As I was browsing the Maryland’s Department of Business and Economic Development website, I came across the Major Employers section under the Facts and Stats portion of the site. For the state, the biggest employers included military installation/intelligence, higher education institutions, and hospitals/health services. Interspersed amongst these were also major corporations surrounding the food industry, including McDonald’s, Safeway, and Giant.
Per our upcoming discussion on clusters, I wondered if and how large, corporate food entities support regional supplier, meaning locally-based food producers. Upon investigation of the websites for my neighborhood grocers, I quickly found on the GIANT food store’s website they have an in-house initiative “dedicated to promot[ing] an all-inclusive business environment which is beneficial to both our company and our suppliers. This program assists regional, small, minority, and women owned business to develop innovative, low cost, efficient solutions that drive our mutual growth. The department develops partnerships with regional and small businesses, minority-owned suppliers, and women-owned suppliers which enables these vendors to be a part of the kaleidoscope of world class suppliers serving our customers.”
To my dismay though, I realized that this is not the Giant Food, LLC found in Maryland and many other states, but a GIANT (and ironically smaller) grocer based out of Pennsylvania. Nevertheless, their program, dubbed the Supplier Diversity Development Program / Regional & Small Business Initiative, still interests me. It seems to be an example of how proximity can work towards innovation with and support of local business.
I also took a look at some other major grocers to see if they had similar programs. Safeway partners with over 1,000 local vendors throughout the US and claims that 30% of the produce sold at their stores is produced locally. Weis Markets prides itself as being the largest purchaser of Pennsylvania produce and dairy. Food Lion also has a local farming purchasing initiative, but it seems less established and the number of partnerships vary from state to state, with zero in Maryland. And unfortunately, I could find no evidence on the Giant Food, LLC website citing local grown vendors.
So a question to pose is, How can we encourage large corporations to support and invest in the local economy of which they are a part?
I am also interested in these types of programs and eager to see more detail about them on the companies’ websites. I noticed that Giant Food does have a supplier diversity program that focuses on Minority and Women Business Enterprises (M/WBEs), could perhaps be expanded to include local suppliers (http://www.giantfood.com/about_us/company/diversity.htm).
ReplyDeleteBased on what we’ve discussed in class so far, companies might benefit from buying local products if:
Using a local product carries a premium. This might require companies to demonstrate that they have met some industry standard for purchasing locally --or that their product is otherwise unique. However, the State of Green Business Report (http://stateofgreenbusiness.com/) demonstrates some of the challenges associated with creating such standards, especially given the related “green” and “organic” criteria. The fact that a product has traveled fewer miles does not always mean it is green or organic. And while a local product such as local cuisine may carry a premium, establishing its authenticity can be problematic. Extensive marketing may also be required.
The purchasing company requires flexibility over scale. According to an article in Tourism Geographies*, local suppliers may offer more flexibility, responding to impromptu or irregular orders, while larger suppliers offer advantages in scale. Perhaps companies such as restaurants that have difficulty predicting demand would benefit from such flexibility. Also, the article points out that the cumulative effect of having small to mid-size businesses purchasing locally could rival the effects of one large company purchasing locally. Given these issues, would it be better to focus on building links among local suppliers and small/ mid-size businesses over the larger stores (e.g. Giant)?
Transactions costs are low (there are few communication barriers among the purchasing company and the local suppliers, and suppliers know how to market their product “in the larger company’s language.”) The Supplier Diversity Development Program / Regional & Small Business Initiative program aims to address this issue by helping small businesses make their products more marketable. Local merchant associations could also advocate or market on behalf of local suppliers, while full-time “sustainability staff” (which are on the rise, according to the State of Green Business Report) could play a role within the larger companies. Intermediaries can also help maintain continuity between local suppliers and the larger business if managers turn over.
