REGIONAL FOOD HUB PILOT PROJECT. Regional Profiles. A project of the Greenbelt Fund

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1 REGIONAL FOOD HUB PILOT PROJECT Regional Profiles A project of the Greenbelt Fund

2 Copyright 2017 Greenbelt Fund All Rights Reserved Greenbelt Fund 661 Yonge Street, Suite 500 Toronto, Ontario M4Y 1Z9 Canada Tel (416) Fax (416) The Greenbelt Fund Working Paper series provides an avenue to disseminate research findings and information on particular topics. The research for this report was conducted by Rob Anderson. The regional food hub pilot research and report received support from the Friends of the Greenbelt Foundation, the George Cedric Metcalf Charitable Foundation, the J. W. McConnell Foundation, New Directions, and the Ontario Ministry of Agriculture, Food and Rural Affairs. All photos are property of the Greenbelt Fund, unless otherwise noted.

3 TABLE OF CONTENTS 1.0 INTRODUCTION REGIONAL PROFILES Ottawa Region London Region Central Ontario Region ASSESSING OPPORTUNITIES FOR FOOD HUBS IN ONTARIO 3.1 Supply Demand CONCLUSION 32

4 1.0 INTRODUCTION Ontarians are increasingly looking to buy locally-grown food for the social, environmental and economic benefits. At the same time, the food system or supply chain that is farmers, processors, distributors, foodservice companies and retailers want to meet the demands of their customers. Many of these participants are looking for ways to provide more local food as part of their business model. Food hubs businesses that actively manage the aggregation and distribution of source-identified food products 1 are playing a more important role in making it easier to access local foods. Through a pilot project, the Greenbelt Fund looked at how to connect farmers and a food hub to larger markets working in collaboration with a broadline distributor (which moves large volumes of food at a low cost). This report provides an analysis of regional supply and demand in three markets in southern Ontario to help understand the market potential for food hubs. While businesses that operate as food hubs been around for many years, the term has only been used since It s really only been in the last five or more years that food hubs have come to the fore in Ontario. The popularity of, and demand for, local foods has spurred a whole new generation of food hubs all over North America. Since most of these businesses are relatively new, there hasn t been any credible research on the opportunities for food hubs in Ontario 3. This paper presents some data and analysis suggesting there are opportunities to develop more food hubs, and that more work should be done to investigate ways to support them. Levelling the Playing Field Today s food system is built on economies of scale, so only a few food distribution channels control the majority of the food supply. For example, in retail there are just four companies that dominate, while in foodservice there are approximately eight distributors that are basically in control. This situation makes it difficult for farmers who produce smaller volumes, sometimes with differentiated products such as organic or heirloom vegetables to gain access to the marketplace where the majority of food spending occurs. These farmers have typically been limited to selling their products on their farms or at farmers markets. In Ontario, direct food sales accounts for less than $1 billion each for on-farm markets and farmers markets 4, while retail has $30.2 billion and food service is at $30.1 billion 5. The increasing popularity of locally grown food provides an opportunity to establish regional food hubs which pick up, aggregate, and deliver product from small and medium sized farms within a specific region to restaurants and small retail stores. They can provide a diverse set of products, in small volumes within a just-in-time delivery system. The Greenbelt Fund hypothesized that it would be possible to bring the mainstream distribution model with the regional hub model together. The idea was to leverage the efficiencies of large scale distribution while capitalizing on the product variation and freshness that food hubs provide. The Fund then set up a pilot project with three partners (a food hub, a large scale distributor, and a multi-national foodservice operator). 1 National(US) Food Hub Survey There is a project by Nourishing Ontario attempting to capture similar data. 4 As reported by Farmers Markets Ontario and Ontario Farm Fresh Marketing Association 5 As reported by the Ontario Ministry of Agriculture, Food and Rural Affairs 02 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

5 2.0 REGIONAL PROFILES An important component of the regional food hub pilot project was to assess the economic potential of regional food hubs in southern Ontario based on an analysis of the demand and supply of local food. Three regional profiles were developed based on their food production capacities, as well as the potential demand for local food, given demographic profiles and reported sales from food service. There are significant opportunities for food hubs both in retail and direct-toconsumer, but these markets were not included in the assessment as they were not components of the pilot. The three regions are: the City of Ottawa and surrounding area; the City of London and surrounding area; and Central Ontario including the Greater Golden Horseshoe and Grey and Bruce Counties. These regions were selected because their population base provided the local food demand to potentially support regional food hubs. They also had the necessary transportation infrastructure and reflected the full diversity of agriculture, processing, distribution, and food service across southern Ontario. Each profile includes: Demographic information including gender, age, income, and education from the 2011 population survey. Food production data from the Agriculture Census 2011 (Statistics Canada) divided into four categories: field crops (although many of them are less likely to be handled by a regional food hub and the restaurant/ foodservice supply chain), fruit crops, vegetable crops, and livestock. Some commodities are excluded because they are not appropriate for sale through food hubs (corn for grain or silage, soybeans, wheat, canola, alfalfa, tobacco, hay and fodder crops, and forage seed). Food-related economic data including jobs, gross sales and average earnings for each of parts of the supply chain (described above). Potential food service purchases by residents estimated using the consumer expenditure data from the Pitney Bowes Software Expenditure database for Canada (2013), and sales data provided by Gordon Food Service. The profiles provide information on all key components of the value chain including: farm wholesalers that sell the input products, such as seeds and fertilizer, to farmers; farms that produce the crops; food manufacturers that process the food; food distributors that sell the food to food service operators and retailers; and, food service operators and retailers that sell food to the consumer through restaurants, broader public sector institutions (schools, hospitals, universities), at retail stores and other venues. REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 03

