Connecting with institutional markets for World PEAS Food Hub participants
This project called Connecting with Institutional Markets for World PEAS Food Hub Participants is aimed at assisting small-scale beginning, immigrant, and refugee farmers to reach new wholesale market channels to increase sales. This project also focuses specifically on the sale of ethnic produce through these sales channels. Because ethnic produce is in low demand in the direct-to-consumer markets that the World PEAS Food Hub already works with, this project seeks to establish an alternative market for these crops, as well as other more traditional crops, to increase revenues for small-scale beginning farmers. The goals of this project are: to understand the wholesale market demand for ethnic produce in eastern MA; to understand the requirements and expectations of these buyers in regards to quality, quantity, food safety, etc.; to cultivate relationships with institutional buyers on behalf of farmers; to provide technical assistance to farmers to develop production schedules, crop plans, and food safety plans to meet the demand of the institutional buyer; to understand the impact of increased volume of wholesale sales on the profitability of the World PEAS Food Hub; to increase revenues for beginning, immigrant, and refugee farmers by selling produce through institutional market channels.
The core objectives stated in this project are included below. In order to accomplish these objectives, we used a combination of research/data collection, technical assistance, group meetings, and outreach strategies.
- Assure farmer capacity is aligned with sales goals for new wholesale/institutional markets;
- In order to asses that the capacity of our beginning farmers was aligned with the demand of wholesale/institutional buyers we partnered with the Harvard Business School to conduct research around market demand in the greater Boston area, institutional buyer requirements around food safety, volume, quality, and price, and the impact wholesale pricing would have on the profitability of the World PEAS Food Hub.
- Through research we discovered that our beginning farmers have the capacity to meet the demands of some institutional buyers, but not others. Because the farmers that sell to the World PEAS Food Hub are very small-scale (operating on less than 5 acres), do not currently have food safety certifications, and are still working toward producing consistently high quality products, certain types of institutional opportunities are not currently available to them. These include large retailers (supermarkets and grocery stores), public schools, hospitals, and food service providers (like Sodexo or Bon Appetit).
- Our research revealed that there is a great deal of variation between the demands of different types of institutions, and we were able to identify four main institutional channels that align with our farmer’s capabilities, including non-profit organizations, universities, workplace dining services, and restaurants. These are the main institutional channels we targeted in 2016 and will continue to target in 2017.
- Through analysis of pricing models, we discovered that wholesale pricing does not function well for our farmers because they are not currently able to deliver high volumes. The institutional buyers we have identified (non-profits, universities, workplace dining services, and restaurants) have more flexible pricing options, as well as volume requirements, which is another reason we have decided to work with them over large scale institutional contracts.
- Between September and December we partnered with a graduate student at Tufts University’s Friedman School of Nutrition Science and Policy to conduct retail and wholesale pricing research, and as a result we have altered our pricing structure to help the Food Hub cover its operating expenses while retaining fair and stable prices for farmers, given the anticipated increase of sales through the wholesale market channel.
- The results of this research have reinforced for our staff the importance of continuing to provide training and technical assistance to our farmers to assist them with scaling up their farm businesses. New Entry has recently hired a Beginning Farmer Education and Curriculum Coordinator who will be working on developing curriculum and training materials aimed specifically at helping farmers scale their farm businesses to reach new markets, including wholesale markets like the ones that are not currently available to them. The World PEAS Food Hub will continue to provide support to these farmers and remain prepared to connect them with those markets when they are ready.
- The World PEAS Food Hub is exploring a partnership with New Venture Advisors, a food-business consulting firm, to utilize a wholesale readiness tool to help farmers understand the steps needed to become eligible to access larger scale wholesale markets and assess their overall readiness for the wholesale market.
- This information, along with exact sales information for our farmers, will be compiled into a report and widely disseminated at the project’s completion.
