When it comes to supplying the public sector, the fresh produce industry has come a long way in the last five years, thanks to both a change in attitudes and procedures. But there is still a fair way to go before all the opportunities within the public sector have been used to their full potential.
Once content to rely on national or sometimes international one-stop shops for all their food orders, UK schools, hospitals, nursing homes and the like have been forced to take a different view of things since the introduction of the Public Sector Food Procurement Initiative (PSFPI) in 2003. Part of the government’s Sustainable Farming and Food Strategy for England, the ongoing initiative aims to use the business generated in the public sector to help deliver a world-class sustainable farming and food industry that contributes to a better environment, as well as healthier and prosperous communities.
The PSFPI sets out six priority objectives that organisations must consider when procuring food. These are to promote food safety; to increase the consumption of healthy and nutritious food; to improve the sustainability and efficiency of production, processing and distribution; to increase tenders from small and local producers; to increase co-operation among buyers, producers and along supply chains; and to improve the sustainability and efficiency of public food procurement and catering services.
Before the PSFPI was introduced, the public sector was mostly reliant on processed food, and supplying the sector involved a complicated and long-winded tender process. As a result, the sector was pretty much ignored by the fresh produce industry. But now it represents an opportunity to supply regular, long-term customers that pay on time -something that will surely become paramount in these unsettling financial times.
Teething problems
The public sector in England spends approximately £2 billion on food and catering services, and local authorities around the country have been working with organisations and farming groups to enable them to tender for contracts in their area.
However, supplying the public sector can be a rocky path at first and one of the first such fresh produce groups to get together was the since disbanded Public Sector Produce Supplies (PSPS), which tendered for Leeds County Council’s contract to supply schools and care homes in 2006.
The then Skipton- and Midlands-based food and farming network, FEASTnet, was asked to put together a tender with local growers to supply the contract, and PSPS was formed out of Snaith Salads, Greenfield Produce in Wakefield, Humber VHB, Poskitt Carrots and ST Holmes, Owston Ferry, Doncaster, D Westwood & Son, Thorpe, Greyfriars Ltd, Metcalfe Organic and Boroughbridge.
At the time, FEASTnet’s Rebecca Roberts - who now continues to supply the contract for Leeds County Council in addition to a new contract with Nottingham County Council through her new company, Feast Fresh - and Sally Scantlebury, who still runs FEASTnet, which is now based only in the Midlands, were new to fresh produce procurement. But they could see its potential for growers.
“I got involved with supplying the public sector in 2004 when I was working as regional marketing officer for the Soil Association,” explains Scantlebury. “Part of my work was on the initial stages of their excellent Food4Life Programme, and I had to visit school kitchens and look at existing supply chains. It was when a lot of schools were opting out of council contracts and things were getting in a right mess.
“Then, in 2005, I set up FEASTnet and continued to be interested in the market as it had plenty of opportunities if you could just sieve out the problems.
“When the Yorkshire and Humber local development authority came and asked us to bid for the tender, we wanted to look at the realities of it and look at getting the contract. It was naivety that got us through it, as there was a lot of hard work we did not know about to come.”
At the time, the problem for growers was that the public sector wanted to source a full range of fresh produce from one grower, so FEASTnet acted as a catalyst, bringing growers together to supply the Leeds County Council contract. Roberts believes that producers need someone or an organisation that is not involved with the day-to-day work in farming to co-ordinate the process, and that co-ordination is still something the supply chain is missing.
“To form the group, we called every grower that we could think of that would be interested in the area and invited them to a meeting where we explained the situation and basically told them that there were two doors out of the room,” she says. “We were left with six growers and the model we put together was that we would create different hubs within their businesses and they would become like category managers - so a hub for salads, roots and brassicas, etc, which would then be delivered to the schools and care homes by transportation company Igloo Thermo-Logistics.
“It could have worked, but the growers had issues in getting together and would not agree on prices. We spent 18 months putting the bid together for around 300 orders a week, won the bid and then certain companies within PSPS decided they did not need someone to co-ordinate them any longer. Unfortunately for them, the contract was under the administrator’s name and we had to find a new hub. Growers such as D Westwood & Son and Metcalfe Organics stayed with me and new growers were brought in, such as Hedon Salads.”
Despite the problems, Scantlebury believes that the co-operative model can work. “If each part of the supply chain does its bit and takes its fair share of the profit, then companies like PSPS will work,” she says. “Product gets eschewed by the price and when a lot of people get involved, it can be a minefield. But organisations such as PSPS can work if you get the people in the group to work together.
“At the end of the day, it makes sense; we should be able to support our society, whether it be in schools, hospitals, nursing homes or prisons. Before Jamie Oliver made his programme about schools, authorities were spending 30p a meal - you would spend more than that on a dog.
