Colorado Crop to Cuisine
Abstract
Direct marketing opportunities are experiencing renewed interest across the country as small or specialized agricultural producers look for appropriate distribution strategies for their niche and value-added products. This, together with continued growth in the food service industry, led to interest in and development of a Northern Colorado producer direct marketing effort targeting chefs. This case study details the early stages of development for this project, its marketing successes and the constraints and limitations that continue to challenge its economic feasibility.
Northern Colorado agricultural producers formed Colorado Crop to Cuisine (CCC) to expand a personal shopping service for chefs initially operated by Carol Beaver in Boulder. Current operations utilize existing farmers' market activity and producer resources to streamline distributional efforts, thereby minimizing the additional labor and capital needs of developing a new marketing channel. Colorado Crop to Cuisine now faces an important turning point where the set of cooperating producers must decide how, or if, to grow the business in response to producer objectives, chef demands, and market forces.
Jami Daniel grinned to herself, reflecting on the gracious comments about CCC from a chef at the inaugural Slow Food event in Fort Collins in July 2002. It is now early October, a welcome time for farmers' market producers in Colorado. The long hours involved with highly seasonal production and direct marketing will soon end. Even with the production constraints from the drought that escalated in 2002, farmers' market sales reached record high in Northern Colorado—evidence of increased demand for fresh, local produce. Distribution to local chefs further augmented revenues for a set of producers that began marketing to restaurants in 2001. Yet, there are continued challenges to the feasibility of a producer-owned restaurant distribution operation, including the lack of organizational commitment among producers who were only loosely aligned in previous marketing efforts, annual re-recruiting of restaurant accounts due to seasonal supply constraints, and competition from an increasingly concentrated, cost-efficient food distribution system.
For the 2003 season, Jami Daniel and the newly established CCC Board of Directors (including producers Geri McGibney, Cindy Shoemaker, and Sue Oberle) faced several challenges. The funds from a U.S. Department of Agriculture (USDA) grant used to establish and sustain this organization were spent, little remained in cash accounts at the end of the 2002 season, and only minimal organizational structure was in place to continue the operations. As a nonvoting, advisory member of the CCC Board of Directors, Jami Daniel noted three primary issues to address at the Spring 2003 planning meeting.
- Can CCC reach the volume of sales necessary to support a more full-time operations manager for the 2003 season? If not, can a quality manager be recruited with part-time funding, with remaining management provided by members, in-kind?
- Do producer members of CCC perceive sufficient benefits from the chef marketing enterprise to warrant increased capital or contributed managerial commitments?
- Can the CCC concept and current logistical model effectively grow to Denver or other areas of Colorado?
Direct sales through farmers' markets and community-supported agriculture are the current, dominant marketing channels for smaller Northern Colorado producers. There are also some larger producers that find direct sales provide higher profit margins and more consistent outlets for some specialty produce lines to augment larger volume, low-margin commodity sales through distributors and brokers. There are no good statistics on farmers' market in Colorado, but with the increasing vertical integration in the fruit and vegetable distribution industry, anecdotal evidence suggests that the majority of producers with $250,000 or less in sales do most of their marketing directly, primarily through farmers' markets.
Direct Marketing and Foodservice Trends
The USDA's Economic Research Service reports that 90% of all U.S. farms are small, with $250,000 or less in annual sales, and this segment is increasing in numbers and complexity (Hoppe et al.). Thus, support for direct markets and local agriculture is an important and growing concern (Burros; U.S. Department of Agriculture). Former USDA Secretary Dan Glickman announced in August 2000 that a record number of farmers' markets (2,863) were operating. The USDA's Agricultural Marketing Service found 57% growth in farmers' market sales, translating to $17.30 per week or $306 per customer per market season. Colorado Crop to Cuisine initially organized within a farmers' market cooperative, because frequent assembly of producers in one place is an important opportunity to increase distributional efficiency. The growth in restaurant numbers and sales is also an important market force to consider.
A survey of Colorado chefs (Benepe et al.) found that a minority of foodservice institutions bought locally. The most important factors contributing to food purchase choices by chefs were dependability, cost, and freshness, while ecological and local food concerns were less prioritized. The major factor preventing foodservice from buying locally is inconvenient ordering, but low availability, less standardized purchase specifications and higher costs were also mentioned with some frequency.
