Model for a Local Food Buying Club

See also:
http://www.kcfoodcircle.org/buyingclubs/LBC-Only.html

(v.1 – 11-18-07)

PURPOSE

The purpose of this document is to create a model and a network to help highly motivated individual consumers buy organically and locally produced, fresh and processed foods year-round. Local Food Buying Clubs (LFBCs) can be one element in an ecologically sound and energy efficient community food system.

EXPLANATIONS

What is a Community Food System ? A community food system promotes the local production and consumption of sustainably grown food with the objective of maximizing the economic benefit to the area community and minimizing the ecological damage. A community food system consists of local food producers (generally within 120 miles from Kansas City), farmers markets, CSAs, farm based outlets, specialized retail outlets, food buying clubs and the network of people who support these activities. These elements are interrelated and can be used together for the common purpose.

What is a Food Buying Club? Historically a food buying club was a group of individuals and families who got together to buy directly from a natural foods warehouse. Members shared a strong interest in organic and natural foods and were generally able, especially in the early years of the movement, to save money over retail prices and improve product choice. The natural food warehouses obtained truck-load shipments of processed & packaged food products primarily from outside of the region. Buying Clubs in Kansas City consolidated individual orders and sent them to the Ozark Cooperative Warehouse or to the Blooming Prairie Cooperative Warehouse. However, Ozark went out of business in 2006, and Blooming Prairie was purchased by a large national distributor several years ago.

A Local Food Buying Club . While it sounds rather simple, It is actually difficult for eaters to access off-season the kind of personalized, healthy local foods they are accustomed to buying. Even free-range meat products become less available in winter. The purpose of a Local Food Buying Club is to make it easier for eaters to obtain value added products off-season from local and regional sources in an energy efficient manner.

The Kansas City Food Circle has no interest in helping to bring food products from California and Florida at great energy cost. While a Local Food Buying Club, once formed, can buy whatever they choose, the primary object of the KCFC is to enable people to access more local and regional food products off-season, and at the same time help members take advantage of existing seasonal local food opportunities such as CSAs and farmers markets.

The LFBC will be significantly different from a traditional FBC where members ordered out of a catalog and scheduled a monthly or bi-weekly delivery from the warehouse to a central location. No warehouse will be performing the intermediary buying and staging function. Members of a LFBC will be buying from a number of local producers and scheduling multiple deliveries and farm pickups. This indicates that the best model for LFBCs is a large number of relatively small, geographically diverse LFBCs in the Kansas City area.

CSAs and LFBCs . Community Supported Agriculture subscription services are a type of Local Food Buying Club managed by one or more farmers to distribute very fresh produce during the growing season. A LFBC may be a natural extension of an existing CSA (and vice versa) if the farmer(s) wants to continue into the off-season.

Local Products. Examples of local products that can be obtained off-season in the Kansas City region are baking flours, frozen free-range meats, dairy products, baked goods, salsas, dried tomatoes, fruit preserves, honey, sorghum syrup, squash, and root crops. Most of these are considered “value-added” products. This means the raw ingredients are made into specialized products like bread, or the raw food is processed (canned, dried) to extend its shelf life.

How Do We Find these Products. A good question. Most of us know where to find fresh organic produce during the season. After the markets close for the season, though, it gets tougher. The KCFC already maintains a list of Organic and Free Range Food Producers (www.KCFoodCircle.org). Some of them make products available off-season and you can do a search by the product you are looking for. We will also be building a specific product list that may include sources of value-added products from non-member local producers and from producers of important off-season staples in surrounding states.

In addition to individual growers’ listings on the KCFC web site and our KCFC Featured Farmers Markets, local suppliers can be located through
Kansas River Valley
(www.KansasRiverValley.com) and Missouri Exchange (www.MissouriExchange.com).

National guides are also available that include many local producers:
Local Harvest (www.LocalHarvest.org)
Eat Well Guide for (mostly) meat and dairy products (www.EatWellGuide.org)
Eat Wild Guide for grass fed meat products (www.EatWild.com)
Note: Not all the products listed on these guides are organically grown or free range so be sure to contact the producer(s) in this regard.

How Eaters and Producers Help Each Other.  After farmers markets and traditional CSA’s close down for the season, producers cannot easily distribute their value added products to eaters. Thus it would really help if producers could sell a large quantity of product to a Local Food Buying Club where it would be economically worthwhile to deliver to a single point or make it worthwhile for a Club member to go out to the farm.

Local Food Buying Clubs can also facilitate the bulk purchase of important processed grain staples not grown in the immediate area but still in the region, such as organic rolled oats from Nebraska or western Kansas and organic rice from Arkansas. The product is then subdivided by Club members.