6 2.1 OTTAWA REGION The Ottawa Region consists of the following areas: Dundas and Glengarry, Frontenac, Hastings, Lanark, Leeds and Grenville, Lennox and Addington, Ottawa, Prescott and Russell, Prince Edward, Renfrew, and Stormont. The major urban areas are Belleville, Brockville, Cornwall, Kingston, Ottawa and Pembroke. A detailed map outlining the region is shown in Figure 1. Figure 1: Map of Ottawa Region 04 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

7 Table 1: Key Demographics of the City of Ottawa Demographics Total Male Female Total Population 1,215,735 49% 51% Population by Age Group Under years years years 80 years and over 294, , , ,285 41,965 12% 13% 15% 7% 1% 11% 13% 15% 9% 3% Population by Income Group Under $20,000 $20,000-$49,999 $50,000-$79,999 $80,000-$99,999 $100,000 and over 130, ,355 61,965 20,420 18,035 15% 17% 10% 3% 4% 21% 20% 7% 2% 1% Population by Completed Education No certificate, diploma or degree High school diploma or equivalent Postsecondary certificate, diploma or degree Apprenticeship or trades certificate or diploma College, CEGEP or other nonuniversity certificate or diploma University certificate or diploma below bachelor s level University certificate, diploma or degree at bachelor level or above 151, , ,365 73, ,590 40, ,675 6% 9% 25% 4% 7% 1% 13% 6% 10% 26% 2% 8% 2% 13% 2011 Population Survey REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 05

8 The sectors that produce the highest average annual wages (farm and food wholesalers) are also the sectors that produce the fewest jobs and have the fewest locations reported (Table 2). The majority of jobs in these sectors are skilled sales and logistics-type positions, whereas the majority of jobs in the farming, food retail and service sectors are lower skilled positions. This category has more jobs and locations reporting, but also lower average annual wages. Food hubs are wholesalers. Typically they produce higher paying jobs which is good news for the economy. Table 2: Food-Related Economic Overview Farm Wholesale Farming Food Wholesale Food Manufacturing Food Retail Food Service Locations reporting Jobs Gross sales ($000 s) Average earnings (per year) 251 1, ,631 $42,142 3,625 4,911 1,416,881 $21, ,994 $42, ,501 $36,560 1,507 21,578 4,188,688 $17,316 3,742 50,991 1,804,904 $15,760 Data source: 2011 Census of Agriculture Eighteen per cent of Ontario s farms are located within the Ottawa region (Table 3). They are typically lower revenuegenerating farms with only 12 per cent of the province s total farm revenue, which means that the average farm in this region generates about one third less than the provincial average. It is important to note that this region has many small farms, and indexes higher than the rest of the province. Table 3: Agricultural Overview 2011 % of Province Index Total number of farms Gross Farm Sales ($000 s) Farms Under $100,000 in Gross Farm Receipts Farms Over $100,000 to $500,000 in Gross Farm Receipts Farms Over $500,000 in Gross Farm Receipts Total farm business operating expenses ($000 s) Cropland Acres Livestock Farms Oilseed and Grain Farms Greenhouse, nursery and floriculture production 9,581 1,416,881 7,153 1, ,154,456,362 1,556,918 4,532 1, % 12% 21% 14% 14% 12% 17% 20% 11% 13% 113% 75% 73% Data source: 2011 Census of Agriculture 06 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

9 Out of the field crops (Table 4), barley is grown in the highest quantity with 24,662 acres in production. The next crops grown in the greatest quantity are oats with 14,510 acres and mixed grains with 12,485 acres. Buckwheat should also be noted since more than 50 per cent of the province s buckwheat is grown in this region at 3,246 acres. Dry white beans, dry field peas, and triticale (a hybrid of wheat and rye that can be used as either animal feed or, if harvested for grain, sold for human consumption) are grown in the lowest quantities at 145 acres, 349 acres, and 452 acres, respectively. Although sunflowers are grown on fewer acres than most of the other crops in this group and only 18 farms grow sunflower crops, this region produces more than 26 per cent of the province s sunflowers. Table 4: Profile of Field Crops Amount (acres) Number of Farms Size (acres) Percentage of Provincial Total Barley Oats Mixed grains Buckwheat Other dry beans Potatoes Total rye Triticale Sunflowers Dry field peas Dry white beans Chick peas Flaxseed Mustard seed Ginseng Sugar beets 24,662 14,510 12,485 3,246 2,659 2,035 1, X X X X % 20.43% 11.76% 51.47% 5.08% 5.44% 2.87% 18.95% 26.20% 7.27% 0.36% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 07

