The Emergence of Food Hubs and Their Impact on Farmers Markets

Transcription

1 The Emergence of Food Hubs and Their Impact on Farmers Markets Becca Jablonski PhD Candidate, Cornell University Doctoral Fellow, USDA s National Institute of Food and Agriculture Navigating the Local Food Scene Farmers Market Managers Conference Double Tree by Hilton, Binghamton, NY February 27, 2014

2 Background Since 2009, USDA has supported 2,600+ local food system projects (USDA 2013)

3 Background Since 2009, USDA has supported 2,600+ local food system projects (USDA 2013) 450 programs through the Farmers Market Promotion Program 860 projects under the Specialty Crop Block Grants program 89 Community Food Project Awards 40,000+ have received assistance through the Beginning Farmer and Rancher Development Program 10,800 high tunnels through the Environmental Quality Incentives Program 4,000+ microloans by the Farm Service Agency to support small-scale producers who can take advantage of local marketing opportunities

4 What is a Food Hub? A regional 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 (Barham et al. 2012). Source: Common Market Philadelphia, Philly Good Food Lab Source: West Philly Food Hub

5 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) Food Hubs by Years in Operation (n=106)

6 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) Food Hubs Total Gross Sales by Calendar Year 2012

7 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) Food Hubs by County Type

8 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) Food Hubs by Number of Suppliers

9 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) % of Food Hub Producers that are Small and Mid-Scale

10 What is a Food Hub? Findings from the 2013 National Survey (Fischer et al. 2013) Food Hubs Customers by Average Number Selling to them and by Average % of Total Hub Sales

11 Why Food Hubs? Majority of local food sales through intermediated markets (Low & Vogel 2011)

12 Why Food Hubs? Farmers local food marketing, 2008 $4.8 billion in sales 71,200 farms $877 million in sales Farmers markets Roadside stands Farm stores CSA arrangements 22,600 farms $1.2 billion in sales 13,400 farms $2.7 billion in sales Grocers Restaurants Regional Distributors 12

13 Why Food Hubs? Farmers Markets in Madison County, NY (2009) Location Average $ spent per week # of weeks/market Total $ spent per market/year Hamilton, NY $24, $618,858 Cazenovia, NY $12, $313,848 Canastota, NY $3, $51,631 Oneida, NY $3, $69,600 $1,053,939 Source: Madison County Agricultural Economic Development Program, 2009

14 Why Food Hubs? Majority of local food sales through intermediated markets (Low & Vogel 2011) Consumer WTP for local food (e.g., James et al. 2009; Onozaka & Thilmany 2011)

15 Why Food Hubs? Majority of local food sales through intermediated markets (Low & Vogel 2011) Consumer WTP for local food (e.g., James et al. 2009; Onozaka & Thilmany 2011) Yet, unmet demand lack of distribution systems for moving local foods into mainstream markets (Martinez et al. 2010)

16 NYS Distributors Carrying NYS Farm Product Funding provided by: -The Atkinson Center for a Sustainable Future -USDA s Sustainable Agriculture Research and Education Fund -Cornell Small Farm Program Source: Google Maps 2013

17 Results from Distributor Interviews All distributors reported increased consumer demand for NYS grown and source-identified products Almost all distributors wanted to work with more NYS growers if product acquisitions/logistics could be improved

18 USDA Programs that Support Food Hub Development Rural Development Rural Business Enterprise Grant Rural Business Opportunity Grant Value Added Producer Grant Business and Industry Guaranteed Loan Program Community Facilities Program Rural Economic Development Loan and Grant Program National Institute of Food and Agriculture Community Food Projects Competitive Grant Program Sustainable Agriculture Research and Education (SARE) Organic Research and Extension Initiative Agricultural Marketing Service Farmers Market Promotion Program Federal-State Marketing Improvement Program Farm Service Agency Farm Storage Facility Loan Program Natural Resources Conservation Service Environmental Quality Incentives Program Conservation Innovation Grant Risk Management Agency Risk Management Education

19 USDA Programs that Support Food Hub Development Rural Development Rural Business Enterprise Grant Rural Business Opportunity Grant Value Added Producer Grant Business and Industry Guaranteed Loan Program Community Facilities Program Rural Economic Development Loan and Grant Program National Institute of Food and Agriculture Community Food Projects Competitive Grant Program Sustainable Agriculture Research and Education (SARE) Organic Research and Extension Initiative Agricultural Marketing Service Farmers Market Promotion Program Federal-State Marketing Improvement Program Farm Service Agency Farm Storage Facility Loan Program Natural Resources Conservation Service Environmental Quality Incentives Program Conservation Innovation Grant Risk Management Agency Risk Management Education Additional $10-15M through FMPP in 2014 for local food enterprises!

