Food Hubs: An Alternative to Marketing your Products

Food hubs are being established around the country to connect consumers to locally grown food. Alaska is late onto the food hub scene but is certainly not lacking in locally sourced products.

1. Food Hubs: An alternative for
marketing your products

Bridgette Coleman

Business & Economic Development Director
Anchorage Economic Development Corporation
February 26, 2016

VW ”
Y AEDC
ANTAS

2. AGENDA

- What is a food hub?

- Who is supplying the food?
- Operational characteristics
- Fairbanks Market Study, 2014 **
- Opportunity for a food hub in Anchorage

@) AEDS

3. WHAT IS A FOOD HUB?

Roget's Thesaurus (2010) defines a HUB as a:
+ Point of origin from which ideas or influences originate; or
+ Place of concentrated activity, influence or importance.
In agricultural systems, hubs have emerged to
coordinate some aspect of the production, processing
and/or marketing of food to meet consumer demand
for local, fresh, organic or other value laden products.

ENS

4. WHAT IS A FOOD HUB?

Around the country, both formally and informally, food hubs are:

ie + Facilitating aggregation of crops
ls + Improving marketing

« Developing scale efficiency

+ Improving distribution

The development of community based food hubs is
focused on shortening the supply chain and delivering
more than just economic returns. ES

5. WHAT IS A FOOD HUB?

Food hubs as rural development

+ Represent a strategy for small to mid-sized producers to market
their production locally

+ Create marketing opportunities for local producers to differentiate
their products

+ Help connect rural producers to rural, suburban and urban markets

« Lower the barriers to entry and create new infrastructure

OS

6. WHAT IS "LOCAL FOOD?"

+ There is no standardized definition for "local"

+ Locavores are residents who try to eat food grown within 100 miles of
where they live

+ Many consumers and policy makers consider “local a 100-mile radius
from someones home, while others feel 200, 300 or 400 should be
considered

+ The Food Safety Modernization Act of 2011 defines ‘local as food
purchased within 275 miles or the same state where it was produced.

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7. WHO IS SUPPLYING THE FOOD?

Farm and processor suppliers

« 79 hubs enumerated 6255 suppliers
+ The average number of suppliers in 2015 was 115
+ The median number of suppliers in 2015 was 36

“Michigan State University, The 2015 National Food Hub Survey

8. WHO IS SUPPLYING THE FOOD?

Farm and processor supplier types

« 91%: Farms or ranches not owned by the food hub

+ 60%: Food processors not owned by the food hub

+ 32%: A different food distributor

« 25%: The food hubs own farms, ranches and enterprises
+ 15 %: Non-food-related businesses

“Michigan State University, The 2015 National Food Hub Survey, (n=111) a AEDC

9. WHO IS SUPPLYING THE FOOD?

I-

Percentage of supplies
received from small &

mid-sized farms and
ranches

O none @ Few @ Some @ most @ AI

@y A506

*Michigan State University, The 2015 National Food Hub Survey, (n=99)

10. OPERATIONAL CHARACTERISTICS

Food hubs by business structure

© Farmtobusiness/institution @ Fammto consumer @ Hybrid a AEDC
ND cu

“Michigan State University, The 2015 National Food Hub Survey, (n=151)

11. OPERATIONAL CHARACTERISTICS

Food hubs by legal structure

12. OPERATIONAL CHARACTERISTICS
Age of hubs

O Less than3 years @ 3to6years @ 6to11years @ 11 to 16yea

rs
O 16to20years @ More than 20 years

@y AEDC

ND anne

“Michigan State University, The 2015 National Food Hub Survey, (n=149)

13. OPERATIONAL CHARACTERISTICS

Product categories carried by food hubs

+ 92%: Fresh produce and herbs

+ 65%: Meat and poultry

+ 65%: Eggs

+ 53%: Other processed or value added products
+ 51%: Milk and other dairy products
- 51%: Grains, beans, flour

« 46 %: Processed produce

+ 35%: Baked goods and bread

+ 24%: Non-food items

+ 28%: Coffee/tea

+ 12%: Fish

JAS

*Michigan State University, The 2015 National Food Hub Survey, (n=110).
Percentage of polled hubs that carry each category

14. OPERATIONAL CHARACTERISTICS

Sales revenue by product category

+ Milk and dairy - $0.05

« Other - $0.19

+ eggs - $0.04

+ other processed - $0.05

+ processed produce - $0.04
« grains, beans, flour - $0.03
« other - $0.03

« Meat, poultry and fish - $0.18
« Fresh produce - $0.58

wi

“Michigan State University, The 2015 National Food Hub Survey

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15. OPERATIONAL CHARACTERISTICS

Hub preferences for producer/supplier
food safety certification

=Nopreference mPrefer =Required

17%

Good Agricultural Practices
(GAP) or group GAP (102)

| | 14%

Good Handling Practices (GHP) ns | 67%
(93)
a 6%

69%

“Michigan State University, The 2015 National Food Hub Survey

16. OPERATIONAL CHARACTERISTICS

Hub offered food safety services for
producers/suppliers

+ 61%: Assist producers and suppliers in developing or
reviewing food safety plan

+ 35%: Incentivize producer engagement with food safety

+ 33%: Provides staff person responsible for food safety
training and compliance by producers and suppliers