There have been several previous programs developed to create links between restaurants and producers. Home Grown Wisconsin is the most similar in structure, marketing objectives, and initial sales record (Lawless). Red Tomato is a not-for-profit marketing organization that delivers local, seasonal produce to Northeastern businesses, and remains heavily reliant on grant funds for operations (Royzyne). The Practical Farmers of Iowa established an ordering system (while producers remain responsible for delivery and account management) to a banquet facility at Iowa State University (Huber).
The Colorado Department of Agriculture's (CDA) Markets Division fielded calls throughout the 1990s from producers who wanted to market more to restaurants, but found it difficult to develop that marketing channel. In 1998, the CDA hosted a workshop on how to develop a relationship with distributors, but found that most of the producers attending were too small in volume, or seasonal in production, to be attractive to distributors. Several chefs noted interest in using local produce to CDA marketing specialists. While some had purchased product directly from producers, the chefs cited the lack of product diversity from any one producer and time constraints as barriers keeping them from visiting farmers' markets or individual operations. In short, the full potential of farmer chef distribution was not realized.
The CDA enlisted an agribusiness specialist (the author, Dawn Thilmany) from the Colorado State University (CSU) to study, organize, and support restaurant market development for interested producers, with grant support from the USDA's Federal State Marketing Improvement Program (FSMIP). Initially, Denver, Boulder, and Fort Collins were targeted for chef market development. This case focuses on Fort Collins' Colorado Crop to Cuisine, the only effort that remained in operation beyond the USDA funding period.
Colorado Crop to Cuisine
Organizational Issues
The farmer-chef collaborative initially organized under the Colorado Agricultural Marketing Cooperative (CAMC), the operators of several Fort Collins and Loveland farmers' markets. Unlike other models that did not have producer investment or leadership, the Fort Collins cooperative was a producer-based marketing organization, so there were clear benefits to working with local farmers' markets. Moreover, initial market research found that the producers with previous chef market experience were all involved in the CAMC. The initial participants were recruited by Thilmany from the Spring 2001 CAMC meetings. All participants noted their perceived inability, or personal shortcomings in previous efforts, to manage chef accounts during the production season because of the significant logistical and sales efforts required.
To join the new alliance (and demonstrate a commitment to the organization), growers contributed a $50 annual membership fee for operating expenses (a refund was not guaranteed, so the fee was returned in 2001 but not in 2002). Initially, all 34 CAMC members were invited to participate in the “chef marketing enterprise.” Only five producers demonstrated interest, so Thilmany recruited more members based on suggestions from colleagues regarding producers with high-quality produce. Others were drawn in as chefs requested items a producer specialized in producing and marketing. After Thilmany met individually with each member, she determined that the initial objectives of the group were to (1) increase the volume and seasonal length of sales to local restaurants; (2) increase the understanding of local food availability among chefs; and (3) use restaurants to develop individual producer reputations within the community.
In 2002, the five most active Fort Collins producer-members decided to hire Jami Daniel and operate independently as a marketing cooperative, CCC.
Colorado Crop to Cuisine was incorporated as an independent business in 2003. Most producers remained members of CAMC to serve their farmers' market clientele and ensure a strong relationship with CAMC since it provides an important logistical point of delivery for producers. However, CCC has its own membership guidelines, promotional materials, and leadership, which faced the challenge of developing a marketing strategy and determining the organizational and financial feasibility of the new organization.
The decision to form a new organization centered on two issues. First, 2001 market experience suggested that Fort Collins' orders would be predetermined, and not gleaned from weekly farmers' markets offerings (the model proposed by Beaver). As a result, CCC could be independent, even though producer attendance at markets continued to facilitate distribution. Also, the CCC required more coordinated operations and personal selling activities. Still, one-quarter of CAMC members marketed some product through CCC after it decoupled from the farmers' market.
Jami noted some of the organizational changes to the new CCC Board as it deliberated on future objectives. Although the number of chef clients and volume of sales increased between 2001 and 2002, the number of “core” producer members (who paid membership fees and supplied orders regularly) decreased.
I am concerned that most CCC members show no commitment to the organization. Only when I first purchase from them (because no current members have a product requested by chefs) are they willing to join by paying membership fees through a deduction from their first check. Why won't they support CCC so that we can develop more chef accounts and secure more sales?
