buying local for ubcfs - sustain.ubc.ca · ¡ubc food services (ubcfs) purchases $2m from...
TRANSCRIPT
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BUYING LOCAL FOR UBC FOOD SERVICES
BRANDON SOUTHERNSABRINA DHALLAJIMENA SALINASHENRY POLK
IN COLLABORATION WITH SEEDS SUSTAINABILITY
SUPERVISED BYPROFESSOR JOSHUA GOTTLIEB
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Should UBC Food Services shift up to $500K in annual produce spending towards Vancouver
Farmers’ Market Direct?
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OVERVIEW
Background• Context
• Literature Review Findings
Net Benefit Analysis
Framework
Data Analysis
• Procurement Strategy
• Saving on CO2emissions
• Historical Apple Sales
Conclusion• Recommendations
• Further Considerations
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BACKGROUND
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UBC FOOD SERVICES: SCOPE AND MANDATE
¡ UBCFS provides 85% of on-campus food options, including 2 restaurants and 3 residence dining halls.
¡ UBCFS has stated in their Food Vision and Values a desire to source more locally-produced, ethical and sustainable foods
¡ Mandate: To provide a for-profit service to UBC
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CURRENT SITUATION
¡ UBC Food Services (UBCFS) purchases $2M from FreshPoint
¡ $32,000 from Vancouver Farmers’ Market Direct (VFMD)
¡ VFMD anticipates strong growth
¡ 25 producers in the Metro Van, Abbotsford, and Okanagan regions
¡ Many of VFMD products are more expensive
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RESEARCH QUESTIONS
Economic
• Is it feasible for UBCFS to shift a major proportion of their produce procurement to VFMD? • If so, what is the estimated timeline to
reach a $500k partnership?• How much more are customers willing
to pay for locally sourced produce?
Environmental
• What will be the change in transport related carbon emissions generated by switching to local produce?
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KEY FINDINGS IN THE LITERATURE REVIEW
¡ Grebitus et al. (2013) : Consumers place additional value on locally-produced goods (unless they have an exotic factor).
¡ Estimate of 30-40%
¡ Conflicting evidence as to the overall environmental impact and economic efficiency of local production
¡ Carbon price of $35 per tonne (Parry, Veung, and Heine, 2014)
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NET BENEFIT ANALYSIS FRAMEWORK
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FRAMEWORK
Net Benefit to UBCFS
Environmental Impact
Net Benefit to UBCFS Customers
Net Social Benefit
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FRAMEWORK: UBC FOOD SERVICES
Net Benefit to UBCFS
Environmental Impact
Net Benefit to UBCFS
Customers
Net Social Benefit
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IMPLICATIONS OF THE PROCUREMENT SHIFT: UBCFS
UBCFS is a for profit
organization with a
commitment to sustainable sourcing
UBCFS will generate a net benefit if there is no change to
profit or if profit increases
Typical customers are willing to pay up
to 30% more for local produce
UBCFS cannot increase prices by more than 30% without
incurring a loss in sales
Cost Comparison
Analysis
Need to renegotiate a contract with FreshPoint and manage a new procurement relationship
Increased labour and time costs
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FRAMEWORK
Net Benefit to UBCFS
Environmental Impact
Net Benefit to UBCFS Customers
Net Social Benefit
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IMPLICATIONS OF THE PROCUREMENT SHIFT: ENVIRONMENT
Air PollutionCO2 Emissions
Shipping Method
Ship
Plane
Truck
Shipping Distance
From BC
From California
From Mexico
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FRAMEWORK
Net Benefit to UBCFS
Environmental Impact
Net Benefit to UBCFS
Customers
Net Social Benefit
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IMPLICATIONS OF THE PROCUREMENT SHIFT: UBCFS CUSTOMERS
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BENEFITS TO UBCFS & COST ANALYSIS
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COST ANALYSIS
¡ We calculated the change in UBCFS’ surplus as the percentage change in costs that UBCFS would incur if it switched to sourcing produce locally from VFMD
¡ Available Data
¡ UBCFS’ velocities and the prices of goods sourced from FreshPoint in October 2017
¡ VFMD’s product offerings and current prices
¡ Assumptions
¡ Methodology
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PERCENTAGE INCREASE IN COSTS IF SWITCHING ALL AVAILABLE VFMDPRODUCE
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PERCENTAGE CHANGE IN COSTS IF FILTERING BY A 30% COST DIFFERENTIAL
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ENVIRONMENTAL IMPACT ANALYSIS
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ENVIRONMENTAL IMPACT OF SHIPPING
¡ Assumed farming locations
¡ Mexico City, Mexico
¡ Fresno, CA
¡ Carbon emissions per ton kilometer
¡ 16g/ton kilometer by sea
¡ 64g/ton kilometer by road
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HISTORICAL APPLE SALES ANALYSIS
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CURRENT DEMAND FOR DIFFERENT APPLE VARIETIES
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APPLES ANALYSIS : KEY TAKEAWAYS
¡ Your customers are very sensitive to changes in price
¡ We cannot place a dollar value on the additional customer value for local produce
¡ High variation in price sensitivity for very similar goods
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FRAMEWORK REVISITED
Net Benefit to UBCFS
Environmental Impact
Net Benefit to UBCFS Customers
Net Social Benefit
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LIMITATIONS AND FURTHER STUDIES
¡ An estimate for the value UBCFS consumers place on local produce
¡ What is the additional value that UBC consumers place on prepared dishes made with a specified portion of local ingredients?
¡ What are the logistical costs from the decision to source produce from VFMD?
¡ How do VFMD prices change over the year?
¡ Implications with FreshPoint contract
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VFMD CAPABLE OF MEETING THE INCREASED DEMAND FROM UBC
¡ Feasibility
¡ $100,000 for 2019-2020
¡ $500,000 by 2022-2023 academic year
¡ Client Implication:
¡ Will require an upfront commitment
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RECOMMENDATION
¡ UBCFS to engage in strategic procurement practices
¡ Client Implications:
¡ Evaluate VFMD prices and offerings on a month to month basis to determine which produce items should be sourced locally for that month
¡ Flexibility required in FreshPoint contract
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RECOMMENDATION
¡ UBCFS to minimize price changes
¡ Will ensure that customer gains are more evenly distributed
¡ Client Implications
¡ Additional labour and time costs
¡ Price won’t necessarily reflect cost of the good
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THANK YOU! QUESTIONS?
Brandon Southern
Sabrina Dhalla Henry PolkJimena Salinas