For Farmers and Ranchers
Why Should I Get Involved in Farm to Cafeteria?
Montana’s public institutions spend an estimated $33 million on food per year, representing a significant and largely untapped market for Montana’s farmers and ranchers. These institutions can provide a direct market that would expand local food and agriculture businesses, creating economic as well as social effects that help revitalize rural communities. When farmers and ranchers develop the capacity to sell to local institutions, they may find that they can better access the broader $3 billion that Montanans spend on food each year, such as in restaurants and grocery stores. In that way, public institutions can provide sales opportunities as well as a great learning opportunity for helping farmers access additional local markets.
For farmers and ranchers, building a relationship with an institution can help you create a new and stable market for your business and also provide opportunities for you to engage community members in your agricultural operation. Institutions can act as an ideal market for “second quality” products (misshapen or slightly bruised, for example) that are just as tasty as first quality items but more affordable for the institution. The institutional market can also help producers leverage unexpected surplus in a given season or harvest period. In addition to second quality and surplus items, many institutions involved in Farm to Cafeteria also purchase normally-priced local food; they have worked hard to rearrange their budget so that they can help support farmers like you.
Overview of Institutional Markets and Special Considerations for Each
Montana has a variety of institutions that serve food such as K-12 schools, public and private universities, correctional facilities, healthcare institutions, senior living centers, veterans’ services facilities, preschools, and many more. While there are broad commonalities in the purchasing needs of institutional food services, there is also great variation and it is important to understand their different characteristics when considering this market for your products.
Institutions generally purchase large volumes of food from a few broadline vendors, such as Sysco or Foodservices of America. Long-term contracts with these vendors or distributors oft en require a majority of purchasing through that company. In return, institutions are assured frequent deliveries, fast and convenient ordering, access to nearly any food product all year-round, and confidence that each product meets all food safety regulations. They also often get rock-bottom prices. Of course, what they don’t necessarily provide and where you have an advantage is food grown nearby, for maximum freshness and quality. As a farmer or rancher, you should understand that every institutional buyer is different; some will expect consistent, high-volume sales while others may be more flexible and willing to accept different items and quantities each week. Regardless of which model you’re working with, the institutional market will likely form only one part of your diverse marketing strategy.
Student interest in local food was an initial driver for what are now broadly supported Farm to College programs at the University of Montana (UM) and Montana State University (MSU). The university market is perhaps the most flexible of institutional markets; different food venues on campus offer student meal plans as well as cash-only sales, a feature that allows the consumer to absorb increased costs associated with local food if any exist. Both UM and MSU facilitate group purchasing among their branch campuses in the state and are leaders in purchasing large volumes of processed and fresh Montana food products through their
broadline vendor contracts as well as directly from area food producers. Several private and community colleges in Montana are also beginning to source local food and are worth contacting about potential business.
A school district’s size and available kitchen equipment can greatly affect food purchasing decisions. In Montana’s rural communities, individual schools often purchase and prepare food in their respective kitchens. In urban areas, school districts usually prepare food in a central kitchen and distribute it among elementary, middle, and high schools. When making large purchases, public schools are required to hold a bidding process. The geographic preference option can help foodservice directors prioritize local sources in that process (see Appendix E for more details). For smaller purchases, foodservice directors must use their best discretion and consider full and open competition in the purchasing process. Most schools receive food from a variety of sources, including the federal School Nutrition Program run by the Montana Office of Public Instruction and commodity programs run by USDA. Farm to School programs are increasing in Montana. Check with your local school district to see if it is already purchasing from local farmers and businesses.
Montana has seven correctional facilities that collectively spend around $4 million on food per year. Most of these are public institutions that purchase food through a competitive bidding process. The largest correctional facility – Montana State Prison (MSP) in Deer Lodge – is home to the Food Factory, which prepares food served onsite as well for other institutions. MSP is unique for having an inmate-run beef and dairy ranch. Prisons are a market for some competitively priced Montana food products, most likely channeled through MSP’s Food Factory.
Farm to Hospital programs are gaining ground nationwide as fresh, local food plays an increasingly vital role in hospitals’ missions to improve the health of their patients. In addition to purchasing and serving local foods, a few Montana hospitals have introduced other innovative models for incorporating local food in their institutions. One model is to host farmers markets on hospital campuses, while another is to provide employees with Community Supported Agriculture (CSA) shares. Unlike schools and universities, hospitals, as well as nursing homes and senior living facilities, consistently serve food year-round, including during the peak growing season, making them a great market for local producers. Healthcare facilities tend to be price-sensitive and purchase the majority of their food through broadline vendors, though they have the ability to buy Montana food products through those contracts as well as directly from area producers.
All in One!
If you’re interested in selling to all institutions (and restaurants and grocery stores), your best bet is to work through a broadline distributor like Sysco Foodservices of America (FSA), or a smaller independent distributor. These companies make regular deliveries and already carry products from Montana businesses such as Wheat Montana Bakery, Daily’s Premium Meats, Cream of the West, Baush Potatoes, Quality Meats of Montana, and more. Read further to learn more about distributing options in Montana and how to begin working with distributors.