Small companies (and local communities?) develop innovative processes or products that can be scaled. We learned that small firms are more likely to transform knowledge spillovers into innovations, while larger companies are more equipped to patent. Do local communities behave like small firms in this sense? Prolinnova (i.e. Promoting Local Innovation in Ecologically-Oriented Agriculture and Natural Resource Management), is an organization that “builds on and scales up farmer-led approaches to development.” Another approach is the New Economics Foundation’s program (planning process) for capturing community-based innovation and leveraging all community resources toward “plugging the leaks” in the local economy.
*Telfer, D.J. & Wall, G. (2000). Strengthening backward economic linkages: local food purchasing by three Indonesian hotels. Tourism Geographies, 2(4). 421-447
This is an interesting thread, especially since food didtribution is a strong industry in Prince George's county for the same reason as construction - easy accessibility, and relatively cheap land. Whole foods has a distribution facility in the county as does Giant. I'm not sure about any others. Mary did an analysis of PG county last semester and Jaime was involved in a UMD studio study of local food and food deserts, so we have some knowledge resources in the class. I also think there is an organic food cluster in Frederick county that supplies regional restaurants. As far as the two Giants are concerned I think they were a single company at one point long ago but have been separate for quite a while. Weis Markets is a privately held Pennsylvania company with strong local comittment. I met with Jonathan Weis about ten years ago about developing in-store coffee bars. Wegman's also has a strong local purchasing policy. In short, I think this thread has some possibilities as a potential project. Can somebody write it up? There are obvious connections to sustainability, but are there technology angles related to how local growers network with distributors and customers to sell their product locally? Is USDA doing any research in this regard? It seems to be as much or more an issue of logistics than it is an agricultural issue.
ReplyDeleteI think there is a TLED angle here. Based on data gathered during the University of Maryland’s summer studio, Access to Healthy Food: An Initial Exploration in the Developed Tier of Prince George's County [http://www.arch.umd.edu/student_work/app.cfm?id=961], Prince George’s County’s local farmers face a number of sustainability challenges. In particular, many farms are too small to benefit from wholesale, a problem that is exacerbated by the rising costs of inputs –ie. fuel, fertilizer, seeds, and equipment. With commodity crops becoming less profitable, Prince George’s County is at risk of losing its farmland to development.
ReplyDeletePerhaps the University Center could help commodity farmers (or farms) transition into growing new “specialty” crops (e.g. local wine, specialty meats, etc) to fill niche markets in the Washington, DC area.
A recent article in Science Progress, a publication of the Center for American Progress [http://www.scienceprogress.org/2010/11/agricultural-innovation-21st-century-challenges/], suggests that small-scale farmers would benefit from additional place-based research that facilitates process innovation in low-input farming. Prior to the 1980s, the US provided substantial funding for research that convened agricultural scientists, farmers and other stakeholders to collaborate on localized applied research projects. The programs helped farmers increase their yields based on local soils and growing conditions. The article argues that there has been significant disinvestment in such projects, in part, because special interests (e.g. the pharmaceutical industry) have advocated for alternative “breakthrough” approaches. Within the new model, experiments are one-size-fits-all, conducted in the labs rather than on farms. In some cases, because they emphasize molecular biology and genetic engineering, they might benefit pharmaceutical and other industries more than they help farmers.
Perhaps the University Center, in connection with USDA and other organizations, could help facilitate a return of the place-based applied research for Prince George’s County evolving agricultural sector.
Considering this post and the comments together with the food hubs post it is clear that a food hub might act as both a cooperative and an intermediary. Food hub staff could handle the "certification" aspects for customers seeking certified organics, for example. In terms of the research angle, While I might agree in general with the perspective in Science Progress, I think we have an unusual asset in Prince George's county given the presence of the USDA Agricultural Research Service in Beltsville. From a TLED perspective, leveraging federal labs (even in agriculture) for local economic growth is a clear strategy, and one that we (Marie, Jim Cohen and I) have been advocating to the county for several years. Maybe we'll just have to demonstrate it through the UC.
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