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Aggregation and Food Distribution: Examining Different Models in Virginia

Aggregation and Food Distribution: Examining Different Models in Virginia . Eric S. Bendfeldt Extension Specialist, Community Viability Spencer Penn Centre Spencer, Virginia October 13, 2011 . Local farm and food commerce. Jobs Business development and expansion

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Aggregation and Food Distribution: Examining Different Models in Virginia

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  1. Aggregation and Food Distribution: Examining Different Models in Virginia Eric S. Bendfeldt Extension Specialist, Community Viability Spencer Penn Centre Spencer, Virginia October 13, 2011

  2. Local farm and food commerce • Jobs • Business development and expansion • Access to healthy food products • Farmer development and profitability • Community vitality and resilience

  3. Good food is… • Healthy • Green • Fair • Affordable • Culturally appropriate Adopted from W.K. Kellogg Foundation and the C.S. Mott Group

  4. Position? Leverage? Michael Porter, 1979. How Competitive Forces Shape Strategy

  5. Strategic Alliances and Co-opetition • Benefit of cooperation and competition in working together • Complementary relationships and networks • Shared values-based value chains • Long-term view of market and competition

  6. Competitive Advantage • Low cost-price supplier • Value-added differentiated product • “Food with a face and story.” • “ Memory and romance.” • Leverage • Position

  7. Keys to scaling up to meet the demand for local food • Aggregation • Controlling product quality and consistency • Seasonality • Matching supply and demand • Food identity and product differentiation • Supply chain infrastructure • Capital • Capacity and beginning farmer development • Information flow and transparency UW-Madison Center for Integrated Agricultural Systems, 2009.

  8. 41% 20% Today, in 2011, less than 12 cents of every consumer dollar spent on food actually goes to the farmer. Source ERS; chart by Ken Meter, 2007

  9. Virginia’s Declining Agriculture of the Middle

  10. Loss of farmers and farmland

  11. What is a Value Chain? Market Farmer Farmer Market Farmer Market Farmer Farmer Moving food with value and values

  12. Models of Aggregation and Distribution • Virginia’s history of cooperatives • Appalachian Sustainable Development • Shenandoah Valley Produce Auction • Local Food Hub • Runner Bean • Good Food, Good People • Fall Line Farms/Coastal Farms • Sustain Floyd • LexRocks Grows • SW Virginia Farmers Market

  13. Identifying Your Market? • Direct to Consumer • Farmers markets • Community Supported Agriculture (CSAs) • Restaurants and others • Wholesale • Locally-owned independent retailers • Supermarkets • Food service • Institutions

  14. Why aggregate farmers and farm products? • Retain more of the food dollar for the farmer • Address issues of scale and access • Gain leverage and position in a larger market • Facilitate processing and distribution • Foster a community food enterprise • Provide market development services • Promotion, buyer recruitment, invoicing, billing

  15. Survey your supply • What are the major and minor crops? • What are the growth trends? Increasing or declining? • What are the reasons for those trends? • What type of farmers exist? • What can be raised in the area?

  16. Developing farmers and the supply • Many farmers are not marketers. • Most buyers do not have time to go to the farm • Consistent reliable year-round supply • Quality, quality, and quality • Address issues of seasonality • Reducing risks and liability • Individual and/or umbrella insurance coverage • Good Agricultural Practices (GAP) • Tracking more of an issue

  17. Survey your market • What are the direct-to consumer markets? • What are the wholesale and institutional markets? • Are there farmers already scaling up? • Is there significant demand for some products that lacks adequate supply? • What is needed to increase supply to meet the demand?

  18. What are buyers looking for and expecting? • Quality – taste and freshness • Local • Organic • Sustainably raised • Niche specialty • Low spray or no spray • Price point or range • Payment schedule • Delivery times, places, and requirements • Volume and packaging needs • Labeling and tracking standards • Insurance and liability requirements • GAP or other certification requirements • USDA • Food Alliance

  19. Price Point • Can you as an aggregator and distributor live with the buyer’s price point? • More importantly, can your farmers and suppliers live with the price point? • Again, the importance of knowing your market and customer base • Moving food with value and values for the long-term • Always low price syndrome and caveat

  20. What aggregation and distribution infrastructure exists? • Are farmers already doing some grading, cooling, packaging, and processing? • Are there existing facilities in the region? • Are there existing distributors that can fill this need and demand? • Can you get by without owning and maintaining trucks?

