using the co-op model to supply local food to … the co-op model to supply local food to...
TRANSCRIPT
Using the Co-op Model to Supply
Local Food to Institutions
Wisconsin Local Food
Summit January 27, 2012
Margaret Bau Cooperative Development Specialist
USDA Rural Development – Wisconsin
Courtney Berner Outreach Specialist
UW Center for Cooperatives
Presentation Overview
• How co-ops are engaging
with the local food movement
• How co-ops are connecting
institutions with local foods
• Two Wisconsin examples
Retail: Consumer Owned
• 400+ consumer owned food co-ops
– Most in natural foods
– Tend to be upscale
• Model tends to struggle in other situations
– Conventional foods
– Food deserts
Retail: Worker Owned
• Just Local Food, Eau Claire – Worker-owned grocery store
and delivery service in Eau Claire
– Mission is to connect Chippewa Valley to local producers and fair trade items
– Founded in 2004
– Started with home delivery of milk then expanded to include other local foods
Retail: Consumer + Worker Owned
• Chapel Hill, NC
– Founded in 1988
– 3 grocery stores
– Restaurant
– Food production
– 14,000 members
Distribution:
Producer Owned
• Grown Locally
• Based in Decorah, Iowa
• 16 members farm, but source from 20+ producers
• Deliver to a 6 county region in NE Iowa, SE Minnesota, and Western Wisconsin
Distribution:
Multi-stakeholder Model
• Brings two or more members of the local food chain into one co-op.
• Examples • Producers & Buyers Co-op
(4 member classes)
• Fifth Season Co-op
(6 member classes)
• Eastern Carolina Organics (LLC, but run like a co-op with 2 member classes)
The Situation
• Low quality, cheap food in institutions
– Get whatever you want, when you want
– Mystery food trucked from distant shores
• Risk management issue
– Flu pandemic or oil embargo
– Tracing food borne pathogens
Bright Idea
Spend 10% of
$2 million food
budget on local
food
– Sacred Heart Hospital CEO, Stephen Ronstrom
Explore the Idea
Rick Beckler, Director of
Hospitality Services • Searched for a farmer
– But one farmer can’t fill demand
– Overwhelming for hospital to
work with multiple farmers
• Need to aggregate
– Searched for partners at the 2008
Value Added Ag Conference
– “Who wants a piece of $200K?”
Gather Information
Barriers to purchasing
local food:
– Seasonal production
–Quantity
–Transportation
– Processing
– Pricing
–Delivery
“Form follows function.”
“Form and function should be one,
joined in a spiritual union.”
-Frank Lloyd Wright
So what co-op model (form) to use?
• Traditionally either: – Producer co-op: just of farmers
– Purchasing co-op: just of institutions
• Realized we need all stakeholders
– In theory: ongoing learning and trust
– Mere customer relationship not sufficient
The Stakeholders
• Producers – Strict requirements on feed, handling,
safety, sustainability
• Buyers – hospitals, technical colleges, nursing
homes, schools
– pledge to buy 10% local foods
• Processors – be picky – no mixing mystery meat
• Distributors and local transportation
• “Friends and family” – patient capital investors – want to
support local food
– Nonvoting
Lesson #1
• Raise sufficient capital before launching
– Resist temptation to “just do something”
– Do a thorough equity drive
– If you can’t raise $ - that tells you something!
Lesson #2
• Hire an experienced manager
– Don’t try to get by on the cheap
– Initial position is not the place to “grow”
someone into this field
– Lost time in personnel issues
– Board took on operational and managerial
functions
• Burned out board members!
Lesson #3:
• Require contracts between parties
– Institutional reality
• Personnel churn
• Policy churn
– Clash of cultures
• Small business handshake
• Corporations respect contracts
– Require $ down when placing orders
• 50% down, 50% upon delivery
Lesson #4
• Educate and train members at all levels
(Co-op principle 5: ongoing education)
– Benefits of local food that outweigh costs
• Longer shelf life, less waste
• More sales from better taste
– “buy-in” from all levels of institution
• Doctors, CEO, board
• Front line kitchen staff
– Learn directly about their needs
– Teach new ways to prepare foods
Lesson #5
• Multiple members are needed in each
membership class
• A.k.a. Don’t become identified as one
member’s “project”
– Be wary of the public relations blitz
What DID work?
• Co-op as coordinator
– Buyers want one point of contact
– Producers want to focus on production
– Co-ops can assure
• level of quality
• Aggregate product
• Assure follow through on delivery and invoicing
• Producers and processors got paid in full
Fifth Season Basics
• 6 membership classes
• Community Supporters
• 7 member Board of
Directors
• Advisory Council
• Operate in the 7 Rivers
Region
Learning by Example
• Lesson #1: Raise sufficient capital
– In addition to member equity, Fifth Season has
raised over $90,000 in equity through the sale of
Class B Preferred Stock.
• Lesson #2: Hire an experienced manager
– The Co-op hired an operations manager with
institutional food service experience and a
successful track record with farm to school
programs.
• Lesson #3: Require contracts between parties
– The operations manager is working with buyers and producers to create growing plans for the 2012 season.
• Lesson #4: Educate and train members at all levels
– From the beginning, one of the Co-op’s goals has been education and training for members.
• Lesson #5: Multiple members are needed in each membership class
– The project has never been seen as the pet project of one business or individual and most membership classes have several members.
Ongoing Challenges
• Matching buyer and seller prices
• Matching supply and demand
• Minimizing cost of operations
• Ensuring the product is sourced and
delivered per contract