- Develop and maintain strong relationships with new markets through consistent communications between farmers, WPFH, and buyers/management at wholesale/institutional markets;
- The research process described above took four months instead of the one month we had anticipated in the grant proposal. This disabled us from identifying the type of institutional market we wanted to target in the 2016 season.
- Despite that, we were able to re-establish partnerships with 10 institutional partners including:
- Arlington Council on Aging in partnership with Lahey Hospital and Medical Center in Arlington, MA
- Burlington Council on Aging in partnership with Lahey Hospital and Medical Center in Burlington, MA
- Medford Housing Authority in partnership with the Medford Farmers Market in Medford, MA
- Bridgewell’s Pathfinder Center in Lowell, MA
- Kit Clark Senior Center in Dorchester, MA
- Somerville/Cambridge Elder Services in Cambridge, MA
- Community Teamwork Inc. School Age Program in Lowell, MA
- Community Teamwork Inc. Daycare Program in Lowell, MA
- Springwell Senior Group in Waltham, MA
- WIC in Lowell, MA
- We also established two new partnerships including:
- Cameron Senior Center in Westford, MA
- Corporate Chefs, Inc. at The MITRE Corporation in Bedford, MA
- Staff spent time between March and May either visiting or setting up phone calls with staff at each of the partner organizations to arrange buying agreements and establish delivery plans for the 2016 season.
- Staff developed outreach materials to present to partners and for them to distribute at their institutions. See: harvesting calendar, post card 2, and One-pager overview Final.
- Between June and November, staff remained in consistent communication with both farmers and buyers to source and deliver fresh, locally grown food to the institutional partners.
- Staff have continued to improve systems, working toward becoming more efficient in order to handle more partnerships in 2017. Between August and November staff conducted research to identify appropriate software to assist with systems improvements, which will be purchased and installed for the 2017 season.
- Provide additional income to limited resource producers through new market development;
- In the 2016 season, the World PEAS Food Hub generated over $250,000 in revenues, putting a quarter of a million dollars into the local food economy. Of our total revenues, $175,000 went back into the pockets of local farmers. Of this, $107,000 in sales was generated specifically by beginning farmers.
- In 2016 we developed 2 new wholesale markets generating $10,000 in sales.
- Through the research conducted during the grant period, we learned a great deal about the types of wholesale markets appropriate for our farmers, and we are prepared to target these types of markets to build new market opportunities in 2017 and continue to generate revenues for our farmers.
- World PEAS Food Hub staff provided over 250 hours of technical assistance to 20 farmers during the grant period, assisting them to develop crop plans, establish marketing agreements, develop food safety plans, develop production schedules, and produce, harvest, and pack high quality produce.
- Assure sustainability of new markets for future years.
- Through the research and data collection process, the World PEAS Food Hub has identified a specific target area that is appropriate for our farmers at this time. With the ability to focus specifically on this targeted segment of the institutional market, we will increase the number of our partnerships in 2017.
- New Entry is committed to building the capacity of our farmers in order to scale their businesses and reach new and larger markets in future years.
Between February and May the World PEAS Food Hub partnered with two graduate students at the Harvard Business School to conduct a market analysis of the greater Boston region to help us understand the demand for locally grown produce among institutional buyers. See the final report generated by the students here: World PEAS Market Report – Harvard Business School. Working with the graduate interns, the World PEAS Food Hub Manager and Coordinator quickly realized that the research process would take much longer than the one month planned in the original project work plan. It took a great deal of time for the graduate student interns to identify potential market opportunities in the region, schedule phone calls with the ideal contact at each business, and conduct interviews to understand their buying needs including information around whether or not they are interested in sourcing locally grown food, the types of produce they source, the quantity required, the price framework, food safety requirements, and insurance compliance requirements. We worked with the Harvard Business School graduate interns between February and May to conduct this research, as well as general research around the demand for locally grown food in our region, and the roles of our competitors.
