Tips for Selling to Institutional Markets

NCAT Marketing Tipsheet Series

By Marisa Alcorta, Rex Dufour, and Tammy Hinman, NCAT

Institutional markets are entities such as cafeterias in state and local government buildings, schools, universities, prisons, hospitals, or similar organizations. These institutions are becoming more interested in buying local food, which provides a new marketing opportunity for a medium to large-scale farm.

For this market you can expect:

• Larger volumes of product
• Lower prices per unit

Advantages

• You can sell large volumes of many products.
• There are many possible sales outlets, such as business cafeterias, schools, hospitals, prisons, day-care centers, senior centers, community colleges, and universities.

Considerations

• While you can sell a larger quantity, expect a lower price.
• Requires good communication between buyer and seller.
• Some institutions expect a more processed product.
• Liability insurance is required.
• Institutions usually pay within 30 days.
• The health department requires that vehicles delivering produce to institutions must remain at a certain temperature.

Key Questions to Ask Yourself

• Do I have liability insurance and a Good Agricultural Practices (GAPS) plan? Do these buyers require either of these items?
• How do these buyers want produce packed and delivered?
• What quantities do they need and how often?
• Do they need produce that has been pre-cut or lightly processed for easy use?
• What’s the best way to communicate with these buyers about my product availability — fax, email, text message, phone?
• Is there a competitive bidding process for schools and other public institutions? What do I need to do to be considered?

Tips for Selling to Institutional Markets

Know what the buyer requires from you.

• Produce quality standards?
• Type of pack or size of product?
• Specific delivery times and number of deliveries per week?
• Liability insurance and for how much?
• A Good Agricultural Practices (GAPs) plan?

• Research the institution. Find out who makes buying decisions.
• Maintain consistent volumes and quality.
• Work with local organizations such as universities, nonprofits, and Food Policy Councils to help reduce barriers for farmers selling to local institutions.
• Consider developing a Good Agricultural Practices (GAPs)/Food Safety Plan to allow easier access to these markets.
• Find out if the buyer will purchase imperfect, blemished or small produce for a lower price.

Resources

Selling to Institutions. By Bill Wright, University of Wisconsin Cooperative Extension Emerging Agricultural Markets Team, 2007. A 4-page PDF on how to get started and do well selling to institutions.

Farm to Hospital: Supporting Local Agriculture and Improving Health Care. This 6-page brochure explains farm-to hospital and why it’s important, as well as how hospitals can improve their food, and how growers can approach institutions.

Community Food Security Liability & Food Safety (in English and Spanish). This short brochure summarizes some of the issues regarding food safety when selling to institutional markets. It gives the reader information on what to expect for insurance requirements and how to better protect your farm.

Tips for Selling at Institutional Markets
By Marisa Alcorta, Rex Dufour and Tammy Hinman, NCAT Agriculture Specialists
© 2012 NCAT
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This publication is produced by the National Center for Appropriate Technology through the ATTRA Sustainable Agriculture program, under a cooperative agreement with USDA Rural Development. This publication was also made possible in part by funding from USDA/NIFA/OASDFR. ATTRA.NCAT.ORG.