By MICHELE F. MIHALJEVICH
FORT WAYNE, Ind. — Farmers thinking of moving from the operation of a small roadside stand to supplying local restaurants or grocery stores with fresh products should carefully examine the pros and cons of such a plan, Purdue University extension specialists said late last month.
“The goal should never be that you have to do this,” said Kelly Heckaman, extension educator for agriculture and natural resources in Kosciusko County. “Some may decide (scaling up) isn’t the best thing for them.”
Restaurant chefs and store owners will have expectations for product quality and quantity, she explained. “If you’re going to scale up, obviously supply is going to be the biggest concern,” she said.
“The question of consistent volume and availability of a product is often cited by chefs as a barrier to purchasing locally. Those chefs are also concerned about consistent quality, timing and reliability of deliveries and competitive pricing.”
Producers should understand that different types of restaurant markets, such as chains, independents, caterers and institutions, may not have the same volume needs, Heckaman added.
Farmers who opt to make the move to supplying restaurants and grocery stores may see better profits, according to a 2008 survey, said Gonzalee Martin, extension educator for agriculture and natural resources in Allen County.
According to the survey, 71,200 farms nationwide that sold their products through direct-to-consumer outlets made a total of $877 million, or an average for the year of $12,300 per farm. Producers who supplied restaurants, hospitals, schools and similar entities totaled 13,400 and made $2.7 billion, or an average of $201,000.
“It may have taken them three to four years to get there, but it was worth it,” Martin noted. “But you have to be sure you’re ready to go to another level. You have to develop relationships and find connections.
“It’s all about relationships and it’s about being able to communicate. That can open a lot of doors. Once you find the right people, it may take you a couple of years, but once you’ve got it, you’ve got it.”
Heckaman and Martin spoke Nov. 29 to a small group of local producers as a part of the MarketReady Indiana program sponsored by extension. MarketReady Indiana provides information to farmers who are interested in becoming local suppliers for restaurants, grocery stores and other businesses.
Sessions were offered across the state during October and November, with one more scheduled for Jan. 26, 2013, in Decatur County.
Consumer surveys have shown that local produce is important, Martin noted. A recent survey found 86 percent of consumers rated as very or somewhat important that supermarkets offer locally grown produce or other local foods, he added.
The question of what is considered local tends to vary. For example, officials with Edy’s Ice Cream, which has a large plant in Fort Wayne, consider “local” to mean within 50 miles for dairy operations that provide milk to the plant, he said. Other companies could consider local to be as close as within the same county or as far as nearby states.
Owners of small farm operations should note that 2012 food trends for restaurants, based on responses from chefs, include more emphasis on locally grown meats, seafood and produce, Martin said. Farm-branded ingredients and hyper-local sourcing (restaurant gardens) will also become more important.
“Just because they’re saying this doesn’t mean it’s going to be easy (for a small farm to get in with a restaurant),” he said. “You have to decide if restaurants are a good marketing choice for you and your operation. You’ve got to have a good plan. You have to be a people person and you have to understand buyers, your product, pricing, distribution, promotions and sales.”
Packaging and labeling, in addition to listing basic information that may be required by law, also offer ways for producers to make their products stand out on a grocery store shelf, Heckman noted. Marketing is also essential, as websites and social media sites such as Twitter and Facebook allow for immediate interaction with potential customers, she said.
“If you use social media, you have to have a social media plan,” she explained. “People use their smart phones for texting, to find the store, to browse products, to compare prices and for coupons. You can’t be doing what you were doing five years ago.”
Producers should understand how to price their products and remember to include costs for delivery, production and their own labor when setting prices, Heckaman said. Farmers shouldn’t rely on a restaurant chef for market information nor should they price themselves out of the market, she added.
It’s a good idea for farmers to try to understand what it is they offer restaurants and grocery stores and why those businesses purchase items from them, Martin said.
“Producers need to understand the chef’s customers,” he noted. “We can’t just raise vegetables because we like them. It’s about relationships and understanding how chefs and managers think. I can’t stress how important relationships are.”