Testimony of Marvin Dillard, Vice President of Purchasing, Ukrops Super Markets, Inc., Hearing to Review the Public-Private Partnerships of Food Banks at the House Subcommittee on Department Operations, Nutrition and Foreign Agriculture Sep 11, 1997 TESTIMONY OF MARVIN DILLARD Vice President of Purchasing Ukrop's Super Markets, Inc. Richmond, Virginia on behalf of the FOOD MARKETING INSTITUTE before the House Subcommittee on Department Operations, Nutrition and Foreign Agriculture Committee on Agriculture U.S. House of Representatives Hearing to Review the Public-Private Partnerships of Food Banks September 11, 1997 Mr. Chairman, my name is Marvin Dillard. I am Vice President of Purchasing, Ukrop's Super Markets, Inc. in Richmond, Virginia. I am also here today on behalf of the Food Marketing Institute. Ukrop's is a 25-store, family-owned supermarket chain and the market leader in the Richmond grocery market. Ukrop's has a Central Bakery, a Central Kitchen, a downtown café -- Ukrop's Fresh Express, a uniform shop and pharmacies in 11 of our stores. Ukrop's is committed to meeting and exceeding customer expectations and is committed to improving the well being of the community. Specifically, Ukrop's contributes 10% of pre-tax profits to charitable organizations; Ukrop's encourages associates to be good community volunteers; and Ukrop's will continue to do our best to help our community reach its full economic, social and political potential. The Food Marketing Institute (FMI) is a nonprofit association conducting programs in research, education, industry relations and public affairs on behalf of its 1,500 members including their subsidiaries - food retailers and wholesalers and their customers in the United States and around the world. FMI's domestic member companies operate approximately 21,000 retail food stores with a combined annual sales volume of $220 billion - more than half of all grocery store sales in the United States. FMI's retail membership is composed of large multi-store chains, small regional firms and independent supermarkets. Ukrop's works with the Central Virginia Foodbank in a number of ways. The retail value of the food products Ukrop's donates to the Central Virginia Foodbank is $1.4 million a year. We also provide technical assistance to the Foodbank and I serve on its Board of Directors and Operations Committee. We have helped the Foodbank by simplifying the distribution of salvage food from Ukrop's by cross docking. This means we take all surplus food from over 20 locations on Ukrop's refrigerated trucks to one central location where the Foodbank can collect it. This not only saves transportation costs for the Foodbank, but allows us to assemble, package, box, and load specific shipments for them. Our vice chairman and CEO, Jim Ukrop, led last year's annual fundraising campaign. I have helped in researching new sites for the food bank warehouse as well as a branch facility to serve rural areas. Ukrop's is a participant in the Prepared and Perishable Food Rescue Program, to further increase distribution of usable, but unsaleable foods and USDA products, and exploration of alternative processing methods for maintaining shelf stability of fresh meats and produce. This program was one of the first of the 40 programs operating in the U.S. We also help with the annual Harvest Drive that supplements the Foodbank's food supply by collecting canned goods through community based food drives throughout the year. We are often asked by community groups that designate the Foodbank in food drives to be their collection point. Our trucks can then make streamlined deliveries to the Foodbank. Ukrop's also participates in an innovative state program, called the Virginia Neighborhood Assistance Program, which employs state tax credits as incentives for business partnerships between the private and public sectors to assist the economically deprived. These tax credits are applied for as grants and then are awarded for specific programs. These funds have helped offset the cost of sorting, freezing, packing and returning to one central location the $1.4 million in food products that Ukrop's donated to the Central Virginia Foodbank last year. Supermarket companies are donating a great variety of both food and nonfood items to food banks. In addition, many companies donate in-kind services and other resources. Many more are providing technical expertise and more are donating money directly to food banks. Over half of the companies sponsor food drives and other events to support food banks. This brings the community together and encourages customers to support food banks. Many supermarket companies use the Internal Revenue Service tax deduction for donations of inventory (T.D. 3962), which provides some additional incentive to donate. Cooperation among the food banks, supermarket companies and manufacturers helps ensure that industry food handling standards are maintained. Second Harvest food banks monitor their associated agencies to ensure the food is handled properly. The Food Marketing Institute's 1996 Community Relations Survey of its members, asked retailers to quantify and prioritize their community relations activities. As you might expect, food banks are a large part of most supermarkets' community programs. For instance, the survey shows: 82% of the respondents donate to food banks 50% donate equipment or supplies 34% coordinate food drives 22% operate reclamation centers In community relations, the four areas that supermarkets are most likely to be involved with are partnering with local schools or youth groups, donating to food banks, partnering with local community groups