Building a Market for Local Produce in the Foodservice Industry

Project Overview

Project Type: Farmer/Rancher
Funds awarded in 2009: $14,965.00
Projected End Date: 12/31/2009
Region: Southern
State: Mississippi
Principal Investigator:
Andre Mathews
Family Farmers Cooperative


  • Fruits: apples, melons, peaches, pears, plums
  • Vegetables: cucurbits, greens (leafy), okra


  • Farm Business Management: market study
  • Sustainable Communities: local and regional food systems

    Proposal summary:

    We are a coop of 12 growers who produce a number of fruit and vegetable crops, including collard greens, squash, okra, purple hull peas, watermelons, plums, apples, pears and peaches. Fruit crops are produced in a cooperative-owned 100-tree orchard. The Coop has been selling produce at two farmers markets in Memphis TN, 50 miles away, to senior citizens through the voucher program, to families through a CSA program, and to two restaurants. The Coop recently acquired a refrigerated truck and backup tractor to support members' produce operations. The Coop members have decided to allocate five acres per member, more than double the current allocation of two acres apiece. Thus, the cooperative will have about 60 acres in production of fruits and vegetables. A major element of sustainable agriculture is the development of markets that can absorb a sufficient quantity of product at a profitable price. From the standpoint of financial margin the ideal arrangement is direct marketing to consumers, so that the grower controls and profits from distribution as well as growing the crops and derives as large a portion of the total food dollar as possible. In order to develop the Coop's produce business into a major source of income for the participating farms, the Coop must develop its marketing and distribution system, to connect with lucrative markets willing and able to pay a high price for quality produce. The Coop needs to identify customers that buy a substantial quantity of produce each week and are interested in purchasing quality produce from local growers. Typically, this means selling to food service outlets. Farmers markets in the area probably cannot absorb the volume produced on 50-60 acres. Supermarkets probably would not pay a high enough price to make the operation viable. The problem in developing the foodservice market is that considerable time and effort is needed to contact a substantial number of food service operations (i.e., restaurants and schools), determine their interest in buying local produce, define their delivery requirements (amount and product mix), and develop the seller-buyer relationships that build trust and confidence. In addition, the Coop needs to collect and compile hard data on competitive pricing and quality requirements. In conjunction with market development, cooperative members will need to coordinate their individual activities so that as a group they produce the optimum product mix over the maximum feasible time span and in the required quantities so as to consistently satisfy customers' needs. The goal of our project is to build a market based on solid information and relationships and prepare the cooperative for a more ambitious position in the Memphis area produce market. For small farms, direct marketing is necessarily based on relationships and services rather than price and volume, since large scale agribusinesses are usually more “efficient” from a price standpoint. In order for Family Farms Cooperative to build a lasting market, the organization will need to emphasize communication with customers (in this case chefs, cafeteria managers, and restaurant owners), flexibility, and planning. Developing a market will require the collection of specific, real world data to determine the needs and requirements of each food service outlet, their degree of flexibility, their interest in quality or price, and their interest in offering their customers local food. The President of the Cooperative, Andre Mathews, will seek new customers by contacting either the chef or owner of fifty previously identified restaurants and managers of institutional food services and interviewing them using a data format, presenting the contacts with brochures, product lists and samples and attempt to recruit them as customers of the Cooperative. Items to be investigated will include amount and mix of produce used, delivery frequency, quality standards, price requirements, competition, tolerance for seasonal variation, and interest in purchasing local produce. And then compile data from the survey.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.