6, 2003: If you are a small producer, how do you gain
a competitive advantage in the U.S. food industry?
Visionary business leaders say smaller farmers can take advantage
of emerging opportunities that connect growers with consumers.
And it’s not just grassroots organizations that are
promoting this message. Corporate America is getting involved,
While more work must be done to strengthen and create more
marketing channels for small producers, it can be done, agree
Rick Schnieders, president and CEO of the Texas-based SYSCO
Corporation, and Michael Rozyne, managing director of Red
Tomato, a New England marketing group.
“The demand for unique food products continues to
grow, and there’s a huge demand for variety. In the
end, your business and mine have a very important role to
play. We’re not just raising and selling calories. These
products are about memory, romance and trust. Consumers will
pay more for sustainable ag, if we can share the story with
them,” said Schnieders, one of the keynote speakers
who spoke to nearly 400 participants at the Practical Farmers
of Iowa (PFI) annual meeting Jan. 25.
Schnieders should know. The Iowa native, whose father operated
a small grocery store in Remsen for more than 40 years, maintains
a strong commitment to independent, smaller-scale farmers.
"We’re not just raising
and selling calories. These products are about memory,
romance and trust." - Rick Schnieders, president
and CEO of the SYSCO Corporation
“About 95 percent of our business comes from restaurants,
colleges, nursing homes, schools and hospitals. I think there’s
a larger opportunity for locally-grown foods in the foodservice
industry than in retail. And the foodservice industry is based
on differentiation,” Schnieders said.
Smaller farmers are ideally suited to producing these specialty
products, Rozyne added. “Red Tomato has worked with
apple growers from states like New Hampshire, New York, Massachusetts,
Connecticut and Vermont. We can offer 30 varieties of apples,
many of which are heirloom varieties. Tradition suppliers
usually can only provide four or five basic kinds of apples.”
Sharing the farmer’s story
As CEO of SYSCO, Schnieders is positioning the company to
take advantage of the growing consumer demand for food products
raised in a sustainable manner. This is a new trend for a
large corporation like SYSCO, North America’s number-one
foodservice marketer and distributor.
“To give you a sense of how large SYSCO is, in fiscal
year 2002, the company reported $23.4 billion in sales. We
provide more than 300,000 products to approximately 415,000
customers. We have 149 locations across North America and
have had more than 26 years of sales and growth,” Schnieders
Companies like SYSCO know that 50 percent of the consumer’s
food dollar is spent on food prepared away from home. “This
trend is being driven by duel income earners, the increasing
demand for convenience, and an aging population,” Schnieders
Smaller farmers have a unique selling point that can help
them tap into this market. “These consumers have lost
trust in big corporations. But food that is produced in a
sustainable way by smaller growers is in demand. In this cynical
world, that is making a difference and is rebuilding trust.
The key is to capture the magic and the memories from the
farm and share them with these consumers.”
In New England, food brokers like Red Tomato, a not-for profit
marketing organization, have tried to make it easier for supermarkets
to support local farmers and help share their stories.
“Our role is to help our customers differentiate themselves
from the competition. Even big players feel small when they
compare themselves to competitors like Wal-Mart. We can help
them differentiate themselves by telling farmers’ stories.
We have hung posters with our farmers’ photos and stories
in the grocery stores to help these businesses say, ‘we’re
in business with small, local farmers. You may not know these
farmers’ names, but you’ve heard of their towns,’”
Red Tomato is not a cooperative, but its network helps farmers
sell their produce through independent grocery stores, natural
foods stores and large grocery chains. The growth and success
of Red Tomato has depended on an ability to tap into consumers’
growing desire to purchase high quality, fresh, locally-grown
||"It’s like climbing a mountain—we
succeed and cross the peak, but then we hit another peak."
- Michael Rozyne, managing director of Red Tomato on developing
markets for local growers.
What may appear to the consumer as simply tasty, local produce
is meant to preserve the farmer, sustain functioning open
space, advocate land stewardship, and develop stronger local
economies. “By supplying the highest-quality produce
consumers can buy, the social and environmental benefits from
this type of farming become the icing on the cake,”
Red Tomato’s advocate role is a concept that Rozyne
adapted from his former job as co-founder of the fair trade
coffee company, Equal Exchange. The fair trade model promotes
paying farmers at least enough to cover production costs.
In return, the producers provide high quality goods and use
farming practices that are environmentally sustainable.
Both Rozyne and Schnieders agree that developing systems
to connect local growers with consumers is a challenging process.
Through the years, Red Tomato has had to overcome the loss
of large customers, inadequate trucking systems, high distribution
costs and more.
“It’s like climbing a mountain—we succeed
and cross the peak, but then we hit another peak. When we
grew beyond just being a tiny, niche supplier, we hit a peak
as others looked at us as a competitor. Reinventing local
food systems is something we’ve had to do every year,”
Finding workable solutions
Three important steps are needed to help farmers cross those
peaks that Rozyne described, Schnieders said.
“First, we need to put in place a quality assurance
system. It’s too difficult to set up a different one
on each farm, but a great example of a system that works is
Niman Ranch pork. Second, sustainable agriculture must build
a supply chain, and only a coordinated effort will make this
work. Third, it’s important to think through the marketing—how
do you communicate your story to the consumer? Even a restaurant
menu is an opportunity to connect consumers with the farmer.
You also need to know which items are selling and which aren’t,
and communicate this message back up the supply chain.”
States like Iowa need to support sustainable agriculture,
Schnieders emphasized. “We need to find a way to connect
the dots, to support a cooperative effort that creates a workable
infrastructure for bringing locally-grown food to consumers.
There will always be big growers and packers, but there’s
a need for locally-grown niche products.”