Local food movement moves on up to wholesale buyers

The local food movement is still about farmers markets and similar farm-to-fork outlets, but increasingly it is also about selling into the world of food wholesalers and large-scale buyers. This is creating a host of opportunities for farmers who want to get involved in growing for this so-called institutional market, said a keynote speaker at a Madison conference last week.

"Consumers want to buy foods that match their values and surveys show that 71 percent of people are willing to pay more for food if it's produced locally," said Jim Slama, founder of the nonprofit group FamilyFarmed.org, that seeks to support local and sustainable foods. That desire often translates to wholesale users of foods, like institutional kitchens and restaurants.

Slama spoke at the Institutional Food Market Coalition (IFM) of Dane County's fifth annual meeting May 17 in Madison. He has been working with the coalition to build wholesale fruit and vegetable sales in Wisconsin. Together, they are working on a feasibility study for building a packinghouse that would offer centralized services for growers.

"There's a lot of opportunity," he said. "Large-scale buyers are creating new opportunities through the supply chain."

Slama pointed to growth in the organic food production sector. In 1990, he said, it was worth about $1 billion and by 2010 it had grown to $27 billion.

Though not all local growers are organic producers, they have been seeing similar growth in their sales because people are interested in buying local. "Local is the hottest trend in the restaurant business and on college campuses 'eat local' is the new activist phrase," Slama said.

Consumers are increasingly interested in the food miles that come attached to their food. Local foods, he said, offer a difference in the cost of transportation and that difference can stay in the hands of local producers.

Olivia Parry, director of IFM, explained that it is a private-public partnership designed to develop institutional markets for local food. They have conducted strategic outreach programs, education and technical assistance events and found ways to facilitate sales between Wisconsin producers, institutions, distributors and other large-scale buyers.

"This has grown from a few thousand dollars in sales to millions of dollars in revenue from local foods," she said. "We started with 16 people sitting around the table talking about how to do this to now we have 100 people here at our fifth annual conference representing multimillions of dollars in food purchases."

But one big challenge is that there is not enough aggregation and distribution infrastructure to serve this growing local food movement in Wisconsin, which is why Parry and Slama are working on the idea of a local packinghouse for local produce.

Slama said that before trucking food from other regions became the norm, Wisconsin - and Illinois - had a large number of produce farms that were run strictly to supply the Chicago marketplace. But as trucking from California, which has a mild climate and several different growing seasons, took over, the regional local food system here died out.

Another challenge today is that there are not enough farmers working to produce the products that are needed by the hungry wholesale market, he said.

There are also concerns about food safety, he said, as wholesalers increasingly ask growers to prove they are using safe methods and producing food that isn't going to be a liability. Slama said another challenge is the lack of processing capacity for local and sustainable foods - something that can extend the season during which these local foods can be sold.

There is also the question of farm production growing to meet the burgeoning institutional and wholesale demand. "Scaling up is one of the biggest challenges in the good food movement," he said.

For farmers, the movement can offer them a chance to diversify their revenue source and provide them with a bigger share of the food dollar. But he admitted that selling food direct can be time-intensive. Still, when selling large quantities farmers can have the opportunity of getting a big check, Slama said.

The things that wholesale buyers want are things that a central packinghouse could provide. Slama said the field heat must be removed quickly from the vegetables and then they must be kept cold. Buyers want the products sorted and graded so they know what they're buying and the products are consistent.

Food safety must be assured and large quantities are needed so a consistent, weekly supply can be offered. "The products must build a relationship with the buyers," he said.

Packinghouses can offer farmers the chance to sell large amounts of product into a wholesale market while ensuring proper packing and providing a long-term opportunity. Some existing packinghouses offer grower agreements that specify the type of crops, the variety of sizes and grades that are needed, the price, when the products are needed and payment terms, he said.

Slama said the packing operation, as well as supplying a number of local jobs, can also offer help with the cooling process, put products in standardized containers can create a market for the not-so-perfect offerings. "So-called seconds are great food, they just might be the wrong size or shape and packinghouses can create a market for those products," he said.

Most of the attendees at the conference were buyers for school districts, hospitals, colleges or other institutions. A show of hands indicated that most of them would be in the market for the seconds if they were packed and sold as such, since the chefs in most of their kitchens would have a way to process or otherwise use the seconds.

Packinghouses, said Slama, work out the delivery with the buyer and many are able to schedule "back hauls" - bringing product back to the home base or near it - which lowers transportation costs and lowers the carbon footprint of the food. Packinghouses can also take care of the paperwork for farmers.

Slama's website, www.FamilyFarmed.org, includes online resources for on-farm food safety like manure storage and handling, animal exclusion, irrigation and water issues, and hand-washing facilities. There are also tips, he said, on growing and storage of various different crops.

Slama, who is from Chicago, said he does a lot of consulting and business planning dealing with packinghouses. In Virginia, he worked with a 35,000-square-foot facility that is now working with 40 growers. He said he had worked with other packinghouses in Kankakee and Peoria, Ill.