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21 Research Question What is the economic impact of food hubs to local economies and participating farms? Objective: Better understand the extent to which food hubs affect the overall demand for and consumption of local products

22 Funding Support Agricultural Marketing Service, USDA, Cooperative Agreement No A-5568 National Institute for Food and Agriculture, USDA, Competitive Grant No Northeast Region Sustainable Agriculture Research and Education Program, Grant No. GNE College of Architecture, Art, and Planning, Cornell University

23 Case Study: Regional Access Regional Access LLC, est. in 1989 Over $6 million in sales, 32 employees Delivery (mostly) throughout NYS 10 vehicles Over 3,400 product listings Regional Access 25,000 sq ft warehouse, Trumansburg, NY Beverages, breads, cereals, flour, meats, produce, prepared foods, grains, fruits & vegetables, etc. Purchases from over 100 farmers & 65 specialty processors Over 600 customers Individual households, freight, restaurants, institutions, distributors, buying clubs, retailers, manufacturers, bakery

24 Regional Access Farm / Non Farm Vendor Services: Aggregation Freight Warehousing Marketing Customer Services: Home delivery Retail, Wholesale, Institutional delivery Backhauling Community Outreach: Food donations Foundation - Great Local Foods Network community event, special projects (i.e., Bake mobile )

25 Case Study: Farm Interviews 30 interviews with RA s farmer vendors out of a population of 86 located in NYS Response rate, 35% Commodity, by primary sales: Meat/Livestock, 37% Fruit and Vegetable, 30% Value Added Products, 33% Operation Size, by 2011 gross annual sales: Small, 50% Medium, 20% Large, 30%

26 Case Study: Customer Surveys 305 surveys/interviews with RA customers Response rate, 46% businesses, 80%; households 20% Business customers: Average sales = $5.7 million; median = $515,000 Average years in business = 13 median = 8; range = Primary business function: Retailer, 34%; Restaurant, 25%; Wholesaler, 11%; Processor, 9%; Other, 21%

27 Results: Local Economic Impact Farms that participate in food hubs spent more money in the local economy than other types of farms Food hub sector in NYS has larger multiplier than comparable sectors (wholesale trade, truck transportation, warehousing and storage)

28 Results: Opportunity Cost 49% of RA customers purchases less from other sources due to purchases from RA (n=164) Average reduction >23% Opportunity Cost associated with $1 increase in final demand for food hub sector ~ $0.11

29 Gross sales per farm, 2011 Results: Farm-level Impacts Regional Access facilitated sales as a proportion of total farm sales $3,000,000 $2,500,000 $2,000,000 RA-facilitated Sales $1,500,000 $1,000,000 Non-RA Sales $500,000 $0

30 Gross sales per farm, 2011 Results: Farm-level Impacts Regional Access facilitated sales as a proportion of total farm sales $3,000,000 $2,500,000 $2,000,000 RA-facilitated Sales $1,500,000 $1,000,000 Non-RA Sales $500,000 $0

31 Results: Farm-level Impacts Farm business expansion due to RA? 29% 57% yes, expanded unsure no 14%

32 Results: Farm-level Impacts Farm business expansion due to RA? Expanded (urban) market access Regional Access enabled us to expand our CSA reach, to grow beyond the local area, meaning in the years to come we will increase our acreage under production. 29% 14% 57% yes, expanded unsure no

33 Results: Farm-level Impacts Farm business expansion due to RA? Increased access to warehousing and cold storage We store our potatoes at Regional Access, which allows for extended season sales throughout the year. That has made a big difference to our farm s bottom line. 29% 14% 57% yes, expanded unsure no

