Benefits and pitfalls

The public procurement sector undoubtedly represents an important market opportunity; however it is not a panacea and should be considered as part of an overall business strategy.

Some of the pros and cons of supplying this sector are listed below:

The Positives

• Large market potential: worth some £2billion/yr in UK;

• Low credit risk; public sector organizations are obliged to pay within 30 days of receiving a valid invoice

• Relatively stable market; demand is unlikely to be affected by economic downturn

• Longevity of contracts: Usually between 2 and 4 years;

• Seasonality: schools in particular tend to be busy when other markets are relatively quiet e.g. immediately after holidays;

• Environment: potential environmental benefits from reduced food miles.

• An alternative outlet for products to help improve produce utilization (e.g. carcass or crop).

• Public procurement legislation provides security for small producers


The Negatives

• Small margins: Generally less than other markets, very price competitive;

• Sales often slow to develop: Some may never reach full volume suggested in tender;

• Successful entry requires additional investment/effort: For instance for specialist packaging or product development, need for particular staff skills and distinct sales/marketing;

• Long lead time to secure contracts as the tender process can be lengthy and complex.

More information on selling to the public sector can be found in Defra's report: Selling to the public sector: A guide to the Public Sector Food Procurement Initiative for farmers and growers.