Excerpts from the Regional Food Hub Resource Guide: Food hub impacts on regional food systems, and the resources available to support their growth and development by the USDA Agricultural Marketing Service.
A regional 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.
Regional food hubs are key mechanisms for creating large, consistent, reliable supplies of mostly locally or regionally produced foods. At the core of food hubs is a business management team Clarifying the Regional Food Hub Concept that actively coordinates supply chain logistics. Food hubs work on the supply side with producers in areas such as sustainable production practices, production planning, season extension, packaging, branding, certification, and food safety—all of which is done to enable these producers to access wholesale customers, such as buyers for foodservice institutions and retail stores. Simultaneously, food hubs also work on the demand side by coordinating efforts with other distributors, processors, wholesale buyers, and even consumers to ensure they can meet the growing market demand for source-identified, sustainably produced, locally or regionally grown products.
Defining Characteristics of a Regional Food Hub
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.
How Do Regional Food Hubs Help Farmers and Ranchers?
Many farmers and ranchers are challenged by the lack of distribution and processing infrastructure of appropriate scale that would give them wider access to retail, institutional, and commercial foodservice markets, where demand for local and regional foods continues to rise.6 There are three primary reasons why this lack of infrastructure stifles the development of regionally based food systems:
Limited Market Options and Revenue Opportunities Although many smaller farmer and rancher operations have taken advantage of direct-to-consumer marketing outlets (such as farmers markets, farm stands, and community supported agriculture) to sell their products, they often lack the volume and consistent supply necessary to attract retail and foodservice customers. This problem is particularly acute for operators of mid-sized farms, who are too large to rely on direct marketing channels as their sole market outlet but too small to compete effectively in traditional wholesale supply chains.
Limited Distribution and Marketing Capacity Producers often don’t have the available capital or access to facilities to store, process, and distribute their products. Furthermore, due to limited staff or lack of experience, they are not always able to devote the attention necessary to develop successful business relationships with key wholesale buyers or have the resources to develop an effective marketing strategy by themselves.
High Transaction Costs Wholesale buyers often find it too costly to purchase products directly from numerous farms and prefer to reduce transaction costs by buying product from distributors. Consequently, regional food hubs have emerged as an effective way to overcome these infrastructural and market barriers. For those smaller and mid-sized producers who wish to scale up their operations or diversify their market channels, food hubs offer a combination of production, distribution, and marketing services that allows them to gain entry into new and additional markets that would be difficult or impossible to access on their own. For larger producers, food hubs can provide the product-differentiation strategies and marketing services to ensure the best possible price in the market place. Moreover, for wholesalers, distributors, retailers, and foodservice buyers who would like to purchase larger volumes of locally and regionally grown products, food hubs lower the procurement costs by providing a single point of purchase for consistent and reliable supplies of source-identified products from local and regional producers.
How Do Regional Food Hubs like Delta Harvest Differ From Other Local Food Distributors?
While many regional food hubs, like Delta Harvest, are local food distributors, they are much more than this. Food hubs are innovative, value chain-based business models that strive to achieve triple bottom-line (economic, social, and environmental) impacts within their communities. They do this by offering services to producers, buyers, and the wider community.
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