One of the challenges in local and regional meat markets is that the supply chains are “immature”: the complex distribution networks that exist in conventional meat markets with a wide range of distributors, brokers, service providers, and sales people are often lacking for local and regional meats.
On the most recent NMPAN Advisory Board call, we heard from Jennifer Curtis, Co-CEO of Firsthand Foods in Durham, NC, which tries to fill the gap between local producers and local markets.
Firsthand Foods is a branded meat company that specializes in selling pasture-raised meats from a network of North Carolina farmers. It all started with one local grocery store. Curtis was working at NC Choices, a Center for Environmental Farming Systems initiative that “advances local meat supply chains by providing networking opportunities, educational programming and technical assistance for producers, meat processors, buyers, and food professionals,” and she was trying to figure out how to get more local meats into local markets. This challenge led to the creation of Firsthand Foods.
Firsthand buys whole animals from local farmers, handles all the processing, storage and distribution, and sells the cuts to restaurants, grocers, and through their own subscription-based program. Many farmers in their network do some direct marketing but working with Firsthand Foods allows them to reach “the kind of customer they never could on their own,” says Curtis. “A lot of our producers are thrilled that their product goes to UNC - Chapel Hill, for example, but they could never do that on their own because of the volume required by the university.”
As an aggregator, Firsthand Foods addresses the challenge, for chefs and retailers, of maintaining relationships with many farmers and the challenge, for farmers, of managing processing, inventory management, logistics and customer service. Serving local markets is a lot of work and competition is
“The biggest challenge we have is buyer education,” Curtis says. “People are starting to understand the complexities across production systems, but as the larger distributors get into this market, we're going to need more education around labels and what they mean.”
Firsthand Foods is proud of the fact that their farmers operate independently and pricing is negotiated transparently, considering both production costs and customer willingness-to-pay. Prices are typically set in the fall for the following full year. This is a very different approach than you find in conventional meat supply chains, including the pork industry, which dominates North Carolina: in that model, farmers are price takers, not price makers.
Firsthand Foods works with the North Carolina Natural Hog Growers Association to source all their hogs: they have made an exclusive commitment to them so the farmers can count on Firsthand Foods as a steady customer.
“All of our farmers are profiled on our website,” Curtis explains. “For a lot of our pork farmers this is the only online presence they have. We also make sure every single invoice has the name of the farmer associated with each cut on it, so our restaurants, for example, can tell their customers exactly who raised their pork chop.”
Sourcing local beef was harder. North Carolina is a mostly cow-calf state and there wasn’t an established network of pasture-raised beef producers. Firsthand sources cattle directly from individual beef producers and buys the whole animal. Farmers drop cattle off at one of the two processors they work with: Acre Station in Pinetown, NC, and Chaudhry's Halal Meats in Siler City, NC.
“We don't have any knives, we don't do any cutting, we're not butchers” says Curtis. That’s why their relationships with local processors are so important: without local processors, their business model simply would not work. Firsthand Foods is a reliable, consistent customer for their processors: “we move about 7 beef a week and 12 to 14 hogs per week. For our processors, we're their top customer right behind Whole Foods. We're also there with a fair degree of predictability: for the most part, our cut sheets don't differ too much from week to week.”
Because they can count on Firsthand Foods to provide steady throughput, Curtis notes, “our processors have started to make investments to be able to better serve our and our customers’ needs.”
Once the animals have been slaughtered and processed, the packaged meat is transferred to Firsthand Foods warehouse for inventory and distribution. This allows Firsthand Foods to maintain control of their inventory and do quality control but it does add to their operating costs. “We have to physically handle most of our product. That increases our costs compared to the big processors and distributors.” While Firsthand Foods delivers some of their own orders, the majority is delivered by two local distribution partners, one seafood, one produce.
Firsthand Foods has about 80 different local customers, primarily restaurants. But, says Curtis, “more and more we're adding specialty retailers and larger-scale food service accounts.” Firsthand also does direct to consumer sales via their subscription-based (M)eat Local Box program. This helps them meet their margins, especially in a time of high beef prices. Their Box customers are “die hard local meat enthusiasts” and their willingness to try new things really “helps us move odd parts.”
Firsthand Foods is completing its fourth year in business and is on track to reach $1.25 million in sales this year. They’ve grown their producer network to over 50 farmers and have begun to expand into other geographic markets.
For more on Firsthand Foods, visit firsthandfoods.com.
For more on NC Choices and their leadership in bringing local meat to market in NC, see our USDA-ERS
report Local Meat and Poultry Processing: The Importance of Business Commitments for Long-Term Viability. The section on NC Choices starts on page 35.
Courtesy: Niche Meat Processor Assistance Network