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Navigating the Costs and Returns of Farm-to-Institution Markets

Jill Fitzsimmons head shotJill Ann Fitzsimmons

University of Massachusetts, Amherst

SARE grant: Costs and returns to New England farmers in the farm-to-institution supply chain (2013)

Where she is now: Ph.D. candidate in resource economics

Large institutions such as hospitals, universities, schools and government agencies are increasingly willing to buy from local and regional farmers, an opportunity that benefits the farm economy, public health and communities. To support this growing farm-to-institution market, farmers, institutions and supply-chain intermediaries need information about the costs and returns associated with different distribution models.

While exploring the issue as a graduate student at the University of Massachusetts, Amherst, Jill Ann Fitzsimmons gained valuable insights that go deeper than the straightforward economics of different supply chain models. She learned about, and was able to address, some of the top questions farmers have when they consider marketing to institutions.

Funded by a 2013 SARE Graduate Student grant, Fitzsimmons set out to identify the costs and returns associated with various supply
chain models, from direct sales to arrangements involving multiple intermediaries such as processors, aggregators and distributors. Partnering with a regional collaborative network, she conducted in-depth interviews with 11 farmers.

However, while talking with the farmers, Fitzsimmons also learned what was on their minds, and in the process identified three emerging topics that affect their profitability in the farm-to-institution market. Farmers wanted to know if online brokerage platforms could reduce transaction costs. They also wondered about the increased risk of violating federal labor and wage regulations as a result of adopting new activities when serving institutional markets. Finally, they asked, how might value-added processing affect the long-term profitability of farm-to-institution sales?

Fitzsimmons developed publications addressing these topics and farmers’ questions about them. The publications provide farmers with information and resources they need to make informed choices about whether and how to sell to institutional markets. Fitzsimmons believes that the information she gathered is also important for institutions, researchers and other practitioners who have struggled to clearly understand the role of farm-to-institution marketing in a sustainable farm business plan. Download them now:

Given the interest she has seen in online brokerage platforms and labor regulations, Fitzsimmons is seeking funding to continue studying these issues. Online brokerage platforms have emerged in the last few years across the country and have the potential to improve farmers’ ability to find buyers, negotiate prices and make sales. “Getting better information about these issues through future research would be huge,” Fitzsimmons says.

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