Using the Co-op Model to Supply Local Food to Institutions

Transcription

1 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

2 Presentation Overview How co-ops are engaging with the local food movement How co-ops are connecting institutions with local foods Two Wisconsin examples

3 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

4 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

5 Retail: Consumer + Worker Owned Chapel Hill, NC Founded in grocery stores Restaurant Food production 14,000 members

6 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

7 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)

8 An in depth look at a recent failure

9 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

10 Bright Idea Spend 10% of $2 million food budget on local food Sacred Heart Hospital CEO, Stephen Ronstrom

11 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?

12 Gather Information Barriers to purchasing local food: Seasonal production Quantity Transportation Processing Pricing Delivery

13 Form follows function. Form and function should be one, joined in a spiritual union. -Frank Lloyd Wright

14 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

15 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

16 Lessons Learned

17 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!

18 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!

19 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

20 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

21 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

22 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

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24 Fifth Season Basics 6 membership classes Community Supporters 7 member Board of Directors Advisory Council Operate in the 7 Rivers Region

25 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.

26 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.

27 Ongoing Challenges Matching buyer and seller prices Matching supply and demand Minimizing cost of operations Ensuring the product is sourced and delivered per contract

28 Questions?