In our market research we targeted large retailers, universities, restaurants, grocery stores, and local non-profit organizations serving low-income communities. Initial research resulted in the identification of 29 organizations that met the criteria of institutional buyers potentially interested in sourcing produce from the World PEAS Food Hub. Of the 29, we were able to conduct interviews with 6 businesses, as well as identify another 7 businesses with high potential for interest. We also conducted research on other market analyses looking specifically at the needs of institutional buyers and how small-scale producers can enter into the institutional market channel. From this research we acquired valuable information around the needs of institutional buyers. We also found that the needs varied based on the type of institutional market channel.
Through our research we discovered that large retailers have particularly stringent requirements, demanding high volume, low price-point and little flexibility. With centralized purchasing facilities, contracts with large-scale food suppliers, and regional or national staff, it can be extremely difficult to identify a contact and obtain a meeting with them. Large retailers also indicated that they have less interest in purchasing ethnic produce. We identified large retailers as a low-level priority match for the beginning, immigrant, and refugee farmers at the World PEAS Food Hub.
We also looked at local universities and workplace dining services companies as a potential institutional market channel. We found that universities and workplace dining services companies are often likely to place value on sourcing locally grown food and have a higher interest in sourcing ethnic produce. Research showed that dining halls often have a degree of independence and flexibility in regards to sourcing and purchasing, allowing them more flexibility around volume. The dining services providers we talked to and read about had less stringent food safety requirements when purchasing smaller quantities. We placed these types of businesses at mid-level priority match for our farmers.
We explored local restaurants as another wholesale market channel, finding that there is high demand for locally grown food at local restaurants. Restaurants value high quality and are interested in ethnic produce, but require frequent deliveries of smaller volumes, which is not always possible for the World PEAS Food Hub. We placed restaurants at mid-level priority match for our farmers.
We also identified ethnic grocery stores as a potential market opportunity, but found that most ethnic grocery stores are less interested in sourcing locally and require extremely competitive price points that the World PEAS Food Hub cannot compete with. We placed ethnic grocery stores at low-level priority.
Finally, we looked at non-profit organizations, focusing specifically on elder care facilities, senior centers, and organizations serving low-income people. We found that this market channel had extremely high demand for locally grown produce, offered flexibility on pricing and delivery schedule, and had low food safety requirements. We also found that many of these organizations rely on either internal or external funding to assist people with purchasing fresh produce, which introduces an element of risk for our farmers and requires the World PEAS Food Hub to play a role in fundraising to offset the costs for these organizations. Still, we see this as a high-level priority for expansion.
During the research period between February and May, World PEAS Food Hub staff continued to work with farmers to prepare for the upcoming season. In February and March, staff assisted farmers to determine their needs for capital and distributed $16,452 in microloans to 7 beginning farmers to assist them with purchasing seeds, fertilizer, and equipment for the upcoming season. Staff also provided over 250 hours of technical assistance to 20 farmers during the grant period, to help them develop crop plans, prepare soil, plant, irrigate, and harvest crops, assess crop quality, and get their fresh produce to market.
During March and April, staff continued to develop partnerships and facilitate sales through both direct-to-consumer sales channels and institutional sales channels. Staff created promotional materials (see attached) to use while conducting meetings with new potential buyers and utilized these resources to establish partnerships. In this period, staff re-established 10 institutional partnerships, and established two new institutional partnerships (one with a senior center and one with a workplace dining services provider). These new institutional buyers did not require specific food safety certifications, allowed for flexibility in volume, and were able to accommodate our prices.
In April and May, staff worked with producers to create and update food safety plans. Because our market research was still underway and none of our new partnerships required specific food safety certifications, we did not move forward with mandating any higher level food safety requirements for our farmers in the 2016 season.