“Producers have got to make money and, with public sector contracts, the pay is regular and on time, but there is that feel-good factor they also get when supplying schools, hospitals and nursing homes, etc. Growers like the fact that their fruit and vegetables are feeding the people who need them. There are long-term contracts to take advantage of and, once everyone knows their place in the supply chain and can work as a team, the fresh produce industry will have a lot of opportunities to build a sustainable future by supplying the public sector.”
Success stories
Feast Fresh was formed when Roberts branched out on her own in 2007. She now uses Leeds-based wholesaler Gilbert Thompson as a third-party supplier, as well as other growers. The firm now accounts for two contracts that make up more than 400 deliveries a week throughout Leeds and Nottingham to schools, care homes, nurseries and a council-run sports stadium. Orders are sent to its office and logged in an electrical system, which then sorts which orders should go to which supplier. The suppliers then bring the orders to a hub in Sherburn in Elmet, Leeds, which is run by Igloo Thermo-Logistics and where produce orders for the individual organisations are sent out.
“Our system works very well,” says Roberts. “It is important to have the right people in your team. For example, a driver that knows his or her delivery route is key. Generally with the public sector, the delivery window for goods is short and there is an allotted time for schools and hospitals - it is not like delivering to restaurants, which can pretty much accept a delivery any time of the day.”
But fresh produce companies can go it alone and also reap the benefits associated with supplying the public sector. One of the pioneers of the movement, Stuart’s Foods, started supplying one hospital through a Scarborough and North East Yorkshire NHS Trust contract in the late 1980s, when it was asked to provide prepared peeled potatoes for a six-week period. The company still supplies the hospital with potatoes today, along with a full assortment of prepared fruit and vegetables and, since 2000, has integrated a foodservice element into the business and taken on further public sector contracts.
“We started supplying the hospital with prepared potatoes because a new kitchen was being built and they did not have the room to prepare the product themselves,” explains managing director Stuart Howard. “But the contract length went from six weeks to a year and then we were called in again later when the hospital decided to change the use of their rumble [potato peeling] room.”
In the late 1980s, Stuart’s Foods was a newly formed, small company that concentrated on prepared potatoes, but in 1990 it moved to new premises and started to source local fruit and vegetables for its customers.
“In 2000, we really started to focus on the public sector and it now takes up about 40 per cent of our business,” says Howard. “The public sector can provide a volume order on a local level and the organisations purchase very regularly and provide regular payments. We usually find that when we get involved with a hospital, there tends to be someone professional in charge of buying and they order a week in advance.”
New Covent Garden Market wholesaler Cream of the Crop started out as just “a man and his van” to a foodservice supplier and first became involved in supplying the public sector with fresh produce in 2004, when it identified the sector to be viable for its business model. The company believes that supplying the public sector guarantees payment to terms without fear of bankruptcy.
“The public sector wants a supplier with specialist knowledge and fresh product, rather than bulk packaged frozen or mass-produced produce,” says sales manager David Swain. “It needs a proper level of service that is customer-orientated, rather than delivery times and service levels based on what suits a big multi-national company.”
Stuart’s Foods approached its contracts with North Yorkshire and East Yorkshire county councils, as well as the trust, by itself, and maintains that serving the public sector can open up opportunities on the private sector front as well. “It is a guaranteed volume order and you can arrange other private venture customers along the route,” he says.
The changing face of schools
Due to a rediscovered interest in food and where it is sourced from, school kitchens have come on leaps and bounds in the last five years. Catering supplies in schools were in decline after the broadcast of Oliver’s TV series Jamie’s School Dinners panicked most parents into sending their children to school with a packed lunch, and mostly non-skilled and under-equipped school kitchens came under the microscope.
“Some schools in Leeds were being served by a centralised cooking unit,” explains Scantlebury. “They would cook frozen broccoli and keep it warm in the vans until it reached the school kitchen. By the time it got to the children’s plates, it was mush -there is no wonder that the children were not interested in where that came from. There was a lack of respect for the product. There is no point in producing to a good standard in the field if, by the time it arrives on the plate or hospital tray, it is horrible.
“Because people have started to feel differently about food and individuals in either the government or the community have put that into practise, school kitchens have really come a long way.”
Roberts agrees. Feast Fresh started to supply schools amid the Oliver campaign and was initially faced with a whole host of problems. “The first three months were hell for everyone,” she says. “There were new school nutrition standards and a new range of menus, as well as a huge pressure on the local authorities and the dinner ladies.
“It took a year for the system to settle, but now they are really taking fresh produce on board. From September last year, though, the schools have been very price-conscious and will even change menus mid-term to accommodate a cheaper option at that time, but it is still all fresh and high-quality produce; they are just using the market to their advantage.”
