Over the past year, the Open Food Network (OFN) has been working on a groundbreaking pilot to demonstrate the feasibility of supplying local food onto the Welsh public plate. Working with partners from Social Farms & Gardens, Cultivate, Development Trusts Association Wales and Foothold Cymru, we aimed to demonstrate that the public sector CAN procure efficiently from local producers using methods that benefit the natural environment and local prosperity. The project received funding through the Welsh Government Rural Communities – Rural Development Programme 2014-2020, which was funded by the European Agricultural Fund for Rural Development and the Welsh Government, to pilot two new procurement food hubs in Carmarthenshire and North Powys. As the project draws to a close, we’re taking a look at our key learnings from the project.
To reimagine our food systems, relocalise supply chains and increase the quality and nutritional value of food, as well as divert more money to the local economy, the purchasing power held by large public bodies represents a striking opportunity for change. Whilst dairy and meat products are relatively frequently sourced from Welsh producers, no other category represents a greater opportunity for improvement than fresh fruit & vegetables. The statistics speak for themselves; just 6% of fruit and vegetables bought by the Welsh public sector to supply the public plate in 2019/20 were of Welsh origin. That equates to a total spend of around £435k on Welsh produce, versus a whopping £6.8 million on produce grown & sourced outside of Wales. By comparison, 94% of dairy in 2019/20 was Welsh-sourced.
Whilst the hubs and other project partners focused on sourcing local suppliers and public buyers for the project, the challenge for OFN was how to utilise the software platform to support suppliers and hubs from a technical standpoint. The key requirement from this aspect proved to be stock aggregation across suppliers in order to fulfil the larger order volumes required by the public sector. The need was deceptively simple; combine the produce from multiple suppliers, aggregated by product type, into one single product list from which public buyers could place their order. In practice however, this meant first defining a pricing model that could be applied consistently across all suppliers to each procurement hub.
Pricing & Stock Aggregation
Each hub chose to use a different pricing model for their suppliers. One agreed to pay suppliers their own assigned prices for produce, whilst the other agreed that all suppliers would be paid the same price for the same produce based on wholesale horticultural price lists published by the UK government and the Soil Association. These two different pricing strategies therefore necessitated different technical solutions, resulting in a custom integration (a system for inputting and formatting information to ‘speak’ to OFN) being built for each hub.
With the short timescale of the project and the need for rapid iteration and development, OFN developed these integrations using script-enabled spreadsheets. The spreadsheets enabled hubs to enter supplier produce availability each week, click a button and receive an automatically formatted price list by email ready to upload to the OFN platform. For the hub using wholesale price lists, new prices were automatically pulled into the spreadsheet every time they were updated on the government and Soil Association websites, plus the hub-defined sales margin. This meant the hub manager could select the products available, and the price would autocomplete to the most recent published price.
Data from horticultural price lists autofills spreadsheet when a product is selected
For the hub using supplier prices, the hub manager manually calculated the hub’s selling price for the aggregated produce. This resulted in a variable margin for each supplier. In the integration, a formula was developed to calculate an average price across suppliers plus the hub’s target margin to aid this process.
Spreadsheet using hub managed prices
In practice, both hubs found that their buyers were unable to order online, being accustomed to placing their orders over the phone. It was therefore decided to show ‘unaggregated’ produce on the OFN, and aggregated produce in a separate price list that was shared with buyers. This meant utilising the features built into OFN to easily track orders and deliveries, whilst also working with buyers’ existing procurement processes.
Example price list shared with buyers
There were a number of useful lessons learned over the course of the pilot, which ultimately led to almost £4,300 worth of sustainably produced, nutritious local produce being delivered into the public sector across more than 80 orders. Here we’ll briefly discuss the key learnings from a hub management perspective.
- Buyers were hugely impressed by the quality of the food, the freshness and taste.
- Suppliers were also given support to create their own shop fronts on OFN to sell direct to individual customers through the project, offering additional revenue streams to these local farmers and growers.
- Developing relationships with the buyers proved imperative, including encouraging flexibility around vegetable varieties (i.e. buyers only wanting to purchase one cabbage variety when local suppliers grew others).
- To minimise hub administration when aggregating stock, it was simpler for all suppliers to agree on one price per product, e.g. by using the horticultural price lists.
- This also ensured a consistent ‘margin’ to contribute to the hub’s costs that wasn’t dependent on the supplier used.
- Hubs do need to add a margin to supplier prices in order to recoup some of their own running costs.
- Encouraging public buyers to use the Open Food Network platform to place orders was challenging due to the existing procurement process of ordering over the phone.
- Hub managers therefore generally received orders by phone, and entered them into the OFN themselves.
- Using the OFN system to manage orders simplified administration tasks for hub managers including automatic invoice and packing list creation, as well as allowing for better oversight of hub operations and finances.
- ‘Testing the waters’ with smaller orders establishes relationships and demonstrates the quality of the food, which allows buyers to build trust in small-scale local farmers and growers.
- Building dialogue between suppliers and buyers in order to establish demand and create an established route to market will encourage small growers to increase outputs and adapt to meet demand.
The project has demonstrated huge potential for increasing the percentage of fruit and vegetables grown in Wales that makes its way onto the public plate. The wider benefits of the project are manifold; boosting the local economy, minimising carbon emissions through shortening food chains, supporting local jobs and improving planet and people health with nutritious agro ecologically-produced food. The Open Food Network is excited to continue working with the established procurement food hubs and whilst funding for the project has now come to an end, OFN would warmly welcome working together with new partners on future funding opportunities in this area. Those interested can contact project lead Bethan Phillips and you can read the full report, entitled “The Role of Public Procurement in Transforming Wales’ Food System”, on Social Farms & Gardens’ website (available to download in Welsh & English).