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Posted December 14, 2006: There are great
opportunities for farmers with marketing vision as demand
for food with a clear connection to the producer continues
to outpace supply. The need to break the barriers of selling
to direct, retail and institutional food markets—and
to develop new tools to help farmers succeed in niche markets—is
forging innovative relationships between farmers and buyers
at many levels.
Consider Iowa’s new Market Maker (www.marketmakeriowa.com),
an interactive, online mapping system designed to link food
producers, distributors, buyers and sellers. When the site
goes live in early 2007, it will integrate U.S. Census data,
North American Industry Classification System (NAICS) codes,
global imaging satellite (GIS) location coordinates and data
supplied by Iowa farmers. By overlaying this data and technology,
buyers and sellers will have the ability to truly target market
their sales and purchases to specific populations in specific
areas.
As a resource for all businesses in the food-supply chain,
this easy-to-use site can help a grocery store find farm-fresh
eggs or help a producer find a place to sell his locally-raised
pork, said Ray Hansen with Iowa State University (ISU) Extension’s
Value Added Agriculture Program.
While the Market Maker project originated through the University
of Illinois Extension’s Initiative for the Development
of Entrepreneurs in Agriculture program, it’s spreading
regionally, and project leaders hope it will become national.
Currently there is no fee to use Market Maker.
“This tool should continue to grow in value, especially
as other states are added,” said Hansen, who spoke at
the Leopold Center for Sustainable Agriculture’s recent
Marketing and Food Systems Initiative Workshop in Ames, Iowa.
“It will provide a powerful way to build business networks
throughout the food chain.”
Site offers user-friendly options
The site’s census data can be queried and used in
a variety of ways. If you want to find new markets for a high-end
product, for example, you can search the database to generate
a map of areas with high-income densities. If your goal is
to sell meat to Hispanic consumers, you can request a map
showing the greatest concentration of upper-income Hispanic
households, and then request a complete demographic profile
of those locations.
If you want to find out what businesses or distributors you
can supply in Iowa, Market Maker can also help you get a better
sense of their needs. “While this isn’t a replacement
for a thorough market analysis, it can help you find new opportunities
for your products and can make cold calls a lot easier when
you have a little background information,” Hansen said.
The site works equally well whether you’re a buyer
or a producer, he added. For example, you can request lists
of federally-inspected packing plants, along with a map that
identifies their location. If you’re a grocery store
manager looking for the closest producer of organic vegetables,
you can query the web site to find names and contact information.
A key-word search function will be added in the future, giving
more user-friendly access for specific products.
That’s why it’s so important for farmers to provide
the details for their operations, said Hansen, who noted that
nearly 300 Iowa producers have signed up in the last few months.
“The farmers’ data [set] is the one variable we
can’t just go out and get from census records or other
sources.
“The producer data is what truly makes this tool unique,”
he noted. “We want more producers to sign up so we can
promote the site to grocery stores, restaurants and other
food buyers.”
For more information on the Market Maker program, call 515-294-0588,
or e-mail marketmaker@iastate.edu.
You can also log onto www.iavaap.org.
Finding new ways to partner with food distributors
Food distributors also offer a potentially viable—although
often overlooked—resource to connect local food producers
with consumers. They are a cornerstone of the conventional
food system in moving food toward its destination after processing.
These companies have safe, efficient systems (including refrigerated
facilities) for providing customers with small and large quantities
of food in a short time, said Connie Hardy, a program coordinator
with Iowa State University Extension’s Value Added Agriculture
Program. They also provide a sales force that can get your
product recognized by their customers that you couldn’t
reach otherwise, such as university food service outlets that
use a complex buying process, including contracts with food
distributors.
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“Most producers don’t have time to work directly
with institutional buyers, and vice versa, so that’s
where distributors come in,” Hardy explained. “A
lot of producers don’t really understand what food distributors
do, even though distributors could be a big help to them.”
To foster new connections between growers and food distributors,
Hardy and her colleagues recently interviewed 12 Midwest food
service distributors. The researchers wanted to find out whether
these buyers were accessing locally-grown foods and whether
they planned to do so in the future. The distributors included
Sysco Corporation, Hawkeye Foodservice Distribution, Harker’s
Distribution and Martin Bros.; five retail/grocery distributors
including Wal-Mart and the Midwest-based chains of HyVee,
Dahl’s, Fareway, and Cub Foods; and four Midwest convenience-store
distributors including the Farner-Bocken Company and Casey’s
Inc.
The key message from distributors? “We wish producers
would ask us what we want to buy before they have the product
ready to sell,” they agreed. In fact, only two of the
21 distributors interviewed by ISU’s staff said that
producers involve them in planning for the finished product.
That’s why you should talk to a distributor or two
to help target what to plant for certain markets, emphasized
Hardy, who noted that it’s not unusual for two distributors
to have a totally different mix of customers. Learn who your
distributor’s customers are, since their buyers could
include college campuses, medical institutions, hotels, restaurants,
grocery stores, vending machine suppliers or convenience stores.