Strategies for Selling to Institutions
Successful Farm to Cafeteria programs are built over time and are always based on strong relationships among the parties involved. When first inquiring about selling to an institution, contact the foodservice director or manager to set up a time to introduce yourself and your products. Keep in mind that foodservice directors are extremely busy so a wellprepared, professional introduction delivered in-person will be key in beginning a positive business relationship.
To locate an institution near you that is already versed in purchasing local foods, search the Farm to Cafeteria Network’s database of Montana Farm to Cafeteria programs at www.farmtocafeteria.ncat.org/2013-montana-map/. Then try approaching other institutions in your area that may not yet be procuring food locally but may be interested in your product.
The following are considerations to address when approaching an institution:
“Not only do we produce a wholesome, quality product for our kids to eat but we are also employing their parents by doing so.” — Brian Engle of Pioneer Meats, Big Timber, Montana
Several factors will determine the best method for you to market and sell to an institution. These include the scale of your operation, the size of the institution, the availability of a cooperative near you, delivery options, and more. There are three common ways local producers sell to institutions. You’ll want to discuss these options with the institution’s foodservice director to decide which method will best suit both of your needs.
- Direct Marketing – In this scenario, the producer sells directly to the institution. Because there’s no “middle man,” producers receive a slightly higher price with direct marketing. In turn, they must be able to provide in house all the services of that “middle man,” such as delivery, invoicing, and price negotiations. This method is more common among smaller institutions due to their low purchase volumes and relative flexibility. Still, some larger institutions will consider working directly with producers if purchases will be significant and consistent.
- Cooperatives – Producer cooperatives have been highly successful in serving the institutional market as they are able to aggregate products from multiple small-scale producers to meet the volume requirements of institutions. This one-stop shop makes it convenient and easy for institutional buyers to go local. Check with the cooperative nearest you about joining and marketing to local institutions.
- Wholesale Distributor – Most institutions already work with large distributors like Sysco and Foodservices of America (FSA), and many also receive product from smaller local distributors like Charlie’s Produce, Butte Produce, Quality Food Distributing, and Montana Fish Company. You can contact any distributor about carrying your product, though keep in mind that larger companies generally require a minimum product volume, liability insurance, and a commitment to consistency that best suits medium to large-scale producers.
When you visit with a foodservice director be sure to provide clear information, both verbally and in print, about:
- The volume and prices of your products
- Packaging, processing, and delivery capacities
- Insurance coverage
- Relevant certifications
- Food safety measures and production practices
- Names of your other customers (wholesale)
Presenting this information will demonstrate your level of professionalism as well as provide
the institution with the resources necessary to purchase from you in the future.
Mode of Communication
From a foodservice professional’s perspective, one of the challenges of buying locally can be maintaining clear and consistent communication with vendors. You’ll want to address this issue upfront by discussing the best mode of communication (phone, email, fax, etc.) and by making a commitment to a communication schedule. This may be as simple as agreeing to email every Thursday about weekly product availability, or calling the first Monday of the month to plan a larger sale. Decide what works best for you and the institution you’re working with.
The reasons institutions should adopt Farm to Cafeteria programs are generally understood, while the reasons they should carry your product in particular are far more specific and less obvious. When making a pitch for your product, make sure you mention the big picture benefits of Farm to Cafeteria while also highlighting benefits surrounding your product: what sets it apart from the competition? Why is it better for consumers’ wellbeing? The community’s economy? The environment’s health? Use concrete examples to appeal to potential buyers.
Many institutions lack the kitchen equipment or labor required to prepare food from scratch, making processed food products a near necessity for the institutional market. Minimal processing, such as cutting and bagging vegetables or puréeing and freezing squash, may be the difference between whether a foodservice director buys a local item or sources it from a larger national vendor.
“Sysco actively seeks to source product locally as a part of our guiding principles because it is the right thing to do for our customers, our suppliers, and our environment. We are proud of our progress but are far from finished as we strive to improve our understanding of our environmental and social footprint and generate more ideas to make our company more
sustainable.” — Valerie Carl, Healthcare & Education Account Executive, Sysco Montana
In Montana, this can be challenging as food processing centers are few and far between. In western Montana, producers have access to the Mission Mountain Food Enterprise Center (MMFEC), a processing facility that offers food safety training and affordable kitchen and equipment rental. State government agencies and food and agriculture interest groups are working to redevelop processing capacity in other parts of the state. To learn more, visit Montana’s Food and Ag Development Center Network website: http://agr.mt.gov/agr/Programs/Development/FADC.
Some institutions are modifying foodservice practices to be able to work with whole food products. Th is includes training staff in culinary skills, rearranging budget expenditures, and even investing in new equipment. These changes require innovation and a motivated foodservice director; talk with your local institution to see if it is pioneering such efforts. Let them know if you are willing to take on additional processing yourself. Something as simple as washing and chopping your carrots in a certified kitchen may cinch your sale.