— Jami Daniel, 2002 CCC Operations Manager
Colorado Crop to Cuisine Operations
Colorado Crop to Cuisine's contact with the established restaurant accounts follows a weekly cycle. On Fridays, farmers submit their crop availability lists to the operations manager, (Jami's role in 2002) who compiles that list and distributes it to restaurants by fax on Saturday. The list is very specific and may include varieties and producer names along with prices and quantities available. The chef reviews the list and plans the order for the coming Monday or Wednesday. The manager coordinates orders among growers, picks up product at market, provides invoices for producers, payment invoices to chefs, and pays producers biweekly. Colorado Crop to Cuisine's ordering logistics were streamlined in 2002 by communicating with growers by email or at markets. Colorado Crop to Cuisine's Board of Directors began 2003 with similar operational strategies.
Colorado Crop to Cuisine retains 15% of the chef's purchase price for any preordered produce and marks up any direct purchases from the farmers' market (by CCC nonmembers when chefs request produce that is otherwise unavailable) by 15% as an operating margin. This is an additional 10% above the 5% regularly charged by farmers' markets for sales made to shoppers, but is meant to cover the extra costs of coordinating chef orders. In many cases, the prices were increased to cover some of the 15% margin, so that chefs indirectly bear some of the cost of CCC operations. At the current sales volume and margin, CCC cannot support the hours needed to manage operations.
Chefs are encouraged to have a standing order for some produce, to assist producers in production planning and CCC ordering logistics, and to abide by order deadlines (up to 5 p.m. the day before delivery). Last minute orders are frequently honored (but not guaranteed), as the farmers' market provides a perfect venue for Jami to procure a variety of fresh produce with a short turnaround time. Despite efforts to engage chefs, only producers have been active members with respect to membership fees, planning, and organizational development. One chef was asked, and accepted, a nonvoting position on the Board for 2003, so the CCC leadership is optimistic about recruiting more chefs as active members of the group in the future.
CCC Sales Volume and Prices
Colorado Crop to Cuisine product offerings are somewhat diverse and include fruit, vegetables, meat, cheese, honey, floral products, and mushrooms, all raised in Colorado. In 2001, 18 Northern Colorado producers marketed produce to eight restaurants in Fort Collins. These included Hewlett Packard's local food service provider, Bon Apetit Management Company (BAMCO), the winner of 2001 Colorado Proud award for promotion of local agricultural products. In 2002, 15 producers marketed to 12 restaurants (see tables 1 and 2 for detailed sales information from the primary producers and chefs. Note that only core producers are tracked, so totals do not equal total CCC revenues).
| Chef | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Date | A | B | C | D | E | F | G | Total | |
| 2001 | May | 119 | 106 | 505 | 15 | 20 | 0 | 0 | 764 |
| June | 155 | 113 | 773 | 112 | 0 | 0 | 0 | 1,153 | |
| July | 229 | 114 | 367 | 141 | 15 | 0 | 0 | 866 | |
| August | 275 | 201 | 798 | 425 | 68 | 141 | 16 | 1,922 | |
| September | 190 | 199 | 760 | 143 | 0 | 26 | 0 | 1,318 | |
| Totala | 967 | 732 | 3,203 | 836 | 102 | 167 | 16 | 6,022 | |
| 2002 | April | 74 | 24 | 225 | 8 | 0 | 0 | 0 | 331 |
| May | 78 | 56 | 1,456 | 75 | 0 | 0 | 0 | 1,664 | |
| June | 408 | 114 | 1,886 | 73 | 0 | 0 | 0 | 2,481 | |
| July | 381 | 251 | 1,742 | 227 | 0 | 140 | 0 | 2,741 | |
| August | 268 | 240 | 2,120 | 231 | 42 | 404 | 64 | 3,368 | |
| September | 305 | 190 | 2,579 | 213 | 82 | 731 | 135 | 4,233 | |
| October | 239 | 114 | 1,584 | 39 | 0 | 277 | 56 | 2,309 | |
| November | 301 | 0 | 1,530 | 0 | 0 | 0 | 0 | 1,831 | |
| Totala | 2,052 | 988 | 13,121 | 866 | 124 | 1,552 | 255 | 18,957 | |
- All the values are in dollars.