This will give you a better understanding of end users’
needs.
“Heirloom tomatoes might be great for a white-tablecloth
restaurant, for example, but most college food service outlets
have no desire for these kinds of tomatoes,” Hardy noted.
Distributors seek food with a story
Food service companies stressed to ISU researchers that they
know their customers’ unique needs well and buy what
their customers want. Distributors also seek new and exciting
products, foods with a story, and a consistent, sufficient
quantity. Since distributors sell meats, poultry, fish, fresh
or frozen fruits and vegetables, dairy products, processed
and preserved foods, specialty foods, snacks and desserts,
it helps to analyze whether your product can be promoted as
a “place-based” local food, an all-natural product,
organic, gourmet, or part of a freezer-to-table meal.
In addition, it helps to present an image of your product
that piques all the senses so it’s more appealing to
both the distributor and their customers, Hardy said. Create
a good label design that not only includes the required information
but also highlights the unique background of your product.
If your salsas are made from a special variety of tomatoes
grown in a soil type unique to your area, for example, promote
this story on your label to showcase why your locally-grown
product is superior.
Even if you follow all these suggestions, however, be aware
that it still may be tough to crack the food-distribution
market. In some cases, distributors’ customers are currently
receiving volume discounts for purchasing certain foods and
could lose these discounts if they start buying more locally-grown
foods, Hardy said.
It’s one of the reasons that ISU researchers are looking
at the need to aggregate food supplies locally, since most
farmers by themselves aren’t big enough to supply even
one food distributors. “Few farmers have large enough
coolers, and I think we’re going to have to look at
ways of helping farmers process foods cooperatively,”
Hardy said. “We also need to look at ways to make this
economically feasible.”
Stabilizing local produce for year-round
sales
Bridging this gap between local producers and consumers must
address concerns about year-round consistency of supply, added
Sam Beattie with ISU’s Department of Food Science and
Human Nutrition. “You can’t tell distributors
and food service institutions, ‘We have boatloads of
tomatoes for you, but only for about two weeks.’”
“You can’t
tell distributors and food service institutions, ‘We
have boatloads of tomatoes for you, but only for about
two weeks.’”
Since the peak of freshness is fleeting, adding a processing
step such as freezing would stabilize produce, protect food
safety and allow for year-round availability. This is the
kind of product that high-end restaurants would like to buy,
Beattie noted. “Brett Callison, a chef at Aunt Maude’s—a
white tablecloth restaurant in Ames, Iowa—has told us
they’d like to take as much fresh and frozen local products
as they can get, but they just can’t get the frozen.”
Offering convenience is a key to tapping more food service
outlets. “These buyers are looking for products in a
form that’s easy to prepare,” Hardy noted. “That
means the food needs to be clean, sliced, if appropriate,
or frozen, in some cases.”
In the months ahead, ISU researchers will investigate a pilot
unit or prototype estimated at $300,000 that would include
a blancher and freezing units. They plan to study the economic
viability of having a processing system installed in a centralized
location where area farmers could process their fresh produce.
Facilities that were already set up for food handling, such
as abandoned convenience stores, and include features like
a sloping floor with a drain that can be steam cleaned could
provide a workable solution, Hardy said.
ISU researchers will also conduct studies to determine buyers’
willingness to pay for year-round availability of locally-grown
produce. In addition, they plan to conduct surveys in conventional
and specialty grocery stores to study the types of canned
and frozen foods that are purchased. Researchers are also
studying the feasibility of high tunnels and other systems
that can extend the produce growing season to ensure an adequate
supply of locally-grown foods.
Contracts expand marketing opportunities
Contracts could also help connect more local-foods growers
and food service outlets, since these agreements could alleviate
buyers’ and sellers’ anxiety about unknown supply
and demand levels. “The food service buyers we’ve
surveyed want to buy and feature more local products, but
they’re not going to invest a lot of time to find these
products,” noted Catherine Strohbehn, an Extension specialist
and adjunct associate professor of Hotel, Restaurant, and
Institution Management at ISU. “Contracts could streamline
communication between buyers and sellers to benefit both groups.”
Volume sales to one location could eliminate the need for
multiple contracts and farmers market set-up and staffing
time. Contracts could address contingencies, such as situations
where money has been prepaid and a crop failure occurs.
Contracts may fit especially well with certain food service
buyers, such as independently-owned restaurants and some grocery
store managers who have fairly significant purchasing flexibility
in terms of price and delivery. “There’s a lot
of competition, so these businesses want to outshine others
in their region,” Strohbehn noted. “Contracts
could give these buyers the potential to contract specialty
products or unique varieties from local growers.”
For more information on these topics, log onto www.leopold.iastate.edu/research/marketing_files/workshop06/index.htm.
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