NSAC's Blog
New Survey Shows Food Hubs Poised for Further Growth
September 20, 2013
Earlier this week, the Michigan State University Center for Regional Food Systems and the Wallace Center at Winrock International, both NSAC participating member groups, released the results of their 2013 National Food Hub Survey. A follow-up to an initial survey in 2011 of 45 food hubs by the National Good Food Network’s Food Hub Collaboration, this latest survey contains more detailed information on the structure and operations of food hubs based on 107 respondents from around the country.
According to the USDA, “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.” They’ve become a major focus of the USDA’s Know Your Farmer, Know Your Food Initiative as a promising way to help small and mid-sized family farms access larger markets such as grocery stores and institutional buyers. By aggregating and distributing produce from a number of local farms, food hubs are better able to provide scale-appropriate services on both ends of the transaction, thus providing producers with increased market access and consumers with increased access to local food.
Food hubs’ many forms, customers, and services
Food hubs can take several forms and provide a variety of services. The food hubs surveyed were for-profit, nonprofit, cooperative, and publicly-owned entities. The vast majority (over 80 percent of those surveyed) physically aggregate and distribute food, but many are also involved in product storage, wholesale and retail sales to consumers, and marketing services for producers, including actively helping producers find new markets. Restaurants, small grocery stores, and K-12 schools are the most common customer types served by food hubs. For the minority of food hubs that used them, CSAs or other forms of direct-to-consumer sales accounted for, on average, half or more of total sales. Of the range of food items food hubs carry, fresh produce and herbs are the most common (by 93 percent of food hubs surveyed). Rounding out the top three types of food most often carried by food hubs are meat and poultry (#2) and eggs (#3).
Location and the growth of food hubs
The majority of food hubs (75 percent) were located in or near metro areas, closely matching the high and growing percentage of Americans living in urbanized areas. Geographical distribution of food hubs was comparable to the 2011 Survey: they were most concentrated in the Mid-Atlantic and Northeast regions and least concentrated in the South Central region.
Ninety-six percent of food hubs indicated that demand for their products and services was growing, consistent with the increasing interest in local food across the nation. Additionally, most of the food hubs surveyed were young businesses, another indicator of strong growth. More than half of the food hubs surveyed began operating in the past five years.
Financial health and impacts on sustainable agriculture
In addition to examining what food hubs do and how they’re structured, the survey looked at their financial health and the impacts they are having on local communities, including ways food hubs influence producers in their production methods. Among the positive findings:
- A majority of the food hubs surveyed were on solid financial footing, with operating costs matching revenue.
- Most food hubs were able to operate independently of grants or other outside sources of funding. Two thirds of food hubs reported not receiving any funding from outside sources.
- While most food hubs are small, with annual sales of $500,000 or less, they work with a broad range of producers. Most of the food hubs surveyed work with 30 or more different producers, providing local consumers with access to a broad range of products from local farms and ranches. Those producers were somewhat more likely to be women or people of color than the national averages for primary operators of farms.
- On average, 60 percent of a food hub’s total gross sales came from small and mid-sized farms, while 76 percent of food hubs indicated that all or most of their producers fit this small to mid-sized farm category.
- Most food hubs indicated that they have an impact on their producers, including influencing them to diversify their product offerings or adopt more sustainable production methods.
Operating challenges and barriers to growth
Managing growth, balancing supply and demand, and gaining access to capital, were the most commonly identified challenges. Increasing capacity by hiring additional staff was the barrier to growth most commonly cited by food hubs. Not only is the ability to afford the hiring of additional staff problematic, but finding reliable seasonal and/or part-time staff is as well. Additionally, securing more product supply and increasing delivery capacity were other top barriers to growth. The survey authors note that a need for effective management skills appears to be at the root of many of the above challenges identified by food hubs.
Food hubs, a worthy investment
While most food hubs were able to run their daily operations without outside funding, 40 percent relied on grants for start-up costs. Many of the USDA programs that could support the development of food hubs are stalled in the absence of a new full farm bill or are at risk of losing funding to budget cuts.
Food hubs have tremendous potential to help small and mid-sized farms and ranches access a broader range of markets and facilitate more meaningful relationships between consumers and producers of food. Given the strong and growing interest in local and regional food nationwide and the generally sound financial footing of most of the organizations surveyed, food hubs look to be a sound investment in the future of American agriculture and deserve strong support in the next Farm Bill.
Categories: General Interest, Local & Regional Food Systems
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