10 Out of the fruit crops (Table 5), apples are produced in the highest quantity at 901 acres. The next highest quantity crops are grapes at 709 acres and strawberries at 627 acres respectively. Grapes and strawberries also generate the highest average revenues for farmers in this region at $47,580 and $51,398 respectively. Sweet cherries, sour cherries, and plums are produced in the lowest quantities at one acre, three acres, and 10 acres, respectively. All three of these crops also generate very low average revenues, suggesting that farmers growing these crops are likely hobby farmers, growing other crops as well, or have a source of off-farm income. Table 5: Profile of Fruit Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Apples Grapes Strawberries Raspberries Pears Blueberries Plums and prunes Cherries (sour) Cherries (sweet) $34,146 $47,580 $51,398 $14,477 $3,586 $4,761 $4,053 $3,331 $ % 3.86% 19.10% 30.60% 2.24% 3.41% 1.95% 0.34% 0.17% Data source: 2011 Census of Agriculture 08 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

11 Out of the vegetable crops (Table 6), sweet corn is produced in the greatest quantity with 1,846 acres. The next highest quantity crops are pumpkins, squash and zucchini at 734 acres and green and wax beans at 284 acres. All of the vegetable crops in this region generate average revenues below $14,000, suggesting that farmers growing these crops may be hobby farmers, growing other crops as well, or have a source of off-farm income. Table 6: Profile of Vegetable Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Sweet corn Pumpkins, squash and zucchini Green and wax beans Tomatoes Cauliflower Cucumbers Asparagus, producing Broccoli Carrots Green peas Lettuce Peppers Beets Dry onions, yellow, Spanish, cooking, etc. Cabbage Radishes Rutabagas and turnips Brussels sprouts Shallots and green onions Spinach Chinese cabbage Celery 1, $11,522 $1,733 $3,941 $10,767 $3,347 $5,797 $3,378 $1,440 $1,777 $693 $2,169 $1,623 $1,016 $1,813 $2,703 $1,433 $2,053 $3,613 $3,428 $823 $7,546 $2, % 8.90% 3.09% 1.58% 14.01% 3.62% 4.48% 1.78% 0.72% 0.46% 11.02% 1.72% 4.38% 0.91% 1.22% 9.09% 1.43% 3.25% 4.60% 2.66% 0.92% 0.98% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 09

12 Out of the livestock farms (Table 7), dairy cows generate the highest average revenue at $457,074, far exceeding all other livestock in this region. Bison farms have the second highest average revenue at $170,656, followed by hogs at $123,240. It is not surprising to see dairy cows accruing the highest average revenue due to. the supply management system, which matches the Canadian milk supply with demand and compensates farmers accordingly. Bison farmers may receive higher average revenues due to the niche market that they would likely supply. Table 7: Profile of Livestock Farms Amount (number) Revenue Size (numbers) Percentage of Provincial Total Broilers Laying hens Hogs Dairy cows Beef cows Lambs Turkeys Bison (buffalo) 1,374,866 2,082, ,334 90,807 69,977 30,111 6, $147, $74,060 $123,240 $457,074 $12,987 $1,034 $666 $170, , % 24.70% 3.51% 28.54% 24.81% 18.86% 0.18% 19.53% Data source: 2011 Census of Agriculture Table 8: Total Farm Revenues Total Field Crops Total Fruit Crops Total Greenhouse Crops Total Vegetable Crops Total Livestock Farms Other crops and products Total Revenue (millions) $5.02 $10.23 $7.00 $13.53 $ $17.97 Total $ Data Source: Farm Finance Index 6 Summary of Food Supply The Ottawa region s major farm output is from livestock farms primarily dairy farms (75 per cent of revenues). Combined livestock accounts for 92 per cent of the related farm revenues. Not surprisingly, this region is the smallest of the three that we analyzed with total farm-related revenues of $699 million. 6 Farm Cash Receipts by County and Crop 10 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

13 Food Expenditures The total potential for expenditures on food from consumers living in the Ottawa region was $5.9 billion in As shown in Table 9, approximately $1.8 billion of potential consumer expenditure was attributed to food service; the majority of which (58 per cent) was spent at table service restaurants. Table 9: Potential for Consumer Expenditure by Food Service Type Food Service Type Sales Percentage of Total Estimated Purchase Volume 7 Table-service Fast food Cafeterias Other restaurants $1,050,290,553 $483,431,571 $114,593,192 $156,588,981 58% 27% 6% 9% $315,087,166 $145,029,471 $34,377,958 $46,976,694 Total $1,804,904, % $541,471,289 Data source: Estimations from Pitney Bowes Software, expenditure databases for Canada and Gordan Food Service sales reports 7 Estimated at 30% of Total Sales REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 11

