Building purchasing power: a look at how volume purchasing works in Arizona

Food and Nutrition, Fall-Winter, 1989 by Dick Montoya

When the Master Supplier Program was begun in December 1988, it was accepted so well and so quickly that warehouse stocks were almost immediately depleted. According to 20th Century Food Products marketing specialist Ron McConnehea, it took about a month to get the inventory settled down. "We couldn't stock the warehouse fast enough," says McConnehea.

In the first 4 months of operation, the Master Supplier Program used 373,000 pounds of surplus federal commodities to produce 25,000, cases of finished product. Of the state's eligible agencies, 57 percent are participating in the Master Supplier Program.

Darrel Gray, 20th Century's commodity expert, and McConnehea admit that they are still learning and fine tuning the program.

As part of their education, Gray and McConnehea have found that they need to make adjustments for recipient agencies other than schools. For example, a single school-size portion often isn't large enough for prisons and some other institutions and two portions are too large. They have recommended changes to better serve these agencies.

Discount system

saves money

"A significant advantage of the Master Supplier Program," Lander says, "is that it allows the recipient agencies to buy commodity processed finished goods on a discount basis rather than the refund system. It means savings for recipient agencies since they don't have to apply for and wait for refunds from processors.

"In addition," she says, "they avoid the larger distributor markups which in refund programs are usually based on gross price rather than net price."

One area that Gray expects to become more involved in is keeping attuned to the USDA marketplace. "I've got to be able to anticipate what products might be in surplus. Then find producers who will develop products that use that surplus."

Although 20th Century is not involved in awarding contracts, they do encourage processors to participate in commodity processing by making it more cost efficient for them. "Instead of ordering honey in cans, or butter in 32 1-ounce prints," Gray explains, "we tell them they can get large drums of honey and 68-pound bulk butter from USDA. They don't have to open all those cans and packages, and it cuts costs.

"These are just some simple things the federal government and the state can do in working with the private sector to make the whole program work better."

Lander credits much of the initial success of the Master Supplier Program to Gray and McConnehea's commitment to servicing their clients. Initially Gray and McConnehea thought that they would hire one full-time person and that they could alternate visiting the program weekly. However, they have both become so involved with the program that both spend much of their time in Arizona.

To better serve their clients, they have installed a fax machine and a toll free number so recipient agencies can transmit or call their complaints in.

Not just for

big schools

One of the most frustrating challenges McConnehea faces is marketing the Master Supplier Program. "The schools and agencies have been very cooperative. They've arranged workshops for me, some on Saturdays, and brought the people out to hear about the program," he says. But despite the workshops, articles in statewide newsletters, and one-on-one meetings, McConnehea still runs into the school lunch director who says, "Oh, I thought this was only for the big schools."