- a Chef and monthly sales do not equal total since smaller producers with less frequent sales are not tracked.
| Chef | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Aa | B | C | D | E | F | G | H | I | J | K | Total | ||
| 2001 | May | 1,051 | 0 | 0 | 0 | 0 | 1,051 | ||||||
| June | 1,705 | 0 | 0 | 0 | 0 | 1,705 | |||||||
| July | 5,200 | 289 | 0 | 120 | 225 | 5,978 | |||||||
| August | 6,300 | 731 | 622 | 108 | 231 | 8,376 | |||||||
| September | 3,400 | 527 | 457 | 0 | 263 | 4,667 | |||||||
| Totalb | 17,656 | 1,547 | 1,079 | 228 | 719 | 21,777 | |||||||
| 2002 | April | 191 | 60 | 80 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 331 |
| May | 433 | 622 | 492 | 0 | 71 | 0 | 0 | 0 | 0 | 0 | 0 | 1,617 | |
| June | 981 | 1,319 | 580 | 94 | 276 | 0 | 93 | 27 | 0 | 173 | 550 | 4,092 | |
| July | 529 | 611 | 614 | 317 | 140 | 242 | 256 | 0 | 17 | 236 | 450 | 3,410 | |
| August | 762 | 917 | 707 | 119 | 183 | 166 | 232 | 84 | 27 | 120 | 384 | 3,700 | |
| September | 614 | 889 | 747 | 54 | 258 | 58 | 351 | 200 | 89 | 83 | 981 | 4,324 | |
| October | 274 | 675 | 753 | 0 | 256 | 46 | 294 | 0 | 29 | 26 | 240 | 2,592 | |
| November | 0 | 1,000 | 1,000 | 0 | 240 | 0 | 240 | 0 | 0 | 0 | 0 | 2,480 | |
| Totalb | 3,782 | 6,093 | 4,972 | 584 | 1,423 | 512 | 1,466 | 311 | 162 | 638 | 2,604 | 22,546 | |
- All the values are in dollars.
- a Chef and monthly sales do not equal total since smaller producers with less frequent sales are not tracked.
- b The July–September purchases for this chef were not through CCC, but directly through a farmers' market hosted at this institution's site. Sales volume is still tracked to account for sales that may not have occurred without CCC's initial marketing activity. In 2002, the farmers' market was dissolved; so all sales (albeit lower volumes) were directly through CCC.
Although 75 different products were marketed throughout the season, 10 products represented over 50% of sales. This is similar to farmers' market product variety, where over 100 food products are sold, but a few high-demand products (tomatoes, fruits, and sweet corn) represent the greatest volume. With the exception of tomatoes and peppers, the high-volume products at markets (sweet corn and peaches) are notably different from those in greatest demand from chefs (herbs, baby vegetables, and edible flowers). Comparing these offerings to a wholesale distributor list that includes over 300 types of produce may make CCC appear limited, but chefs note that the seasonality of Colorado produce is actually the most limiting factor.
The level and importance of sales varies greatly among the producers. Among “core” CCC members, sales ranged from $100 to over $13,000 in 2002, and represented 1–20% of product sales. The producer with the highest sales ($13,000) is not the most dependent though, since that producer is large enough to have wholesale accounts. Colorado Crop to Cuisine receipts account for the greatest share of sales among smaller direct producers of specialized, artisinal crops such as herbs, heirloom, and baby vegetables.
To establish prices and assess the competitiveness of CCC offerings, Jami Daniel and Dawn Thilmany had several discussions with producers and chefs. Table 3 presents some of the price information gleaned for some representative products, including CCC prices, farmers' market prices (the other potential marketing channel for producers), and wholesale distributor prices (the other potential purchasing channel for chefs). Colorado Crop to Cuisine tends to be higher than both farmers' market and wholesale distributor prices, based on the more personalized service and freshness of produce. In several cases, however, prices are quite similar among the distribution channels (melons, cut flowers, and standard summer squash). The biggest premium is for products that are in high demand, often sell out at farmers' markets, and have limited “windows” of availability in the local market (asparagus and mesclun salad mix). There are also some products that secure premia because the perceived value to chefs and farmers' market customers (the competing buyers) from a fresh product is relatively high (tomatoes and peaches). Finally, CCC offers a few products cheaper than distributors because of the difficulty of large-scale distribution (edible flowers and baby squash with blossoms).
