Posted June 16, 2015 by Pete Huff
Institutions purchasing and serving regionally produced food has gained momentum in recent years, largely driven by the exponentially successful farm to school movement. But this practice has reached a critical transition point in the growth process: how to move from a good idea that is supported by end users to an economically sustainable one with wide appeal for those at the beginning of the supply chain—particularly the farmer that provide the fruits, vegetables and other products for the cafeteria tray.
In the newly released report “Building Minnesota’s Farm to Institution Markets: A Producer Survey,” the Institute for Agriculture and Trade Policy— along with project partners the Sustainable Farming Association and Renewing the Countryside—summarize the findings of a recently completed survey that identifies some of the key “next steps” that farmers feel are needed to ensure the state’s emerging farm to institution markets work for them. With over 75 percent of survey respondents interested in selling to these markets in the future, it make sense to develop a deeper understanding of how to make them as accessible and successful as possible.
Institutions form the backbone of communities – rural and urban – and have an enormous impact on residents throughout various stages of life. Spanning the educational (e.g. K-12 schools, child care, universities/colleges, etc.), public health (e.g. hospitals, elderly care, etc.) and public service (e.g. government offices, prisons/correctional facilities, etc.) sectors, institutions are major buyers of a huge variety of products—including food. As such, they represent a leverage point for small and medium scale businesses, including farms and the businesses that support them, to move into a larger local market and capture a percentage of that institutional purchasing capacity.
Efforts to orient such purchasing toward local economies are well established and are increasingly focused on food. According to a recent report by Policy Link, “It is estimated that 37 states have laws that require some or all state and local agencies to allow geographic preference for purchasing locally grown food,” making regionally grown food competitive with more conventional food procurement options. When lining up against mainline distributors who operate large aggregation and distribution supply chains, this advantage is critical for small and medium scale producers and the businesses that support their operation (e.g. equipment supply, food hubs, produce processing, etc.).
With decades of trial and error informing its success, Farm to School programs present a possible model for the trajectory of other institutions as they source regionally produced food, individually or collectively. The National Farm to School Network and the Center for Agriculture and Food Systems at Vermont Law School highlight the rapid expansion of Farm to School activities in their recently released “State Farm to School Legislative Survey 2002-2014.” Citing USDA Farm to School Census data, the report notes: “the number of farm to school programs in the U.S. increased 430 percent between 2006 and 2012,” with over 40,000 schools participating in 2012. Such activity equates to approximately $385 million in local food purchases nationwide.
Within Minnesota, the same 2012 USDA Farm to School census revealed that 72 percent of the state’s K-12 schools were engaging in Farm to School practices—directing over $12 million of their food purchasing dollars toward local purchases of some kind—and that such participation was likely to increase by eight percent in the coming years. Two recent University of Minnesota-Extension surveys on the market potential of food procurement for K-12 schools and health care facilities in northwest and central/northeast Minnesota estimate that a 20 percent market capture of the institutional food procurement market would result in $480,000 and $590,000 for each region respectively. Extended statewide, these estimates would mean that $2.1 million dollars would be directed toward to local producers if one out of every five meals at the state’s schools and hospitals was comprised of regionally produced vegetables, fruits, meat and other products. As small and medium scale farms diversify their farm business plans, institutional markets have the potential for real financial gains.
Beyond the economic potential, institutions as a whole are a different type of market for producers to engage due to the nature of the public services they provide. When well established, efforts such as Farm to School present multiple economic, social, nutritional and environmental benefits for farmers, the individuals who rely on institutional services and the region within which both coexist. The new survey results demonstrate that Minnesota producers are aware of and motivated by these multiple benefits, with two-thirds of respondents noting “relationships with the local community” as the highest influencer of their decision to build business relationships with institutions. Interestingly, over half of the respondents were also highly influenced by the economic potential of farm to institution markets, with respondents ranking “fair, steady prices,” access to an “additional local market,” and the possibility of establishing “reliable/advance contracts” as highly influential. While the survey gauged interest overall, respondents were most interested in exploring the benefits of selling to hospitals, universities and colleges. The increasing influence of the economic benefits evident in the survey is a positive sign that institutional markets are becoming more sophisticated and viable for more producers.
While it is growing, institutional markets can still be difﬁcult for farmers to access, particularly for small and medium scale producers. This is due to a number of systemic challenges (e.g., limited budgets, logistical needs, food safety requirements, etc.) that are difﬁcult, yet not impossible to overcome. Such factors were identified through the survey. Somewhat contradictory to the factors highly influencing engagement with institutional markets, respondents to the survey listed low purchasing prices and volume needs of institutions, low or high, as being the major barriers for entry to or expansion within farm to institution sales. However, the desire for expanded producer aggregation and collaboration to counter these barriers was strong—with 25 percent of the respondents currently engaged in such efforts and over 50 percent interested in future participation.
Such cooperation was not limited to interest in food hubs or other aggregation operations to service institutional markets. Respondents were strongly interested in peer-to-peer learning, as well as greater direct connections with institution food purchasing staff in their region. Specifically, there was interest in regional farmer-buyer networking events, workshops, online directories, webinars and farm visits/field days. Clearly, face-to-face relationships are key to regional farm to institution success. However, the strong recommendation for online forums shows that producers are increasingly willing to engage in new approaches to networking—a finding that should be explored more to help maximize the success of the more time-intensive process of face-to-face relationship building.
On a whole, the future for farm to institution market in Minnesota is bright. However, the growth of these markets must be rooted in the needs of farmers and guided by their leadership. The results of the survey provide a starting point for the “next step” in bringing fresh, healthy and locally produced food to cafeterias throughout the state while also ensuring the social and economic benefits are shared by everyone on the path from farm to table.