Ten billion. That’s the size of the organic fruits and vegetables grocery market in the US. According to the USDA, the total direct-to-consumer fruits and vegetables market (conventional and organic) weighs in at roughly two billion. The difference in potential is staggering. Yet very few local organic growers dare venture into wholesale. It is an impersonal environment driven by small margins and high volume. The arena is dominated by large producers who wield the power of industrial efficiencies. They can stomp you. But they’re not local. And you are.
As I began to discuss in the first post in this series on Wholesale Alternatives for the Small Farm, I think the greatest entrepreneur opportunity, both in terms of impact and profitability, is in figuring out how to get local produce into the wholesale system profitably. The wholesale market is alien to most organic farmers. There are no enthusiastic patrons bubbling with praise for the quality of your purple sprouting broccoli. In fact, they probably don’t want your purple sprouting broccoli. But they do want good quality local organic produce in consistent volumes, properly packed and palletized, cooled and delivered. And metropolitan grocers are starting to realize that local organic produce will get people in the door. But Local doesn’t work very well right now for retailers. Only a few retailers are actually willing to work directly with small growers and nobody releases their figures, but I suspect that local is a net loss to them, mainly due to poor shelf life, inefficiency, lack of consistency, etc. Small organic growers have no trouble growing to wholesale quality standards but they struggle to meet the industrial requirements of volume, post-harvest handling, standardized packaging, pallet-scale logistics, and food safety protocols. So along comes the food hub, which I introduced in part one of this series.
What is a food hub? It's pretty simple. A food hub is a company, co-op, or non-profit which aggregates and prepares the produce from small farms for the wholesale market. The concept of the Food Hub is not entirely new but is the realignment and blending of existing models, scaled down to work with small producers. Food hubs are an emerging model and take on many forms, from web-based marketing systems such as LocallyGrown to traditional distributors who focus on local produce such as Atlanta’s Turnip Truck. The most relevant to food system reform, though, is often called the full-service food hub. It is this form which adds the most value for both the grower and the retailer. The full-service food hub acts as both aggregator and value-added processor, preparing the local produce for wholesale customers and taking on the risks of compliance and marketing which allows the grower to continue growing.