| Product | Quantity | CCC ($) | Farmers' Market ($) | Wholesale Distribution ($) |
|---|---|---|---|---|
| Asparagus | lb | 3.00 | 2.00 | 1.20 |
| Basil | lb | 10.00 | 12.00 | 7.35 |
| Cucumbers | 5 lb | 7.25 | 7.50 | 7.85 |
| Edible flowers | Pint | 7.50 | NA | 10.00 |
| Eggplant, Japanese | lb | 2.00 | 1.50 | 1.40 |
| Flowers, cut | Bucket | 27.00 | 25.00 | 25.00 |
| Green beans | 5 lb | 8.70 | 7.50 | 6.05 |
| Melon, Cantaloupe | lb | 0.30 | 0.30 | 0.30 |
| Mesclun salad mix | 3 lb | 12.75 | 18.00 | 9.35 |
| Onions, white | 10 lb | 10.00 | 7.50 | 6.00 |
| Parsley, Italian | lb | 10.00 | 16.00 | 5.65 |
| Peaches | lb | 1.50 | 1.50 | 0.75 |
| Peppers, Anaheim | 30 lb | 20.00 | 20.00 | 19.50 |
| Peppers, Habanero | lb | 2.00 | 2.00 | 1.90 |
| Peppers, tri-color | lb | 2.50 | 2.75 | 2.00 |
| Rosemary | lb | 15.00 | 18.00 | 7.50 |
| Squash, yellow | 20 lb | 20.00 | 20.00 | 24.95 |
| Squash, baby w/flower | lb | 4.00 | 5.00 | 6.00 |
| Tomatoes, vine-ripe | 20 lb | 32.00 | 40.00 | 20.00 |
2001 Market Outcomes
Between May and mid-September 2001, the Fort Collins Agricultural Marketing Cooperative (the forerunner of CCC which was a sub-entity of CAMC) filled $8,700 in orders, shared among 19 producers (table 1). A total of nine chefs/restaurants ordered from FCAMC during the season (table 2). In addition, this group established an account with Bon Apetit Management Company at the Fort Collins Hewlett Packard site. However, a joint effort to establish a farmers' market at their site allowed BAMCO to establish a direct marketing connection with producers. For the season, they made $15,000 in direct purchases from producers, but did not contribute as much to the cooperative's operating budget. Still, producers were convinced that these sales would not have been possible without CCC.
2002 Market Outcomes
Between May and October 2002, CCC filled over $20,000 in orders, among 16 producers (table 2). Moreover, several local meat, cheese, and mushroom producers secured new sales accounts, even though their own distribution efforts precluded those sales from CCC's operations. In short, CCC estimated that another $25,000 in sales could be attributed to activities under the farmer-chef cooperative during the 2001 and 2002 seasons.
Operations were subsidized by a USDA-FSMIP grant in 2001 and 2002, so 2003 represents the first time that CCC must be self-sustaining, a focus of several of the planning decisions to be made at the Board meeting. There is some potential for salary support from Colorado State University and some local nonprofits based on the education and local agricultural promotion activities of the operations manager in their work with chefs and producers. As part of the decision-making process, the CCC Board realized that more market analysis and background research were needed.
Articles and conversations with chef marketing projects and their leadership would suggest that CCC's challenges are part of the natural evolution of chef marketing, and can be overcome with good planning and marketing efforts. Turning back to CCC's challenges for 2003, Jami decided to review the market forces influencing the producers and chefs that use CCC.
The Supply Side: Expanding the Season and Diversity of Product Lines
Colorado Crop to Cuisine was able to connect our farm with numerous new restaurants, boosting our sales and marketing. They helped spread the word on what growers in Northeastern Colorado can produce. We are looking forward to providing local restaurants with the freshest and widest variety of produce.
—Susan and Duane Pope, Pope Farms
Colorado Crop to Cuisine benefits producers' marketing goals because chefs are knowledgeable and enthusiastic bulk buyers. For producers with perishable crops, chefs often represent produce sales that would otherwise be composted due to excess supply in a high-production season. Chefs also order products that have weak consumer interest in the farmers' market (culinary herbs and baby vegetables).
Jami wondered why some producers did not return after the 2001 season, and what it might mean for future membership. In conversations with past and current producer members, several issues arose that may explain the loss. Most commonly noted among past members, the volume of sales was not as large as some had hoped, and the small increase in sales did not justify a membership fee or extra coordination efforts with the CCC operations manager. Also, when orders were assigned to some members, it was for produce for which they already had sufficient demand from farmers' market patrons.
