Institutions and local: It’s pay to play

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Many people believe that getting local food into a city is a simple, straight line that starts in one place and goes by the most efficient route possible to the destination. A ————– Z, where A is the farm and Z is the table.

Unfortunately, the market doesn’t work in a straight line. Far from it.
I believed in that A-to-Z trajectory when I first started working on farm-to-fork relationships in 2009. My job was to set up relationships, then walk away, to take on another project and relationship. The dominoes would fall and we would have world peace, or at least a local food system, within a few short years.

At every first meeting with buyers, the barriers to buying local are tediously predictable – cost, quantity, quality, safety. Every chef initially voices support for local, then the “buts” begin: the cost is too high, the proper quantities aren’t available, the quality is erratic, the safety suspect.

When I learned how cost, quantity, quality and safety issues could be addressed, I enthusiastically set out to “sell” the idea of local food to large institutions. Then I learned those barriers – cost, quality, etc — are, in some respect, ruses. In general, you cannot interest large institutions in buying local by reducing costs, providing consistent quality, and sufficient quantities of safe food.

The system favors large-volume food processors that pay their way into the system.
There’s something call a “large volume rebate” through which large food companies “reward” dining service workers by returning money to them for ordering lots of, say, chicken nuggets or hamburger patties. To its credit, the Kentucky Department of Agriculture competes with these large volume rebates by offering Restaurant Rewards – money from our Tobacco Settlement fund – that return a portion of the money someone spends on Kentucky-grown food to the purchaser. If the price of local is a little higher than wholesale, the buyer can make it up in Restaurant Rewards.

But large volume rebates are only one business practice that eliminates local food from large-volume, long-distance food chains.

Conventional food industry folks don’t talk about the payments that move food through the system. But I’ve learned that no matter how cheap, prevalent and safe local food might be, it will not be welcome in the typical wholesale food chain.

There are “compliance” numbers and “marketing fees” that are built into the structure of the current long-distance supply chain that maintain pay-to-play standard practice. “Strategic marketing” companies are consultants that keep watch over the numbers.

“Compliance” numbers are minimum goals. A national or multinational dining service company contracting with, say, a large hospital chain, can require 95% compliance from its managers. For that, a hospital dining contractor who buys from Cargill and Tyson is required to buy 95% of all the beef, pork, chicken, turkey, eggs, breakfast products, dressings and so on from those companies. Even if the dining manager can get less expensive (and better quality) beef from a local source (and she often can), her priority is “compliance.” Achieving compliance is how her work is evaluated every year and how she gets her raises, her promotions, her job security.

Becoming one of those “preferred” vendors requires a payoff to the company.
Likewise, the owner of the truck that delivers the food – the large-volume distributor — requires payment from the folks (Cargill and Tyson) whose products are on their trucks. If I want the salesmen to aggressively sell that product, I add a “marketing fee” to the cost of the product.

So it isn’t a simple “I have a product that people want, therefore I will sell successfully.” The system requires that if you want to play, you have to pay.

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