The Farmer-Food Buyer Dialogue Project

This project originally aimed to bring farmers and food buyers (chefs, produce managers, etc.) to the same table to talk about increasing local purchases of locally-grown farm products. Occasionally, such meetings were possible, as at a two-hour workshop held at the Urban-Rural Conferencein October 1995 in East Troy. However, it soon became clear that time and geography were limiting factors. In the place of face-to-face dialogues, meetings and interviews with farmers and food buyers were often conducted separately. (While some gatherings were planned, others were more impromptu.) This report is a concluding attempt to present views and insights collected from both food buyers and farmers.

About half-way through the project, a survey seeking quantitative data was sent to 300 food buyers in Wisconsin and neighboring areas. However, much of the information provided below was gathered from qualitative interpretations of the local food marketplace, as provided by participating chefs and retail managers. The meetings and interviews with food buyers and farmers sought to:

1. map out the marketing options available to sustainable farmers within the local food marketplace,
2. identify obstacles and opportunities in that marketplace,
3. identify and pursue "next steps" to overcome those obstacles and capitalize on the best of those opportunities.

Figure 3: Food buyers agree: "local" has market value.

As was the case with farmer participation, exploration of the food buying sectors was certainly biased by the orientations of those chefs and retailers who chose to participate in this project. We did try to include representatives from the many different types or categories of restaurants and groceries in the region. However, those food buyers who chose to participate were generally proponents of a more regional, more sustainable food system. Unfortunately, larger chain restaurants and supermarkets were under-represented. We welcome further research and outreach to expand upon the preliminary conclusions offered herein, and to engage more food buyers in a discussion that should not end with this project.

A large majority of the food buyers that returned surveys agreed with a statement that must fundamentally underlie a shift to a more regional food system. The statement, restated: there is market value in the term or concept of "local" (Figure 2). The presentation of the retail and restaurant sectors that follows presents respondents' personal interpretations of this value. The enthusiasm and continuing involvement of many of these participants encouraged the "next steps" taken toward the conclusion of this Farmer-Food Buyer Dialogue Project.

Food buyers were asked to engage the same two subjective concepts that were presented to farmers: "local" and "sustainable." As Figure 1 shows, almost 80% of the food buyers surveyed described "local" as an area the size of their state or smaller. Among Wisconsin food buyers, it was often suggested that "Wisconsin-grown" was a marketable label which their customers might well understand and appreciate.

Fewer agreed on the issue of "sustainability." In the case of natural foods retailers, the labels "organic" and "sustainable" were used almost interchangeably. These retailers explained that, like the phrase, "Wisconsin-grown," the word "organic" is a marketable label that succinctly conveys a message to consumers. Natural foods stores have traditionally sold organic foods, so it came as no surprise that many of these retailers supported organic, and sustainable agriculture. On the other hand, interviews with mainstream grocers and restaurant chefs revealed widely varying opinions regarding organic and sustainable labels.

The survey questionnaires sent to food buyers were primarily concerned with the issue of "local," not with sustainability. As already explained, survey recipients were first asked to use their own definitions of the term "local" when answering subsequent questions. They were then asked what they currently source locally, and why, and what prevents them from purchasing more food products from local farmers. These results are discussed below.

The survey questionnaire concluded with three questions intended to measure food buyers' interest in issues other than "local." Specifically, they were asked to rank from 0 to 50 their agreement with the following statements: "There is market value in being able to tell my customers...

• ...this sweet corn is as fresh as it gets."
• ...these chickens were humanely raised."
• ...this lettuce is certified free of pesticide residues."

A ranking of 50 signified strong agreement with a statement. As Figure 3 shows, on average, there was fairly strong agreement with each of the three statements above. Furthermore, there was almost no variation between average responses to these statements as made respectively by retailers vs. restaurant chefs. However, as indicated above, personal interviews revealed much less conformity in response -- especially with regard to organic products. While some retailers were almost ecstatic about growth trends in the organic industry, others were ambivalent or even hostile to organic products. There was just as much variabiation on the issue of organics among the restaurants chefs that were interviewed.

The first four months of business done by Home Grown Wisconsin (the new wholesale venture that sprouted from this project) also seem to reveal Madison restaurants' hesitance to support local, organic agriculture. At bottom, it seems, the issue is price. Marketplace transactions may be the truest test of theoretical designs and high ideals. HGW farmers are finding that the prices they're asking for their products are meriting luke-warm reception from Madison-area restaurant chefs.

The growers and chefs that formed HGW essentially pursued this new venture as a low-cost experiment. It is still too early to determine whether this experiment will succeed as a business. The remainder of this chapter explains why HGW was set up to market organically-grown produce to mid- and up-scale Madison-area restaurants. The chapter also identifies other opportunities, and some of the obstacles that stand in the way.

The retail food sector was the subject of the first focus group interview conducted in this project. Retailers for this first interview were selected from the Madison area, primarily for convenience sake, and because relationships had been established with some of them in the months and years preceding this project. Participants in this focus group represented relatively smaller groceries in Madison. Three came from the natural foods industry, and one from a smaller, mainstream grocery. An owner of a second small, mainstream grocery missed the meeting, but offered a lengthy telephone interview beforehand. These and numerous other retailers participated in different ways through the remainder of the project.

One purpose of the early focus group and subsequent interviews was to roughly map out variations in the local retail sector so as to provide local farmers with a better understanding of the different obstacles and opportunities among the various "store-types." Within that context, we identified four different retail types. The distinguishing traits are presented in terms of products offered and relative scale (Table 2). A third distinguishing trait, ownership, is also discussed, although interviews with retailers suggested that the first two distinctions may be more indicative of a retailer's proclivity to purchase local and/or sustainable food products.

The first distinction, "natural food products," was discussed in the introduction. A written or "authorized" description of this niche was never obtained. However, there was a general understanding among participating retailers and farmers that natural foods stores targeted a special niche in the marketplace, offering health-oriented and/or issues-oriented foods and other products. The issues acknowledged and engaged through the marketing of these products include environmental as well as social concerns. Organic foods are but one example of the products fitting this characterization.

There was also a general understanding among many retailers and farmers that natural foods stores tend to target and serve customers earning higher personal incomes than the average mainstream grocery customer. At the same time, representatives from some of the smaller natural foods stores indicated that a good share of their business was done with low- and middle-income consumers. No quantitative data was not collected to either support or challenge these perceptions.

While natural foods retailers specialize in natural foods products, "mainstream groceries" offer a broader selection of foods. That is not to say mainstream stores do not include natural foods in their product mix. On the contrary, some mainstream groceries are making a clear effort to attract natural foods consumers, and market some products typical to that niche industry. Nevertheless, interviews with retailers revealed different obstacles and opportunities regarding local/sustainable food products with respect to natural foods vs. broader-line, mainstream groceries.

The second distinction noted as significant to this project involves the scale of business done by a retail store. The cut-off mark distinguishing smaller from larger stores was set at $2 million of total food purchased annually. That said, a quantitative measurement defining small versus large stores was only intended to assign subjective measurements to some rough marker. As a self-defined "dialogue project," subjective opinions were considered quite relevant. From a farmer's point of view, a large retail store may be one that is too big to do business with.

Table 2 presents four retailer types: smaller natural foods stores (Type I), larger natural foods stores (Type II), smaller mainstream groceries (Type III), and larger mainstream groceries (Type IV). The spectrum of store sizes is probably much greater among mainstream groceries, which can range from the so-called "mom-and-pop" or "corner" store, up to giant supermarket chain stores and discount food warehouses. With hindsight, it might have been better to have identified a "medium range" mainstream retail category between $1 and $5 million in sales, to distinguish opportunities in a broader range of stores.

We should identify another shortcoming of our questionnaires: in them the separate distinguishing traits of product mix and ownership were imprecisely blended together. In other words, an incorrect assumption was made that natural foods groceries and food cooperatives were synonymous categories. Respondents should have been asked to identify their store's product mix as (a) primarily natural foods, (b) exclusively mainstream foods, or (c) primarily mainstream foods with a natural foods section. Having not asked this question, the only other distinction between retailers (besides relative size differences) that could be drawn from the survey data, then, is their form of ownership: cooperative vs. "private."

Private ownership is defined broadly here as any ownership structure other than the legal cooperative model. Many states have their own cooperative statutes, and cooperative businesses are identified as such by their appropriate state agency. Private groceries, whether sole-proprietorships, partnerships, limited liability companies, or non-cooperative corporations, are lumped together in this report in contrast to their cooperative counterparts.

Food cooperatives are typically owned by their customers. As paying customers, these consumers' buying habits help determine their store's product mix, as is true of any grocery. However, as voting members, these consumer-owners have a voice in the mission and the management of the business. For instance, they may set policies within which the food buyers must operate.

We should note here another type of cooperative arrangement in the retail sector. Retailer-owned cooperatives involve independent, privately-owned groceries that join together, typically at the national level, in order to make bulk purchases and enjoy other economies of scale. Cooperation among retailers helps smaller and medium-sized stores compete with larger, investor-owned, highly-integrated national chains. Independent Grocers of America (IGA) is one example. North Farm Cooperative of Madison is a more regional example; its retailer members are typically natural foods cooperatives.

Interviews with retailers indicated that, with a few exceptions, most cooperatively-owned groceries in the region fall into one of the two natural foods categories within Table 2 (Types I or II). Hyde Park Society Cooperative, which markets mainstream food products in a mixed-income community of Chicago, is one noted exception. Likewise, most non-cooperative (private) groceries in the region fall into one of the two mainstream food categories in Table 2 (Types III or IV). Whole Foods Market -- a privately-owned national chain of natural foods stores headquartered in Austin, Texas -- is a noted exception which recently opened a store in Madison.

Finally, another issue of ownership worth noting parallels the discussion of farm locality that underlies this project. Simply put, a food retail store may be owned by individuals living either within or outside of a defined "local" area. While quantitative data was not collected, store visits and anecdotal evidence indicate that smaller groceries (Types I and III) are more likely to be locally-owned than their larger counterparts. As alluded to above, retailer-owned "purchasing" cooperatives may make local ownership in the food retail sector a viable alternative to national, investor-owned chains. These distinctions of ownership will arise again in our discussion of obstacles and opportunities in the local food marketplace. First, issues of local and sustainable food products are presented from the retailers' perspective.

Table 3 presents retailers' responses to two questions: "Why do you buy locally-grown food products?" and "Why does the 'locally-grown' label have market value." The first question received a more personal response from the food buyers themselves. The latter question points more to the final customer -- in other words, why are some customers willing to pay for "local"? A quantitative price comparison of local vs. non-local food products was not within the scope of this project. Certainly we welcome further research to help quantify the qualitative responses presented herein.

Unfortunately, not all survey respondents took the time to answer the qualitative, open-ended queries. The written responses presented in Table 3 parallel similar reactions in personal interviews with retail sector food buyers. From both sources of inquiry (survey and interviews), we may identify two thematically different responses. On one hand, retailers report that local food products are valued and purchased, as such, out of support for the local farm economy, or because of perceived environmental benefits to sourcing food locally. These reactions point to "social" benefits of locally-grown foods.

On the other hand, local food products may be valued for the qualities of the food itself. "Freshness," "taste," and simply "high quality" were among the written responses, and the interviews elicited similar comments. Furthermore, as a number of retailers emphasized, perception is as important as reality in food retailing. This means that consumers' perceptions of local food as being fresher, tastier, and even more nutritional may translate into market value. These reactions point to "food quality" benefits of locally-grown food. Both social and food quality benefits, real or perceived, may give locally-sourced food a competitive advantage over non-local food products.

Visits to dozens of stores within the four retail types revealed common marketing strategies for those stores that sourced food products locally. For instance, with respect to produce, many stores included the location of the food source along with the price of each food product. Sometimes, the descriptions "locally-grown" or "Wisconsin-grown" were used, while other stores identified the specific farm from which the food was purchased. One Type II store hung large photographs of their farmer suppliers above the produce, while at least one Type I store made their support of local farms the primary message of their radio commercials.

Only one survey respondent mentioned "price" as a reason they source some food products locally. Presumably, this retailer found that, at least, at certain times of the year, some locally-grown products were priced lower than their non-local counterparts. This issue of price is addressed further in the discussion of organic products below.

As Table 4 shows, most (26, or 74%) of the thirty-eight surveys received from retailers were from food cooperatives. Of this majority, all but two purchased less than $2 million of food in the previous

year. Table 4 shows that these twenty-six smaller food cooperatives purchased $771,550 worth of food from local sources in the previous year, at an average of $28,576 per store.

With only eleven survey responses gathered from the other stores, the data from these stores that is presented in Table 4 may be of limited value. It is worth noting, however, that just two Type II retailers purchased almost half as much as the twenty-six Type I stores represented. A less dramatic but similar result is shown in the comparison of small vs. large mainstream groceries. These comparisons reveal what may be obvious: larger stores may purchase greater volumes of local food than smaller stores simply because they move more product overall. Farmers and retailers were well aware of this fact, and both groups identified potentially great opportunities if larger groceries were to follow the lead of the smaller, consumer-owned natural foods stores, and source and market more local farm products

Table 4: A breakdown of retailers in terms of ownership and total volume of all food purchased annually. Regrettably, the survey questionnaire did not ask retailers to indicate whether they targeted natural foods or mainstream consumers, although it might be fair to assume that most of the food co-ops responding target the former, while the private groceries responding target the latter, with a few known exceptions.

Food buyers were also asked to distinguish what share of this locally-purchased food was received directly from farmers, as opposed to that sourced from wholesalers (which themselves sourced locally). The average across all stores reporting shows retailers purchased 57% of their local food products directly from farmers

This project also investigated what local farm products were already being sourced by area retailers. In developing the survey questionnaire, we sought input from a mixed focus group of retailers, restaurateurs, and food service providers. The founder and owner of a fast-food restaurant chain suggested it would also be useful to know which food products are perceived as local. He reasoned that food buying businesses would be more likely to buy local products if they knew that that their customers already recognized the products as typical of the region.

Table 5 presents both retailer and restaurant food buyers' perceptions of what food products are grown locally. Because respondents were not asked specifically to rank their five choices, we assigned each item one equal vote. As Table 5 shows, fresh produce received the greatest number of votes among both retailers and restaurant chefs. Given that Wisconsin is often referred to as "the dairy state," it is somewhat surprising that milk, cheeses, and other dairy products did not fare better. Partly, this is explained by the fact that fruits and vegetables that were listed separately by respondents resulted in an accumulation of votes that outnumbered dairy products (which were often listed under one heading). Perhaps, too, the phrase "locally-grown" creates a bias in favor of cultivated crops like fruits and vegetables, while products that are "raised," "gathered," and/or "processed" -- like milk, eggs, meat, and honey -- were neglected by force of suggestion.

Nevertheless, it is interesting that tomatoes, for instance, were listed more often than dairy products as common local products. Apples and sweet corn received almost as many votes as dairy. Perhaps food buyers source their dairy products from wholesale intermediaries, rather than directly from farmers, and so they did not consider dairy within the scope of this project's dialogue. Whatever the explanation, Wisconsin dairy farmers might wonder if their national milk promotion campaigns might be supplemented with a more regional campaign that reminds the area's food buyers (and consumers) that Wisconsin is, in fact, a dairy state. This issue of dairy products will be raised again.

Table 5: Food buyer perceptions of what is grown or raised locally. Some listed simply "produce," or "meats," and these votes were lumped under the general headings along with more specific items. Because respondents were not asked to rank these products, each product listed was given equal scoring.

Food buyers were also asked to rank the top five food products that they already source locally (Table 6). Because these products were ranked, points were given to each

product listed: five for the top product, four for the second, etc. Table 6 shows, again, that fresh produce is most popular among food buyers that source from local farms. Again, tomatoes, apples, and sweet corn vied with dairy products as the most popular items.

Table 6: Local farm products that Wisconsin-area food buyers purchase. First products listed were given five points, second four, etc. Again, some food buyers simply listed "produce," or "vegetables," and these votes were lumped under general headings along with more specific items.

The data presented in Tables 5 and 6 was gathered to give a rough idea of what local food products are on the minds, in the aisles, and on the menus of Wisconsin-area retailers and restaurateurs. Qualitative interviews with retailers, along with tours of and visits to numerous groceries in Madison, Milwaukee, and Chicago, added further insight into the marketplace for sustainably- and locally-grown (-raised, -gathered, and -processed) farm products.

A brief discussion of the issue of organic vs. natural vs. commercial food products, from the retailer's point of view, should precede the topic of marketplace opportunities. The survey questionnaires sent to food buyers dealt primarily with the issue of food source, not production methods. Retailers' opinions, as presented here, were gathered primarily from interviews with food buyers. Their opinions reveal a good deal of disagreement on the issue of "organics" within the local food marketplace.

The topic of sustainability was raised often in interviews with retailers. Generally speaking, participating representatives of natural foods stores were more acquainted with the issue than were those from mainstream groceries. Many of these stores put substantial resources into educating their customers not only about the availability of organic and natural foods, but also about some of the broader issues behind sustainable agriculture. While these retailers often used the words "organic," "natural," and "sustainable" interchangeably, many preferred to use the label "organic" in their marketing strategies, because it has become a familiar term that conveys a fairly concise message to consumers.

Retailers familiar with organic products claimed that prices for organic, as compared to "commercial" produce, varied by season, by item, and by geographic source. On average, organic prices tend to be about 20% higher than commercial, or conventional "non-organic" foods. However, in winter months, certain organic products might be priced more than 100% higher than their conventional counterparts. In season, wholesale prices for locally-grown organic produce might be priced as low or lower than organic produce from California, Florida, or other regions, and can occasionally compete even with commercial produce from out-of-state.

One produce buyer from a Type II natural foods cooperative referred to industry statistics that showed demand for organic products on a long-term growth trend. Other farmers and retailers confirmed this trend. The fastest growth rate for organics was said to be in processed food products. Demand for organic meat products was expected to rise if and when federal standards for organic meat products were finally approved.

Traditionally, natural foods groceries have been providers of organic food products. Many of these retailers require records from suppliers "certifying" these products as organically-grown. Farmers looking to market their organic products directly to such retailers would be wise to have their farm certified as organic by an outside agency. Some sort of certification will be mandatory if and when federal standards are adopted.

In the meantime, preceding federal standards, it is known that at least some of the smaller (Type I) stores may be satisfied enough with the word of the farmer. In other words, they might label a farm's products as organic without certification papers to back up that claim. Others stores may label a farm's products as "transitional" if the farmer claims to be making the three-year transition to organic production. Finally, many of the natural foods stores do offer "natural" or "low-pesticide" products that tend to fetch a lower price than their organic counterparts. Until new federal standards are passed to change the situation, meat producers, who are legally prevented from using the word "organic" in their marketing efforts, often market their products as "naturally-grown."

If the interviews and store visits conducted in this project are any indication, smaller-sized, mainstream (Type III) groceries seem to show limited interest in organic and natural food products. There was a surprising level of distrust and dissatisfaction among certain of these retailers with regard to the organic and natural foods industries. One retailer who tried to market "natural beef" was very disappointed with his sales and saw no good reason to market "sustainability." Another Type III retailer referred to a scandal in the international trade of organic bananas as reason to avoid organic produce altogether. He also claimed that whatever quality advantages organic produce temporarily had over conventional varieties has since vanished, as California's organic farms have shifted toward the same large-scale, industrial production and long-distance marketing methods of conventional agriculture.

While Type IV supermarkets were poorly represented in the surveys or interviews, it is common knowledge that some of these stores have begun to offer organically-grown products. These stores tend to order by the pallet and the truckload, dealing primarily with very large distributors. If these large stores can expand the organic niche market by presenting this option to their many customers, this might present a new opportunity for farmers in the region, if they can meet the demand.

Farmers looking to receive favorable prices to offset the costs of their sustainable farming practices would be wise to market as directly to the consumer as possible. Selling directly to retailers, either individually or cooperatively, may also be rewarding, especially if the retailer can pass along the costs of the farmers' added costs to the final consumers. Furthermore, the retailer may be more able to do so if the products involved can targeted to some niche market that can garner premium prices.

The retail food sector's organic foods niche is probably best suited to the aim of supporting sustainable agriculture. Certainly not all organic foods consumers buy organic to support sustainable agriculture; personal health, perceived taste, or added prestige may be motivating factors instead. Still, the organic foods consumer is accustomed to paying 20% or more for foods that are distinguished by the organic label. When this premium is passed along to the farmer, it should help offset any added costs sustainable practices may incur.

Organics are not the only niche market able to demand premium prices. Other distinctive niche products can be produced on the farm and sold directly to retailers. Examples include distinctive varieties of produce, like "heirloom" tomatoes or oriental greens; unique meat products, like pheasant or bison; and value-added specialty products like sweet sorghum. Such products may receive a warmer reception from up-scale restaurants, as the following section will show, and they may also garner premium prices in the retail sector.

Value-added processing offers another avenue for local retailers. A number of retailers made reference, in particular, to the growing demand for organic processed foods. Processed products suggested in the returned food buyer surveys included: vinegar, salsas, pickles, catsup, pesto, frozen vegetables (peas, corn, beans), peeled and chopped garlic, dried beans, flour, sun-dried tomatoes, canned tomatoes, soups, canned vegetables, cereals, pizzas, frozen juices, cleaned and hulled beans and grains, bread, french fried veggies, beet salad, and sausages.

Finally, it may be worthwhile to see "local" as a niche in and of itself. As the food buyers reported in the surveys, it seems there is a very real added market value in the local label; whether measured by social/environmental or food quality benefits, many retailers clearly acknowledge this added value. This project was not able to determine how much retail customers are willing to pay for the local label. Still, it seems that when local is combined with other niche qualities, like organic, there may well be market opportunities for farmers.

Within the local food marketplace, surveys and interviews indicate that opportunities within the smaller, Type I natural foods sub-sector may be somewhat limited -- at least with regard to fresh produce. Two stores of this size reported sourcing as much as 60% to 80% of their produce from local farmers, in season; however, with their limited volumes, such percentages may not amount to much in sales. Until these Type I stores grow and expand, it seems that many are already being served adequately by local produce growers.

However, there may be opportunities in Type I stores with regard to meat and specialty products. While many natural foods consumers may be vegetarian, certainly not all are, and sustainable meat producers might want to convince more Type I retail food buyers to give them the same level of support that they have traditionally given to local, sustainable produce farmers. Likewise, farmers developing new value-added processed products might find the smaller natural foods stores good places to test market their products at the local level.

These small natural foods stores are typically consumer-owned cooperatives which harken back to those that created the so-called natural foods industry some twenty to thirty years ago. By many accounts, they are still the best places for local, sustainable farmers to go for support in the marketplace. Type I retailers participating in this project report that their customers value and demand that local food products be made available. And, despite the added transaction costs of dealing with so many suppliers, the staff of these smaller stores seem to value the relationships they form with their farmer-suppliers, and they would not have it otherwise.

Type II natural foods retailers offer different opportunities to farmers. In the surveys received, only two retailers identified their stores as falling into this category. However, interviews revealed that there are one or more Type II stores in the Twin Cities, La Crosse, Milwaukee, Chicago, and, as of this summer, Madison.

Surveys, store visits, and interviews reveal that these larger natural foods stores sell much greater volumes of organic and other distinctive food products than do their smaller counterparts. They tend to offer an extensive selection of meat and other animal products. They also offer a wide array of value-added, specialty products, like processed, ready-to-eat, organic foods, which seem to targeted to mid- and upper-income consumers who are willing and able to pay for convenience.

If interviews and store visits are any indication, it is not likely that many of these larger stores are sourcing 60 to 80% of any products locally -- in any season. To get them to do so may require a coordinated effort by local growers to make their products available to these retailers. It may also require an educational campaign. These "next steps" will be discussed further below.

Opportunities in the Type III retail sub-sector may be more limited. Unlike the larger mainstream groceries, these "mom-and-pop" or "neighborhood" stores have limited shelf space, which restricts their ability to cater to the natural foods consumer. Rather than targeting small niches, their product mix is more generic, and they tend to carry few organic or natural farm products. For this reason, organic and other niche products, which may offer the sustainable farmer attractive premiums, are not big sellers in the Type III stores.

At the same time, as owners of local businesses themselves, some of the Type III retailers interviewed did show interest in supporting local farms. However, these Type III stores probably require a much more coordinated supply than do their Type I counterparts. In other words, their needs would probably have to be met with no added transaction costs being incurred.

Finally, Type IV mainstream groceries may also represent an opportunity to local farmers. While under-represented in this project, interviews with other retailers and visits to a number of large supermarkets in the area revealed that natural foods sections are appearing and expanding in Type IV stores. One of Wisconsin's larger-scale organic potato growers has developed contacts with a number of area supermarkets. These stores indicated to him that they would be more likely to source organic foods locally if other local growers could match his scale of production with other organic fruit and vegetable products, and if these farms could offer a coordinated supply from a single source.

As already mentioned, Type IV supermarkets typically work with very large distributors, and generally purchase food by the pallet and by the truckload. Greatly increased supply and coordination of locally produced food would be necessary to meet their needs. Sysco Inc., a national "broadline distributor" out of Baraboo, has also made it known that they would source more organic and commercial produce locally if they could deal with just one farmer representative that would coordinate supply.

Finally, given that this is Wisconsin, special mention must be made of opportunities in the retail sector regarding dairy products. Most Type I and II groceries in the region offer dairy products produced locally under the Organic Valley label by CROPP Cooperative of La Farge. In these stores, the Organic Valley brand is often shelved with another organic brand, this one out of Colorado. Some of these natural foods stores also make it a point to procure "non-organic" milk, cheese, and butter from more conventional dairy cooperatives in Wisconsin. An effort has been made by many of these stores to insure that the commercial dairy products they offer are made from milk produced free of the synthetic rBGH hormone.

Because Type III and IV mainstream retailers were underrepresented in this project, we can say little can about opportunities for locally-produced dairy products in those large sub-sectors. Still, it is worth considering whether a more intensive regionalized marketing and education effort might expand local markets for existing and new dairy products. If there is indeed a growing trend of appreciation for social and food quality benefits of local, sustainable food products, dairy producers would be wise to tap into and accelerate that trend.

Many of this project's focus group interviews were conducted in the elegant dining room of L'Etoile Restaurant, a Madison business co-owned by executive chef, Odessa Piper. Odessa is well known as a long-time supporter of sustainable agriculture in Wisconsin, and has in many respects been one of the original proponents here of a more regional food system. Her vision of "a more regional palette" would have Wisconsin's citizens and visitors enjoying a diet that is unique to our region's climate, soil, and agricultural skills. Her consultation and support were sought throughout this project.

L'Etoile is one of a dozen-plus Madison-area restaurants that have recently established a local chapter of Chefs' Collaborative 2000 (CC 2000), an "Educational Initiative" of the Oldways & Preservation Exchange Trust. A similar chapter has become active in Chicago. This national organization and its local chapters are composed of restaurants that intend to support a more sustainable agriculture by sourcing foods grown in conformance with that broad concept. Interviews with CC 2000 chefs indicate that the group is equally committed to supporting farms local to their members respective regions, and that, indeed, the group sees the two issues of locality and sustainability as strongly related.

A restaurant's membership in CC 2000 indicated its interest in local and sustainable food products. We also attempted also to categorize restaurants in a more general way, to illuminate different opportunities in the local food marketplace. In designing the survey questionnaires, we assumed that the relative size of a restaurant would be an important factor in assessing its proclivity to sourcing foods locally. Subsequent interviews and meetings with chefs confirmed that, indeed, volume of business is an important trait for distinguishing restaurants.

