Question of the Week
Answer: As a producer interested in working with a food hub, it is important to evaluate several components of a hub to see if the operation meets your needs and the needs of your farm. Here are some factors to consider.
• Purpose/Mission – Food hubs target a particular customer base and are often oriented around a specific mission to help meet the economic, social, and environmental needs of a community. By looking at the purpose and mission of a food hub, a producer can determine whether or not the food hub is in line with the goals and values of the farm.
• Legal Structure – The legal business structure of a food hub influences how the food hub operates. Food hubs may be legally classified, for example, as a for-profit business, not-for-profit, or cooperative. Producers may be required to be involved in the operation or governance of the business and should be clear about what is expected of them.
• Types of Markets – Food hubs target specific types of markets that fit the purpose and infrastructure of the food hub. This includes larger wholesale markets as well as smaller retail outlets. The type of market plays a significant role in the products offered by the food hub.
• Products and Branding – Product selection and differentiation help ensure producers get a good price for their products. Food hubs utilize marketing strategies to differentiate products in order to help preserve the identity of the grower, their product(s), and their growing practices. When products are aggregated from different farms, it’s important to know whether the individual producer’s identity is preserved or whether aggregated products are branded under a single identity.
• Price – How is price determined? Is the price representative of any social, environmental, and community values? Is the food hub able to negotiate a price for products that don’t meet grading standards?
• Scale – Food hubs vary greatly in scale. Larger hubs typically work with more markets and in a wider geographical area than smaller food hubs. As a result, they tend to work with more producers and sell more types of products. Scale is important to consider in terms of variety selection, quantity, and price.
• Location – Where is the food hub located in relation to the producer? This is important to consider with regard to whether the producer has to deliver the product(s) to the food hub or the food hub provides on-farm pick-up services.
• Infrastructure – What type of infrastructure is available? Does the food hub have appropriately scaled equipment for processing, packing, storing, and distribution?
• Financing – How is the food hub able to operate financially? Does it have access to capital?
• Age – How long a food hub has been in business is important. Newer operations may not be as stable financially or in their daily operations as well-established food hubs.
• Contracts & Agreements – Does the food hub establish contracts with its producers and/or buyers to guarantee they will purchase from the producer at specified quantities, qualities, and price? What happens if the producer is unable to meet its obligation to the food hub?
• Logistical Support – What type of logistical support does the food hub provide? Do they offer assistance in crop planning? Do they furnish packing materials that are required?
• Insurance – Are there any specific types of insurance coverage required of the producer?
• Challenges – Food hubs face many challenges related to the viability of the business. As a producer working with a food hub, it is important to know what barriers the food hub is currently facing and how they impact the short- and long-term success of the food hub.
Learn more about how food hubs can provide new marketing outlets in the ATTRA publication Food Hubs: A Producer Guide.
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