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Growing Markets for Local and Organic Produce Raises Questions about Supply, Distribution and USDA Food Safety Guidelines

By John Hendrickson

As most everyone knows, the market for organic food has been increasing by about 20% a year for quite some time.  As impressive as this is, the market may have increased at an even greater rate if there had been additional supply.  Fresh produce has been one of the most sought after products, accounting for as much as 43% of organic food sales.  But today, many consumers are not just concerned about how their food is grown, but where it is produced.  'Local' has become as important a distinction as 'organic' for consumers concerned about long distant transport, preserving farmland around their communities, supporting local business and a regional economy, and a host of related social, environmental and economic issues.

Demand for local food is escalating rapidly in cities such as Madison, Chicago, and the Twin Cities as well as in smaller towns and villages throughout the Midwest.  "Buy Local" campaigns are springing up everywhere and are supported by a range of organizations from REAP (www.reapfoodgroup.org) and Blue Planet Partners in Madison to the Minnesota Food Association (www.mnfoodassociation.org) to Family Farmed in Chicago (www.familyfarmed.org).  Legislators and State Departments of Agriculture also recognize the benefits of supporting local food systems and are creating programs, forming tasks forces, and hiring staff to assist farmers and help develop local markets.  Chicago even has a paid staff person with the title of "farm forager" whose mandate is to "build, brick by brick, a network of local farmers and link them to end buyers in Chicago, from individual consumers through the city’s farmer’s market program to large commercial kitchens."1

Meanwhile, UW faculty and staff are fielding inquiries from wholesalers and processors who are looking for farmers interested in growing organic vegetables for chain restaurants, wholesale distributors, and retail clients.  Part of the challenge is simply linking interested buyers with interested growers.  But it is not always that easy and there are bigger issues with which to contend.

Who is going to produce it?

The demand for local food seems to be ahead of supply.  This may be hard for some farmers' market vendors to believe as they compete for stall space, prices, and customers on a weekly basis and either donate portions of their harvest or haul it back home to add to the compost pile.  But while farmers' markets are popular, the demand for local food is spilling over to grocery stores, restaurants, and institutions...even Wal-Mart (for better or worse).  Whole Foods Market continues to expand and is re-affirming and following through on a commitment to buy from local growers.  "Fast Casual" restaurants such as Panera, Noodles and Company, and Chipotle are using organic products and some chains are developing connections with growers on a local and regional basis.  Processors are looking to develop and expand organic lines to meet the demand created by grocery chains and superstores.  These markets represent another level of production in terms of quantity, delivery, price, and quality.

There are at least three types of growers who might be interested in taking advantage of the emerging wholesale vegetable marketing opportunities: (1) small to medium scale vegetable market farmers looking to expand in scale, (2) existing organic dairy or crop farmers who might consider adding a vegetable or two to their cropping rotation, and (3) existing larger-scale, commercial vegetable growers who might broaden their cropping mix and transition to organic certification.  Each will face unique challenges as they pursue wholesale marketing.

For small to medium market farmers, obstacles might include access to land, equipment, and labor and an aversion to wholesale prices compared to direct marketing.  Organic dairy/crop farmers who might diversify into vegetables likely lack knowledge and experience with growing, harvesting, and packing vegetables.  They also may need specialized equipment and new pools of labor.  For existing commercial vegetable growers there is the 3-year organic transition period, not to mention all the learning and experience needed to grow organic crops successfully and the various certification requirements.  All three types of growers will need information on grading and packing standards, food safety guidelines, and basic information on distribution logistics.

While there are a great many organic vegetable growers in the Upper Midwest, they are often small in scale and most focus on direct market sales at farmers' markets, road side stands, or to CSA members.  In order to engage the growing wholesale markets, smaller market farms will need to scale-up individually or collectively—through marketing co-ops or other structures—to meet the needs of buyers.  Home Grown Wisconsin, a cooperative of growers that sells to restaurants, and Organic Valley (the well known dairy co-op that also has meat and vegetable pools) represent viable models to pool produce together to reach significant volume.  There is room for a variety of individual growers, collectives, and cooperative marketing groups regionally.

Some growers, given their scale, time, and existing machinery, may find it better and easier to work directly with processors.  Existing organic dairy and crop farms are likely to fall in this group.  Others—small to mid-sized market farms—may be better suited to growing and selling various fresh-market crops. 

How is it going to get to consumers?

Who is going to grow the vegetables to meet regional demand is only a portion of the challenge.  Distribution is perhaps a bigger conundrum.  There are several existing and potential players.  Organizations like Organic Valley, Home Grown Wisconsin, and Co-op Partners in the Twin Cities (www.wedgecoop.com) already have structures in place to gather, market, and distribute fresh produce.  There are also wholesale distributors and retailers who have expressed interest in working with local growers such as Goodness Greenness (Chicago) and Whole Foods.  Various regional produce packers and shippers are already working with local, organic products such as Alsum Produce based out of Friesland, Wisconsin.  Even large-scale, conventional businesses like Sysco recognize the marketing potential of local and organic products.

Another interesting distribution solution is being pioneered in New Hampshire, where growers have collectively bargained with UPS for reduced overnight rates in order to ship product to restaurant customers.  See nhfarmtorestaurant.com/UPS.htm and www.nhmade.com/upsform.cfm for more information.

While the logistics of distribution represent a layer of difficulty, solutions will manifest and evolve as various businesses recognize and respond to opportunities in the marketplace.  Far more complex, and in need of serious dialog, is whether these business relationships between growers, buyers, processors, and retailers are negotiated fairly and equitably.  Fair trade between farmers, retailers, wholesalers and processors remains a source of frustration for many.  The vast majority of the food system runs on tight profit margins and an aggressive, competitive mentality.  There is some talk of organizing a grower cooperative for organic processing vegetables to improve the likelihood that farmers will get a fair shake in the contracting process.  Some fresh vegetable wholesalers have indicated that they are open to advance contracting to ease the cost of transition to organic.  Domestic fair trade needs to be a central element of new relationships between farmers and wholesale markets lest the hazards and characteristics of the dominant food system are merely replicated in a local, organic context.

Faculty and staff at UW-Madison are part of a national project examining alternative value-chains that treat all players in the food system as partners who will engage in open, honest, and fair negotiations on prices and long-term, mutually beneficial business relationships.  Such efforts can help save and revive mid-sized farms, thus the effort has been named "Agriculture of the Middle."  For more on this project, see: http://www.agofthemiddle.org/archives/2004/09/case_studies.html.

Food Safety Issues

Major retailers and restaurant chains are increasingly concerned about food-born pathogens.  Many major buyers are demanding that suppliers adhere to the USDA's currently voluntary Good Agricultural Practices (GAP) food safety certification program.  There is also a parallel packing and distribution certification program called Good Handling Practices (GHP).  These programs resemble organic certification in that they require farmers to write food safety plans and procedures, allow on-site inspections by a third party certifier, and maintain extensive records.  Given that wholesale clients view this voluntary certification process as critical to ensuring public health, GAP certification will be critical for most any farmer in order to enter the wholesale vegetable market. 

The rub is that the GAP food safety protocols are geared toward industrial-scale vegetable production and many of the rules and procedures will be difficult and/or expensive for many growers to follow.  For example, GAP guidelines call for produce to be covered when transported from field to packing house.  This rule is certainly relevant for large scale growers whose production areas are extensive and remote.  For most organic growers in the upper mid-west, production areas and the washing and packing facility are relatively close.  Does it make sense to cover a product when it is only traveling 100 to 500 feet?  GAP rules also require that the washing and packing facilities be totally enclosed.  While there is nothing inherently wrong with this ideal, most smaller-scale fresh market growers do not have such facilities.  Many use portable awnings or have roofed but open-air facilities.  Some larger fresh market organic vegetable farmers in the region are already investing in enclosed processing facilities to address GAP requirements.

Another issue is the common practice—allowable under organic rules—of re-using waxed produce boxes as long as they are labeled as only have contained organic products.  GAP certifiers frown on this as used boxes are deemed a potential harbor for pathogens.
 
It is also true that some of the GAP rules do not mesh with organic farming goals and practices.  Of primary concern is the requirement that animal and vegetable production be entirely separate which negates the basic tenant of a diverse, integrated system and a key element of sustainability.  Certainly manure and fresh produce represent a potentially dangerous situation but it seems that a carefully managed farm can successfully—and safely—raise both vegetables and animal products. 

UW faculty and staff are investigating GAP (as is Organic Valley and Homegrown Wisconsin) to help get growers up to speed on the various rules as well as to ascertain how GAP procedures mesh with organic certification and broader sustainability goals.

Getting from Here to There

Market opportunities for savvy, skilled, sustainable farmers have never been greater given the rising consumer consciousness about how and where food is grown.  The challenges are many, however.  Several issues have been raised here...from supply, to fair trade distribution, to how food safety programs mesh with sustainable farming practices...and there are certainly many more.  Solutions will be created in many forms through the work of many partners.  As stated above, some of the work simply revolves around networking: matching interested buyers with interested producers.  But if we do just that, without addressing some of the larger issue above, the results may not have some of the characteristics—and longevity—that might be our ideal.

By thoughtfully realigning existing resources, we have the potential to re-craft a regional food system that honors the needs of all engaged in the food supply chain.  The region needs the work of many creative and willing partners working intentionally and carefully to help growers "scale-up" supply, develop equitable, stable business relationships, and to mesh the goals of sustainable farming practices and food safety.  Given the large and growing number of potential partners the first vital step is communication in order to share information and ideas and develop synergies and a common vision.  Another necessary step is to take time to intentionally plan for our future food system.  This requires that we identify regional food system assets and opportunities, and then implement strategic activities to support a sustainable regional food economy.  Let's get to work!

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