Food and Business

The business of food is an essential part of our economy. Except for the few who grow all of their own food, we rely on businesses to deliver the food we all need to live. When it comes to the business of local food, consumers are leading the way. Consumers are no longer just looking for taste, price, and convenience when it comes to food. They want their purchases to align with their values. Businesses and entrepreneurs have responded by setting up new values-based food supply chains.

“Values-based food supply chains (referred to herein as food value chains) are strategic alliances between farms or ranches and other supply-chain partners that deal in significant volumes of high-quality, differentiated food products and distribute rewards equitably across the chain” [USDA].

At the local level, the increasing presence of local food options like farmers’ markets, CSA, food co-ops, and farm to table restaurants is driven by consumers demanding food that aligns with their values. These values are related to triple-bottom-line accounting, which includes social, environmental, and financial performance, but they can include much more like animal welfare and nutritional concerns. In order for food-value chains to work, they need to track and transmit key information along the supply chain. For example, the identity of the farm is known when food is purchased through food-value chains. By contrast, food that goes through traditional food supply chain is anonymous.

Demand for food-value chains creates new networks of food entrepreneurs. Some of these networks start at events like a local food summit or farm conferences, while others started online. The internet enables easier connections between local entrepreneurs and their colleagues in other parts of the country. An online network might simply be a listserv open to all, but there are other online networks limited to professionals in the industry, which are commonly called “communities of practice” (COP).

These new networks distribute knowledge about what has worked and what hasn’t in the rather new business of local food. With better access to key information and support from consumers, governments, and other stakeholders, new local food value chains are being established across the country. Several hurdles face food value chain businesses like seasonality, dealing with smaller suppliers, maintaining short supply chains, and ensuring fair and equitable marketing and prices. Now enabled new local supply chains to start. Food hubs tackle these problems, and they are an innovation that has grown across the country.

A 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”.

Thanks to the establishment of local supply chains new businesses are able to start. There are now local food delivery options, more restaurants sourcing from local farms, more local food options in grocery stores, and more small food businesses making value-added products sourced from local farms. Another key part of the local food infrastructure are value-added processing facilities. Thanks to cottage food laws many products can be made at home, but when a licensed facility is required, kitchen incubators and shared-use kitchens help small food businesses develop. When a food business outgrows a shared-use kitchen, it might use a co-packer. A co-packer takes the ingredients and a recipe from a food business and makes the product at a larger scale.

At the other end of the supply chain, local supply chains reduce food waste and food insecurity. Food rescue organizations, food waste apps, and new retail store initiatives are ensuring that perfectly good food ends up on someone’s plate instead of in the landfill.

Finally, as with all business, regulations are an important aspect of the food supply chain. Food safety is the most important type of regulation with which food businesses must comply. Food safety regulations start on the farm and continue all the way up the supply chain until food reaches the consumer. Other kinds of regulation deal with the environment, employees, advertising health benefits, and more.

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