Profitability in farm-to-institution sales in Massachusetts

Profitability in farm-to-institution sales in Massachusetts

Summary

“Profitability in Farm to Institution Sales in Massachusetts” is assessing the impact of farm to institution sales on sustainable farm income in Massachusetts. In partnership with farmers using more sustainable farming methods we are gathering knowledge about the opportunities, challenges, and profitability of farming for the institutional market that farmers can use to grow their businesses and increase their profitability. Massachusetts Farm to School Project is currently undertaking three activities with the shared goal of providing the information farmers need to make more informed decisions about selling to the institutional market. The activities include detailed case studies of three Massachusetts farms with sustainable growing practices, an income study of Massachusetts farms participating in the wholesale market to understand the statewide participation in farm to institution sales, and a statewide event that brings together farmers and potential institutional customers. We have worked throughout the grant period with our three “case study” farms to aid them in the collection of financial information for the 2014 growing season and have analyzed this information over the past few months. Throughout the 14/15 winter season we conducted our income survey for approximately 175 Massachusetts wholesale farms and synthesized the information for sharing with growers across the region.  We are in the final stages of editing and desgining the report and case studies for distribution and publication.

Objectives/Performance Targets

This project has three activities with the collective goal of supporting increased profitability of institutional sales by sustainable farms in Massachusetts.

Case Studies: We have partnered with three Massachusetts farms to participate in case studies and have requested they document their financial costs of raising crops and bringing them to institutional markets and the profitability of those sales. We requested farms track income in real time and record annual expenses at the end of the 2014 calendar year. Program staff met with each farm at the beginning of the project to review the tracking tool and collect additional background information on each farm. Following the initial meeting staff contacted each farm on a monthly basis via email or phone to encourage them to continue collecting data through the growing season and following winter and answer any questions.

Farm Income Study: For a picture of statewide participation in farm to institution sales, we have surveyed Massachusetts farmers’ participation in institutional sales during the 2014 growing season. We created the survey tool and administered it electronically and via a phone call throughout the first few months of 2015 (January – April). We selected 175 wholesale farms in Massachusetts with current or past ‘institutional’ relationships to survey and alerted all farms of the upcoming survey via email or U.S. mail to encourage participation. We also alerted them to the chance to win one of two $100 VISA gift cards through their timely participation. Once all phone calls had been made and online surveys completed, we analyzed the data to quantify the number of farms in Massachusetts selling wholesale, the number that participated in our survey, and that participate in farm to school sales. Individual financial data was kept confidential, but we are able present aggregate financial information.

Statewide Farm to Institution Gathering: Lastly, to compliment the research, and in order to increase the marketability of sustainably grown local produce, and strengthen farmers’ relationships with their customers, we hosted a statewide gathering of farmers and institutional food purchasers in conjunction with our statewide Farm to Cafeteria conference in January 2015. During the morning of January 13th, 2015 we organized a buyer tradeshow to attract farmers and institutional food service staff. Seven distributors and local food aggregators displayed information and networked with MA farmers to establish relationships for increased institutional sales. Regional networking sessions were also held in order for individual farmers, schools, distributors, and food service management companies to participate in regionally focused discussions about opportunities and challenges to procurement relationships between farmers and school districts, colleges, and hospitals. Although our original workplan was to share preliminary case study and survey results during this statewide event, we determined that holding the farmer meet and greet during our scheduled Farm to Cafeteria Conference in January 2015 was more productive and had greater potential for increased relationship development for attending farmers. Unfortunately the timing of this event could not wait until these research results were available but we determined the quality of holding concurrent events in 1/13/15 was of priority. Instead we alerted attendees to the status of the research during the event and made plans to disseminate the findings in two ways upon completion of the research. We presented the preliminary information at the Northeast Regional Farm to Institution Summit, which was held in April 2015 in Amherst, MA and we will electronically distribute research results to attendees of our January conference, along with other MA stakeholders once complete.

Accomplishments/Milestones

2015 Accomplishments:
January – March 2015 – Final phone or email check-ins were made to Case Study farms to collect data.
January 2015 – Finalized invites to farmers, distributors, and institutions to statewide gathering and meet and greet.
January 2015 –Hosted Farm to Institution gathering along with farmer/institutional meet & greet
January 2015 – April 2015 –Contacting farmers for survey response via phone and/or email.
March 2015 –May 2015 –Conduct follow up calls to clarify responses to Farm Income Survey as necessary
February 2015 –May2015 – Compilation and analysis of Farm Income Survey results
January 2015 –June 2015 – Compilation and analysis of Case Study results  
June – July 2015 –Drafted Case Study reports

2016 Workplan:
January 2016 –- Finalize Case Study publication.
January 2016 –- Finalize Farmer Survey publication.
January – April 2016 – Distribute Case Study and Farmer Income Survey publications via website, social media, colleague organizations, email newsletter

Impacts and Contributions/Outcomes

This project has a collective goal of supporting increased profitability of institutional sales by sustainable farms in Massachusetts through three activities; case studies, a farmer income survey, and hosting a farm to instiution gathering that includes farmers and institutional purchasers.  While the final outcomes will be shared in the Final Project Report in the coming months, below are some preliminary impacts/outcomes this project has seen thus far. 

Case Studies:

Three Massachusetts farms were chosen, interviewed, and provided detailed financial data to contribute to narratives/profiles of farms currently participating in institutional sales. These case studies will provide complimentary qualitative information to the Farmer Income Survey completed during the same time period (2014 growing season).  These case studies will be finalized and distributed within the first quarter of 2016.  

Farmer Income Survey:

This study provides an updated profile of Massachusetts farms that sold to institutions directly or through a distributor in 2014.

In this study, 155 commercially active Massachusetts farms were contacted in early 2015 and asked to answer a one-page questionnaire, resulting in 70 responses – a 45% response rate. Preliminary findings include the following stats (based on 70 responses): 

• 36 farms, 51%, of respondents, sold their farm products to institutions.
• 22 respondents provided their 2014 gross institutional sales, which totals $2,967,695.
• 78% of respondents estimated their institutional sales were less than 10% of their total farm gross sales; 15% estimated institutional sales were 10 – 30% of total farm sales; 7% estimated institutional sales were 30 – 90% of total farm sales.
• 65% of responding farms that sold to institutions in 2014 thought that it was profitable.
• 36 farms sold their products to 48 institutions, a marked decrease from 146 total institutions reported as buying from farmers in the 2010 survey.
• 83% of responding farms that sold to institutions in 2014 plan to continue; 14% answered Maybe; and 3% (1 farm) answered No. Top challenges to those that said No or Maybe are:
  • Price
  • Growing enough volume
  • Delivery
• 24% of respondents have expanded volume to meet institutional demand, by expanding acreage, increasing production on existing acreage, winter extension/greenhouse production, processing, freezing products, picking differently, or storing root crops.
• Top 3 Products sold by both volume and profitability:
  • Apples
  • Tomatoes
  • Corn

Statewide Farm to Institution Gathering:
A meet and greet between farmers and distributors/institutional purchasers, along with a tradeshow was held in conjunction with our 2015 Farm to Cafeteria Conference in January 2015.  The Conference attracted over 375 total attendees from across the state and generated a wait list of 30 plus people.  Conference attendees included 7 distributors/aggregators and 32 farmers. Outreach to distributors and farmers was completed following the workshop/tradeshow to enhance institutional contacts.

Collaborators: