WSDA Regional Markets
Serving local produce and minimally processed foods is a goal for many school cafeterias and other institutions, but there are challenges to reaching that end. To understand the challenges and potential solutions better, WSDA’s Regional Markets team studied supply chains in Washington state for local, minimally processed food from farm to school for 2016-2017.
The study, “Value Chain Strategies for Source-Identified Minimally Processed Produce for the School Market,” was completed earlier this year.
The study also sought to identify strategies for developing a “value chain” infrastructure and building relationships to help local farms meet the demand for these products from schools, hospitals, and other institutional buyers.
The value chain model
A value chain model is one that considers how value is added to a product or service at each step along the supply chain to best meet customer needs. The model seeks to maximize the business benefit that comes from engaging interested parties at all steps along the chain, from the initial supplier through the end customer.
Value chains often provide increased transparency so it is clear where the food is coming from and how it is produced. They also foster collaboration between suppliers, distributors, processors, sellers, and buyers.
Many value chains help develop relationships among the various partners built on shared values, reflected in their business operations and the products they make. Below are some of the findings of the report.
Farmers working together
In Washington state, several different groups of farmers have formed cooperatives and food hubs in order to develop value chain relationships with processors, other food businesses, and their end customers.
WSDA studied some of these food hubs and small farmer co-ops to understand what barriers they encounter when developing source-identified, minimally processed products such as fresh cut fruits and vegetables, dried fruit, or Individually Quick Frozen (IQF) vegetables and berries, for schools and institutional markets. WSDA also identified some strategies that farmers and food hubs are using to overcome those barriers and meet school demand for minimally processed produce.
Access to processing
The availability of appropriate, minimal processing infrastructure, such as space and equipment to cut, freeze or dehydrate food, varies widely depending on the region and the crop. Finding scale-appropriate processing equipment and meeting minimum volume requirements for frozen processors was especially challenging. While fresh cut processing services are available in some regions and for some products, the lack of information about them and the lack of coordination among these services means less access for smaller farms.
Existing and emerging supply chain models
One emerging supply chain model for providing source-identified, minimally processed fruits and vegetables to schools and other higher-volume markets appears to be food hubs, which are currently poised to meet this demand in three main ways, each with their own opportunities and challenges:
- Processing capacity: Some food hubs have developed internal infrastructure to process their own members’ produce into specific products. They are still working to refine their operations, marketing, and suppliers to achieve a financially and operationally viable business model.
- Sales of farmer-processed products: Some food hubs do not have their own processing infrastructure, but may have individual farmer members who already produce their own processed product that is sold through the food hub. This may offer a good fit for meeting institutional buyer needs.
- New partnerships: Some farms and food hubs already sell to a small or medium sized processor, and could launch or develop source-identified products with a processor to better serve K-12 school buyer needs.
Through interviews and surveys, WSDA learned more about traditional supply chain operators, such as conventional processors, and emerging alternatives, like food hubs and farmer cooperatives, and believe both can learn from each other to foster value chain development.
Conventional and traditional agricultural minimal processing infrastructure either no longer exists or has consolidated to serve primarily high-volume, larger-scale farms. This leaves little room for custom runs to serve smaller farms or for purchasing raw product from smaller-scale suppliers. Traditional processors have developed flexible, competitively-priced products that meet some school buyer needs, but face challenges sourcing from local farms and building value chain partnerships, such as co-packing for farmers, food hubs, or schools.
Negotiating values, relationships, and new participants
WSDA tried to understand whether new physical infrastructure are needed to fill the supply chain gap, or whether new relationships and integrating new participants in the value chain could fill this need.
The full report includes a profile of the five food hubs that participated in the research project, and four case studies on specific products (dried treefruit, sliced carrots, frozen strawberries, and bagged salad mix).
To assist food hubs and small farmer co-ops with these issues, WSDA developed a toolkit for product development and potential supply chain partnerships. This also includes a Salesforce database to help with networking and referral services to support regional links in produce value chains. Simply email firstname.lastname@example.org to request these resources.
This project was funded and made possible thanks to a USDA Federal-State Marketing Improvement Program grant.