Posts Tagged: food hub

Thoughts on Convenience and Middlemen

As part of our Specialty Crop Block Grant here at the Placer-Nevada office of UC Cooperative Extension, we've been surveying local consumers about purchasing locally grown fruits and vegetables.  One of the most important questions we've been asking (at least in my opinion) is, “What keeps you from buying more locally-grown fruits and veggies?” A plurality of the responses - more than 38 percent of the people we've asked (over 1,600 people so far) indicate that lack of convenience is the most significant barrier.  By my interpretation, this response means that people would purchase more from local farmers and ranchers if locally grown products were available 7 days a week (like in a grocery store).  Indeed, some survey respondents have indicated in conversation that they would buy more locally grown produce if there were a farmers market each day of the week!  While many shoppers enjoy going to the farmers market, modern shopping habits have evolved to the point where most people don't buy all of their groceries one day per week.  Furthermore, shoppers can't make ALL of their food purchases at the farmers' market – our local markets don't have things like milk, flour, and other staples.  In other words, there are many factors wrapped up in the idea of convenience from a consumer perspective.

As a rancher, marketing convenience has a very different meaning for me.  A convenient market, for me, means a place where I can sell a high volume of product, at retail prices (or close to it), with minimal time commitment on my part.  Convenience, by my definition, has a great deal to do with efficiency.  As a rancher, I can't afford to go to more than one or two farmers markets per week – let alone seven!

In many parts of the country, communities have turned to the concept of a food hub as a way to increase marketing efficiency for producers and convenience for consumers.  In the food hub model, producers can sell higher volumes and close-to-retail prices to the food hub.  The hub then distributes the produce to chefs, retailers, and even directly to consumers.  The Community Alliance with Family Farmers (CAFF) says,

“Many stakeholders in local food systems work have looked to the emergence of food hubs as the missing infrastructural link that will enable greater access to markets for small farmers and greater access to fresh, local food for communities. The USDA definition of a food hub is a “business or organization that actively manages the aggregation, distribution, and marketing of source-identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand.”[1]

From my perspective, a food hub operates like a locally-focused produce distributor – like a middleman that facilitates the sale of locally grown fruits, vegetables, meats, etc. within a community or region.

Food hubs differ from conventional distribution middlemen, in my opinion, primarily by lack of a profit motive.  Food hubs – at least those with which I'm familiar – are motivated by a desire to serve community needs (e.g., access to healthy, local food and increased viability of local small farms), rather than by a desire to generate profit.  Like many farmers, however, food hubs often discover that profit is vital to their survival – without profit, a food hub can't pay overhead expenses, let alone the farmers and ranchers it supposed to serve.  At the other end of the supply chain, food hubs can't serve community customers if they aren't economically sustainable.

CAFF puts it like this:

“As a result of our efforts over the last decade, CAFF concludes that new, stand-alone facilities and aggregation hubs, unless farmer owned and operated, are not viable enterprises in California. These third party food hubs add on an extra layer of costs to the supply chain, duplicate existing efforts/infrastructure, and struggle financially without subsidy. In our view, a more effective strategy for local food system development is achieved not by establishing a stand-alone food hub as described above, but rather by working collaboratively to modify existing infrastructure and fostering supply chain values among a broad set of food system stakeholders while also educating the community about local food and engaging them in the movement. Ultimately, CAFF hopes that our findings and experience will help advance the theory and practice of local food system development and inform future decision-making processes around the need for new food hubs in California.”[2]

Food hubs can be subsidized in various ways.  Growers can donate time and facilities to these hubs, or they can take lower prices or deferred payments.  Similarly customers can pay higher prices, or likewise donate time and facilities.  In the long run, however, such subsidies are not sustainable.

What's the answer, then, to this conundrum?  How do we match the needs of local consumers (for markets that are time- and location-convenient) with the needs of farmers and ranchers (for markets that are efficient and fair in terms of price and volume)?  As CAFF suggests, perhaps we need to work within the existing aggregation and distribution infrastructure.  In this scenario, consumer demand for locally grown food would carry back through the supply chain, from the retailer to the distributor to the producer.  At the same time, a small family farm's need for higher prices could carry through this same set of middlemen to the retailer (and ultimately to the consumer).   For me, the key to these issues is that we need to discuss our local food system as a community.  Too often, farmers talk amongst themselves without including the rest of the food system.  Sometimes (believe it or not!), we even complain that profiteering in the processing, distribution or retail sectors comes at our expense as farmers!  Similarly, local food advocates often leave the idea of profit (within any segment of the system) out of their discussions.  It's time we all talked together!

 

[1] “Making the Invisible Visible: Looking Back at Fifteen Years of Local Food Distribution Solutions (October 2014), p. 5.

[2] Ibid., p. 3.

Farm to fork, and all that's in between

* - Updated 8/6/2012

As the local food movement scales up and consumers demand information about where their food comes from, more grocers and institutions are seeking wholesale access to local produce. To make the connection between producers and retail sellers, distribution networks are taking on an increasingly important role in the local food system. More and more, farmers are becoming part of values-based supply chains and  ‘food hubs’ to pool their product with that of other farmers and move food more easily to market and complete the chain from farm to fork (*). 

New reports released by the UC Sustainable Agriculture Research and Education Program (SAREP) show that, while food hubs help close the gap in distribution efforts, farmers should invest carefully. UC SAREP has created a Farmer Toolkit for those interested in taking part in a food hub.

“We wanted to suggest some questions farmers should consider before getting involved with an enterprise,” said Gail Feenstra, academic coordinator at UC SAREP (*). 

“When food hubs are working,” Feenstra said, “the farmer gets a higher price for their product, and everybody along the supply chain benefits. Consumers get the satisfaction of knowing where their food comes from, and the food is good quality” (*).   

But the challenges of food hubs are steep. While food hubs often succeed at keeping the social and environmental values of their products front and center (that they are organic, local, or grown by family farmers, to name a few values), business plans for long-term success are not always part of the planning process (*).

Traditional distribution centers that have been the standard in produce distribution are incredibly well established compared to young food hubs. In researching existing distribution networks, “we found that there are really long-standing partnerships amongst distributors,” says Feenstra. “They go back decades and generations.” 

For farmers looking to keep their social and environmental values embedded in their products, abandoning traditional distribution networks may not be the way to succeed.  Rather, “creative partnerships between conventional players and more alternative folks may be a better model. In cases where you can create cooperative of growers in which they own the process and they’ve got good management, it’s a slow build up, it can’t happen overnight. But they can succeed,” Feenstra said.

The farmer toolkit is meant to give farmers a better sense of how to make that success happen and how to bring the value of sustainably produced food into the supply chain. 

The farmer toolkit and more information on values-based supply chains can be found at the UC SAREP Web site.

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