Feast Fresh had trouble getting schools to understand the advantages of eating seasonally at first, but those teething problems have also smoothed out along the way. “In the first year, we could not believe the amount of orders we were getting in for strawberries in February,” says Roberts. “We had to educate our customers and learn to have the confidence to say that something is not in season. They are much more switched on now. And we now advise what is in season and where it is grown on the order form, which helps the process. But we do have to cater for a lot of theme days, where they will need fruit from a certain country or events such as Chinese New Year. And we also go into the school to hold healthy-eating events for the children.”
Healthy hospitals?
The food provided in the country’s hospitals has been a cause for concern for many years now, with some new hospitals even being built without kitchens. A lot of the nation’s hospitals are served in the same way as some schools, by a centralised cooking unit.
Swain feels strongly about the demise of the hospital kitchen and believes that the public sector is sacrificing quality and health. “Budgets will determine the extent to which new specialised suppliers will be able to break in and improve the standards of food in hospitals,” he says. “It is no coincidence that the poor reputation of food in hospitals - and the decrease in patient recovery times - has coincided with a time when the cheapest option has won contracts.”
But Howard thinks hospitals are on the way up and are transforming, just as schools have. “All the hospitals we supply have their own kitchens,” he says. “I know that units became popular at one point, but the use of them has certainly stopped in the Yorkshire area. Hospitals tend to use more ready prepared vegetables, where individual schools are usually a smaller affair and can prep more on the day. Hospitals prefer to use us, as we can deliver more regularly than a one-stop-shop supplier, and they have found that they rely on receiving fresh produce every day.
“Suppliers have to make sure that they have the necessary accreditation, such as British Retail Consortium, in place to serve the public sector and have good refrigerated vehicles. They also need to provide quality and price along with that.”
Future potential
FEASTnet is now in talks to tender for some large public sector contracts in the East Midlands, and Scantlebury is very optimistic about the future. “Lots of councils are coming together in the East Midlands and we have been making sure that companies in the area are aware of the opportunities coming up,” she reveals. “Once live tenders happen, it is fast and you need to get through the paperwork, as well as everything else that goes with it.
“There are so many opportunities out there and, because of the recession, people need to think about obtaining further business.”
Roberts believes that the fresh produce industry has embraced the public sector over the last five years, but feels that there is still a long way to go. “We are still at the tip of the iceberg and we have a long way to go to convince growers and suppliers of the opportunities,” she says.
“The great benefits of supplying the public sector are that the organisations pay on time and are safe customers in this climate - which is quite an important consideration now.
“The public sector is more approachable now and large, difficult tenders are more user-friendly. At one point, you needed a degree just to read through the paperwork.
“But the public sector will never be able to go out and visit growers - it is impossible for a dinner lady, for instance, to go out on the farms, so there has to be an ordering system and someone to take control of the sourcing. That is where the opportunities open up for wholesalers as well.”
Swain claims that the public sector is more approachable and is “certainly talking the talk” with regard to using specialist suppliers from the wholesale market, but believes that this has yet to be translated into real action so far.
He thinks that the public sector still has a long way to go to accommodate fresh produce companies. “Unfortunately, the public sector tends to buy from larger foodservice providers due to price and convenience,” says Swain. “I have worked hard to increase our market share in this sector, but have found that, while many catering managers talk about sustainability, seasonality and quality, invariably they go for the lowest price. This means that the produce is often mass-produced, mass-manufactured and sourced from a big multi-national company abroad, where wages and therefore costs are lower.”
But Scantlebury is not deterred and advises any fresh produce company looking into supplying the public sector that it should turn to companies that are already supplying the sector and see if they are willing to work alongside it. “You will need distribution, logistics and a good wholesaler to make sure you can provide everything asked of you,” she says. “You need to make sure your house is in order, with accreditations and all the paperwork to hand, which is common sense to any desk-based business, but not necessarily for a farm.
“Learn how to find an opportunity. There are lots of agencies and local authorities out there that can help. The online version of the Official Journal of the European Union (OJEU) publishes public sector contracts available in the EU and, although it can be a bit daunting, producers would probably find it useful to familiarise themselves with the process and then it will not be such a barrier when they go for a contract.
“If you get on board with the public sector, you can reap the rewards of a good long-term contract.”
Roberts agrees. “It can only get better for fresh produce businesses,” she says. “Tenders come up every two to three years and we are now getting to the stage where local authorities are renewing their contracts - and they may not have been switched on to local sourcing and sustainability when the contract was last taken up. We are all at the beginning of this journey and I can only see the opportunities growing.”
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