Innovations in Value Chain Infrastructure - Red Tomato
Can Red Tomato build a regional supply chain that maintains the highest quality, and satisfies both farmers and consumers alike?
Red Tomato, a small nonprofit business in Massachusetts, is the marketing agent for a network of 40 mid-size farms in the Northeast. Red Tomato orchestrates their supply into more than 200 supermarkets in the greater Boston area, and as of recently, in the greater NYC metro area. To satisfy farms and deliver high-quality produce to distributors, Red Tomato's value-added strategy is to differentiate products, or decommodify them, through branding, local and farm identity, packaging, variety choice and diversity, eco certification, aggregation, and through intense focus on quality control to maximize flavor and freshness.
Can Red Tomato build a regional supply chain that maintains the highest quality, and satisfies both farmers and consumers alike? This webinar explores this question as well as some of the contradictions in the system, such as seasonality vs. the year-round supply that is required to compete in the produce industry.
Michael Rozyne, Co-Director, Red Tomato
Answers to Additional Questions
The Cluster Call was packed with terrific questions, and there were a few that Michael wasn't able to answer within the time constraints of the Cluster Call. Here we present those questions, and Micheal's thoughtful answers.
What do you think of the Wescott model where regional product is the focus of the business, but it is "cushioned" with product to cover 12 month demand?
We’ve thought a lot about how to address the demand for year-round supply. I don’t know the specifics of Wescott, but I would say in general, if regional product is really a significant portion of someone’s business, cushioning it with other product makes sense. If regional and local is only a small percent of the sales, it ends up being more like window-dressing for the rest, and I’m not sure that’s a benefit.
How does red tomato view filling the 95% of the market filled by mid level local farms and out of region suppliers? What is the role of RT, beyond the few farms it is working with?
We hold the 5% or so of the market that is direct sales in high admiration—they are really doing something magic for consumers. But the other 95% is exactly what we are working on. In terms of our role beyond our specific network of farms, we see our work as helping to test and develop strategies that we hope are then useful to others with similar goals. We spend a certain amount of time working with other networks, researchers, collaborations of various kinds, and also giving presentations, providing consulting on other food systems projects, and sharing our current thinking when we have an opportunity, such as this webinar.
Have you had any success working with State agencies, such as school meals or hospitals?
Mainly this has not been our focus. We do sell through several distributors that serve institutional markets; so for example, Harvard Medical School food service uses our produce, and we have been involved with the Boston Food and Fitness Initiative exploring ways to bring fresh local produce to various communities.
Do you think that in order to replicate this sort of marketing/brokerage assistance, it requires grants to subsidize? Unclear the breakdown of grants vs fees?
Red Tomato is funded approximately 2/3 by grants, foundations and individual donors, and 1/3 by income from our trade activities. The grants and donors support research, pilot projects, grower network meetings, video production and a wide range of activities that are fundamental to our work, but that are not possible to support on the very slim margins in the commercial produce industry. It may be possible to operate as a progressive-minded produce broker without grants, but it is not possible to invest in the kind of market development, grower development, crop research, and sharing of knowledge that are part of Red Tomato’s mission without some type of financial support.
Do you ever try to negotiate the retail price as part of the partnership development?
Negotiating retail prices (the end price to consumers) is always part of the conversation when we are bringing growers and retail buyers together. We try to find the price point that the retailer believes will work for their market, and at the same time will be adequate return for the grower. It’s always a dance.