Leopold Center for Sustainable Agriculture

Food projects yield new insight, tools for farmers

Back to Leopold Letter Spring 2007

By ANNE LARSON, Special to the Leopold Center

Two projects originating from Iowa State University’s program of Hotel, Restaurant and Institution Management (HRIM) have shed light on the attitudes and needs of Iowa chefs and producers of local food. As part of one project, researchers also generated an on-line calculator that will help producers make better decisions about how to market their produce.

Recently completed work funded by the Leopold Center’s Marketing and Food Systems Initiative looked at the costs and decision-making processes of independent restaurateurs, local food producers and restaurant patrons. The projects have laid the groundwork for future research and helped researchers fine-tune their tools to gather better information.

Surveys of central Iowa chefs, producers and restaurant patrons were part of a two-year project led by Amit Sharma, a former Iowa State University (ISU) researcher, and Catherine Strohbehn, who still is with HRIM. Strohbehn also worked on a project led by Jason Ellis, also formerly of ISU, that explored using contracts to expand produce market opportunities. One of the products of the second study is a web-based calculator that can help producers decide whether contracting with foodservice operators is profitable.

The calculator was introduced at a series of meetings in March that focused on selling to foodservice and retail markets and were cosponsored by the Leopold Center. The tool is already available on the web.

According to Strohbehn, the intent of the calculator is to “provide producers with a tool that will help them in making a decision as to whether to contract with a foodservice operation for a set period of time or product amount.”

She explains that producers can create scenarios with various data sets to assist in making decisions about what and how much to plant as well as sales decisions such as how, where, when and price.

Procurement, production evaluated
The surveys of central Iowa chefs included ten restaurants that have some experience using locally sourced foods. Several aspects of the restaurant-producer relationship were explored, including the costs of purchasing, receiving, pre-preparation and preparation.

Additionally, ten producers who have experience supplying food to independent restaurants were interviewed about the benefit and cost differences between selling to restaurants versus other marketing outlets.

Finally, an experiment offering ISU HRIM Tearoom patrons a choice of a “typical” versus “locally sourced” main entrée showed consumer willingness to pay price premiums of up to $2.

While the surveys were limited, they will help researchers refine methods for future studies of these groups. Sharma says that there was mixed enthusiasm from both restaurant operators and producers, “but producers appeared slightly more enthusiastic about the project.” He said, “There were some chefs that were very committed to the concept of local food use, but this was not widespread among all restaurants.”

Surveys of the ten restaurants found that some parts of the food procurement process – purchasing, receiving, pre-preparation and preparation – were more time-consuming using locally sourced products. Additionally, the survey found that chef commitment to local foods and skill in preparing those foods are an important part of successful use of these items. “Verbal commitment is not enough if restaurants want to maximize local food use,” Sharma explains, “there must also be the ability to plan and prepare seasonal menus.”

One of the areas that will be fine-tuned in future research is cost-comparison of locally- versus nationally-sourced foods. The researchers believe that transportation costs for local producers were not factored into the purchase price, while national vendors usually will charge a transportation and delivery fee. Future research will track producers’ total costs related to food sales to restaurants, including costs of delivery (gas, mileage, time) and value of dollars lost due to delayed payments. These will then be compared with total food procurement costs from national vendors to provide a more accurate assessment.

The producers who were interviewed saw some benefits and costs associated with selling to local restaurants versus other outlets such as direct sales to consumers at farmers’ markets. Most of the producers thought that their selling prices to restaurants could be higher than they are, and most were interested in continuing to sell to restaurants.

One of the challenges to continued sales was development of purchase agreements and information on the needs of restaurants. Improved communication between producers and restaurants and more sophisticated decision-making tools are needed, the study found.

Focus for future work
Future work will quantify the costs and return on costs of using local foods in restaurants. In addition, researchers hope to evaluate the decision-making process of restaurateurs, given supply and demand uncertainties. “We also anticipate further investigating the distribution aspects of local foods and continued process analysis of local food use from perspectives of producers and restaurant operators,” Sharma said.

Initial efforts will continue with independently-owned restaurants because these outlets have greater purchasing and menu flexibility, but future efforts could expand to regional chains to identify the efficiencies of an established infrastructure.
 

Back to Leopold Letter Spring 2007