New markets for producers: selling to colleges (Research Brief #39)
Posted February 1999
Colleges can support local farmers, highlight regional foods in their cafeterias, grills, and catering services, and educate future consumers about local, sustainably produced foods. This makes them an intriguing potential market for growers. Yet farmers selling to college food services can face challenges in working with institutional food-buying systems. Can it work? Yes—-if farmers focus on making a customer, rather than simply making a sale, according to a Center for Integrated Agricultural Systems (CIAS)-sponsored study.
Many consumers value local, sustainably produced food and are willing to pay a premium for it. Many producers gain satisfaction from seeing the fruits of their labor so appreciated. Some producers focus on direct market sales to individuals and others find their operations produce enough for them to pursue larger institutional markets. Doug Johnson, CIAS researcher, set out to identify what opportunities and barriers face producers who would like to market to colleges.
Johnson looked at six U.S. colleges, each with significant local, sustainable food buying components. What he found was that while these institutions were trying to increase efficiency and meet budgetary and safety requirements, marketing opportunities do exist for producers of local, sustainably produced food even within the largest and most structured food service departments. Johnson found that, in general, institutional food buyers were more interested in buying locally produced foods which benefited their community than they were in buying certified organic foods. So Johnson focused his study on local, sustainably produced foods.
Why do colleges buy local, sustainably produced foods? There are a wide variety of reasons among the surveyed institutions. The founding principles of one of the colleges surveyed include stewardship. Buying sustainably produced foods is a natural way to carry out these tenets.
Other institutions report a unique catalyst for their local, sustainably produced food buying initiative. At one college, an environmental issues committee made up of faculty, students, and staff initiated the program. At another, students working on a term paper got an initiative underway. And at a third, international visitors expressed an interest in local, sustainably produced food. Several colleges responding to Johnson’s survey reported that there is high student demand for local, sustainably produced food and that customer satisfaction is high for these products.
“If there is no sure-fire formula, there are at least one or two key ingredients to make the recipe work,” Johnson says of initiatives to buy local, sustainably produced food. Successful initiatives often combine a champion for the project with broader college support. Another key ingredient is how the food service is managed and its management’s receptiveness to new ideas.
Is there a way for colleges missing some of these key ingredients to have a local, sustainably produced food buying initiative? Special events offer a way for a targeted but limited initiative to get going. With assistance from CIAS, the University of Wisconsin-Madison hosted “Home Grown Wisconsin” organic meals in 1997 and 1998 in all of its dining halls. Oberlin College in Ohio is similarly planning for an annual “All-Ohio meal” event.
Barriers and potential solutions
For those wishing to sell local, sustainably produced food to colleges a mismatch between institutional needs and a farmer’s ability to meet them can pose barriers.
Johnson says, “While small-scale producers sometimes have higher costs of production that result in higher wholesale and retail prices, colleges and universities are seeking ways to minimize and control costs.” Institutional food buying has a bottom-line focus, and often paying higher prices for food cannot be justified. To overcome this barrier, Johnson suggests that producers look at how the institution recovers its food costs.
A board plan is the most common college food service plan. Students prepay for their food at the beginning of the quarter or semester and thecollege food service must keep its costs within these funds. The college has no way to pass along costs for higher end products to students, so low price is the driving force.
An à la carte system allows a student to select whatever food is most attractive and to pay for it with cash or using a debit card. Higher costs can be passed on to students willing to pay more for local, sustainably produced food.
One stop shopping.
Food service directors have a limited amount of time. “Food service directors appreciate one-stop shopping that allows them to purchase as many items from one phone call as possible,” Johnson comments. They simply do not have the time to work with multiple farmers if one farmer is unable to fill an order. Johnson suggests that producers and marketers of local, sustainably produced food work together to form cooperatives or partnerships. Then food service directors can work with them more efficiently to ensure an adequate variety and quantity of produce.
Food service management.
The food service of a college can be self-managed or contract-managed. Johnson found that colleges with self-managed food service operations were more likely to make independent decisions and respond to student requests. Contract-managed colleges tend to make bulk purchases with national food sellers. But even within contract-managed food services, new alliances are emerging that allow for the purchase of special locally or sustainably produced foods through the contract vendor. One private college in Minnesota contracts with a national food service chain, but works with them to purchase local produce in the summer and fall.
Food service directors vary in their opinions on the safety of local, sustainably produced food. Most are used to providing food from an large institutional model, feel more comfortable with it, and believe that a different source of food will be less safe. In addition, colleges commonly require vendors to hold a minimum of $1 million in liability insurance, among other requirements. How can producers overcome these barriers? “Producers can secure liability insurance cooperatively,” Johnson says. But just as key to making the sale is reassuring food service directors about safety.
Labor and storage.
One of the concerns cited by colleges about local, sustainably produced food was the labor required to process vegetables or other products straight from the farm. Many products ordered through a large vendor are pre-processed. In addition, colleges often lack the cold cellar and freezer space to buy large quantities available from farmers. Producers can work together on cooperative processing and storage arrangements to meet their customers’ needs. For example, producers can deliver contracted produce in multiple trips to accommodate storage limitations. Producers also need to time the availability of their products to match the academic year. For vegetable producers in the far north, this can be a challenge.
Farmers want a college commitment to buy before they plant their crop, or plan their livestock numbers. But the college won’t want to commit to buy until they are sure that a certain quantity can be provided. Johnson suggests that establishing a strong relationship with the food buyer is key to overcoming this barrier. Building a sense of trust and understanding will enable producers and buyers to make commitments.
Johnson offers five recommendations for producers who would like to pursue selling to universities and colleges.
- Evaluate the market for your products. It will be easier to sell what you produce if the demand already exists.
Build a strong relationship with buyers and work to meet their needs. Demand is easier to build when such relationships exist.
- Focus marketing efforts on small, private colleges, or those with self-managed contracts or à la carte food plans because they may provide more opportunities for buying local, sustainably produced food.
- Plan effective promotions. Use a marketing cooperative if possible.
- Consider working with the institution’s current distributors instead of forming a cooperative. This may be a shortcut to meeting the college’s requirements.
Johnson says, “A local producer or processor still needs to deliver those traditional elements- quality, price, performance, customer service, and delivery-if they expect to establish a sustained marketing relationship.” For producers of sustainably produced food, this means willingness to manage and build marketing relationships in addition to managing and building their farms.
CIAS plans to follow up on this work with an in-depth study of food service preferences, buying practices, and protocols at colleges and universities in Wisconsin.
Common requirements for selling to colleges
- Hold a minimum of $1 million in liability insurance
- Pay a fee for quality control auditors to inspect producer and processing facilities
- Satisfy product specifications on quality and portion control
- Provide state- or federal-inspected meats
- Be willing to take a purchase order and wait for payment
- Possess certifications that satisfy sanitary, health, and food safety criteria
(None of the colleges contacted for the study required all of the above, but many were mentioned frequently enough that a producer is likely to come into contact with several.)
Something to Cheer About: National Trends and Prospects for Sustainable Agriculture Products in Food Service Operations of Colleges and Universities. Written by Douglas Johnson and Steve Stevenson.
Published as Research Brief #39