and sponsoring special events. Also, when asked to identify the top community relations priority, 17% rated hunger programs as the chief priority. Large companies (those with 50 or more stores) were slightly more apt to highlight hunger programs, with 29% of the respondents, representing thousands of stores, identifying hunger programs as the top priority. FMI has done five surveys since 1982, which illustrate retailers' support of food banks over the years. The number of supermarkets donating to food banks has grown steadily and has more than tripled in 14 years - from 25% in 1982 to 82% in 1996. These percentages reflect: A strong commitment within the supermarket industry to find ways to work with food banks. The growth in the food bank network. More cooperation among supermarket companies, manufacturers and charities. Consistent effort by FMI and other grocery industry associations to promote food banks. The continued proficiency of Second Harvest. The incentive provided by T.D. 3962, the federal tax deduction contributors can receive for donating inventory items. FMI executives and member companies have served on the Second Harvest Board of Directors since 1982, and in 1983 FMI established a task force to build support for food banks. In the last 15 years FMI has: Worked closely with Second Harvest to provide standards, staff training and technical advice for food handling and sanitation, in addition to foundation and grant assistance. Developed the Association Outreach Program, which encouraged other food trade associations to support food banks. Created training programs for store personnel on how to properly sort, store and handle damaged products for food banks and other charity programs. Monitored legislation and regulatory proposals related to food banks and hunger relief. Regularly publicized members' food bank programs. Surveyed FMI membership periodically to gauge involvement with food banks. Encouraged exhibitors to donate food and other products after FMI national conventions. Promoted White House programs to recognize businesses and employees for their charitable efforts. How Else Are Food Banks Supported? FMI's survey show that many companies donate in-kind services and other resources. Many donate technical expertise and money, staff to serve on foodbank boards, as well as transportation and equipment. Reclamation Centers Reclamation centers are generally third-party operators who receive, sort, invoice and distribute unsaleable products. Distribution options include returns to the manufacturer, recycling and repacking, reselling, destroying or donating to charity. When food banks and reclamation centers maintain a strong relationship, this can maximize contributions to charity. The advantages of reclamation centers to supermarket companies include: Relieving the wholesaler from administrative and operations duties connected to damaged or otherwise unmarketable goods. A centralized system that can save time and money for those handling damaged products. Supermarket companies can receive credit for damaged product. While in FMI's 1996 Supermarket Community Relations Survey, the median number of 22% of those responding operate reclamation centers, that number is 25.6% for those with 11-49 stores and 71.4% for those with 50 or more stores. New Cooperation Reflects Changes in Supply Chain Supermarkets are continuing to heavily support food banks despite changes in the supply chain that reduce the amount of excess inventory. New programs devised by food banks in concert with manufacturers and distributors are encouraging supermarket cooperation. As packaging and distribution efficiencies in the food industry reduce the amount of damaged and unsaleable merchandise available for distribution to food banks, so Second Harvest has begun a number of programs to increase the percentage of such merchandise that goes to food banks, and to develop new sources of donations. The newest program, Production Alliance, is an effort to have manufacturers produce some products directly for Second Harvest. Pillsbury is the first manufacturer to become involved in that effort. Second Harvest is also trying to expand the number of reclamation centers operated by food banks to process unsaleables for retailers. FMI serves on Second Harvest's Reclamation Center Industry Advisors Team. In a third effort, Harvest Scan, Second Harvest food banks provide specific information on donated merchandise to participating manufacturers. For supermarkets, the expansion of the reclamation centers is perhaps the most important program. As food banks begin to run reclamation centers, it provides an opportunity for the partnership with supermarkets to improve. The reclamation service can be provided for less cost than other contractors because there is not a profit motive. A&P in Milwaukee, for example, has turned over its reclamation work to that city's food-bank program. Only six of the food banks affiliated with Second Harvest currently run reclamation centers - in Milwaukee; Cincinnati; Nashville, Tenn.; McKeesport, Penn., near Pittsburgh; Tyler, Texas; and Omaha, Neb. At these sites, damaged and unsaleable merchandise is scanned and the information compiled so it can be reported to manufacturers. Perishable Programs There is also increased interest in taking prepared foods, both from restaurants and from supermarkets as they expand their prepared food programs. Since 1992, the Kansas City, MO-based food rescue network, Foodchain, has worked with restaurants, corporations and other food industry organizations to distribute prepared and perishable food to soup kitchens, day-care centers, shelters and other