14 Using the consumer expenditure data above, sales data provided by Gordon Food Service, and with the assumption that 30 per cent of sales represent total food costs, the potential food service expenditures by residents living in the metropolitan area of Ottawa (Table 10) was estimated. The estimates (Table 10) show that in the Ottawa region, canned and dry foods and frozen foods make up more than half of all the potential for food service food expenditures at $523 million and $451 million, respectively. Food service providers in this region also purchased over $125 million worth of produce, which typically represents the easiest commodity to source locally. Table 10: Potential for Consumer Expenditure by Food Type Food Type Sales Percentage of Total Estimated Food Purchases Beverages Dairy Frozen Canned and dry Meat Poultry Produce Seafood $54,147,129 $216,588,516 $451,226,074 $523,422,246 $180,490,430 $198,539,473 $126,343,301 $54,147,129 3% 12% 25% 29% 10% 11% 7% 3% $18,049,043 $72,196,172 $150,408,691 $174,474,082 $60,163,477 $66,179,824 $42,114,434 $18,049,043 Total $1,804,904, % $601,634,766 Data source: Estimations from Pitney Bowes Software, expenditure databases for Canada and Gordan Food Service sales reports 12 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

15 2.2 LONDON REGION The London Region consists of the follow seven Census Divisions: Chatham-Kent, Elgin, Essex, Huron, Lambton, Middlesex, Oxford, and Perth. The major urban areas in this region include London, Windsor, and Sarnia. A detailed map outlining the region is shown in Figure 2. Figure 2: Map of London Region Relative to the rest of the province, there are fewer females over the age of 40 and under the age of 80 in the London region. There are also a lower proportion of people with a bachelor s degree or above and a lower portion of people with an income of $50,000 or above. These demographics indicate there would likely be a proportionately lower demand for local food in this region compared to the rest of the province since none of the three key demographics are found in greater proportion. REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 13

16 Table 11: Key Demographics of the City of London Demographics Total Male Female Total Population 366,150 48% 52% Population by Age Group Under years years years 80 years and over 84, , ,830 58,810 16,145 12% 14% 14% 7% 2% 11% 14% 15% 9% 3% Population by Income Group Under $20,000 $20,000-$49,999 $50,000-$79,999 $80,000-$99,999 $100,000 and over 117, ,650 47,545 15,240 14,140 17% 16% 9% 3% 3% 22% 19% 7% 2% 1% Population by Completed Education No certificate, diploma or degree High school diploma or equivalent Postsecondary certificate, diploma or degree Apprenticeship or trades certificate or diploma College, CEGEP or other nonuniversity certificate or diploma University certificate or diploma below bachelor s level University certificate, diploma or degree at bachelor level or above 51,205 83, ,780 20,825 66,980 10,735 68,240 8% 13% 26% 5% 10% 2% 11% 9% 14% 29% 2% 13% 2% 12% 2011 Population Survey 14 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

17 As shown in Table 12 the sectors that produce the highest average annual wages, farm and food wholesalers, are also the sectors that produce the fewest jobs and have the fewest locations reported. This likely reflects that the majority of jobs in these sectors would be skilled sales and logistics type positions, whereas the farming, food retail and service sectors would largely have lower skilled positions commanding lower average annual wages, although they have more jobs and locations reporting. Table 12: Food-Related Economic Overview Farm Wholesale Farming Food Wholesale Food Manufacturing Food Retail Food Service Locations reporting Jobs Average earnings (per year) ,330 12,551 12,336 25, ,648 $48, ,746 $43,976 1,326 16,208 21,348 2,677 39,913 13,975 Data source: 2011 Census of Agriculture Thirty one per cent of the province s farms are located within this region (Table 13). They are proportionally higher revenue generating farms with 42 per cent of the province s total farm revenue. The region also has a relatively higher number of farms generating more than $500,000 in gross farm receipts. Table 13: Agricultural Overview 2011 % of Province Index Total number of farms Gross Farm Sales ($000 s) Farms Under $100,000 in Gross Farm Receipts Farms Over $100,000 to $500,000 in Gross Farm Receipts Farms Over $500,000 in Gross Farm Receipts Total farm business operating expenses ($000 s) Cropland Acres Livestock Farms Oilseed and Grain Farms Greenhouse, nursery and floriculture production 51,950 11,890,835 34,270 12,071 5,609 9,970,000 8,929,948 22,407 15,818 2,372 31% 42% 26% 39% 43% 42% 40% 23% 57% 20% 84% 127% 138% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 15

18 Out of the field crops (Table 14), other dry beans are produced in the highest quantity with 42,719 acres. The next crops grown in the highest quantity are dry white beans with 31,557 acres and mixed grains with 17,390 acres. Sugar beets should also be noted since over 96 per cent of the province s sugar beets are grown in this region with 10,400 acres. Buckwheat, sunflowers, and ginseng are grown in the lowest quantities at 239 acres 406 acres, and 705 acres respectively. Although sunflowers are produced on fewer acres than most of the other crops in this group and only 15 farms grow sunflower crops, this region produces more than 30 per cent of the province s sunflowers. Table 14: Profile of Field Crops Amount (acres) Number of Farms Size (acres) Percentage of Provincial Total Other dry beans Dry white beans Mixed grains Barley Sugar beets Oats Total rye Potatoes Dry field peas Flaxseed Triticale Ginseng Sunflowers Buckwheat Chick peas 42,719 31,557 17,390 11,949 10,400 7,506 6,870 6,696 2, X % 78.43% 16.38% 9.42% 96.15% 10.57% 19.70% 17.91% 55.99% 30.51% 34.28% 9.75% 30.39% 3.79% Data source: 2011 Census of Agriculture 16 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

