Local Sourcing Can Pay Big Dividends

By Mic LeBel


For many food manufacturers, sourcing certified organic ingredients is only the beginning of a long and arduous journey to getting food production back to where it should be. Now that the organic movement is gaining momentum, leaders are striving to add another key element of sustainable agriculture to the movement: local sourcing that supports small family-owned farms and celebrates community and product freshness.

Most of the organic ingredients used today by U.S. food companies are farmed in large operations in a particular region of the world, stored, shipped a long distance, and handled by a middleman for sales and distribution. This system, which is similar to that for conventional food, can drive up prices, compromise the freshness of the ingredients and perpetuate the distance of connection between the farm and consumers. It also negatively impacts the environment through the consumption of fossil fuels to transport products back and forth across the country.

The “buy local” movement has been growing steadily in the U.S. over the past decade, and its popularity is best demonstrated by the more than 3,100 farmers’ markets that have cropped up across the country. While buying locally produced food is relatively easy for the general population now that there are an abundance of farmers markets, the challenges for organic food manufacturers are much more complicated.

A decade from now, when regional organic food infrastructure is more developed than it is today, manufacturers sourcing organic ingredients will take for granted that there will be an ample variety of local producers from which to buy. Until then there will be many challenges, however patient “buy local” pioneers who are willing to deal with adversity and network in the farming community are finding that blazing the trail offers product quality and marketing rewards that can be realized today.

Benefits of the Buy Local Mindset
There are many benefits from sourcing local ingredients, but for most companies, the motivating factor is a mission to support sustainable agriculture and help their communities. This conviction is usually shared by the company’s core demographic of customers, and therefore, it makes inherent financial sense to explore opportunities.

There is a huge slice of the U.S. population who want fresh, local products produced in a sustainable manner by people they know. In fact, recent market demographic research by sociologist Paul Ray, Ph.D., and psychologist Sherry Anderson, Ph.D., introduced in their 2000 book, How 50 Million People Are Changing the World, identified a population of more than 50 million “cultural creatives” in the U.S. who care deeply about a sense of community, read labels, and want to know the story and people behind the products they buy. This demographic of mission-driven consumers has spending power and these consumers are usually willing to pay more for a product that supports a cause they care about. Cul-tural creatives are a well-educated bunch that are likely to view “buy local” as a concept that is on par with “buy organic.” They are aware that buying locally keeps dollars in town, supports family farm heritages, creates local jobs, provides “fresh-from-the-field” food, and fosters a sense of community.

A company that can champion the local farming cause will have won more respect from that core demographic that also buys organic products. In theory, then, companies that are able to achieve local organic sourcing and successfully communicate that accomplishment in their marketing should draw in more cultural creative customers and enhance the loyalty of those already buying their products.

Pioneers in the “Grainaissance”
Aaron Anker, president of GrandyOats, and Jim Amaral, president of Borealis Breads, are two pioneers in the pursuit of locally grown ingredients. Both of these Maine-based food manufacturing companies make their artisan products in small batches and have made sourcing of local ingredients a key part of their companies’ missions. Amaral and Anker believe that “organic” should not be the only objective for food production and that there are many quality, environmental and societal merits to sourcing local organic ingredients.

While Borealis Breads has already been successful in having its primary ingredient grown and processed as organic within the state of Maine, GrandyOats is in the midst of the long process toward achieving the local grain processing capacity it needs to “close the local sourcing loop.”

Borealis Breads has been in business since 1993 and distributes a large variety of products fresh to regional supermarkets, cafes and health food stores. Several years ago, Amaral began his efforts to source organic ingredients for Borealis Breads. It took many years to find the capacity and quality of grains necessary to make the many products the company creates, and the organic ingredients he did find were being grown far away by people he had never met.

He found that in Maine, in order to take on the cost and paperwork of organic agriculture, farmers needed assurance that there would be reliable demand for their crops.

Amaral, who believes that personal relationships are a key component in the food business, networked through the Maine Organic Farmers and Gardeners Association (MOFGA), and the University of Maine Cooperative Extension, eventually teaming up with Matt Williams, a grain specialist at the Cooperative extension, to build a network of growers that could provide a consistent supply of high quality organic wheat, the largest ingredient used by Borealis Breads.

