Ökokauf in Vienna – Procurement for sourcing ecological food

ÖkoKauf (Eco-Purchase) is an initiative of the City of Vienna, part of the Eco-Business Plan of the City, that was started in 1998 to purchase goods and services according to ecological considerations (from laundry detergents and office supplies to construction services). The City of Vienna has around 65.000 public employees and a total cost of procurement for materials and services of several billion euro per year, for which the city applies a certain compulsory quota that must be spent on ecologically-friendly products. It is a project organised across all departments of the Vienna City Administration with approximately 200 public employees participating within 17 topic-specific working groups that deal with the purchase of food, and look into how a prescribed monetary quota of 30% (50% for kindergartens and public schools) of the allocated budget should be spent for healthy and environmentally save food delivered to the public kitchens of the city.

“The problem is that the production of fresh vegetables can be unstable but procurers are inflexible when stipulating the quantities needed.”

What is the Ökokauf and how does it work in Vienna?

At present, a 100.000 full boards or warm lunch menus are provided daily for clients and staff of municipal kindergartens, all-day compulsory public schools, municipal hospitals and geriatric centres as well as retiree´s residential houses.
Laws applying to Kindergartens, which were already implemented in Vienna back in 2003, already foresaw the provision of 50% of the expenditure to go towards organic food, which is run by a big external catering company in a cook-chill quality. So food is brought in cold and only needs to be heated up before serving in all of the 360 Kindergartens. The quality is good and it is improving constantly, due to responsible people in this catering company, for example they recently changed the menu in order to provide children with two vegetarian meals per week, one pasta and one sweet menu, two meat and one fish menus.
So this is also one of the aims of Ökokauf, who are having an internal revision process on how to improve the quality and also the selection criteria to get a variety of food that is more regional, seasonal and more vegetable-based.
One of the main cost factors is obviously meat purchasing, whether it be organically or conventionally produced, as conventional meat, even when not very high quality, is still expensive, so the reduction in the size of meat portions saves a lot of money. This reduction in meat provision has already been carried out by the hospital procurers. The main problem at the moment is that whilst the daily quota of one full meal has been stable for at least 6 or 7 years, food prices of conventional as well as for organic food in the past two years have increased very steeply. So procurers have to save to be still able to afford the organic quota. However, this is not the same situation in other European countries, for example in southern Germany a big procurement programme was started. It is called “Bio Regio Bayern – Süd-Deutschland”, through which also in cities like Munich, or Regensburg a quota of 50% of organic food shall be provided to kindergartens and school canteens.

What is the relationship with the local food producers?

Up to now a very small amount of biological food has been retrieved locally, mainly due to the fact that Vienna has the second biggest concentration of professional gardening companies in Austria and most of which, over the past twenty years, have changed to artificial substrates in closed greenhouses. Since this is not compatible with the regulation on organic farming, requiring a natural growing substrate, that means natural soil, there was a first attempt by the Vienna Agricultural Chamber to overcome this obstacle by installing the so-called Topf-Kultur (pot culture), that means containers filled with organically certified soil and thus being able to grow organically certified fresh vegetables. But this way was also not compatible with regulation on organic farming.
So a second initiative for producing locally organic fresh vegetables was recently started by moving production onto fields already certified organic in the city area, where folia tunnels are used , which can be replaced in order to enable crop rotation. This is also an initiative of the Vienna Agricultural Chamber, under the title of “Ecologisation Campaign”, where one of the goals is to create a so-called bio cluster, which would enable conventional and professional gardeners in the city of Vienna to start up biological production in new fields, this time being compatible within the guidelines of organic production. Thus, interested farmers are now creating an association with 7-8 producers.

How does the public procurement procedure work?

Even though there are many local producers in Vienna, the Ökokauf procurement procedures foresee a future where retailers specialised in trading organic food products would be the ones dealing directly with the producers. For instance, for fresh vegetables and fruit there are up to 180 medium-sized and small-sized producers, who have a contract with the trading company. These companies are also the ones having to invest in increasing the storage sites, because for example hospitals are not able to keep fresh vegetables for lengthy periods, they can no longer clean and wash nor process it. The reason behind this is they do not have the facilities, but also due to hygienic reasons. Therefore, the problem is that procurers are in contact with the trading companies.
Up to now there was a reliance on good quality but there is an increasing trend where new traders, international and mainly large ones, are creating a highly competitive situation. This is how big food traders try to bring the price down almost to the point of self-destruction, just to push other big competitors out of the market. This explains why so many city initiatives are now taking place to aim towards sustainability and green procurement.

How can local producers remain competitive in this environment?

The Ökokauf is a model of public procurement in which trading companies, specialized in organic products and their network of contracted farmers, all together can provide large amounts of fresh biological food to the City of Vienna. This implies that trading companies take a pre-order for one season, which could be a contract with hospitals’ procurers that need say a hundred tons of fresh carrots, 500 tons of organic potatoes and so on. The problem concerns especially fresh vegetables because produce can be flexible, but procurers are inflexible about the quantities needed. Then another significant factor is that farmers need to buy seeds or seedlings whose certification incurs much more expense than those for conventional production. Moreover, plants are grown in a distributed manner over several farms specialised in specific production and finally not to mention the costs incurred by the collection of large food quantities. Producers cannot guarantee the production at short notice, whilst at the same time procurers (like hospitals) order six weeks upfront, as this is the time they need to organise their menus, therefore without pre-ordering they cannot put in a last-minute request of perhaps 20 tons of carrots.
On the other hand, if the contracts are too loose about quantities, the farmers might have to find where to sell their over-produce. There are about a thousand very big organic vegetable producers, that are bound by long-term contracts to supermarket chains, who would be able to provide enough vegetables in season for the total amount needed by the City, but they are not interested in it.
There are in Vienna many conventional farmers who produce big quantities of the products they are specialised in and who have a total turnover of 1.5 million euro per year. But this is only half the requirement of retirement homes in Vienna for organic vegetables. This is how when rushing towards the lowest prices, it is only possible for large groups to respond to, producers distributed over Lower-Austria, Burgenland maybe even up to upper-Austria.

Interview with Bernhard Kromp on 1 April 2016