19 Out of the fruit crops (Table 15), apples are grown in the highest quantity with 4,365 acres. The next crops grown in the highest quantity are grapes with 1,332 acres and peaches with 662 acres. Apples and grapes also generate the highest average revenues for farmers in this region at $130,347 and $130,629 respectively. Apricots, plums and prunes, and sweet cherries are grown in the lowest quantities at 15 acres, 85 acres, and 91 acres, respectively. All three of these crops also generate very low average revenues suggesting that farmers growing these crops are likely hobby farmers, growing other crops as well, or have a source of off-farm income. Table 15: Profile of Fruit Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Apples Grapes Peaches Strawberries Blueberries Pears Cherries (sour) Raspberries Cherries (sweet) Plums and prunes Apricots Saskatoon 4,365 1, $130,347 $130,629 $59,795 $41,343 $43,774 $15,042 $42,703 $9,496 $9,616 $12,585 $5, % 7.25% 10.26% 16.75% 33.59% 13.81% 6.06% 14.19% 15.80% 7.91% 14.71% 16.07% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 17

20 Out of the vegetable crops (Table 16), tomatoes are grown in the highest quantity with 14,174 acres. The next crops grown in the highest quantity are sweet corn with 13,973 acres and green peas with 13,965 acres. This region produces the highest average revenues for vegetable crops of the three regions examined. Even crops that are produced in relatively small amounts such as celery, shallots and green onions, and Chinese cabbage produce average revenues above $55,000. Table 16: Profile of Vegetable Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Tomatoes Sweet corn Green peas Green and wax beans Carrots Dry onions Pumpkins, squash and zucchini Peppers Broccoli Cucumbers Cabbage Asparagus, producing Beets Brussels sprouts Rutabagas and turnips Cauliflower Shallots and green onions Chinese cabbage Radishes Lettuce Celery Spinach 14,174 13,973 13,965 6,729 4,482 2,750 2,696 2,187 2,104 1, $200,700 $57,803 $48,093 $41,424 $178,734 $102,355 $23,996 $67,324 $118,313 $51,435 $44,176 $50,945 $16,225 $105,912 $56,963 $23,498 $57,561 $89,524 $11,628 $12,090 $57,611 $2, % 93.16% 10.39% 3.20% 5.29% 0.77% 19.01% 13.29% 0.72% 0.76% 3.61% 1.35% 1.76% 1.18% 1.94% 0.15% 1.60% 1.43% 4.92% 0.26% 1.14% 3.04% Data source: 2011 Census of Agriculture 18 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

21 Out of the livestock farms (Table 17), hogs generate the highest average revenue at $565,306. Dairy cow farms have the second highest average revenue at $498,899, followed by turkey farms at $217,150. Lambs, beef cows, and egg laying hen farms produce the lowest average revenues at $1,181, $48149, and $92,751 respectively. Table 17: Profile of Livestock Farms Amount (number) Number of Farms Revenue Percentage of Provincial Total Broilers Laying hens Hogs Turkeys Dairy cows Beef cows Lambs Bison (buffalo) 11,894,108 3,100,237 2,202,864 1,960, ,868 41,597 36, , $54,777 $92,751 $565,306 $217,150 $498,899 $13,850 $1,181 $48, % 36.76% 71.32% 56.29% 33.90% 14.75% 23.13% 3.41% Data source: 2011 Census of Agriculture Table 18: Total Farm Revenues Total Revenue (millions) Total Field Crops Total Fruit Crops Total Greenhouse Crops Total Vegetable Crops Total Livestock Farms Other crops and products $76.33 $36.40 $ $ $2, $ Total $3, Data Source: Farm Finance Index 8 Summary of Food Supply The London area s major farm output is from livestock farms (66 per cent) followed by greenhouse production (17 per cent) and vegetable production (10 per cent). The total region produces a significant amount of food at $3.3 billion despite its relatively small number of territories. 8 Farm Cash Receipts by County and Crop REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 19