Given Montana’s vast distances and relatively small populations, it is oft en difficult for
individual producers to distribute products to institutions and businesses outside their area. The current solution to this challenge is for producers to connect with a cooperative or wholesale distributor that can market, sell, and distribute their items.
A successful example of the producer cooperative model is the Western Montana Growers’ Cooperative based in Arlee. Th e Growers’ Co-op serves western Montana and is working to expand their distribution network farther east. Other independent distributors carrying Montana products include Quality Food Distributing and Market Day Foods, both located in Bozeman.
Broadline distributors (also called broadline vendors) such as Sysco and FSA service a wide variety of accounts with a wide variety of products. They serve most of Montana’s institutions and have expressed interest in carrying more Montana products. To stock your product with one of these companies, they recommend that you use a broker to represent your product, though this isn’t essential if you have a plan (e.g., flyers, ride with sales people, sample program, representation at shows). The first step is to contact the distributor and set up an appointment to show the product in the test kitchen. Based on this initial meeting, the company will decide if they think the product will sell. For this reason, it is essential that the ‘showing’ go well and that producers are prepared with information such as who your target customers are, why your product is better than the competitors’, and what your business plan looks like.
In addition to having a quality product, you’ll need to show you can provide a relatively consistent supply of your product to larger distributors. These companies oft en sell in the hundreds of cases and they usually demand a steady product volume.
If the broadline distributor declines to carry the product aft er the initial meeting, there’s still another option. Because the broadline distributors’ primary goal is customer service, they will go out of their way to meet the requests of their customers, particularly larger ones such as colleges, hospitals, or big school districts. If a food producer gets an institution excited about the product, that institution can request that its broadline vendor stock the product. With the additional incentive of keeping their customers happy, Sysco or FSA will likely try to make it work. It may be a long process to begin working with a large distributor, but once you’re in, you’re in!
Food Safety Considerations
Food-safety requirements pertaining to production and handling practices, packaging specifications, and transportation conditions vary among institutions as well as among food type. In 2011, the Food Safety Modernization Act (FSMA) was passed with the goal of creating a safer food supply and more stable food industry. At the time of this writing, the Food and Drug Administration (FDA) is still receiving comments on the proposed rules, most of which are consistent with Good Agricultural Practices (GAP) standards. Until the final rules are adopted, below are some food safety considerations to help you prepare for selling to institutions. To get current updates on the Food Safety Modernization Act, check the FDA website, www.fda.gov/Food/GuidanceRegulation/FSMA/. You can also contact your your county health officer or sanitarian, or Chief Attorney of the Montana Department of Agriculture Cort Jensen at email@example.com or (406) 444-5402 if you have additional questions.
Institutions and distributors are increasingly looking to the Good Agricultural Practices (GAP) and Good Handling Practices (GHP) for safety guidelines required of farmers to minimize health risks associated with growing and transporting produce. Some institutions and food buyers may require GAP certification though most in Montana don’t. They may, however, require a GAP plan or simply give preference to producers who follow GAP guidelines even if they aren’t GAP certified.
For more information about GAP/GHP guidelines and to access an audit checklist, visit the USDA’s GAP/GHP website, www.ams.usda.gov/gapghp.
For information on GAP/GHP trainings in Montana, contact Nancy Matheson, Agricultural Marketing and Business
Development Director at the Montana Department of Agriculture, at (406) 444-2402 or firstname.lastname@example.org.
Local Food Procurement Checklist
Iowa State University has developed a thorough Checklist for Retail Purchasing of Local Produce that can give you a sense of what types of food safety standards institutions may be looking for. It is a good idea to complete the checklist and bring a copy to prospective institutional buyers to give them a better idea about your production practices (and show off your professionalism!). Expectations will vary by institution, and not meeting one of the standards listed is by no means reason not to inquire about doing
business with an institution.
Montana institutions can purchase beef directly from any meat plant that is state or federally-inspected, or from a producer who slaughters and processes in one of these plants. Animals slaughtered and processed in a “custom exempt” plant may not be sold to institutions. Montana has 9 state Department of Livestock inspected plants and 5 USDA inspected plants.
Local chicken, turkey, and other poultry sold to institutions must be processed by a grower licensed by the Montana Department of Livestock or the USDA under the federal 1,000 or 20,000 bird poultry grower exemption. These exemptions mean they are exempt from an on-site, bird-by-bird inspection but that they have met licensing requirements. Institutions may also buy from state-inspected poultry plants; currently the New Rockport Hutterite Colony near Choteau is the only such facility in Montana.
The Department of Health and Human Services (DPHHS) requires that dairy products be pasteurized at a processing facility licensed by the Milk and Egg Bureau.
DPHHS requires egg vendors to be licensed by the Milk and Egg Bureau. However, according to food safety law MCA 81-20-201, producers that sell fewer than 25 cases (about 750 dozen eggs) a month over a year are exempt from grading requirements, though they must have a vendor’s license and the eggs must be reasonably clean.
For additional questions about meat and poultry, contact the Meat and Poultry Bureau at (406) 444-5202. For questions about eggs and dairy, contact the Milk and Egg Bureau at (406) 444-9761.