feeding agencies. Foodchain is a national network of 138 food rescue programs that collect prepared and perishable foods for distribution to nearly 7,000 local social service feeding agencies. Three of every four Foodchain programs work with a supermarket to recover prepared and perishable food. Large chains such as Albertsons, Publix, Harris Teeter, Kroger, Spartan Stores and Food Lion currently work with Foodchain on local levels. Many of the network's programs also collect produce, but because the weight and bulk of produce is so great, it is sent to a reclamation center, where it can be handled quickly and efficiently. These efforts can be expanded upon at the local level, but must proceed very carefully. Restaurants and those operators in the food distribution chain not already involved in food donation should be encouraged to participate. Close attention to food safety, especially in the perishable and prepared foods area is paramount so as not to tarnish or perhaps jeopardize the donation of goods nationwide. Retailer Involvement Over the years, most retailers have developed relationships with their local food banks. In general, supermarkets donate more on a local level than through national programs. Retailer programs vary widely from company to company. For instance Stop & Shop, a Quincy, Massachusetts-based retailer, has been involved with the Greater Boston Food Bank since 1979. For the last few years, the company has donated more than $13 million to area food banks each year, including monetary contributions, donated product and in-kind support such as repairs, maintenance and transportation. Company chairman Bob Tobin is a member of the Second Harvest Board, while Terry Vandewater, director of public affairs, serves on the board of the Greater Boston Food Bank. Other employees are members of local boards serving their operating areas of Massachusetts, Connecticut, Rhode Island and New York. In 1994 Stop & Shop became the first retailer to win Second Harvest's "Grocery Distribution Award," an annual award that recognizes exemplary service and support to food banks. One of Stop & Shop's most effective hunger relief programs is its "Food for Friends" campaign, which is made up of three components. The first is a 40-page coupon book including information about hunger issues and food banks. For every coupon a customer redeems, Stop & Shop donates five cents - up to $150,000 - to the Second Harvest Food Bank Network and its New England members. The second component is the food drive in the spring. The third component is the fundraising done by individual store teams for four weeks every fall. Store employees encourage food and dollar donations through events such as car washes, golf tournaments, bake sales and dunk tanks. Just last week they kicked off their "Food for Friends" food donation program. Supermarket companies have also helped develop food banks from the ground up. H.E. Butt Grocery Company, based in Texas, helped found the Texas food bank network, which has become one of the country's largest regional food bank programs. They received the Hunger's Hope Award for Grocery Distributor Support from the Second Harvest National Food Bank Network. H.E. Butt's contributions support 15 food banks, 14 in Texas and one in Mexico. Liz Minyard, co-chairman of Minyard Food Stores, Coppell, Texas, has been active in the North Texas Food Bank program since it began in 1982. Minyard's, like other chains, donates food, plus paper bags, office furniture, shelves and warehouse racks. They also donate fresh produce as part of their regular contribution. Minyard serves on the Board of Directors of Second Harvest. Minyard's is also a resource to the food bank on things like running a warehouse and providing help or advice on industry procedures. The Kroger Co., headquartered in Cincinnati, Ohio, was the second recipient of the Second Harvest Grocery Distributor Award. They received the award based on participation in a wide variety of areas, such as product donation, board representation, technical assistance, funding and event sponsorship. These are just a few of the individual company programs to help feed those in need. There are many, many more examples that could be cited. In addition, several broader industry programs are in place. These include: Checkout Hunger, a program that encourages supermarket customers to "round up" their checkout totals and donate the extra funds to food banks, continues to grow in popularity around the country and raises thousands of dollars for local food banks. The program consists of bar-coded, tear-off coupons for $1, $2 or $3 located at the checkout stand that are handed to the cashier and scanned. The amount appears on the customer's receipt as a food bank donation. The area food bank receives the amount collected at the end of the fundraiser, which generally runs four to six weeks. Sister Hook-Up, a program that many food bank agencies rely on every day to help feed the needy. Day-old bread, outdated dairy products, or overripe produce, mislabeled products or cans damaged in shipment are donated directly to local food bank agencies, such as neighborhood soup kitchens, retirement homes, rehabilitation centers, or homeless shelters. Giant Food Inc., based in Washington, D.C. has been involved since the early 1980s, in cooperation with the Capital Area Community Food Bank (in the Washington Metropolitan Area) and the Maryland Food Bank for the state of Maryland. Since it was not feasible for Giant and/or the food banks to send trucks out to the nearly 700 feeding programs operating in the Baltimore/Washington area, the food banks decided to act as facilitators between their agencies and the stores. As facilitators, the food banks are responsible for "hooking-up" their agencies with the Giant stores. Additionally, the food banks monitor the agencies at least twice a year to ensure that they still are serving the community, are eligible for the program and have appropriate facilities to support it. Once the "hook-up" is made, the food banks step back and let the agencies meet directly with the store managers and receivers to determine the pickup days and times. This arrangement is ideal because it allows the agencies and stores themselves to continually evaluate the "hook-up." This way they can ensure that the agencies' volunteers come to the stores at convenient times, and when the maximum amount of unsaleable food is available. Giant has carried this program forward into every area where they do business, which now involves the cooperation of six major Second Harvest member food banks. At least one agency is "hooked-up" to every one of their stores, and a year-long waiting list for agencies that are hoping to become part of this successful program. In total, they donate approximately two million pounds of food to participating agencies annually. "Fast Forward To End Hunger" -- a partnership between the Video Software Dealers Association (VSDA) and the End Hunger Network - is an in-store fundraising program designed to raise consumer awareness and contribute directly to the community where funds are raised; 100 percent of the money goes to the local food bank. Last year, Fast Forward raised more than $1 million in just three months. This year's campaign was launched with the VSDA Show in July, and continues through the fall. Supermarkets with video departments can participate by simply placing a canister on the counter . The canister, point-of sale materials, media kits, operating and administrative costs are paid for by the Fast Forward To End Hunger founding sponsors. Celebrity public service announcements are available on in-store loops and as trailers on some videos. For more information contact Kelli Clayton at 800/955-VSDA. As a board member of the Central Virginia Foodbank I would like to share with you the public-private-partnerships with food banks that have been successful in our operating area. Virginia's Table/Enabler Prepared and Perishable Food Rescue Program The Virginia's Table/Enabler program is designed to bring food to those who need it most, in an efficient and effective manner. The Central Virginia Foodbank coordinates with food donors to allow member organizations to pick up directly from the donor site. The program assists members in acquiring food without traveling to the Foodbank. Donor participants in this program include: Ukrop's Super Markets, Food Lion, Pizza Hut, Fast Marts and other retailers. The program originated after the Good Samaritan Law was passed in 1990, due to the enormous amount of prepared and perishable food that was being wasted. Members are trained in safe food handling and storage before being allowed to pick up the food. Currently the Foodbank is concentrating its efforts on establishing more food donors in rural areas. This will enable organizations that have to travel a long distance to the Foodbank, a more efficient and effective way to expand their services of feeding those in need. Virginia State Tax Credits The Virginia Neighborhood Assistance Program, created by the 1981 Virginia General Assembly, employs state tax credits as incentives for businesses that contribute directly to approved neighborhood assistance organizations. This is a unique STATE program which emphasizes partnerships between the private and public sectors to assist the economically deprived. Activities sponsored under the program include education, job training, housing assistance, free health care clinics and community services. The state tax credit is 45% of their total contribution. The program has a streamlined application and minimum record keeping requirements. Documentation of the contribution is maintained by our company and the Central Virginia Foodbank. Public-Private Partnerships of the Central Virginia Foodbank Since 1995, the Central Virginia Foodbank has had a public-private partnership with the Virginia Department of Corrections, called the "Food Rescue Project." Salvage from grocery stores, USDA Soup Kitchen Commodities and TEFAP (Temporary Emergency Food Assistance Program) foods are handled by prison inmates who inventory, sort and categorize salvage making it easier for the more than 500 member agencies to access and distribute to those in need. Sorting and categorizing product has streamlined the feeding programs' access to food and has assisted with inventory control, helping the Foodbank achieve a 19.6% increase in total pounds distributed in 1995 and a 49% increase in 1996. The project has enhanced morale among inmates by offering them an opportunity to perform community service and providing them with work experience and job training skills. Because of this collaborative effort, more than 1,502,427 meals were provided to central Virginians in need including children of low-income families, the elderly, people with disabilities and the homeless. The Food Rescue Project won the Second Harvest national 1997 Hunger's Hope Award for Innovation Resources and Model Programs. In conclusion, I am extremely proud of Ukrop's involvement with the Central Virginia Foodbank. Supermarket operators recognize their responsibility to the communities they serve, and I believe, our industry's commitment to food banking is an example of what can be accomplished through the use of public-private partnerships.