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Glossary of Terms

  • Balance Sheet

    • A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

  • Bid

    • The documents submitted to apply for a contract.

  • Bid Package

    • All the documents related to soliciting a request for goods/services. 

  • Break-even price

    • The amount of money, or change in value, for which an asset must be sold to cover the costs of acquiring and owning it. It also refers to the amount of money for which a product or service must be sold to cover the costs of manufacturing or providing it.

  • Competitive Bid

    • Referring to projects where the buyer has to advertise the opportunity or solicit proposals from more than one vendor. Competitive bids may be required for contracts larger than a certain dollar threshold, like over $100,000 (although it varies). This bid process is typically used to procure goods and services in the public sector.

  • Contractor

    • A person or business that agrees to conduct work for another entity as specified under the terms of a contract. 

  • Direct markets

    • Otherwise known as direct-to-consumer market channels, these are sales outlets that end users/consumers access to purchase goods. In farming, these sale outlets include agritourism/pick-your-own, CSA, farmers’ markets, roadside stands, and online sales. Some restaurants and grocery stores could be considered a direct market, but share many characteristics of an indirect market. Customers in these channels are often looking for or making purchasing decisions based on quality, emotion, and trust.

  • Economies of scope

    • The cost savings gained by producing two or more distinct goods. 

  • Economies of scale

    • The cost savings gained from an increased level of production.

  • Enterprise Budget

    • Includes all costs and returns associated with producing a single crop or product in a particular manner. Enterprise budgets are constructed on a per unit basis, such as per acre or per head, to facilitate comparisons among alternative enterprises. An enterprise is any activity which results in a product used on the farm or sold in the market.

  • Farm Safety Plan 

    • A farm safety plan identifies and minimizes hazards. Having a plan helps farmers respond to hazards appropriately, and trains everyone on the farm to stay safe. Safety training enables farmers to (1) Avoid serious and fatal accidents, (2) Use pesticides and fertilizers safely, and (3) Reduce income lost to agricultural accidents.

  • Food Distributor

    • A company that provides food and non-food products to restaurants, cafeterias, industrial caterers, hospitals, schools/colleges/universities, nursing homes, or anywhere food is served away from the home.

  • Food Safety Modernization Act (FSMA)

    • FSMA (Food Safety Modernization Act) is a U.S. food safety law signed in 2011 that focuses on preventing serious adverse health consequences by establishing a proactive and risk-based approach in food safety.

  • Food Service Management Company (FSMC)

    • A company that specializes in the purchasing, preparation, and/or delivery of meals for an institutional client. Although not all institutions outsource their food services, many Metro Chicago institutions have contracts with FSMCs instead of managing meal programs themselves.

  • Good Agricultural Practices (GAP) Certification

    • A voluntary USDA audit program for specialty crop producers to demonstrate their compliance with food safety requirements to purchasers and retailers. 

  • Global Animal Partnership (G.A.P.) Steps 1, 2, 3, 4 Certification

    • A nonprofit which seeks to promote the welfare of farmed animals by rating the welfare standards of various farmed animal products.

  • Good Food Purchasing Initiative of Metro Chicago (GFPI)

    • The Good Food Purchasing Initiative of Metro Chicago (GFPI) works to ensure that institutional food purchasing advances an equitable, healthy, fair, local, humane, and sustainable food system while creating good food access for all. GFPI partners are working to:

      • Fully implement the Good Food Purchasing Policy with the City of Chicago, its Sister Agencies, and Cook County Government

      • Develop a racially & socially equitable regional food supply chain to meet increasing institutional demand for good food; supporting pathways for BIPOC food producers and food businesses to scale operations for sales to public and community-based meal programs, cafeterias, and concessions.

      • Normalize values-based procurement across all community-based “anchor” institutions in the Chicago region, including hospitals, higher ed institutions, cultural institutions, senior living facilities, and others.

  • Good Food Purchasing Policy (GFPP)

    • With a focus on equity and transparency, GFPP shifts institutions’ food purchasing dollars toward five core values: local economies, valued workforce, animal welfare, environmental sustainability, and nutrition. In partnership with the Center for Good Food Purchasing, the City of Chicago and Cook County’s departments & agencies have adopted GFPP and are in the beginning stages of implementing the Good Food Purchasing Program.

  • Income Statement

    • An income statement is a financial statement that shows a company's income and expenditures. It also shows whether a company is making profit or loss for a given period.

  • Indirect markets 

    • Indirect market channels/wholesale channels are sales outlets intermediaries use to purchase goods. In farming these sales outlets include marketing coops, brokers/distributors, packing houses, wholesale buyers, and processors. Generally these are traditional supply channels for commercial buyers and regional/national sellers not local buyers and sellers. Restaurants and grocery stores share important characteristics with wholesale channels (especially if they are larger businesses). Buyers in these channels tend to make purchasing decisions primarily based on quality, price, and on quantity, accurate invoicing, delivery, storage capability, packaging, and if you have a Farm Safety Plan, 3rd-Party Verification/Audit, and insurance.

  • Invitation for a Bid (IFB)

    • Buyers who know what they want will issue an Invitation for a Bid, typically a distributor will respond to the IFB and producers/food business owners may have an opportunity to subcontract via the distributor. The distributor may be awarded more points for contracting a Producer or food business owner with a certified minority/women/ veteran owned business. 

  • Market channel

    • Or distribution channel is the way goods are transferred from the supplier, manufacturer, or grower to the end user or consumer. It is made up of  people, organizations, and activities who facilitate the flow of goods.

  • Prime 

    • The primary contractor that wins a contract who may hire other companies as subcontractors.

  • Produce Safety Rule

    • The Produce Safety rule establishes science-based minimum standards for the safe growing, harvesting, packing, and holding of fruits and vegetables grown for human consumption.

  • Request for a Proposal (RFP)

    • A RFP is similar to responding to essay questions about how you will provide a solution. There are several factors to be considered in the decision making process, and the buyer wants to hear the bidder’s perspective. The RFP is being evaluated on more than just the price. AN RFP would be issued for a food service contract that requires more than just a price quote. Administrators are including evaluation criteria in RFPs that assess how well the vendor can achieve Good Food Purchasing goals

  • Request for Qualifications

    • A potential buyer wants to review a “Capability Statement” or a “Statement of Qualification” that summarizes a vendor in one or two pages.

  • Request for a Quote

    • A RFQ is usually issued before an RFP to estimate the costs for commodity type of purchases where pricing is relatively standard.Buyers are looking for the best value for the best price.

  • Subcontractor

    • Subcontractors don’t work directly with government agencies, but instead work for the primes who have won government contracts. Subcontractors are often small/diverse certified firms

  • Supplier Diversity & Inclusion Spend and Goals

    • Public and private sector entities may publicly state that they want to spend __% of their budget with diverse suppliers. They set annual goals and then monitor utilization of diverse businesses on their projects.

  • Third-party verification/audit

    • A third party audit is performed by an independent party who visits the farm production area and evaluates the field and/or facility for its ability to produce safe, quality foods.

  • Working Capital

    • Current assets (cash, anything that will convert to cash or be used up in the business within the next year) minus current liabilities (anything due now or that will come due within the year) equals working capital.

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