+ 43%: Assists with or provides Good Agricultural Practices
(GAP) training and certification

ro

*Michigan State University, The 2015 National Food Hub Survey

17. OPERATIONAL CHARACTERISTICS

Social mission components of
day-to-day activities

Strongly
related

Increasing small and medium sized farmers'/ranchers' access to
markets (146)

Promoting environmentally sensitive production practices (145)

Promoting good animal welfare practices (102)

Improving human health in your community or region (145)

Ensuring food hub employees receive a fair wage (118) 629

Increasing healthy or fresh food access to economically 40%
disadvantaged communities (147) °

Increasing minority producers'/suppliers' access to market (146) 23%
Addressing racial disparities through access to healthy food (143) 19%

“Michigan State University, The 2015 National Food Hub Survey

18. Food donations to local food 83%
pantries/banks =
Education about community and O 79%
food systems issues °
Nutrition or cooking education a 51%

Health screenings | 6%

Aoc

*Michigan State University, The 2015 National Food Hub Survey

19. OPERATIONAL CHARACTERISTICS

The three biggest barriers to growth in 2015 include:
+ 57%: Securing more product supply

+ 46%: Securing capital

+ 45%: Increasing truck capacity/delivery

20. Demand for local produce in interior Alaska:

2014 market study conducted by the
Alaska Cooperative Development
Program for the Fairbanks Economic
Development Corporation and
Interior Vegetable Farmers.

21. FAIRBANKS MARKET STUDY, 2014

Demand for local produce in interior Alaska:
2014 market study

40 one-on-one interviews in the Fairbanks area found
demand for local produce. Interested buyers include:
« Institutions
« Restaurants
« Individual buyers

All high-volume buyers required consistent
coordination and product availability.

Aoc

22. FAIRBANKS MARKET STUDY, 2014

Where buyers are purchasing local and non-local produce

Table 3: Local and Non-Local Suppliers of Produce

Where Do Buyers Purchase Local and Non-Local Produce in the Growing Season

Non- Local Farms Farmers —_ Retailer Food Other: Purchasing
foie Commercial Market (including Service decisions made
Garden or Sam's Distributor from external entity
Greenhouse Club)
Institutions (5) 1 4 0 0 4 1
Retailers (4) 0 2 0 0 2 2
Restaurants (20) 0 15 1 7 13 o
Cafés (9) 1 4 0 9 6 0
Other (2) 1 1 1 1 0 0
Total (40) 3 2 2 17 30 3

*There are 20 buyers purchasing from both local farms and food service distributors, and 2 buyers purchasing only
from local farms and retailers.

BD.

*2014, Demand for local produce in the interior: market study

23. FAIRBANKS MARKET STUDY, 2014

How much more buyers are willing to pay for local produce:

‘Table 4: Price Premiums Buyers are Willing to Pay

How Much More are Buyers Willing to Pay for Local
Produce?

% Buyers Willing
to Pay More

Price Premium Over
Non-Locally Grown
Produce

26% or more
21-25%

16.20%

11-15%

6-10%

15%

None

Yes, would pay more
but cannot measure
in numbers

Total:

# Buyer
Respondents

LS a neue

13%
23%
16%
13%
16%

3%

3%

13%

100%

Over 50% of buyers said they would be willing to spend
an additional 10-25% for locally grown produce and 36%

of buyers said they would pay 20% or more.

*2014, Demand for local produce in the interior: market study

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24. FAIRBANKS MARKET STUDY, 2014

Challenges between buyers who currently buy Local and those who do not

Lack of Vegetable Variety gr

Produce Washing 8 Packing EP

ere
Constant cual ER
cone 1 ma
roce fees
tete
es ene a oa
AR
Lack of Convenience sa

DN AEDC

*2014, Demand for Local produce in the interior: market study

25. FAIRBANKS MARKET STUDY, 2014

Pricing comparison: farmers vs. buyers

How Do Farmer Prices From the Producer Survey Compare with Locally

Grown Prices From Buyer Interviews

ragen an Pod save | auge roman pre | Reta Bye
A | Marae rote | Geren rr
fury Pres Senate’ | Swe
Fer wes ares ned

510 < DT

5220 = 3200

$2106 < 52700
$240 : ETS

D] = 5220

Parsnips™ 5250 E $290
5120 < 3210

$200 = 520

$130 E 5230

TumipsiRutabages 5130 E 5200

Note, highlighted vegetables indicate that over 50% of buyers and producers
would buy or sell that vegetable. All prices are rounded to the nearest tenth.

@y A50C

*2014, Demand for local produce in the interior: market study

26. OPPORTUNITY FOR A FOOD HUB IN ANCHORAGE

The role of a food hub in local food marketing

+ Market access for local producers
+ Information sharing

« Transportation and distribution

+ Brokerage service

+ Product bundling/aggregation

+ Season extension

+ Maintaining producer consumer connections
« Producer oriented technical assistance

@) AERC

27. Bridgette Coleman

[phone]
[email protected]

www.AEDCweb.com

28. SOURCES

The 2015 National Food Hub Survey, conducted by Michigan

State University: http: ngfn.org/r rces/ngfn-
cluster-calls/food-hub-survey-2015/2015%20Food%20Hub
% % hi

Demand for local produce in interior Alaska, 2014 Study:
http://dnr.alaska.gov/ag/Grants/
DemandforLocalPr inthelnterior2014Mark: f