Food Hubs Help Create New Markets
“Agriculture of the middle” farms are too small to attain the economies of scale to sell in commodity markets and are too large to profitably rely on direct-marketing like farmers’ markets. A solution to the “agriculture in the middle” problem has been the use of food hubs and establishing what is described as a “values-based food supply chain”.
According to the USDA working definition, 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.”
Food hubs respond to community food needs and can assume various roles in your local food system. This is why it is important for producers, distributors, retailers and consumers to work together to develop regional food hubs. Current hub models can:
- Increase access to local food for larger volume buyers
- Enable local farmers to sell more of their products and retain product identity and transparency
- Assist buyers with larger quantities of local food products not available in local farmers markets
- Provide technical assistance for growers and buyers to ensure the marketplace is offering goods and services needed in the area
- Preserve greater market share and revenue for local food farmers
- Coordinate distribution and delivery (see video below)
Business Structures and Business Models
Food hubs are diverse. The National Good Food Network Food Hub Center lists over 300 food hubs nationwide. They serve customers virtually and physically. Of the 107 food hubs surveyed in the 2013 National Food Hub Survey, 47% of food hubs are structured as for profit, 34% as non-profit, 13% as cooperative, 4% as publicly-owned, and 2% as other. Geographically, 75% of food hubs operate in counties in metro areas. As far as the business model, a survey of 200 food hubs in Regional Food Hubs: Improving Market Access for Local Producers revealed that 34% are farm-to-institution, 39% are farm-to-consumer, and 27% are both
Regional food hubs are defined less by a particular business or legal structure, and more by how their functions and outcomes affect producers and the wider communities they serve. Defining characteristics of a regional food hub include:
- Carries out or coordinates the aggregation, distribution, and marketing of primarily locally/regionally produced foods from multiple producers to multiple markets.
- Considers producers as valued business partners instead of interchangeable suppliers and is committed to buying from small to mid-sized local producers whenever possible.
- Works closely with producers, particularly small-scale operations, to ensure they can meet buyer requirements by either providing technical assistance or findings partners that can provide this technical assistance.
- Uses product differentiation strategies to ensure that producers get a good price for their products. Examples of product differentiation strategies include identity preservation (knowing who produced it and where it comes from), group branding, specialty product attributes (such as heirloom or unusual varieties), and sustainable production practices (such as certified organic, minimum pesticides, or “naturally” grown or raised).
- Aims to be financially viable while also having positive economic, social, and environmental impacts within their communities, as demonstrated by carrying out certain production, community, or environmental services and activities.
This Webinar, hosted and recorded by Purdue Extension Local Food Program can help you learn more about starting a food hub from two national experts:
Jeff Farbman, Senior Program Associate Wallace Center and National Good Food Network
Jim Barham, Agricultural Economist, USDA Rural Development
Find a Food Hub Near You
Food Hubs in Indiana
This Old Farm
Located in Colfax, IN, This Old Farm sells to wholesale customers and individuals. There are shipping options as well as pick up locations in Lafayette, Zionsville, Indianapolis, and Lebanon.
Green BEAN Delivery
Based in Indianapolis, IN, Green BEAN Delivery is an online food hub that delivers directly to residences. It serves several metro areas in Indiana, Kentucky, Missouri, Ohio, and Tennessee.
Hoosier Harvest Market
Based in Hancock County, near Indianapolis, Hoosier Harvest Market sells to wholesale customers and individuals. They have pickup locations in Marion, Hamilton, Hancock, and Henry counties.
Mission: a localization initiative that focuses on aggregating goods produced within 100 miles of the market location to optimize the physical and financial well-being of the community.
The Agricultural Marketing Service publishes reports on the progress of food hubs and food value chains. Additionally, there are many links to non-USDA sites in the What We Are Reading page.
A project of PolicyLink, The Reinvestment Fund, and The Food Trust, the Healthy Food Access Portal has a quick overview of food hubs, challenges and strategies for successful food hubs, a guide to community engagement and equitable development, a listing of funding opportunities, and a few short success stories.
The tools and resources section contains guides for entrepreneurs and investors.
- The Food Hub Business Assessment Toolkit provides evaluation tools for operators and investors in food hubs.
- The Tech Guide for Food Hubs aggregates available tech and software solutions for running a food hub and provides an evaluation framework to reveal your technology needs.
- How To Choose a Business Structure: A Decision Guide details the pros and cons regarding taxes, financing, liability, governance and more when choosing incorporation.
- New England Food Hub Site Suitability shows a GIS based analysis of supply, need (lack of existing food hub), infrastructure, and demand of the New England region.
A Guide to Funding Opportunities and Incentives for Food Hubs and Food Systems: How to Navigate the Funding Process [PDF]
This guide from New York’s Senator Gillibrand presents the information, eligibility requirements and contact information for the federal funding opportunities available to food hubs. Most of the contacts in the guide are officials at the federal level, but there are a few New York specific federal officials listed as a contact.
Last Modified: 08/03/2015