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Food Hubs

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Summary
Food Hubs are a hot topic in the ag industry right now. Essentially, they are an aggregation point where regional producers can pack, sort or aggregate their products to strengthen regional food systems and support their own communities. The term “food hub” is used when repacking or resorting is involved. Food hubs can be in rural or urban areas, and they can serve consumers or wholesale buyers, such as distributors, stores, or restaurants. Some farmers markets are being transformed into make-shift hubs, since farms are already converging at one point, making aggregation and resorting convenient.

Structurally, food hubs vary. They can be a dock, a cross-dock, a portion of an existing conventional warehouse or storage room, or simply extra cooler space on a farm. Any place where fresh product can be stored, even if briefly, can qualify. Sometimes, food hubs stand alone and are intended only for distribution, and sometimes they may have an associated educational center, communal kitchen to make value-added products, or a farmers market-style grocery store.

Historically, food hubs have been managed by farm coops, farm advocacy groups, or farmers market associations. Recently, more hubs are founded and managed by for-profit businesses or hybrid coalitions of both nonprofit and for-profit groups.

Regardless of the business model, food hubs require some sort of infrastructure, which is always capital-intensive. Until recently, they were financed predominately by nonprofit grants and government money, but lately, some economic development and community redevelopment vets are stepping in with some creative financing strategies.

Challenges
People are working hard to find the right model for food hubs, but many operations are not profitable or even self-sustaining. There are several efforts to research and understand food hubs, but because they always entail many stakeholders and variables unique to each region, it's difficult to identify the "best" replicable models—there is controversy about which aggregation and food hub models even make sense. We know that we need more food hubs for regional food systems, but which type? Questions abound. How should food hubs integrate with existing distribution channels and infrastructure? How do we allow for each stakeholder in the supply chain to focus on core competencies while maintaining transparency, fair prices to producers, and affordable prices to end-buyers?

Beyond the hub operations itself, there are questions about all the stakeholders involved. Once a food hub is set up, there is a need to help producers learn how to meet the item, consistency, and food safety standards of wholesale and retail buyers. There’s also the need to help buyers learn to be flexible in volatile availability, pack and pricing when buying through conventional global channels can be so easy. A more basic challenge is how to raise enough capital to set up the systems and infrastructure to get food hubs in place. Hubs can and should be profitable, but where do we find the startup funds?

Successes
Despite the difficulty in identifying "best" models, there are some common successful practices. Again, each region is different, so these all aren't always necessary.

  • Technical assistance for producers to learn how to better plan, price, and understand compliance rules so they can provide more consistency for more or larger buyers via food hubs. This can be a structured program, or casual face-to-face meetings of a food hub operator with farmers.
  • Focused aggregation of farms that cannot reach distributors and larger buyers themselves. Aggregators that focus on larger farms that already sell to distributors and end-buyers can find counter-productive competition and inefficient logistics.
  • Consolidated marketing across multiple producers.
  • Creating a brand of quality associated with the food hub, so that buyers trust they will receive quality and consistency regardless of specific farm name.
  • Leveraging existing infrastructure to save costs. For example, partnering with a local food bank with unused warehouse and shared office space, or using a farmers market structure as a cross-dock.
  • Partnerships with conventional distributors. Focusing on the aggregation piece and letting distributors do what they do best: manage end-buyers and trucking.
  • Partnerships with large buyers who can commit to consistent purchasing despite volatile mother nature.
  • Moving larger volumes in fewer transactions; or if many transactions are necessary, moving fewer varieties.
  • Education for distributors and end-buyers in transitioning to regional food sources. Again, this can be a structured program, or casual face-to-face meetings.
  • Relationship-building between producers and end-buyers, even if there are aggregators or distributors in between.
  • Collaborative regional food hubs, where different stakeholders in the vertical contribute to the food hub success.
  • Creative financing, which can include tax credits, USDA grants, foundation grants, economic or community development funds, loans, equity investment, and so forth.

Future Promise
Ultimately, there is a lot of opportunity to rebuild the essential food hub infrastructure we have lost over the past century, and there are economic benefits in doing so—for farm owners, farm workers, end-buyers, and all others in the supply chain. As aggregation food hubs gain popularity, and as more research is conducted, more definitive winning models will arise. Also, as more tools are developed to help producers with planning, packing, pricing and compliance, smaller regional farms will be better prepared to serve more and larger markets.

Please help improve this page by posting your ideas and feedback.

Comments[2] Log in to add your comment

HWong | April 13, 2011
There's a conference coming up in April all about Food Hubs called Making Good Food Work. I just posted it to the Food Hub Events.
RFernandez | April 1, 2011
I just published an article in the local paper about some policies that can help bring city money to fund new food hubs in their neighboring rural areas. Here’s my link in the Resources section. I'd love to know what you think!
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