“I met Matt Williams through a community of sustainable agriculture and business people and we have been working together ever since,” says Amaral, who took on the role of organic ingredient scout at Borealis Breads in addition to his usual duties as the president and head baker. He believes that one person with the company should become the champion of the cause and serve as the key contact and relationship-builder. “It takes up a little bit more of my time, but it is nice to get out of the bakery and head up to the farm to meet with Matt.”

Obtaining the farming capacity in Maine was only the first piece of the local organic puzzle for Amaral. Because there was no certified organic milling operation to process the grain in Maine, it was being shipped from the farms in Aroostock County across the border to Canada. It would be milled north of the border and shipped back to Aroostook County and then on to three Borealis bakeries in Maine.

Amaral began working with Williams on some concepts for a milling operation in Maine, and he ultimately invested in the equipment necessary to perform the milling production closer to home. The international milling scenario became even more of a challenge, however, after 9/11, when international commerce took on a whole new layer of burden. After two years of fine-tuning, the dream finally became a reality as organic wheat grown and milled in Maine began to be used in Borealis’ flagship artisan breads.

GrandyOats Makes A Similar Quest
Operating from a restored 100-year-old dairy barn nestled in the rural hills of western Maine, GrandyOats is following in the footsteps of Borealis. Anker has already taken the company’s organic commitment to the extreme by spending the last four years converting its entire line to 100 percent organic. The next challenge has been to find ways to source the organic ingredients locally. The company has encountered many of the same challenges as Borealis, only with different grains.

Like Amaral and Borealis Breads, GrandyOats has focused its efforts on sourcing its largest ingredient in Maine. “We use more than 260,000 pounds of oats annually grown on more than 150 acres, so that ingredient is our number one priority,” says Anker. While the company has been able to find an agricultural supply of organic oats in Maine, it is still searching for an adequate processing facility in Maine that provides the quality necessary for its products.

Over the past several years, GrandyOats has been able to ramp up the Maine farming of the certified organic oats it needs. But, much like the challenge faced by Amaral and Borealis Breads a few years earlier, the organic processing of the oats within Maine is a big hurdle for the project to overcome. “We are getting closer and hope to have Maine-grown organic oats in our products this summer,” says Anker, who cites patience as a key virtue when embarking on the journey. “Part of why we do this is so that there will be an organic oat infrastructure emerging right here in Maine that other farmers and small businesses can tap into—making it more efficient for everyone.”

Both Amaral and Anker say that proactive business networking as a key to success for sourcing local organic ingredients. Borealis and GrandyOats share a similar network of resources to help them with local sourcing. Amaral is well-known throughout Maine as a local organic sourcing pioneer, and has been a mentor for Anker in his pursuit.

“When I approached Jim several years ago with questions about sourcing organic ingredients in Maine he was eager to help,” says Anker, who serves on the board of Maine Businesses for Social Responsibility with Amaral. “The greatest resource available is the experience of others who have walked the path.”

“Sourcing local is all about relationships, and that is what makes it rewarding and long-lasting,” Amaral adds. “To find out what is going on in the local agriculture scene you have to go out to the farms and meet people that work the land.”

Buying Local Can Lower Costs
In this age of subsidized mega-farms, some processors may be surprised to learn that sourcing locally from small family farms can reduce the cost of organic ingredients. Borealis Breads saves 10% to 20% on the organic wheat it buys in Maine versus using an out of state supplier because buying direct from local farms reduces transportation and storage costs that are built into the price, and eliminates the middleman associated with the logistics of distribution. The energy crisis is also likely to continue to raise the cost of transportation, which makes localization even more cost-effective.

Not only is the local organic wheat Borealis buys in the Northern Maine county of Aroostook less expensive, it is also fresher and of a higher quality for its specific bread making. On average, food grown in the U.S. travels 1,300 miles from farm to table or store shelf. That means that some of these foods and ingredients have been grown for their ability to withstand extensive travel and warehousing—often at the compromise of flavor and other qualities. Crops that are planned to be used locally can be sown and harvested for maximum flavor, freshness, ripeness and uniqueness. “Ingredients sourced locally can be better to work with at the bakery because they are fresher and have been grown specifically with our baking quality needs in mind,” Amaral says. “We get our organic grain from the farm in Aroostook fresh on demand. Our customers say they notice a big difference in freshness and flavor in our breads versus commercial non-local varieties.”