22 Food Expenditure Profile The total potential for consumer expenditure on food in the London region was $3.9 billion in As shown in Table 19, approximately $1.0 billion of potential consumer expenditure was attributed to food service, the majority of which (52 per cent) was attributed to table service restaurants. Table 19: Potential for Consumer Expenditure by Food Service Type Food Service Type Sales Percentage of Total Estimated Food Purchases Table-service Fast food Cafeterias Other restaurants $532,765,963 $321,582,648 $68,911,396 $105,352,622 52% 31% 7% 10% $159,829,789 $96,474,794 $20,673,419 $31,605,787 Total $1,028,612, % $308,583,772 Data source: Estimations from Pitney Bowes Software expenditure databases for Canada Potential food service expenditures by residents living London region were estimated using the consumer expenditure data mentioned above, sales data provided by Gordon Food Service, and with the assumption that 30 per cent of sales represents total food costs. Table 20: Potential for Consumer Expenditure by Food Type Food Type Sales Percentage of Total Estimated Food Purchases Beverages Dairy Frozen Canned and dry Meat Poultry Produce Seafood $21,600,864 $86,403,456 $180,007,200 $208,808,352 $72,002,880 $79,203,168 $50,402,016 $21,600,864 3% 12% 25% 29% 10% 11% 7% 3% $6,480,259 $25,921,037 $54,002,160 $62,642,506 $21,600,864 $23,760,950 $15,120,605 $6,480,259 Total $720,028, % $216,008,640 Data source: Estimations from Pitney Bowes Software expenditure databases for Canada and Gordan Food Service sales reports 20 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

23 2.3 CENTRAL ONTARIO REGION The region of Central Ontario consists of the following Census Divisions: Brant, Bruce, Dufferin, Durham, Grey, Haldimand-Norfolk, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, City of Toronto, Waterloo, Wellington and York. The major urban areas in this region include Toronto, Mississauga, Guelph, Barrie, Kitchener-Waterloo, Hamilton, and St-Catherine s. A detailed map outlining the region is shown in Figure 3. Figure 3: Map of Central Ontario Region Relative to the rest of the province, there are more females over the age of 80 with a bachelor s degree or above but fewer females with an income above $100,000 in the Central Ontario Region. These demographics indicate there would be a proportionately higher demand for local food in this region compared to the rest of the province since all three key demographics are found in greater proportion. REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 21

24 Table 21: Key Demographics of City of Toronto Demographics Total Male Female Total Population 2,175,830 48% 52% Population by Age Group Under years years years 80 years and over 550, , , , ,590 11% 14% 14% 7% 2% 10% 16% 15% 8% 3% Population by Income Group Under $20,000 $20,000-$49,999 $50,000-$79,999 $80,000-$99,999 $100,000 and over 927, , , , ,150 18% 15% 7% 3% 4% 24% 17% 7% 2% 3% Population by Completed Education No certificate, diploma or degree High school diploma or equivalent Postsecondary certificate, diploma or degree Apprenticeship or trades certificate or diploma College, CEGEP or other nonuniversity certificate or diploma University certificate or diploma below bachelor s level University certificate, diploma or degree at bachelor level or above 380, ,320 1,271, , , , ,380 8% 12% 28% 3% 7% 2% 16% 9% 13% 31% 2% 9% 3% 17% 2011 Population Survey 22 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

25 As outlined in Table 22 the sectors that produce the highest average annual wages are food wholesalers and manufacturers. Food manufacturing produced the third highest number of jobs out of these sectors in this region. This region represents the highest opportunity in the number of food service locations but also the greatest area of competition with the highest number of food wholesalers. Table 22: Food-Related Economic Overview Farm Wholesale Farming Food Wholesale Food Manufacturing Food Retail Food Service Locations reporting Jobs Average earnings (per year) 688 2,275 44,369 12,887 40,915 24,775 3,271 23,945 49,229 2,174 65,055 47,172 8, ,060 21,980 21, ,295 17,604 Data source: 2011 Census of Agriculture Forty one per cent of the province s farms are located within this region (Table 23). These are typically average revenue generating farms with 41 per cent of the province s total farm revenue. Table 23: Agricultural Overview 2011 % of Province Index Total number of farms Gross Farm Sales ($000 s) Farms Under $100,000 in Gross Farm Receipts Farms Over $100,000 to $500,000 in Gross Farm Receipts Farms Over $500,000 in Gross Farm Receipts Total farm business operating expenses ($000 s) Cropland Acres Livestock Farms Oilseed and Grain Farms Greenhouse, nursery and floriculture production 51,950 11,890,835 34,270 12,071 5,609 9,970,000 8,929,948 22,407 15,818 2,372 41% 41% 42% 40% 39% 42% 34% 46% 28% 60% 102% 98% 91% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 23

26 Out of the field crops (Table 24), barley is grown in the highest quantity with 64,676 acres. The next crops grown in the highest quantity are mixed grains with 58,972 acres and potatoes with 26,717 acres. Rye should also be noted since over 74 per cent of the province s rye is grown in this region with 26,108 acres. Sugar beets, sunflowers, and mustard seeds are grown in the lowest quantities at 180 acres, 490 acres, and 448 acres, respectively. Although mustard seeds are grown on fewer acres than most of the other crops in this group and only 17 farms grow mustard seeds, this region produce more than 77 per cent of the province s mustard seeds. Table 24: Profile of Field Crops Amount (acres) Number of Farms Size (acres) Percentage of Provincial Total Barley Mixed grains Potatoes Rye Oats Ginseng Other dry beans Dry white beans Buckwheat Flaxseed Dry field peas Triticale Mustard seed Sunflowers Sugar beets 64,676 58,972 26,717 26,108 23,270 6,495 6,108 3,808 1,861 1, ,514 2, % 55.55% 71.47% 74.88% 32.76% 89.81% 11.66% 9.46% 29.51% 29.51% 13.14% 28.00% 77.64% 30.61% 1.66% Data source: 2011 Census of Agriculture 24 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

