Understanding Produce Supply Chains

Food loss and waste along the supply chain, graph sourced from MEED’s Investing in Food Security report

Written by: David Ceaser

July 1st, 2024

Agritecture recently had the pleasure of interviewing produce industry veteran Ben Hartman, currently of Sungold Consulting.  05-07-18-2659-Edit+(b5e28fd5604f75acb3ff84657f5997e6811437fe)+(2)
Ben has managed produce and floral departments at both Good Eggs and Bi-Rite Markets,two west coast based operations that prioritize a sustainable and equitable produce supply chain.  Ben currently advises farms on increasing their product reach in a way that doesn’t compromise their values.  As such, he has become an expert in this category and Agritecture was excited to speak with him to better understand his critical perspective as a produce buyer.

Agritecture works with many entrepreneurs who want to launch or operate farms, both large and small.  It is often the case with the smaller operations that the focus is on crop production and sales is a bit of an afterthought.  For large operations, the opposite is often true.  They tend to first find a buyer and then worry about the logistics of production.  

Successful farms always understand  the priorities and realities of produce buyers .  As Agritecture tells its clients, “it is generally much easier to grow produce than to sell it”. 

Takeaways from our interview with Ben:

  1. Learn about what a produce buyer does

    There are many different types of produce buyers and they each will think differently.  A produce buyer for a large institution will think very differently from a buyer for a small supermarket.  Understanding what they do and what they need is critical to having a successful relationship with them.  At the end of the day, they can’t do their job without collaboration from producers.
  2. Producers need to understand the margins and velocity that buyers need for a specific product.

    sales velocity formula and how to calculate sales velocity

    While a buyer may want to support a local farm, if they won’t be able to sell the product quickly enough or with a high enough margin, then they won’t carry your product.  Buyers do want to support local producers but their first commitment is to the financial viability of their store.  Producers need to remember this.
  3. What margins does a retailer expect? 

    This will vary by the retailer, as a small retailer will have different expectations than a Walmart.  But, within the produce category, the margin will vary based on the type of produce.  For example, items that are highly perishable will require a higher margin.  If a produce category is associated with a lot of shrink, that will also require a higher margin.  Finally, a producer should think about the amount of work their product will require from the buyer.  Does it come pre-packaged and ready for retail or is it a head of lettuce that needs to be trimmed every couple of days?  The retailer will look at the amount of work associated with your product and adjust the required margin accordingly.  
  4. How are produce departments structured?

    In general, produce departments have a main purchaser and then an assistant who will fill in and do purchasing as needed when the main buyer is off.  As operations get larger, category buyers will be established and there will be a specific person who deals with a category of produce such as hard fruit or mushrooms or leafy greens.  Additionally, there may be a separation between the buyer who does the day to day purchasing “I need 500 apples” versus the person who establishes the relationship with a particular farm and vets whether their farm and produce meet the standards of the market.     
  5. Do all retailers have direct relationships with producers?


    This depends on the size and values of the retailer.  Some retailers are too small to negotiate directly with a farm for a product like bananas so they have to use a distributor to carry that type of item.  For some retailers it is easier to get all their produce from a distributor.  Other retailers value the direct communication with the producer and the ability to align on goals relating to production.  Finally, it may be easier and more efficient for a producer to work directly with a distributor that services various grocery stores versus having a direct relationship with each one.  Each relationship takes time and resources to maintain and having one large, solid relationship may be easier than maintaining five or six smaller ones. 
  6. If I am a producer that already sells to Supermarket X, is this an important thing for engaging with Supermarket Y ?

    In general, Supermarket Y will be interested in knowing who you are already supplying as a farm.  Why ?  Because this will give your farm and operation an initial vetting.  For example, knowing that you already sell to a certain buyer means that you are a serious producer, have your certificates in line, understand packaging requirements, you know how to invoice, etc.  The same can be said regarding values as values of certain retailers may align very closely with those of a perspective buyer. In the world of restaurants and flavor, if you sell to a specific restaurant with a certain chef, that can carry a lot of weight in the restaurant world.
  7. What can small farms learn from large operations?

    Lots- Large farms are great at marketing their produce.  They have much more of an understanding of who their customers are and subsequently how to reach them.  Large farms are also great with packaging, food handling and food safety.  Finally, they understand how to produce at a cost that is accessible to the general public, allowing their products to have a much wider reach.  

Check Agritecture's Local Food System Planning work

Interested in learning more about produce supply chains?

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