Item - 2008.GM18.4

On May 15, 2008 the Government Management Committee considered a staff report from the Deputy City Manager Richard Butts (report dated May 1, 2008) that recommended the establishment of a local and sustainable food procurement policy and implementation plan for the City of Toronto.

The staff report was submitted in response to Council’s direction through the City’s Climate Change, Clean Air and Sustainable Energy Action Plan to undertake a review of City procurement policies regarding the purchase of local food products.  That direction was based on the premise that there is a reduction in greenhouse gas emissions when food is grown and consumed locally, as opposed to food imports that are transported greater distances from the field to the point of purchase.

The Government Management Committee deferred consideration of the item and requested a follow-up report that would provide additional information on certification procedures, identification protocols for local and non-local grown foods, and additional information on financial impacts.

This report responds to those requests from the Committee. It is recommended that the City embark on implementing a Local Food Procurement Policy in a phased manner in order to gain a better understanding and knowledge about the opportunities, financial implications and operational adjustments that may be required to incorporate a greater quantity of local food into its food service operations.  The Toronto Environment Office will work with Children Services Division in piloting some specific strategies in 2009 to examine the implications of increasing the amount of locally grown food used in directly operated Childcare Centres where food is prepared on site.

Drawing from this experience, it is further recommended that the General Manager of Children’s Services and the Director of the Toronto Environment Office report back prior to the 2010 budget process with an implementation strategy that provides further options for expanding the implementation to other centres and potentially other divisions in the City.

The 2009 impact of implementing the first phase of a Local Food Procurement Policy is a $15,000 gross and net increase to Children’s Services 2009 Operating Budget if the new and enhanced request by the General Manager, Children’s Services is approved as part of the 2009 Operating Budget Process. 

Options for expanding the implementation of the policy will have further financial implications, which will be reported as part of the implementation strategy.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

In order to estimate the financial implications of adopting a local and sustainable food procurement policy, staff have drawn from the experience of the University of Toronto (U of T) which adopted a 10% local and sustainable procurement policy in 2006. The University found, on average, a 15% increase in the cost for procurement of food that is local and sustainable.  This increase was only experienced on the percentage of the budget allocated to the purchase of local and sustainable food.

The U of T in its procurement policy set a target that 10% of the food would be certified as local and sustainable and they interpreted this as 10% of the food budget should be spent on these purchases.  For example, if the total food budget was $1 million, then $100,000 should be allocated for local and sustainable food purchases.  The average 15% cost increase would be on that $100,000, representing a $15,000 increase in the food budget.

If the City of Toronto were to follow a similar approach for its current $11 million annual food budget it would result in an increase of $165,000 in the required operating budget (10% of $11 million equals $1.1 million times 15% equals $165,000).

The U of T example provides an indication of what might be the financial implications. However, City Operations are very different in terms of client groups, the amount of food being prepared on-site and food preparation operations. As the City gets more experience in implementing a local and sustainable food procurement policy it will be able to more accurately identify and quantify probable cost changes.

Estimating what the financial implications might be on contracts with vendors operating food concessions out of City facilities is also difficult at this time. There is a possibility that it may result in less revenue being generated for the City from these contracts because the vendor may have increased operating costs.

To address potential cost pressures in 2008, it is recommended that an amount up to a maximum of $100,000 be allocated from the approved 2008 operating budget of the Toronto Environment Office for the Live Green Toronto program. This money would only be accessed to support any identified cost increases associated with the implementation of the local food procurement policy in 2008.

For 2009 and beyond the financial implications of implementing the Local and Sustainable Food Procurement policy should be identified and integrated into the operating budget submissions of the engaged Divisions and appropriate City Agencies, Boards and Commissions. The budget submissions should clearly articulate what is the local and sustainable food objective and the estimated cost comparison to alternative purchases.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.