional customers, (ii) nonfarmer, nonprofit corporation with large wholesale distribution network, institutional customers, (iii) nonfarmer for-profit corporation with wholesale distribution, institutional customers, (iv) farmer-owned for-profit with wholesale distribution, (v) local foods “umbrella organizations”: nonfarmer nonprofit organizations coordinating farmer-buyer networks, and (vi) farmer-owned, on-farm cooperative. The Steering Committee concluded that, while strong supply and demand are essential for any distribution model to work, equally important are sophisticated management skills, accountability and relationship-building. Producers/sellers must understand that pricing for higher volume sales may be lower than for direct-to-consumer retail sales, just as buyers should recognize that local produce may command a higher price than commercial wholesale product – and that the market does indeed bear this “custom” pricing. Locally grown is really in its own category, supporting its own pricing system apart from general wholesale, as evidenced by all models surveyed.

• Successful models started out small – matching a few farmers with a few buyers – and then expanded as demand grew and their experience enabled them to work out the kinks.
  Most models have evolved with situation and place-specific pairings of farmers with institutional buyers.
  Farmers may need to start small to limit risk and balance with premium retail sales.
  Choice of model may be most dependent upon who is available to do the work (i.e., farmer-owned cooperative will not work if no farmer is willing to take on this responsibility), although not-for-profit organizations may have a leg-up given that they may be most able to weather a long start-up period – with no need or expectation of (ever) operating in the black.
  It is very hard to quantify the start-up costs or risk assumed by farmers, another reason to start small.
  There are models which take advantage of farmer’s inability to sell imperfect crops, seconds, and previously-unsaleable product (i.e., purchases for processing, food banks and soup kitchens).

We identified many regional institutional buyers. Our interviews with a select group of these buyers confirmed that buyers are very interested in offering and showcasing local products. The Steering Committee concluded that there is more local buying happening than is intuited or widely known. Many farmers and buyers have found each other without the help of a broker or formal distribution system and have made informal and varying arrangements to purchase small amounts of local crops. Contrary to our expectations, many buyers reported that the prices for local foods in season were below what they would have to pay for similar, non-local product. Buyers had some leeway in negotiating prices for local food, and many were willing and able to pay a premium for local product, particularly when the product was not easily available through a commercial market, such as specialty crops or sensitive items that did not survive long storage or transportation well (note: one farmer says his products draw a premium because in addition to being local, they are organic and have named varietals). There was recognition that farmers deserved a fair price, and most buyers felt that their market would support more supply of local produce than is currently available.

We have 7 buyers identified for the mid-winter focus group; additional buyers are interested in increasing their purchases of local foods in the next growing season. We also have several local foods advocates following our project, some of whom have expressed interest in presenting at our forum, or collaborating in a successor project to increase regional distribution of local foods.

• Restaurants may have more flexibility in purchasing local because they can adjust their menus based on what’s available.
  High-end restaurants can more easily pass on price premiums to the consumer and are willing to pay the most for good product (but it must be reliably high-quality).
  Farmers have considerable power to negotiate prices.
  Restaurants generally have lower product demand (fewer meals – smaller consumer pool).
  Low-end restaurants are not so interested in local product because consumer demand/expectation is lower, ability to adjust prices limited. Some low-end restaurants have been able to work the local angle by selectively using local ingredients and good PR.
  Our region’s buyers do not always maximize their marketing opportunities with regard to local foods – failing to publicize the local origin of their inventory, put a face/place to the food, and inadequately communicating the reasons to eat local.
  Packaging and product uniformity do not seem to be as important as had been indicated in our environmental scan/literature review – quality of product is very important, but there is some expectation of variance with a local product (if it looked “too perfect” it might not truly be local).

The project began in the Summer of 2009, with a series of Steering Committee meetings. The environmental scan and literature review progressed according to schedule. Case studies of business models were more time-consuming than predicted, each taking 3-5 hours. As the 2009 growing season unfolded – a cold, wet beginning progressing through unusually widespread tomato blight, mid-season hail, and continued extremes in temperature and precipitation, it became apparent that farmers were busy trying to limit their losses and sell what products they could, and would not easily engage in conversations about new marketing channels.