Other Possible Activities of a LFBC . Buying clubs could also form the basis for home processing of excess fresh produce. For example, one member of a group might own a dehydrator and be willing to dry large quantities of premium tomatoes in season and sell to (or trade with) other group members.

It’s Fun! A strong social element will develop within the Club as people make friends and share their interest in cooking and fine foods. Members might have a potluck once a month to trade tips on buying great local products. The club could do farm tours. And it would be supporting good cause…keeping our local organic producers in business.

Who Should Consider Joining a LFBC? Usually it is people who really care about their personal health and the health of their children, who are willing to go the extra mile to obtain top quality food, who are concerned about the environmental impacts of the industrial food system and who care about how farm animals are treated. It’s important to understand that membership in a buying club may take a little more time compared to just stopping by the supermarket. Each member will need to pitch in and help with the various tasks as mentioned below.

HOW ARE BUYING CLUBS ORGANIZED ?

Type of Management . LFBCs can be eater- managed or producer -managed. A producer or producer’s coop that already manages a CSA may opt to manage a LFBC to help their existing members get the good stuff off-season. It would also help maintain loyalty to their CSA and facilitate distribution of their value added products. In that case eaters should expect to pay for that service from the producer.

A major advantage of the producer managed LFBC is that the group has already been organized and members already know each other. Also the farm, if fairly centrally located, would be an ideal staging point where refrigeration equipment is already located or could be located by the LFBC.

The model described in this document, however, is focused primarily on LFBCs that are organized and managed by eaters. Actually your CSA farmer may choose to take off his farmer hat and just become one of the eater crowd in the LFBC, and pitch in along with everyone else.

Degree of Organization . A formally organized LFBC has a treasurer and a bank account to pay producers for bulk orders and to receive payments from members. It would have one or two coordinators who schedule distribution and social events and other volunteer jobs. If successful, such a group could eventually go on to form a retail cooperative with professional management.

On the other hand it is possible to put together an informally organized group, essentially an email list, that consists of people who have expressed an interest in getting together from time to time to order in bulk. For example, one member might send out an email to the list saying that she or he plans to order 100 pounds of organic rolled oats and asking if anyone wishes to participate. In this case that individual would take the initiative to order, pick up, pay for and distribute the product among the ad hoc participants.

In this case no group bank account or treasurer is needed. However a coordinator, or list leader, would still be needed to add and subtract members and announce the availability of new products and other news. Transparency would be, to a substantial extent, available from the common list of products and prices assessable through the KCFC website. While it would probably not be necessary to assess members a membership fee participants will need to use a few supply items they probably already have such as a weighing scale, reusable plastic containers and foam coolers.

Energy Considerations . Every attempt should be made to organize LFBCs within a particular area of town to minimize unnecessary vehicle miles traveled. Alternately an LFBC can be organized from an existing affinity group that already holds regular meetings. E-mail communications should be used as much as possible such as to compile individual orders. The KCFC will help potential members find each other through our website. However, some minimum local travel will be necessary and desirable to hold occasional get-togethers to socialize.

GETTING STARTED

Finding Members . It’s best to start with at least five or six families who share your interest in local organic foods and already have some experience in obtaining them. Look for interested people in environmental groups, at your church, and in your neighborhood, especially those neighbors who like to garden, regularly go to farmers markets or who grew up in rural areas. Also the Kansas City Food Circle will keep on our website a list of people who have expressed interest in LFBCs and the area of the region where they live. What follows describes a formally organized LFBC.

A potluck organizational meeting is a good way to get everyone together for introductions, to make decisions about the operations of the group, and divide up the work.

The following jobs need to be assigned:

  • Coordinator . This person develops the schedule for ordering, delivery and pickup. She or he researches producer directories and develops relationships with new suppliers. She or he also handles any problems with product returns and credits.
  • Treasurer . This person opens and manages the bank account, keeps the books and pays the producers.
  • Order Compiler . This person receives individual orders from members by email. She or he combines them as necessary and transmits the orders to the local and regional producers.
  • Order Receiver . This person is responsible for checking and accepting delivery of the items as they come in. Since one is not dealing with a single warehouse, delivery of items from various producers will occur at different times. Unless the LFBC has a relationship with a staffed commercial location, this will best be accomplished at one’s home. Ideally this person would have refrigerator and freezer space to temporarily store certain items. Otherwise this person will need to take perishable items to the Club’s central location if it has refrigeration equipment. For this to work it is critical that each member pick up his or her order promptly as promised. Otherwise, it will become a serious burden on the order receiver who likely will quit.Alternately the coordinator can schedule the distribution on the day of receipt of these items. This job should be rotated among members periodically to prevent it from becoming burdensome.
  • Farm Pick- Up . While it will normally be best to rely on the producer to drop off his or her products or to rely on UPS shipment, the Club may find it desirable to pick up an order at the farm. The Coordinator should ask for a volunteer as needed especially if he or she knows of someone already headed in that direction.
  • Pick-up Coordinator . It will be everyone’s responsibility to arrive on time at the central pick up point and to help break down the order for distribution to each family and to make payment. However one person should be designated to supervise, ensuring that nothing gets left behind and the place is cleaned up.

It’s best to limit the membership of a LFBC to a manageable size, say 10 or 15 families. If the jobs get to be too burdensome, it won’t be fun anymore, and people will begin to drop out.

Finding a Location . Next you need a place to meet once a month where everyone picks up their order and where the group can have occasional potluck meetings to socialize and conduct a little business. This can be done in someone’s home but it’s best to find a public place like a church basement or a community center even if it requires paying some rent. Maybe someone in the group owns some commercial space that she or he is willing to rent or share.

The problem with using a home, especially the same person’s home month after month is that it can become a burden if other members are not reliable about picking up their food at the appointed time.

Member Assessments . The LFBC will need some start up money especially if the group will be paying rent for space. The initial assessment should be a significant amount, say $100.00, for three reasons. First there will be some minor equipment and supplies that must be purchased. It’s too much paperwork for the treasurer to collect monthly, or even quarterly assessments to cover these items (try an annual assessment to replenish the account as needed).

Second, a significant upfront commitment weeds out people who are just curious or will soon find out it requires a time commitment. A good way to accommodate new prospects is for their member friends to order for them for a few months and have them come to distribution nights so they can decide if they are really interested.

Finally the upfront investment protects the Club from a member who orders more than he or she wants or decides to move away on short notice and leaves behind the order (this happens!).

Each member should sign a form agreeing that his or her initial assessment can be applied to arrears in payment. Members in good standing, however, should be able to recoup what’s left of their original assessment if they leave the group.

Equipment and supplies . The Club will need a scale, a scoop and some supplies like bags and ties for break down of bulk purchases into smaller amounts according to individual orders. There will be a need for some form of refrigeration. However it is not recommended that the Club buy its own refrigerator or freezer that runs empty 90% of the time, just to store product for pick up. A better solution is to carefully schedule delivery of frozen items the day of the pickup. The Club will need to buy a number of large, well-insulated portable coolers.

For example, four families decide to go in on the purchase of a whole beef.

One member volunteers to drive out to the locker plant and takes the Club’s coolers. The locker plant is happy to segregate each family’s quarter beef so these can easily be packed into individual coolers for transport back to the central pick-up point. It’s best to do this during late Fall so that the weather is cool. That’s the way things were done many years ago before the advent of personal freezers. That is, animals were processed in the late fall and the meat was smoked or stored in central ice houses.

If the Club is renting space at a church which already has a refrigerator or freezer, one might ask to temporarily use their facility. However the public will likely have access to the product briefly before the distribution is made.

TAXES

Sales taxes . Purchases made by the LFBC are final sales, and the club must pay sales taxes to producers on purchases received in the same state where the items were shipped (intra-state sales). Conversely, though, the club does not need to pay sales tax on items shipped in from another state. It would be wise for the LFBC to declare its location in either Kansas or Missouri via the information provided to the bank for its account. The club could take the position that it is a wholesale distributor to its members, but that means the club must charge its members sales tax and do a lot of paperwork to report and send in these taxes.

Income Taxes . As far as we know from calls to the IRS, a formally organized LFBC would need to file a 1120a (short-form) tax return as a business whether they make a profit or not. However, if all product payments go out to pay producers there should be no profit to pay taxes on. Since the assessments are subject to being returned (less expenditures), they are a liability and not revenue unless spent for supplies. At that point the expense exactly offsets the revenue and there is still no profit. The KCFC, however, is not responsible for the accuracy of this opinion, and each LFBC should confirm for itself their tax treatment.

Organizing an informal LFBC . The easiest approach would be to ask an existing affinity group in which one has membership if they would be interested. If they are unwilling to allow the existing email list to be used routinely for this purpose just collect interested members in the beginning, agree on a name, and start a new email listserve. Select a coordinator and find one or two volunteers who will review availability of products on the Kansas City Food Circle website as well as other guides previously listed. In order to increase understanding and trust among the list members it would still be useful to hold occasional social gatherings.

It would still be necessary to pay sales taxes to vendors but income taxes would not be a worry.

For more information contact Craig Volland, Co-coordinator of the Kansas City Food Circle, at hartwood2 (@) mindspring.com

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See also:

http://www.kcfoodcircle.org/buyingclubs/LBC-Only.html