2. Entering wholesale markets: strategies and resources for small & Mid-scale farm businesses
A Curriculum Unit for Small Business Centers
Rebecca Dunning| CEFS – NCGT | February 14,

3. Components of the Local Food System
Local Food Economy
PRODUCTION
Land use, land protections, the business of farming
Suppliers’ suppliers Direct suppliers Farmers & producers
STORAGE & PROCESSING
Cold storage, value-added food products, food manufacturing
Food hubs/aggregation Cold storage units Processing centers Commercial kitchens
DISTRIBUTION & SALES
Wholesale and retail supply chains, transportation channels, warehousing
Trucking companies Grocery warehouses Sales teams
CONSUMPTION & ACCESS
Wholesale, retail, direct-to-consumer sales, food security initiatives
Restaurants, specialty markets, institutions, CSAs, farmers’ markets, grocery stores, food banks/pantries
Components of the Local Food System

4. Steps to Market (the supply chain)
Consumer
Retailing/Food Service
Wholesaling/Distribution
Processing
Production
Steps to Market (the supply chain)
Input Supplier

5. Where do you think you want to be?
Consumer
Retailing/Food Service
Wholesaling/Distribution
Processing
Production
Ask participants where they are in this chain. If they have not yet started a business, ask them to think about where they plan to be, and encourage people to give examples of businesses at each point in the supply chain. It’s not all about just being a primary producer. Or even a producer at all, you can be a support services business.
Think about all the things that go with making a product and bringing it to market, and how many of those things you want or are able to be involved in.
The more steps you take ownership of, the more stretched you are. Consider collaborating with others of similar size and holding similar ideas (e.g., producing a 100% local value added product to area restaurants and retailers).
Steps to Market (the supply chain)
Input Supplier

6. Selling Wholesale and/or Being the Wholesaler
Retailing/Restaurant
Wholesaling/Distribution
Production
Let’s imagine you’re planning to be the producer and also act as the wholesaler, delivering to retail and food service customers.
OR alternatively
Your’e the producer but sell to a wholesaler.
Selling Wholesale and/or Being the Wholesaler

7. Selling Wholesale – Consider:
Costs of Production
If you don’t know your costs of production, you can’t wisely make decisions on price and where to sell
What and How Much to Produce
Base it on your existing assets, your skills, and what you like to do; conduct a market assessment (estimate volume and price)
If You are the Wholesaler – Food Service (restaurant)
Selling/delivering direct to restaurants – timing, relationships, communication; small quantities, likely no GAP required for produce; cold chain important; labeling not required (except for meat)
If You are the Wholesaler – Grocery Stores
Selling/delivering direct to grocery stores - timing, relationships, communication; case and bin quantities; likely GAP required; cold chain essential; labeling essential; differentiation key.
(go through each on in succeeding slides)
If You Sell to a Wholesaler – Grocery or Food Service
Communication, quantity, quality; GAP, cold chain, labeling essential. Pallets not cases; Bins for grocery but not food service; Risk of rejection for produce; differentiation key.

8. Where and How to Sell – Consider:
Costs of Production
If you don’t know your costs of production, you can’t wisely make decisions on price and where to sell
Resources for understanding costs of production so you can estimate your breakeven price.

9. Where and How to Sell – Consider:
Costs of Production
If you don’t know your costs of production, you can’t wisely make decisions on price and where to sell
What and How Much to Produce
Base it on your existing assets, your skills, and what you like to do; conduct a market assessment (estimate volume and price)
Classes at Small Business Centers like this!
=> A Business Plan

10. Where and How to Sell – Consider:
Costs of Production
If you don’t know your costs of production, you can’t wisely make decisions on price and where to sell
What and How Much to Produce
Base it on your existing assets, your skills, and what you like to do; conduct a market assessment (estimate volume and price)
If You are the Wholesaler – Food Service (restaurant)
Selling/delivering direct to restaurants – timing, relationships, communication; small quantities, likely no GAP required for produce; cold chain important; labeling not required (except for meat)
If You are the Wholesaler – Grocery Stores
Selling/delivering direct to grocery stores - timing, relationships, communication; case and bin quantities; likely GAP required; cold chain essential; labeling essential; differentiation key.
Discuss differences between the highlighted items—differences are detailed in next two slides.
If You Sell to a Wholesaler – Grocery or Food Service
Communication, quantity, quality; GAP, cold chain, labeling essential. Pallets not cases; Bins for grocery but not food service; Risk of rejection for produce; differentiation key.

11. When You are the Wholesaler
Who holds the liability?
Liability
Determine the insurance needs of the buyer
Typically $1- $2 million for grocery; may be none for restaurant but that leaves you vulnerable
How and over what distance?
Delivery
Cold chain!! How will you maintain it.
Explore restaurants/grocers within a small footprint; look for restaurant groups with commissary kitchens
Consider delivery windows for each; how can you make it work so you are not driving all the time; Will you have a minimum order?
Products & communication
Ordering
Restaurants like specialty; Grocers like commodity
Restaurants and grocers can be flexible if they have backup
If they have backup, that makes you dispensable
It is “all about relationships,” but people have to make a living
Set expectations: What, when, contingencies
Discuss restaurant vs grocery differences, get participants to concretely walk through how they will do this.

12. Resources
“Selling Direct to Grocery Stores” Series from NC Growing Together

13. When You Sell to a Wholesaler
Who holds the liability?
Liability
Determine the insurance needs of the buyer
Typically $2 million+
Indemnity
Product rejection at the warehouse
How and over what distance?
Delivery
Cold chain!! How will you maintain it. Temps will be taken.
Pick up vs delivery; don’t plan on backhaul; backhaul means you are available to meet the truck whenever it arrives
Do you produce enough to justify wholesale?
Products & communication
Ordering
They won’t “tell you what to grow”
Grower contracts – you have to prove yourself first
Contract or not: Establish what is being agreed to, get it in an
Wholesalers are not typically flexible – you’d better have it
Be committed to lower prices on some items if you go this route
Price will be 30-50% less than what you’d get selling direct to consumer

14. Resources
Selling to a Wholesale/Distributor resources from NC Growing Together

15. Resources
Meeting buyers

16. This curriculum unit was developed as part of a series of units for use by Small Business Centers and others teaching food & farm business courses across North Carolina. Additional units include Introduction to Food Safety, Direct Marketing, and Social and Online Media for Farm & Food Businesses.
Please visit to learn more, download resources for classes, or find additional units.