January Homegrown Profile
The twinkle of Christmas lights is slowly disappearing, holiday feasts are a mere memory, and festive noisemakers have fallen silent. It’s a new year, which signifies a new beginning for the 2014 growing season and for Farm to Cafeteria programs across Montana. While Montana-grown produce is scarce during the winter months, there are plenty of ways to get your Farm to Cafeteria program going as the fields lie fallow. You can begin planning your institution’s garden, start purchasing a Montana food that is available year-round, or put together a grant application to help fund educational activities associated with your program.
But perhaps the most important thing you can do for your Farm to Cafeteria program this winter is to establish relationships with local farmers and ranchers (or vice versa, if you’re a food producer looking to sell to an institution). Now’s the time to start those conversations about which local products your foodservice program is interested in buying, and in what quantity, so that producers can understand demand and plan ahead for spring planting.
What is forward contracting and will it work for my institution?
One formal way to establish a relationship between an institution and a producer is via forward contracting. This process involves developing a contract in which a buyer promises to purchase a certain amount of product at a later date. Forward contracting is common between large-scale commodities farmers and their buyers. Though it is an appealing arrangement, such contracts may be intimidating to smaller-scale farmers for whom an unforeseen breach of contract due to crop failure could be devastating.
Instead, to create strong relationships between local producers and buyers, memorandums of agreement, or MOAs, are coming into favor. An MOA is simply an agreement between two parties to cooperate. It does not have to be legally enforceable, unless the parties decide to include certain legal language in the document. MOAs can be great for arrangements within the local foods economy—informal, but still fostering partnerships and trust.
6 Tips for creating a Memorandum of Agreement (MOA) between an institution and producer
1- Start small when working with a new producer, planning for one or two menu items at a time to test how the relationship will work, if the product’s quality is up to your standards, and to decide if you’d like to scale up purchases from that vendor in the future.
2- Specify and clearly communicate your program’s needs. Give producers a copy of your menu and volume needs, so they can plan(t) around them. Decide on a timeline that works for both parties (ie: weekly deliveries of spinach May – August, or a one-time mass delivery of carrots in the fall). Discuss packaging preferences such as number of pounds in each box/bag, type of packaging (vacuum-sealed, loose-packed, or other), and any other special requirements.
3- Consider the middleperson. Will the product require processing or storage? How will it be distributed? These questions will determine if you work with a distributor, or have an agreement directly with a processor or producer. For example, when buying beef from a local rancher you might have it ground into taco meat at a local processor, and delivered by an independent distributor. The MOA can still be with the rancher, though the price should consider the added processing and delivery costs.
4- Agree on a price or price range. This can be tricky, as prices may vary due to unforeseen weather events and other factors influencing the market. That’s why it’s helpful to decide on a price range that’s somewhat flexible and is expected to work for both the buyer and seller.
5- Coordinate a payment plan. Decide whether you will pre-pay for the product, pay on delivery, or some combination of the two. Be aware that in Montana, state agencies are not permitted to pre-pay for a product that does not yet exist (like onions that haven’t been planted yet).
6- Be patient. Coming up with an MOA that works for both parties can take a while, which is why January is the perfect time to get started. Once in place, MOAs can form the foundation for long-lasting relationships that ultimately save you time with local purchasing.
Entering into an MOA with a food producer or institution may be intimidating at first, but the quality of the relationships built over time can make it more than worthwhile. Solidifying commitment and trust on both sides as agreements are renewed creates reliable business for producers and a reliable supply of fresh, locally produced food for the buyers, supporting local economies over the long term. So what are you waiting for? Let’s get to planning…