OPERATIONS
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Services and Products
Our cooperative exists to provide services and infrastructure to local growers and buyers that neither party can service on their own and to facilitate a much larger movement of goods from growers to buyers. In other words, FarmFED Co-op can fill processing, storage, marketing, and distribution roles in our local food system that are currently unavailable.
The primary service we will provide is the processing, freezing, and distribution of local produce. In this role, we will serve as the end-market for local growers. Our initial focus will be on sweet corn, carrots, peppers, and broccoli, though others are feasible. These are foods that are scalable for growers, readily usable by food service providers, and amenable to freezing. Once we have frozen this produce, we can distribute it to local buyers. These transactions will be facilitated by arranging grower and buyer contracts in the winter months, allowing both parties to plan their own operations for the year ahead.
In addition to this primary service, our cooperative has at least three other opportunities to sell goods and services.
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Rent cold storage to local growers: Many farms in the area have expressed a need for more cold storage in the peak of the season, and our facility should have the capacity to accommodate both our purchased bulk crops and the temporary storage of crops, even if those growers will still handle their own marketing and distribution.
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Custom processing: A few farms we spoke with would like to retain their brand identity with their farm’s crops, but would need a facility like ours to process and package it. In this role, we would charge a service fee for custom processing and return the product to the grower.
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Commercial kitchen rental: While the commercial kitchen space would be vital to our operations, it would not be in constant use. A licensed, food-safe commercial kitchen can be an immense boon to a budding food business or caterer. Renting this commercial kitchen space could be a modest profit center while also being an invaluable service to other local businesses.
Business Model
A central part of our research revolved around the many similar projects to ours that have been undertaken around the country. Even before we got started, we knew the success rate of such endeavors was modest. Food and agriculture businesses operate on particularly tight margins. Our fundamental challenge is to provide a service to both local growers and local buyers, and base our margin on the value of that service.
This does in effect put us in the position of a middleman, but rather than the bloat and extraction that can often come from having many hands in the pot between the producer and the consumer, our intention is to provide value that cannot be created by those parties alone, and keep our operations lean so that all links in the chain remain viable and stronger for being a part of it.
Our margin exists in the space between the bulk price the producer must get for their crop, and the price the buyer is willing and able to pay for it after we have processed, packaged, stored, and distributed it. This counts on the producer being willing to take a lower price than they would get at a farmers’ market, for instance, in exchange for the opportunity to grow much more of a crop, knowing they will be able to sell it all at once. This reduces producers’ costs associated with marketing and infrastructure as well as having to discard food that goes bad before it can be sold.
This also counts on the buyer being willing to pay a higher price than what they can generally pay to a large distributor. Here our task becomes even more challenging, because buyers such as school food service providers are usually required to buy whatever food is the absolute cheapest. No other aspect of the product is considered besides price. However, two opportunities present themselves that make us believe that “farm-to-school” can become a reality here:
1) Lincoln Elementary School District #27 initiated a local buying program in collaboration with Abraham Lincoln Memorial Hospital in the past few years. They have also made it clear that they would jump at the chance to have pre-processed and frozen local produce coming into their cafeterias and are willing to hit our proposed price points to make that happen. This sets an exciting new precedent and is one of the most promising aspects in favor of this project taking root here in Central Illinois, as their example could be followed by other regional school districts as well.
2) The City of Chicago implemented a Good Food Purchasing Policy in recent years, which incentivizes their schools to base their food purchasing on a variety of traits in addition to price, such as locality and how humanely workers and livestock are treated. With its ongoing success, organizations such as the Illinois Stewardship Alliance are gearing up to push for a similar policy at the state level. Our cooperative and its products would be an ideal fit for school districts should they be newly incentivized to purchase from local growers.
There’s no other way to say it: we will operate on thin margins, just like any other link in the food system. And the first several years will be a cycle of fundraising, investment, more fundraising, and reinvestment, all while paying down debt, like any other business. It will be a hard road, and we don’t mean to mislead anyone about that. But early on we elected to be a cooperative, so that our community’s investment truly matters. We are committed to turning your investment and your trust in us into a viable and critical part of a more robust local food system.
Mailing Address: PO Box 31, Mt. Pulaski, IL 62548