Wholesale Buyers Looking for $23 million in Illinois Grown Fruits and Vegetables –
The demand for locally grown fruits and vegetables in Illinois far outstrips supply and a new Action Plan and Feasibility Study released today by FamilyFarmed.org gives strong recommendations on remedies. This work is the culmination of a six-month assessment in which 181 growers were surveyed, 14 trade buyers and 20 growers were interviewed, and over 60 stakeholders participated in two downstate strategy sessions. Ready to Grow: A Plan for Increasing Illinois Fruit and Vegetable Production was funded by the Illinois Department of Agriculture through a USDA Specialty Crop Block Grant.
“Buying local is the hottest trend in the food industry right now and Illinois is taking strides to capitalize on this movement,” says Jim Slama, president of FamilyFarmed.org.
“This report describes the opportunity in this niche and spells out concrete steps that need to happen in order to take local fruit and vegetable production and sales to the next level.”
Despite high demand, promising economics, and the fact that four-fifths of Illinois land is farmland, 89% of which is prime farmland, Illinois wholesale buyers cannot currently meet their demand for fruits and vegetables from in-state production. The fourteen buyers interviewed for this report repeatedly stated that their demand for Illinois-grown fruits and vegetables far surpasses available supply, so they resort to purchasing produce grown outside the state. If they could, they would purchase over $23 million in Illinois-grown produce on an annual basis. Participating buyers include a wide range of large and small companies including SYSCO, US Foods, Whole Foods Market, Goodness Greeness, Compass Group (Chicago Public Schools), Chipotle, Hy-Vee, Lettuce Entertain You, and more. The sampling was only a small percentage of Illinois retailers, restaurants and distributors, so overall demand is substantially greater.
“The state of Illinois is ready to step up and meet the demand for local food,” says Tom Jennings, Director of the Illinois Department of Agriculture. “In today’s economic climate it is imperative that we capture the economic value available in local food production, processing, sales, and distribution.”
A 2010 study by the Leopold Center for Sustainable Agriculture at Iowa State determined that the economic value of the state’s current consumption of 28 types of fruits and vegetables amounts to 2,600 farm-level jobs and over $264 million in farm-level sales. Increasing production within the state will ensure that this value is realized by Illinois farmers.
To address the challenges Illinois growers face with wholesale marketing, the Project Team studied barriers that prevent growers from increasing participation in wholesale markets and proposes an Action Plan to mitigate them. The Project Team also completed a Feasibility Study to determine the viability of a packing house as a way to overcome some of the barriers. A packing house, or food hub, is a facility that aggregates and packs produce from a number of farms and ships it in large volumes to customers.
Key Findings regarding barriers to meeting wholesale demand:
- There is a large capacity among a network of growers with experience in wholesale marketing to further expand production and sales to wholesale buyers. Almost half of respondents who indicated this growth potential said that they could at least double participation by 2015. Extrapolating from survey responses, this could result in 550-700 acres of additional production by 2015.
- The most significant barriers to scaling up identified in this study include marketing (finding buyers and negotiating terms), processing capacity, risk of not selling crops grown, access to funding/financing, food safety certification cost, liability insurance cost, grower satisfaction level with current marketing channels, and labor availability.
- To address these barriers, growers recommend improving the local food system infrastructure, providing education and information about resources available, help with lowering their costs, and building win-win relationships with buyers.
- 83% of respondents believe a packing house would be valuable and the chief reasons cited were marketing and to let farmers focus on farming.
Recommendations for the Illinois Food Farms and Jobs Council and the Illinois Specialty Crop Industry to help mitigate barriers that growers face:
- Encourage the development of regional packing houses to supply wholesale markets.
- Support existing efforts across the state to better inform farmers about funding and financing options.
- Implement a Good Agricultural Practices (GAP) food safety audit cost-share program and offer GAP training to Illinois growers.
- Create and disseminate a resource sheet to inform growers about options for locating qualified farm labor.
- Create and disseminate a fact sheet and support existing efforts to train growers about best practices in post harvest handling.
Next, through interviews, secondary research and the development of a financial model, the Project Team concludes that a packing house is feasible based on favorable market dynamics, political climate, grower engagement and financial projections. Of note:
- Market demand is strong and the growth potential is increasing
- With increasing national and state support for local food system development, the political climate is favorable for the development of a packing house
- There are strong indications that Illinois farmers will increase their participation in wholesale marketing if a packing house were developed
- Financial modeling presents that a packing house facility scaled to process the yield of acreage likely to participate within 2-5 years of startup can operate profitably.
- Potential business risks can be mitigated with attention to the following:
- Management team skill is critically important, particularly in marketing and sales
- Establish a wide and cooperative network of growers
- Collaborate with other intermediaries to strengthen the market
- Engage all stakeholders to maintain a supportive climate
An informal assessment of the potential acreage that might participate if a packing house were established indicates several thousand acres in the areas surrounding both Kankakee and Peoria, and additional acreage throughout the state. Project stakeholders also noted that southern Illinois is a vast fruit producing area and could be an ideal spot for a regional packing house. The study presents potential packing house locations, roll out beginning with a proof of concept facility, packing house profit maximizing strategies, and potential ownership structure options.
The Project Team concludes that Illinois fruit and vegetable growers interested in wholesale markets are for the most part Ready to Grow. The report presents concrete ways the Illinois Specialty Crop Industry can help them accomplish their goals to more closely meet the current and projected demand. One action the industry can begin pursuing immediately is the business planning process for the development of regional packing houses, which is the next step following a positive feasibility assessment.
To download the report, please visit www.FamilyFarmed.org.
For more information contact: 708-763-9920 or firstname.lastname@example.org