By his own admission, Ben Holtz, a 70-acre avocado grower in San Diego County, is an unlikely winner in the U.S. Department of Agriculture’s recently announced Farmers to Families Food Box Program.
But on May 8, Holtz, under his California Avocados Direct d/b/a, was awarded a $40 million contract. It was by far the largest award in the “Fresh Fruit/Fresh Vegetable Box” division in the Southwest region and one of the highest contracts in the entire country in all divisions.
Though Holtz has been selling avocados online for many years and did start producing and selling online food packages to consumers earlier this spring as a result of the coronavirus pandemic, he is not a major produce distributor. Reportedly, many of those applied for inclusion in the program and didn’t make the final cut. Winners of the awards included wedding planners, event coordinators and other business classifications that have nothing to do with producing or selling the nation’s food.
Still, Holtz would have seemingly gone into the effort with a strike or two against him. The program is administered by the USDA’s Agricultural Marketing Service, with officials there certainly having heard of him -- and not in an endearing way.
Holtz has filed many Freedom of Information Act requests with the USDA. He is a loud and vociferous opponent of the spending habits of the federal Hass Avocado Board. A decade ago, he was also a vocal critic of the spending habits of the eventually ousted president of the California Avocado Commission.
Last year, the number of FOIA requests he has filed was discussed at a HAB meeting by USDA officials, who claimed the time devoted to fulfilling those many requests prevented them from doing their regular work in their oversight capacity of the HAB. He regularly asks for information about expense account items for board members and staff.
Ironically, Holtz believes his experience in filling out those FOIA requests helped him secure this Farmers to Families contract.
“It’s like writing a grant proposal,” he said of the FOIA requests. “You have to dot every i and cross every t. If you get one number wrong or a dash out of place, they will reject the request.”
So when the request for proposal rules came out for this new program, he read every word of the many pages involved in the regulations, answered every question and filled out every form with meticulous detail. He suspects that some unsuccessful bidders didn’t do their homework and weren’t as careful with the details. In devising his work plan, he made sure “I put all the square pegs in the round holes. It’s not an easy process.”
His work proposal listed a range of boxes he could provide (5,000 to 200,000 per week) and offered a range of locations where he would operate. With his $40 million contract to deliver 1 million fruit and vegetable boxes, AMS awarded him a contract near his top range for the Southwest region. Now he must go about securing product, creating boxes and delivering them to needy recipients.
Holtz plans to only deliver the free boxes through 501(c)(3) charities, which encompasses churches, food banks and other such organizations. While the boxes can be distributed through community groups that do not have official 501(c)(3) status, that will require more paperwork and jumping through more hoops to be reimbursed.
The award, he noted, requires the contractor to spend the funds up front to create the boxes and then submit paperwork, including invoices, for payment. His proposal calls for 16 to 20 pounds of fruits and vegetables per carton -- and he must prove that he delivered on that promise. He said that requires dedicated staff to do the accounting work.
When he spoke with The Produce News on May 11, three days after the award was announced, Holtz had already contacted four banks to discuss accounts receivable financing. He said he can’t afford to front the cost of the program, so he is planning to fund it through financing.
Though the post award Internet conference for all awardees would not be held until the following day, Holtz was already working on his first 500-box delivery for Friday, May 15.
“I have to get this started so we can start the accounts-receivable financing,” he said. “That’s how I am going to pay for this.”
Delivering 1 million cartons over a six-week period will be a herculean task, so Holtz will be using sub-contractors, as allowed under the regulation. In fact, he likened the entire program to a construction project with a general contractor (Holtz) and many sub-contractors. Holtz noted that the regulations did not call for pre-involvement in the agriculture industry because it is more of a logistics challenge than anything else. Farmers must provide the produce and sub-contractors can provide the mechanics of putting together the boxes, but the general contractor has to oversee the entire project.
Holtz plans to use direct-from-the-farmer products as much as he can. He expects to include one to four avocados in each carton from his acreage as well as that of grower colleagues.
After the awards were announced, produce companies interested in being sub-contractors contacted Holtz.
“I have to be very careful who I pick. If a company applied for the program and didn’t get a contract, I want to know why,” he said, fearing that working with that company might negatively impact the reimbursement for the delivered boxes.
Holtz explained, for example, that one major component of the regulations is that the agricultural products included in the boxes have to be produced in the United States. The regulations required potential contractors to carefully explain how they segregate foreign-grown produce from U.S.-grown produce within the warehouse. A mistake – for example, the inclusion of a Mexican avocado rather than a California avocado -- will invalidate the box.
Holtz would not speculate on how much profit he expects to make from this project. He said the proposal calls for an initial six-week effort with the chance for two subsequent eight-week extensions.
He agreed that “some people were shocked” that he got the award. But at the end of the day, he said it is going to require a lot of work with no guarantee of a profit.