The chef orders I received were not consistent enough for me to base my market plans upon, and the greatest demand was for products (bacon, ribs) that already move quickly when brought to the farmers market.
—John Long, Long Family Farms
On the other hand, several of the members who continue to participate in CCC noted that specialty produce that does not always sell well at markets (heirloom vegetables and herbs) has been in demand with chefs. These unique products have helped growers develop their production expertise and local reputations.
Yet, there are several other supply challenges to a chef marketing system, including the extreme seasonality of cropping systems in most U.S. regions, the long planning horizon for changes in planting mix and inability to quickly respond to changing chef demands. Colorado Crop to Cuisine has several producers with hothouses and coldframes to extend the growing season for a limited line of products. Thus far, joint planning efforts with chefs to assure that the right crops and varieties are planted have had only limited success, since chefs are rarely able to commit to a menu six months ahead.
The Demand Side: Personal Shopping for Chefs
If properly managed and promoted, CCC has some strong potential benefits to chefs. They have the opportunity to purchase a vast array of locally produced foods, custom order their food supplies to meet their preferences for variety, and almost always receive delivery within twenty-four hours of harvest (and in most cases, within several hours of harvest).
As a chef, I feel that the success of my restaurant depends upon the flavors that only the freshest possible ingredients can provide. Previous to the Colorado Crop to Cuisine, there was simply no easy way for the local chef to get local product. Through the efforts of Colorado Crop to Cuisine leadership, local produce is now easily obtainable. This makes the best ingredients available to chefs, who, much as they would like to spend their time at the farmer's markets, unfortunately have too many other things to spend time on.
—Don Braddy, Chef/owner, Braddy's Downtown Restaurant
In contrast, all chefs still use national or smaller, regional distributors to augment CCC's product lines. Distributors are admittedly easier to work with given their broad array of offerings, ability to deliver from warehouses with twenty-four hours and standardized specifications for products.
Ordering small volumes of product that are not available on a consistent basis or in sufficient volumes does not fit our current buying model. We may consider purchasing from CCC in the future if a broader availability list with formalized product specifications is developed.
—Anonymous Fort Collins chef, end of 2001 market season
However, such convenience comes at the cost of freshness and quality, according to several chefs. So, many restaurant buyers remain loyal through extra planning effort, and working with CCC to make last-minute orders from market more workable.
Planning orders farther in advance is a challenge for my business … forecasting what and how much will sell in any one day or week is not possible, so I appreciate CCC's willingness to take limited order additions the day of delivery.
—Nancy, Déjè vu Coffee House
A core set of chefs changed from making 100% of their orders through distributors in winter months, to ordering 75% of all fresh produce through CCC from July to September, when product availability is greatest. (Meat and slightly processed product (honey) sales remain limited, as chefs seem fairly happy with the current quality from distributors.) The remaining share represents products that are in demand by customers, but cannot be grown in Colorado, such as avocados, mangoes, and citrus. Distributors remain the primary source of produce for a larger share of chefs, but they choose to use CCC for produce that they feel really makes a difference to the quality of their food offerings.
The quality and flavor of Honeyacre tomatoes is worth the extra price, as they help our sandwiches and salads stand out from franchise competitors.
—Scott McBryde, Fiona's European Delicatessen
Overall, CCC has very little product penetration with customers. Two or three use whatever is available in season, representing 75% of total produce use in peak season. Another 5–6 order a few products exclusively through CCC (usually tomatoes, herbs, cut flowers, and in-season fruits and vegetables). A remaining handful order only one or two products that are either unique (baby vegetables and exotic mushrooms) or improve the quality of specific dish (basil and bacon). After lengthy discussions with some chefs, it is clear that CCC will never be viewed as a replacement for distributors because of its extreme seasonality and limited selection.
Still, all chef accounts (besides Bon Apetit) grew between 2001 and 2002. The loss of CCC's biggest account is of concern since it represented such a large share of 2001 sales. Bon Apetit saw major losses in food sales due to the downturn in Hewlett Packard's (HP) business and employment, forcing them to cut back on discretionary expenses (some premium products, such as fresh herbs). Eventually, Bon Apetit lost the HP food service contract to Sodexho, and CCC lost the account.