It also became clear with time that "price per meal" might be an even better indicator of a restaurant's ability to source locally. Unfortunately, such data was not gathered in the surveys. Therefore, the data presented in Table 7 breaks down restaurant respondents only in terms of volume of food purchased annually. Not surprisingly, this data shows that the larger the restaurant, the higher the average dollar value of food purchased locally. Both the smaller- and medium-sized restaurants responding purchase the majority of this local food directly from farmers.

Clearly, the number of restaurants responding was far too small to make any definitive conclusions from this data. Only 27 of 159 (or 16%) of surveys sent to restaurants were returned. Furthermore, it is best to note up-front that the total and average volumes of local food purchased in both the medium and the larger categories were raised significantly by the purchases of one restaurant in each category. More than half of the $201,800 of local food purchased in the medium-scale category represents one restaurant's purchases. Furthermore, almost all of the $2.2 million sum in the large-scale restaurant category was provided by a pizza chain owner that proudly included the value of his cheese ingredients, which he sourced exclusively from Wisconsin dairy farms.

The dearth of quantitative data from the restaurant sector was supplemented by useful qualitative data gathered from open-ended survey questions, personal interviews, and meeting participation. For instance, the interviews which that price-per-meal was perhaps the best means of distinguishing restaurants in the local food marketplace. While price-per-meal data was not gathered from each restaurant, participating restaurateurs generally agreed that a loose continuum could be identified ranging from fast food, to mid-scale, to up-scale establishments, with price-per-meal rising respective to each classification. Obstacles and opportunities for local farm products with respect to these different restaurant classes were identified and are discussed further below.

Table 8 presents further qualitative data. The table presents restaurant chef responses to the same two questions posed to retailers regarding local food products. Unfortunately, not many chefs took the time to answer these open-ended questions. Of those that did, "freshness" was a common reason given as to why they already source some food products locally. (Presumably, these chefs had fresh produce in mind, which might again show a bias toward produce over meat and other farm products in this project.)

As for why there is market value in the "local label," freshness was emphasized again, while two respondents linked "localness" with the organic label when considering market value. Two other respondents were emphatic about the positive value of the local label: "Simply, it empowers the server to have a STRONG selling point that elicit customers' pride in this area's bounty." and "There is GREAT market value (but don't tell anyone!)." Finally, one respondent was ambivalent: "We do not advertise (about localness), so I can't say."

With one exception, all participating restaurants would likely have fallen into two of the three loosely defined classifications: up-scale and mid-scale establishments. In interviews, a number of restaurants that identified themselves as mid-scale strongly supportive of local and sustainable food products. Not surprisingly, however, chefs at these restaurants made it clear that food prices were more of an issue for them than for their up-scale counterparts. In other words, the prices their customers were accustomed to paying could not be adjusted upward much without adversely affecting sales. If local food products were to cost much more than their current supply, there would be a strict limit to what these mid-scale operations could purchase.

Information gathered from chefs about specific food products is presented along with retailer responses in Tables 5 and 6. The pizza chain owner aside, replies from most chefs paralleled those received from retailers. Specifically, dairy products ranked a distant second to fresh produce in terms of both "perceived local" products and actual food products bought. Restaurant chefs listed more diverse meat products among local food purchases than did retailers, and were also more likely to list specialized fruits and vegetables, like "heirloom tomatoes" and "fingerling potatoes" (although these specialties were lumped with their more common varieties in Tables 5 and 6).

Interviews with chefs further indicated that restaurants may offer a better market for certain local food products than would retail stores. Again, distinctive meats and uncommon varieties of fruits and vegetables are popular with some chefs that strive to offer unique menu items that bolster their restaurant's theme or specialty. It seems that up-scale, and, to a lesser extent, mid-scale restaurants, are more likely to use such a marketing approach than would fast food establishments.

At this time, there is no commonly accepted distinction among restaurants regarding their orientation to issues of sustainability. In the retail sector, groceries that would identify themselves as belonging to the "natural foods industry" typically market "organic" and "natural" food products with messages that often include direct references to sustainable farming practices. Certainly some restaurants use similar marketing strategies, but not enough do so to have generated a so-called "industry," or a commonly defined sub-sector oriented, at least in part, toward sustainable agriculture. (It may be that the Chefs Collaborative 2000 initiative is intended to develop just such a distinction, but this effort is but a few years old.)

The issues presented in Figure 4 were included in the questionnaire as a means of roughly positioning respondents with respect to a couple of themes that are often included under the heading of sustainable agriculture: humane treatment of animals and pesticide use. As Figure 4 showed, responding restaurants and retailers generally agreed that these issues were relevant in the marketplace.

However, personal interviews with chefs revealed more. Most notably, many chefs who were interested in sourcing pesticide-free food products were not especially concerned that those products be certified as such. In other words, the organic label was not valued so much as was the farmer's actual production practices. There seemed to be a willingness among these chefs to trust the word of local farmer suppliers. Restaurant customers, these chefs believed, did not care whether claims about pesticide-free ingredients could be backed-up with certification papers.

Certainly some participating chefs indicated that neither they nor their customers cared whether pesticides were used or not. In fact, more than one chef noted that, unless all ingredients used were organic -- which limited supply and high prices would probably discourage -- it could be detrimental for a restaurant to advertise only some ingredients as organically-grown. Why? Because, they argued, then their customers might call into question ingredients not list as organic!

The high percentage of restaurant participants that did show concern about pesticides (and other sustainable issues) undoubtedly reflects their motivations for becoming involved with the project in the first place. As individuals, many participants indicated strong personal support for sustainable agriculture goals. But, as many chefs indicated, it is imperative in their business to keep food costs down. This demand is most imperative in the fast food sub-sector, but, even among up-scale restaurants, uncontrolled food costs can quickly run a restaurant into the red.

In the conclusion of the retail section, we stated that the organic foods niche of the natural foods retail sub-sector is probably best suited to supporting a more sustainable agriculture. Not only might that well-defined niche market offer farmers premium prices that can offset costly production practices, but, in their promotions for organic foods, natural foods stores often make it explicitly clear that farmers' added costs justify the premium prices. In other words, organic foods customers are accustomed to paying 20% or more for the organic label and should understand why these prices are higher; either despite or because of this reasoning, customers go ahead and purchase these products.

The retail sector is contrasted here with the restaurant industry. In the latter sector, there has been no organized consumer movement to demand and coordinate supply of so-called "natural foods" (as happened in the food co-op movement in the 1970s and continues to this day). Among the restaurant chefs participating in this project, only a few were intent on sourcing organic foods to satisfy perceived customer demand for organics. Many chefs claimed to serve customers that were highly sensitive to any increases in meal prices, and a dramatic shift from commercial to organic foods, with accompanying price premiums, could not be made.

The best opportunities for local, sustainable farmers in the restaurant sector of the local food marketplace seems to be among "up-scale" and "high-volume mid-scale" restaurants -- especially among those active in the Madison or Chicago chapters of the Chefs Collaborative 2000. High-volume mid-scale restaurants may garner less per-meal than their up-scale counterparts, but their high volume of business can generate margins which add up to give these mid-scale restaurants the same purchasing flexibility that up-scale restaurants may enjoy.

This "purchasing flexibility" refers to the ability of a restaurant's food buyer to pay higher (premium) prices for distinctive food ingredients. Farm-fresh trout, heirloom tomatoes, ready-to-serve salad mixes, and free-range chickens are examples of distinctive or unique farm products that may merit premium prices from some restaurant chefs. Furthermore, the "localness" of a farm product may merit a certain premium on its own accord. The menus of some of the participating restaurants clearly advertised many locally-sourced ingredients as such.

A comment should be made regarding the individuals who purchase foods and plan menus for restaurants. Up until now, this person has been referred to generically as the restaurant "chef." In reality, the person with authority to make these decisions may be the restaurant owner, the chef, the kitchen manager, or someone holding any combination of these positions in the business.

If the authorized food buyer is not responsible for planning menus, then the two (or more) persons responsible for buying food and planning menus probably need to agree to a shift to more local sources of food. Using local food, especially in Wisconsin, would likely require adjustments in a restaurant's menu to accommodate the revolving availability of local foods. The food purchaser may source local foods, but the menu planner better be willing, able, and prepared to use them appropriately.

Regardless of who makes the food buying and menu planning decisions, food costs must be kept "under control." Within that limitation, however, it seems that a key factor determining a restaurant's proclivity to source local, sustainable food ingredients is the personality and inclination of the person(s) authorized to make food buying decisions and plan menus. If the concept of using local, sustainable farm products appeals to a restaurant's key decision-makers, an opportunity is presented.

Spare time is a very limited resource in the restaurant business. Nevertheless, twenty-seven restaurant owners, chefs, and kitchen managers took the time to answer questions regarding local and sustainable farm products. Others participated in interviews and meetings. Almost all of these respondents and participants expressed interest in sourcing locally-grown, sustainably-grown farm products. They also indicated obstacles that stood in the way of their doing so. Home Grown Wisconsin was established to surmount some of these obstacles, through concerted cooperation among farmers and restaurants. After four months of business, it is apparent that this first step is not sufficient. To make a significant shift toward a more local, more sustainable food system, much more work must be done.

Return to UWCC Homepage