27 Out of the fruit crops (Table 25), apples are grown in the highest quantity with 4,365 acres. The next crops grown in the highest quantity are grapes with 1,332 acres and peaches with 662 acres. Apples and grapes also generate the highest average revenues for farmers in this region at $130,347 and $130,629 respectively. Apricots, plums and prunes, and sweet cherries are grown in the lowest quantities at 15 acres, 85 acres, and 91 acres, respectively. All three of these crops also generate very low average revenues suggesting that farmers growing these crops are likely hobby farmers, growing other crops as well, or have a source of off-farm income. Table 25: Profile of Fruit Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Grapes total area Apples total area Peaches total area Cherries (sour) total area Strawberries total area Pears total area Plums and prunes total area Cherries (sweet) total area Raspberries total area Blueberries total area Apricots total area Saskatoon total area 16,316 10,441 5,790 2,187 1,749 1, $193,704 $84,875 $159,037 $131,518 $60,198 $20,610 $29,806 $11,065 $11,474 $21,025 $6, % 88.76% 53.27% 48.34% 33.33% 83.88% 90.14% 93.38% 82.29% 89.70% 81.37% 28.57% Data source: 2011 Census of Agriculture REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 25

28 Out of the vegetable crops (Table 26), sweet corn is grown in the highest quantity with 9,084 acres. The next crops grown in the highest quantity are carrots with 5,230 acres and dry onions with 3,618 acres. Chinese cabbage, celery, and asparagus produce the highest average revenues at $92,284, $59,938, and $63,737 respectively. Table 26: Profile of Vegetable Crops Amount (acres) Revenue Size (acres) Percentage of Provincial Total Sweet corn Carrots Dry onions Broccoli Tomatoes Green and wax beans Asparagus Cabbage Peppers Pumpkins, squash and zucchini Chinese cabbage Cucumbers Rutabagas and turnips Cauliflower Spinach Beets Green peas Celery Lettuce Radishes Brussels sprouts Shallots and green onions 9,084 5,230 3,618 2,317 2,245 2,130 2,041 1,832 1,616 1,536 1,504 1,329 1,088 1, $28,410 $55,349 $55,071 $47,765 $17,793 $51,038 $63,737 $35,592 $29,866 $4,697 $92,284 $15,625 $49,035 $29,960 $16,368 $5,672 $1,910 $59,938 $8,596 $3,630 $8,599 $4, % 53.07% 56.04% 51.42% 13.56% 23.19% 74.38% 54.62% 41.52% 55.00% 81.08% 38.15% 70.93% 64.28% 92.78% 50.18% 4.52% 78.99% 60.45% 42.05% 16.23% 17.94% Data source: 2011 Census of Agriculture and Ontario Ministry of Agriculture and Rural Affairs Horticulture Statistics website 26 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

29 Out of the livestock farms (Table 27), dairy cows generate the highest average revenue at $254,354. Hog farms have the second highest average revenue at $213,482, followed by bison at $170,423. It is not surprising to see dairy cows having the highest average revenue due to the supply management system, which matches the Canadian milk supply with demand and compensates farmers accordingly. Bison farmers may receive higher average revenues due to the niche market they supply. Table 27: Profile of Livestock Amount (number) Number of Farms Revenue Percentage of Provincial Total Broilers Laying hens Turkeys Hogs Beef cows Dairy cows Lambs Bison (buffalo) 18,023,187 2,874,756 1,464, , ,666 97,550 76, ,328 1,130 3, $214, $40,348 $63,927 $213,482 $13,804 $254,354 $1,233 $170, % 60.22% 42.04% 21.47% 40.30% 30.66% 47.81% 31.64% Data source: 2011 Census of Agriculture and Ontario Ministry of Agriculture and Rural Affairs Livestock and Poultry Statistics website Table 28: Total Farm Revenues Total Field Crops Total Fruit Crops Total Greenhouse Crops Total Vegetable Crops Total Livestock Farms Other crops and products Total Revenue (millions) $154 $169 $77 $195 $2,141 $135 Total $2,871 Data Source: Farm Finance Index 9 Summary of Food Supply Central Ontario s major farm output is from livestock farms (75 per cent) followed by vegetable production (seven per cent) and field crops (five per cent). For a relative large number of counties and territories, the region produces just $2.9 billion in related farm revenues. 9 Farm Cash Receipts by County and Crop REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 27

30 Food Expenditure Profile The total potential for expenditure on food by consumers living in this region was $27 billion dollars in As shown in Table 29, approximately $7.4 billion of potential consumer expenditure is attributed to food service, the majority of which (53 per cent) is attributed to table service restaurants. Table 29 shows that the remaining $19.7 billion was attributed to food retail, almost all of which is in supermarkets. Table 29: Potential for Consumer Expenditure by Food Service Type Food Service Type Sales Percentage of Total Estimated Food Purchases Table-service Fast food Cafeterias Other restaurants $3,940,972,935 $2,254,436,551 $506,218,532 $744,303,606 53% 30% 7% 10% $1,182,291,881 $676,330,965 $151,865,560 $223,291,082 Total $7,445,931, % $2,233,779,457 Data source: Estimations from Pitney Bowes Software expenditure databases for Canada 28 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