34 percent of business customer respondents Results: Farm-level Impacts Do customers receive a price premium for items marketed as locally grown? 60% 50% 40% 42% 49% 30% 20% 10% 0% 1% Significantly lower prices 5% Somewhat lower prices No price difference Somewhat higher prices 3% Significantly higher prices

35 Results: Farm-level Impacts 79% of customers reported expanded local food sales due to availability of product through RA (n=166) Mean Increase = 17% Businesses would increase purchases if RA: Expanded product offerings, 73% Improved logistics, 40%

36 Results Summary What is the economic impact of food hubs to local economies and participating farms? Local Economic Impact Food hubs have larger multipliers than similar businesses Participating farms spend more money than other types of farms in the local economy (per unit of output) Policies supporting food hubs produce winners and losers Farm-Level Impact Price impact - consumer WTP for differentiated products Expanded market access, particularly for mid-scale producers Increased access to warehousing and storage But, questions remain about profitability impact

37 Implications for Farmers Markets 1. Farmers selling through FMs spend more of their money locally that other types of farms Data-driven evidence to support their development

38 Case Study: Capital District Small and mid-scale farms only direct-to-consumer (D2C) sales CCE educators provided list of 752 farms 116 interviews conducted in Summer 75% response rate 82 with sales <= $500,000 Detailed 2010 sales and expenditures data collected (by amount & location) Fruit (15%), Vegetable (27%), Dairy (6%), Livestock-Meat (23%), Green Nursery (12%), Other Crop (17%) Small (82%), Medium (18%) Farming Full-time (62%), Part-time (34%) Off farm employment (60%) Capital District Counties include: Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington

39 Case Study: Capital District Small and mid-scale farms only direct-to-consumer (D2C) sales Results: CCE educators provided list of 752 farms 116 interviews conducted in Summer Farms reported 82% of total 75% response rate expenditures 82 with sales <= $500,000 in NYS, Detailed 2010 sales and expenditures data collected (by amount & location) compared to 70% for all Fruit (15%), Vegetable (27%), Dairy (6%), Livestock-Meat agriculture (23%), Green Nursery (12%), Other Crop (17%) Small Import (82%), Medium local (18%) economic impact Farming Full-time (62%), Part-time (34%) Off farm employment (60%) Capital District Counties include: Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington

40 Implications for Farmers Markets 1. Farmers selling through FMs spend more of their money locally that other types of farms Data-driven evidence to support their development 2. Likely some diverted sales Farms have more choices about where to sell products

41 Implications for Farmers Markets 1. Farmers selling through FMs spend more of their money locally that other types of farms Data-driven evidence to support their development 2. Likely some diverted sales Farms have more choices about where to sell products 3. But, farmers markets play key and different role

42 Implications for Farmers Markets 1. Farmers selling through FMs spend more of their money locally that other types of farms Data-driven evidence to support their development 2. Likely some diverted sales Farms have more choices about where to sell products 3. But, farmers markets play key and different role Facilitating direct farm-to-consumer interactions

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45 Implications for Farmers Markets 1. Farmers selling through FMs spend more of their money locally that other types of farms Data-driven evidence to support their development 2. Likely some diverted sales Farms have more choices about where to sell products 3. But, farmers markets play key and different role Facilitating direct farm-to-consumer interactions Sales outlets for small farms

46 Gross sales per farm, 2011 Implications for Farmers Markets D2C Outlets Important for Small Farms $3,000,000 $2,500,000 $2,000,000 RA-facilitated Sales $1,500,000 $1,000,000 Non-RA Sales $500,000 $0

47 Looking Forward: Strategies for Collaboration GrowNYC New York, NY Profile: 54 farmers markets in all 5 NYC boroughs 230+ farms and fisherman from 6 Northeastern states Greenmarket Co. established to distribute farm products via wholesale channels

48 Looking Forward: Strategies for Collaboration J. King s Long Island, New York Profile: 400+ employees + $170 million in gross sales 125,000 square foot facility 100+ schools through CT, NYC, and Long Island 30+ NYS participating farmers and looking for more Diverse markets

49 Thank You! Becca B.R. Jablonski 314 W. Sibley Hall Cornell University Ithaca, NY beccajablonski.wordpress.com