A yet-to-be-resolved hurdle concerns the underlying “root” goal of the project: the project proposal identified the perceived need to match demand for local foods with supply. As we move forward, however, biases about the relative benefits of “eating local” to individual personal health, the local agricultural economy, and the environment have continually raised questions about what constitutes “local”? – grown within what distance, by what size of operation, by conventional or organic/sustainable practices, etc. For purposes of this study, we agreed to consider first the farms most immediate to the New Milford-area, moving out in an ever-widening radius. However, it may be impractical in the end not to privilege one or more of these biases over the others.

• We did not stick to our original timeline. This has resulted in a lack of continuity and buy-in from the Steering Committee and may ultimately postpone implementation of any Phase II project.
  While some members of the Steering Committee are strong, others still need to be engaged, and lack connection to the project, resulting in a lack of project capacity.
  The economic climate has made it difficult for farmers or buyers to consider new models that might increase their operating expenses in the short-term.
  The poor growing season of 2009 made it difficult to access farmers during the season, farmers were focused on limiting their losses, and farmers were unable to make time to consider new business models and practices.
  The poor growing season limited supplies and farmers were able to realize premium retail sales, diminishing interest in bulk sales to institutions or brokerage sales.
  Farmers believe they can make connections with institutional buyers, if desired, on their own.
  Despite farmer representation on our Steering Committee, farmers may lack trust and confidence in the project and do not feel it represents their interests.

Impacts and Contributions/Outcomes

At the midpoint of the project, the literature review and environmental scan have been completed, resulting in a wealth of information about growing public awareness of food security issues and a concomitant receptiveness to increased consumption of locally-grown foods. Comparative analyses of successful business models across the nation yielded several models worthy of further consideration as we continue to engage regional producers, buyers, and the community. Further analysis of local business practices with regard to local foods purchasing and willingness among certain types of business purchasers (restaurants, schools, health care facilities, markets) to increase local purchasing has resulted in identification of several business leaders to participate in a focus group and who may participate in a pilot project. Beginning analysis of local farming practices has resulted in a similar picture of current distribution patterns and some willingness to try new models.

• Convening of nine-member Steering Committee.

  Four Steering Committee meetings: May, June, July and September. Attendance at meetings average 8. Meeting periods 2 hrs each.

  Literature review –A short bibliography and digest of important local foods-advocacy research, reporting, and sources has been prepared as a resource to Committee members and other local foods advocates.

  Environmental Scan – The Steering Committee identified more than 20 businesses operating across the United States using different models to distribute locally-grown food.

• Distribution Models – Members of the Steering Committee developed a standard interview questionnaire and conducted in-depth interviews of 9 distribution operations. The results of these interviews were distributed to the members of the Steering Committee and the Committee discussed the results.

  Institutional Buyers – We built a list of more than 45 “institutional” food purchasers within Litchfield County and the surrounding Fairfield County town of Sherman, falling within the four categories of restaurants, schools, healthcare facilities, and markets. The list includes data about each buyer’s principal and contact information, whether or not they buy local, whether they are interested in participating in our focus group or in other parts of the project, and notes about the buyer. Members of the Steering Committee developed a standard interview questionnaire and conducted in-depth interviews of 11 buyers, including representatives in all four categories. Results of these interviews were distributed to the Steering Committee and the Committee discussed the results.

  Farmers – We built a list of more than 202 farms throughout Connecticut and close to the New York state-Litchfield County border. The list includes data about each farm’s distance from New Milford, principal’s name and contact information, products, acreage farmed and available (if known), organic/conventional practices, whether the farmer(s) were interested in participating in our focus group or otherwise working with our project, and notes particular to the farm. Members of the Steering Committee developed a standard interview questionnaire and have begun interviewing select farmers. Results of these interviews will be distributed to the Steering Committee and discussed.

In the winter of 2010, the Steering Committee plans to complete its objective of farmer and buyer outreach, interviewing at least 20 farmers and 20 buyers, and securing a group of 15 participants for a mid-winter focus group to consider the feasibility of new marketing channels and distribution models in light of the Steering Committee’s findings. Following the focus group, the Steering Committee will make recommendations for additional projects – such as a small-scale distribution pilot or business/capital financing feasibility study – as well as identify further needs among the constituents (i.e., technical assistance in marketing for farmers, public relations campaigns around local farms and foods), prioritizing and estimating costs of such needs. A public presentation of the Committee’s findings, including panel presentations from focus group members and local foods advocates, is planned for April or May – to kick off the 2010 growing season – and will serve to promote Phase II of the project while raising public awareness of local farmers and businesses who purchase local food.

Collaborators: