2014 Southern Sustainable Agriculture Working Group

JANUARY 18, 2014

Food Hubs Lessons 1: Getting Started

HISTORY• Inception: Started in 2000 to

provide an alternative to tobacco

• Location: Rural Central Appalachia

• Structure: A program of the nonprofit; not separate and not a cooperative; farmers are loosely structured network

• Markets: Large wholesale buyers such as grocery store chains

• Infrastructure: Tobacco barn and small box truck with an rv air conditioner

• Startup Capital: Grants from a variety of sources were used to improve the original tobacco barn and then again when we rebuilt after a fire in 2007.

CURRENT

• Location: Rural Central Appalachia – have expanded our reach with farmers and buyers/markets

• Markets: Large wholesale buyers, produce brokers, farmers

• Infrastructure: 15K sf warehouse and 2 tractor trailers

• Current Funding: Still requires grants or other philanthropic support; grants are also used to fund educational work – separate from the operations of the enterprise

CHALLENGES• Organic: Made sense as a motivator for farmers to

become certified; the reality was that farmers weren’t ready for that and we should have provided alternatives to get them engaged

• Farmer size: Small farmers serving large wholesale markets is not a good long term strategy, as pricing and volumes are not a good match with small scale farmers

• Farmer turnover: Many farmers learn to grow and market with a food hub and then move on to direct markets that provide them a better ROI. (particularly as GAP and Organic certification costs continued to eat into their profit)

• Logistics: Costly and difficult to navigate (but a necessary evil in some cases)

• Grading: Cost of washing, grading and packing produce was prohibitive given the local labor available

MARKET CHARACTERISTICS

Direct Wholesome

Product Quality Medium to High High

Product Volume Low to Medium Medium to High

Product Pricing Medium to High Low to Medium

Time Spent on Marketing High Low

Product Diversity Needed Medium to High Low to Medium

Customer Interaction High Low

Land Base Needed Low to Medium Medium to High

Labor Needed Low to Medium Medium to High

FEASIBILITY

• No feasibility study conducted

• Didn’t know exactly what we wanted to do

• No models to follow so tried things and learned from them

• Performed market research

• Relied on previous CSA experience (~4 years of experience with a 50-60 household CSA)

INCREMENTAL STEPS FOR LONG-TERM SUCCESS

• Answer difficult questions:

• What is the need you are trying to fill?

• What is already there and what is not?

• What assets do you (or the community) have?

• Is a food hub really the answer? And how are you defining “food hub”?

• How can existing infrastructure and other support/services be leveraged?

• How will you make your food hub financially viable long-term? (e.g. How will you cash flow it in the off-season?)

INCREMENTAL STEPS FOR LONG-TERM SUCCESS (CONT.)

• Identify the best partners for the work you want to accomplish.

• Include conventional distribution and buyers in your mix. If nothing else, you can learn a tremendous amount from them on how markets and distribution work.

• Be very aware of the appropriate size and scale for your enterprise – bigger and larger volume is not necessarily the answer.

• How can you create the greatest diversity in farmers and markets?

• How can you leverage whatever logistics model you implement to be as efficient as possible and hopefully even earn more money for the enterprise?

EXPERTISE

• Farmer engagement/growing skills

• Marketing expertise:

• Find the right person

• Outstanding communication a necessity

• Logistics: over time this has evolved but should have started with talking to/working with the experts

• Food Safety: gained expertise internally and also partnered with Extension

• Grower education and TA

BIGGEST CHALLENGES

• Funding/financial support

• Supply/farmer turnover

• Small farmers

• Cash flow in the off season

BIGGEST SUCCESSES

• Marketing

• Distribution

… sort of…

GETTING STARTED

• If you are starting as a nonprofit, be sure to figure out what it will take to sustain the operation over the long term.

• What markets will you serve, what are their pros and cons, what do they pay, and are the farmers in your targeted area interested in serving those markets; are they an appropriate match?

• Who/what is already there? How can you partner with them to minimize costs – both start up and long term operational?

• How can you diversify your markets and your farmers?

• What can you do to mimic successful urban-based food hubs?

TAKE-AWAYS• Be very cautious about the infrastructure you choose

to implement, it may be necessary but make absolutely sure it is necessary before you proceed.

• Collaborate! Make sure that you are not duplicating efforts in your region. Work with those who are already there or adjacent to your region.

• Food hubs that are located in rural areas have more challenges – cost to distribute, fewer market options, etc. Figure out what those are and the impacts they will have on your efforts.

• Involve those in your community – build social capital – so the effort can sustain itself long term

• Learn from/leverage conventional systems – don’t recreate the wheel

THE FUTURE FOR APPALACHIAN HARVEST

• Collaboration with other food hubs

• Regional aggregation of demand from large buyers• Regional planning that recognizes and capitalizes on the opportunities

inherent in different climates, soil types, etc.• Shared infrastructure and services • Logistics planning and support

• Diversification/joining with Rooted in Appalachia mini-hub

• Livestock/Protein

• Hopefully serve as an option for out of work coal employees

RESOURCES

• Extension

• Buyers

• USDA/StrikeForce

• Communities of Practice

• National Good Food Network

• SSAWG

• Conventional distributors

• Other food hubs

QUESTIONS?

Kathlyn Terry, Executive DirectorAppalachian Sustainable Development

kterry@asdevelop.org276.623.1121