31 Potential food service expenditures by Central Ontario residents in this region were estimated using the consumer expenditure data mentioned above, sales data provided by Gordon Food Service, and with the assumption that 30 per cent of sales represents total food costs. The estimates (Table 30) show that canned and dry foods and frozen foods make up more than half of all the potential food service expenditures by local residents at $1.5 billion and $1.3 billion, respectively. Food service providers had a potential of over $365 million worth of produce, which typically has the highest potential of gaining a price premium on the local food market. Table 30: Potential for Consumer Expenditure by Food Type Food Type Sales Percentage of Total Estimated Food Purchases Beverages Dairy Frozen Canned and dry Meat Poultry Produce Seafood $156,364,562 $625,458,248 $1,303,038,017 $1,511,524,099 $521,215,207 $573,336,727 $364,850,645 $156,364,562 3% 12% 25% 29% 10% 11% 7% 3% $46,909,369 $187,637,474 $390,911,405 $453,457,230 $156,364,562 $172,001,018 $109,455,194 $46,909,369 Total $5,212,152, % $1,563,645,620 Data source: Estimations from Pitney Bowes Software expenditure databases for Canada and GFS sales reports REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 29

32 3.0 ASSESSING OPPORTUNITIES FOR REGIONAL FOOD HUBS IN ONTARIO 3.1 Supply Some of the farms that participated in the pilot were already able to supply customers at a regional or provincial level. There were also a small number of farmers that supplied the food hub, but did not have the volumes or types of products, and/or appropriate packaging and food safety assurances to participate in the pilot. The farmers between these two ends of the spectrum seem to present the biggest opportunity. These are the farmers that may be near the limit of what they can sell through their current channels and are most open to trying new things. They are more likely to be able to scale up their production to service new markets. It is estimated that 50 to 70 per cent of mid-sized farms could be potential suppliers for regional food hubs. It is important to note this is an optimistic but educated guess; more work could be done to test this hypothesis as well as the estimates for the market potential of small and large farms. Even though many small farm operators are not looking at sales beyond the farm gate, there are some who want to grow their business, but don t know how to market to wholesale channels. There may be a role for food hubs in helping farmers understand what the potential is out there, and act as a coach to help them adapt to meet the needs of larger customers. Food hubs could be a suitable next step for 40 to 60 per cent of small farms and could also play a particularly important role for new farmers in helping them scale up. Large farms don t need food hubs, however, could benefit from diversifying market channels. Food hubs may be useful to them as a channel for new products for which they do not have sufficient quantities for their regular markets. This would be a good fit because food hubs tend to serve higher end restaurants that like to experiment with new products and can work around inconsistency in supply. The larger farms could also help ensure food hubs have access to a reliable source of consistent supply. The potential is more limited to five to 20 per cent of large farms. Analyzing data from the three regions there is $6.9 billion in related farm sales (based on Tables 1.7, 2.7, and 3.7). If we use an industry assumption that 80 per cent of total food volume is shipped by broadline distributors, that leaves a maximum of 20 per cent for food hubs, so the total could be up to $1.4 billion. 30 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

33 3.2 Demand On the other side of the equation, the concentration of the customer base for food hubs is anchored in cities. We assessed the market potential for food hubs in the Ottawa-area, Central Ontario, and London-area, specifically in the wholesale and restaurant markets. Food hubs are primarily geared to the fresh market at this point in time, so frozen, canned and dry goods, beverage and seafood categories were eliminated in the calculations. The resulting total demand is $952,515,611 (drawn from Tables 1.9, 2.9 and 3.9). Based on the 80:20 assumption above, 20 per cent of the total represents a $190 million market opportunity for the three regions. As food hubs become more sophisticated and the number of food hubs expands, they may be able to capture a larger piece of the pie for wholesale and restaurant markets, as well as entering into other markets. There are food hubs in the United States, for example, that focus solely on retail while others focus on direct-to-consumer channels. More research would need to be done to better understand the associated market opportunities. REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES 31

34 4.0 CONCLUSION The data reveals that there is no shortage of supply in southern Ontario to fill the current demand in food service the supply is seven times more than the demand for fresh products. Regional food hubs can be the market channel to help medium-sized farms scale up to meet this demand with Ontario-grown product. These farms are typically cut out of foodservice markets due to consolidation and centralized purchasing. Regional food hubs can serve as a mechanism to mimic that consolidation on a regional basis. There is also an opportunity to look at how more local foods can be used to develop processed and frozen products, which make up 54 per cent of the food service marketplace. There are many food hubs in the US that have taken the opportunity to incorporate commercial kitchens and incubators into their models to help fulfill this need. 32 REGIONAL FOOD HUB PILOT PROJECT REGIONAL PROFILES

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