In the late spring and early summer, Pulcinella began to work with CCC, guided by efforts from CSU personnel. Since that time we have been extremely pleased with CCC's patience for our particular nature in looking for quality foods and we, along with our customers, have enjoyed the new fresh produce that the farmers have provided.
—Jorma, Chef, Pulcinella Ristorante
For basic commodities whose quality does not decline as much with time, such as onions and potatoes, CCC realized the need to meet wholesale prices. Even for specialized produce where quality matters, chefs noted a need to keep prices competitive.
The herbs and tomatoes from CCC have improved the quality of our food offerings, but wholesale distributor's offer a fairly comparable product, so the premium we are willing to pay cannot exceed 15–20%, or our food costs begin to make us less competitive.
—Scott McBryde, Fiona's European Delicatessen
Providing local produce to restaurant patrons raises awareness about the variety and quality of agricultural production in Northern Colorado. This is especially important as the share of meals eaten outside the home increases and Americans consume a higher share of their meals at foodservice institutions. Also, the knowledge chefs possess is an untapped resource for producers who want to stay in touch with consumer preferences. Producers also can benefit from the chef's understanding of the potential for future food demand as U.S. consumers develop an increasingly refined palate (Burros).
Operations: Coordinating Producers in a Low-Investment Venture
Although the need for direct marketing to chefs may be apparent, it may not be as clear why a distribution organization is needed to coordinate producers. Chefs and producers are both difficult to organize, coordinate, and recruit into long-term planning exercises and commitments. Some of this is due to uncertainty within their industries, and may also attest to the independence of these entrepreneurs who are used to having much of their operational plans self-contained and under direct management.
The U.S. system of produce distribution is possibly the most efficient in the world, and this contributes to the competitive environment faced by smaller, less sophisticated distribution systems. Each link in the marketing channel watches out for its own best interest, which may threaten cooperative ventures. Any new marketing and distribution effort needs to directly assess the role it plays in the market, whether it is to improve the quality of produce available, promise delivery within twenty-four hours of harvest, help chefs market and promote their products, or simply move volumes of commodities at wholesale prices in a cost-efficient manner.
Closing
Jami and the CCC Board have gradually compiled information, websites, and testimonials from participating producers and chefs for the CCC website (http://www.geocities.com/coloradocrop/) to promote the organization and educate CCC members on each other's businesses. Jami Daniel ended her operational work with CCC on November 1, 2002, and joined the regional office of American Farmland Trust in Fort Collins. Although she no longer manages operations, she hopes to indirectly support CCC efforts through her nonvoting advisement to the Board, and indirectly through American Farmland Trust's agricultural regional market development efforts.
There is some evidence that farmer-to-chef distribution systems are feasible if seed money is available to establish the initial market connections, reputation, and operational structure. Colorado Crop to Cuisine is not expected to be self-sufficient until its third or fourth season, which is consistent with projects in other states. With no further grant support available, and little in cash reserves after operating costs from the 2002 season (approximately $1,500), CCC must find a way to finance operations for 2003.
Staffing and management are also challenges, given the seasonality and small size of the current venture. Presently, an operations manager is only needed for about fifteen hours a week from late April to November 1. Since the season runs longer than the summer, and requires developed sales skills (as well as familiarity with agricultural production and the restaurant industry), the pool of qualified and available managers is limited. To justify a full-time professional, the CCC feels it must grow from its current sales level, but is not certain how to determine sales goals.
Colorado Crop to Cuisine faces some important planning and managerial challenges for the 2003 market season. Jami (now serving as a technical advisor), Dawn Thilmany (the CSU technical advisor) and the CCC Board Members decided to discuss the following issues.
-
What value does CCC currently have for chefs? For producer members?
- What are the costs, benefits, and risks of marketing through CCC for producers? Procuring from CCC for chefs?
- What are the alternatives to direct marketing in this channel?
-
How is CCC's current business model performing?
- What are the costs and benefits to the producer alliance?
- What costs, benefits and risks (1a) does it take into consideration?
- Should producers bear more of the financial and capital requirements? How do producers currently demonstrate loyalty and commitment to CCC? What sustained role should grants and public support play?
- Is there a potentially better organizational structure?
- What pieces of a business plan still need to be addressed?
Acknowledgments
The author wishes to thank the Colorado Agriculture Experiment Station, Colorado Department of Agriculture, and USDA Federal-State Marketing Improvement Program for funding and support on this project and study.
