MONTEREY, Calif. — Within the locally grown movement, there’s a new way of doing business, and it may become the newest industry acronym — VBSC.

The values-based supply chain model is designed to overcome barriers buyers face when they want to purchase locally grown produce.

Barriers include a price premium (up to 10%) buyers incur, delivery logistics, timeliness and consistency of deliveries, limited product selection/volume and seasonality, said Shermain Hardesty, extension economist agricultural and resource economist for the University of California-Davis.

She was one of six panelists at the “Locally Grown: Supply Chain Success Stories” workshop at the Produce Marketing Association Foodservice Conference & Exposition on July 31.

The tenets of VBSC call for treatment of growers as strategic partners (not input suppliers), increased volumes through product aggregation, differentiated products/local branding, and rewards and responsibilities distributed equitably across the supply chain. It also includes a story of the people and business practices behind the products, Hardesty said.

UC-Davis researchers recently studied supply chain solutions to problems associated with supplying locally grown product to foodservice operators.

The research showed that for distributors to be successful, they need to find the right balance of small, midscale and large producers in their networks, said Gail Feenstra, a food systems analyst at UC-Davis.

Food safety is another challenge.

“Unless smaller growers are exempt, they will need to prepare for the (good agricultural practice) standards coming down from the federal government,” she said.

To better handle the distribution and marketing challenges small growers face, aggregation hubs or regional food hubs in various forms are emerging to consolidate product.

“These may involve existing distribution warehouses, or they may involve farmers markets as the distribution or food hub,” Feenstra said.

Communicating stories about the grower may soon trump “local” in the consumer’s mind, she said.

“People want to know how their food is produced, who is producing it and what their story is,” Feenstra said. “If there’s a good communication stream, that may be the most critical element in what defines value for these value-based supply chains.”

Study example

The other four session panelists were part of one of the successful supply chain collaborations UC-Davis studied and held up as an industry example.

The study looked at obstacles to getting locally grown produce into the UC-Davis, which is operated by foodservice management company Sodexo.

Growers Collaborative dba Thumbs Up Bay Area, Oakland Calif., serves as the aggregator for the small growers supplying Sodexo. The collaborative helps qualify the growers and then distribute product through FreshPoint’s South San Francisco distribution center, while Davis-based Community Alliance with Family Farmers (CAFF) provides marketing and education.

“We assist the farmer in a GAP program, explaining packout standards to meet distributor needs, and we create the farmer’s profile, helping them to market themselves. We work both ends each day,” said Ben Ratto, owner of Growers Collaborative.

FreshPoint began working with Growers Collaborative in February and defines “local” as product grown within 150 miles from the hub, said Claire Appel, FreshPoint’s specialty coordinator.
Pricing is the biggest challenge with local produce, Appel said.

“The sales staff comes back all up in the air about pricing. (The buyer) compares it to larger producers’ prices and local producers might be $4 different,” she said. “We find chefs ask for local product and don’t understand why it’s more expensive. We are trying to educate. It’s one of the biggest hurdles we find.”

With values-based supply chains, everyone must benefit by the collaboration, said Bob Corshen, director local food systems for CAFF.

“The farmer may need to give a bit, and the distributor may need to give a bit,” he said. “But get values satisfied and cut down on the carbon footprint. Help the community economy. This is what you have to pay for.”

A new paradigm for locally grown