Borealis Breads takes pride in its artisan approach to baking and is constantly researching new grain varieties that have subtle flavor profile and baking quality differences. “Because we have a face-to-face relationship, it is easy for me to work with Matt on test plots growing new grain varieties to try out every year,” says Amaral.

Anker has also found that local sourcing is efficient for some of the company’s smaller quantity ingredients, such as apples and maple syrup.

Year-Round Sourcing and Other Challenges
Of course, being a pioneer sourcing locally can have its concerns. For example, when part of the company’s marketing is driven by the sourcing of local ingredients, what happens when there is a local weather crisis that harms crops and threatens or diminishes supply? How about if the milling equipment at the only local operation goes down and is not operating for a time to produce the fresh milled grain?

“There are not a lot of back-up systems in place yet to address these problems,” says Amaral. “If there is a capacity problem we will go out in concentric circles from local to regional to national. Our goal is to get ingredients from people as close as possible and from people we know and have a relationship with.”

There is another challenge with sourcing locally that involves the organic movement itself. When GrandyOats converted its entire line of granola and trail mixes to organic, it had to drop its local honey supplier because it was not certified organic. Even though the product was produced in an eco-friendly, natural manner, the producer was not pursuing the formality and expense of certification. So, now the organic honey in GrandyOats products comes from out of state.

Anker notes that situations like this lead to a quandary that is cropping up—are there times when ‘local’ should trump ‘organic’? “Being the first company with sales of granola nationwide to go 100% organic has been a big marketing tool for us and something we are proud of. It took us several years to accomplish that feat,” says Anker of the organic switch, which was championed by his business partner Nat Peirce, who manages operations at the bakery.

Amaral and Anker also face the hurdle of sourcing certified organic quantities year-round that are consistent and adequate for their expanding product lines. Many of the ingredients they use just can’t be grown in Maine, or they can be grown only seasonally. “Each year local small farms approach us to supply ingredients, but they don’t have the capacity to meet our production needs for our year-round products or the quality might not be consistent from multiple farms, so that is a work in progress for us,” says Amaral.

Buying from the small local farms is an advantage for the companies when it comes to seasonal products. “We have carved out a nice niche with seasonal varieties based on what is in season locally, such as Maine Fiddleheads,” he says.

The Rewards of Marketing “Local”
The exact financial results from sourcing locally are difficult to assess because, like many marketing concepts, the value of “local” of the overall brand in the purchasing decisions of consumers is hard to quantify. Over the past several years, Amaral figures that Borealis Breads has gained additional sales of approximately $100,000 due to sourcing locally and is quick to communicate this fact in its marketing materials and on its website. He figures part of this is attributable to favorable local and even national publicity that his company has earned as a pioneer in the “buy local” movement, including a feature in the New York Times.

When it comes to marketing, many states have special programs to help promote local products and companies. For example, Borealis tapped into a program called “Get Real Get Maine” that funded the production of farmer cards to be inserted in packaging for Borealis Breads. Much like sports collectable cards, they have a picture of the farmer(s) on the front and interesting facts and personal recipes on the back to help customers connect with the Maine people behind the product. However, outside of Maine, Borealis products lose some of that market appeal.“Our sales are regional in New England and even though Maine has a general marketing value as a pristine and natural place, once our products go over the border the value decreases a bit as there is less of the “local angle” for a marketing tool,” says Amaral.

For Anker and GrandyOats that has been less of an issue. Although GrandyOats has a core customer base in New England, it recently became the first all-organic granola company to distribute product from coast-to-coast. “We sell our products nationwide, and we find that our customers around the country know that a product made locally is more eco-friendly and instills the sense of community that people want to support, whether they are right in New England or 1,000 miles away,” says Anker. “Small family farms are in jeopardy and we need to help find ways to make them successful in order to preserve a way of life and open space.”

Mic LeBel is a freelance writer and organic food consultant located in Newcastle, ME. He can be reached at mic@planetfriendlypr.com.