Between June and November the World PEAS Food Hub was open and in full operation. The Beginning Farmer Resource Coordinator and the World PEAS Food Hub Coordinator along with other staff worked together over this time period to assist farmers with producing high-quality fresh produce, delivering it to the World PEAS Food Hub, and getting it distributed out to our wholesale and institutional buyers. Staff worked directly with farmers to provide feedback on production techniques, post-harvest handling, crop quality, and packaging for wholesale. Staff identified and noted core areas for improvement, specifically around growing for the wholesale market. Some of the core areas for improvement included consistency in size and appearance of produce, method of packing produce, and consistency of quality. Throughout this period, staff placed weekly orders with farmers, who delivered produce to the Food Hub, where it was re-packed and distributed out to buyers. World PEAS Food Hub staff were in communication with institutional buyers to assess quality, systems for ordering, delivery logistics, and other needs to stream-line the process. Farmers were paid on a bi-weekly basis for the produce delivered and sold through the Food Hub.
In December, staff are finalizing all farmer payments for the season, assessing total revenues and expenditures, generating sales goals and budgets for 2017, pulling together data and statistics around sales, populations served, and farmer earnings, and analyzing the World PEAS Food Hub business plan for improvements. On December 12th, we hosted the Annual Farmer Meeting, inviting 20 farmers to our office to discuss the season, obtain feedback for how we can improve our Food Hub operations, offer feedback for how farmers can improve their production, and launch the 2017 crop planning process. 13 farmers attended the meeting and 20 farmers participated in the launch of the Crop Bid process, initiating crop planning for 2017. In December and January staff will offer technical assistance to farmers through the crop planning process. At the meeting, farmers were also given the Annual Farmer Survey, an important tool for us to understand our farmer’s financial situations, market access, land access, and many other critical aspects of their business’s success. Farmers are required to submit the Annual Farmer Survey by January 13th. Staff are pulling together data from the 2016 season to draft the Annual Report, which will be available in January, and sent to all partners and posted online at that time. The staff at the World PEAS Food Hub are also setting up projections for the 2017 season and beginning to identify new wholesale market opportunities. In 2017, staff plan to focus on the identified key areas for institutional partnership including senior centers, universities, workplace dining services, and restaurants.
Impacts and Contributions/Outcomes
As a result of the research conducted, technical assistance offered, and outreach strategies employed in the grant period, 20 small-scale beginning farmers gained access to 2 new institutional markets and 10 on-going institutional markets, as well as a 300-member direct-to-consumer CSA program generating a total of $107,647 in revenues for beginning farmers. Individual farmer earnings ranged between $114 and $18,457 in the 2016 season with the average farmer earning $5,666. Through our institutional sales channels small-scale beginning farmers reached over 2,300 low-income and food insecure individuals, making fresh, healthy, locally grown food more accessible in our region. In the 2016 season we found that 7 of the 20 producers we worked with, or 35%, increased their wholesale readiness as a result of on-going technical assistance and support through the World PEAS Food Hub. These farmers increased their quality and improved their consistency, making them more prepared to reach wholesale markets in 2017. Through our data collection, we also discovered that there are varying degrees of wholesale readiness that farmers must obtain, opening up different types of wholesale market opportunities. As small-scale producers working with a third-party distributor, our farmers are able to utilize our technical assistance and support around crop quality to participate in certain types of wholesale market opportunities including non-profit organizations, universities, restaurants, and workplace dining services. In order to access larger wholesale market opportunities, farmers must scale their farm businesses to provide larger volumes, continue to hone their production skills to deliver consistently high-quality produce that does not require review by World PEAS Food Hub staff, and obtain food safety certifications. In the upcoming season, we have identified scaling up our farmer’s operations as a primary goal in our training and technical assistance programming. We look forward to continuing to provide the appropriate support to our farmers as they grow their farm businesses and become eligible to access larger scale wholesale markets. In the 2017 season we will continue to expand our partnerships with institutional partners that align with our farmer’s current capabilities in order to help them increase their farm business revenues and continue to grow and scale their operations.
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