  21. Local Food Hub video Local Food Hub video 2

  22. Local Food Hub • Non-profit organization working with farmers, eaters, and the community • “One number to call.” • Addressing 3 major issues • Distribution, supply and access • Work with 50 to 60 farmers within 100 miles of Charlottesville • Distribute to more than 100 locations • Public schools, hospitals, institutions, restaurants and other markets

  23. Local Food Hub offers • One-stop shopping • Refrigerated delivery • Pre-season planning • Liability and traceability coverage • $3 million insurance policy and guarantee • Marketing materials about the farmers and their farms

  24. Local Food Hub offers • Outreach • Workshops for training and technical assistance • Farm apprenticeships • High school internships • Networking opportunities • Community advocates • Access to larger markets

  25. Bringing School Food Home

  26. Knowing your community’s context and assets • 300 to 400 Old Order Mennonite families in Rockingham County • Their simple plain ethos is typified by non-conformity, non-resistance, horse-drawn buggies, and a strong sense of faith and community

  27. What is a Produce Auction? • A way to wholesale market fresh vegetables, fruit, bedded plants, flowers, nursery crops, baked goods, and other farm fresh products. • Buyers include owners of roadside stands, greenhouses, nurseries, farmers market, local and regional grocery chains, local restaurants, and some institutions. • Presently, 50 produce auctions in the U.S. predominantly within Amish, Mennonite, or “Plain” communities

  28. Key Ingredients to a Produce Auction “A lot of enthusiasm will not fill a produce bin or an auction with high quality, reputable produce,” … a local produce grower. • Grower Commitment and Loyalty, Cohesion, Location, Quality, Quantity, Variety, Service, Consistency, Communication, and Fortitude • Commitment to a seasonal average price point rather than returns from one sale

  29. Attributes of a Produce Auction • Central site for growers and aggregating product • Buyer recruitment • Sales and billing services • Order-buyer service • Balance between seller’s and buyer’s needs • Product volume and product mix • Farm tours, workshops, and outreach • Market reports • Occasional gluts • Relies on a good manager and auctioneer

  30. Shenandoah Valley Produce Auction • One model for aggregating farmers and farm products • Began in 2005 with 39 growers. • In 2011, more than 350 growers participate, along with 350 buyers of various scales. That represents over 700 independent locally-owned businesses and enterprises that have been expanded because of collaboration, partnership, and some seed money for educational programming.

  31. Shenandoah Valley Produce Auction

  32. Season Extension and Product Differentiation

  33. New Business Enterprises

  34. Infrastructure and Associated Businesses • Roadside stands • Greenhouses • High tunnels • Fertilizer and seed dealerships • Produce Suppliers • Equipment dealers • Custom applicators

  35. Other Aggregating Models • Online farmers markets and cooperatives • Modified Community Supported Agriculture(CSAs) • Providing convenience • Place and method for aggregating farmers and farm products • Some internet sales • Mostly retail and direct-to-consumer sales, but some institutional • Modified from one farm and multiple subscriptions to multiple farms, multiple subscriptions, and multiple pick-up locations

  36. Other Models of Aggregation and Alliances of Interest • Good Natured Family Farms • www.goodnatured.net • Penn’s Corner Farmer Alliance • www.pennscorner.com • La Montanita Co-op • www.lamontanita.coop • Tuscarora Organic Growers Cooperative • www.tog.coop

  37. New Cooperatives and Alliances Friendly City Food Co-op SV Beef Co-operative

  38. Community Food Enterprises • Hard work • Innovation • Local delivery • Aggregation • Vertical integration, but more cooperation and “co-opetition” • Shareholder loyalty • Speed • Better access • Better taste • Better story • Better stewardship • Better service • Revitalizing local economies • More community spirit • More social change The Wallace Center and the Business Alliance for Local Living Economies

  39. “If you want to go quickly – go it alone, if you want to go far – go together.” ~ African Proverb

  40. Eric S. Bendfeldt Phone: 540-432-6029 Email: ebendfel@vt.edu

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