Development of a Cooperative Food Distribution Model for Small Farms

View the project final report

• 2013 annual report

Commodities

Practices

• Farm Business Management: community-supported agriculture

PROBLEM/SOLUTION Wayne County has $247 million in total agricultural sales. Only $1,392,000 is sold directly to consumers in Wayne County. With Wayne County’s population of only 114,222 people, we, as small scale growers, have more production capacity than market in this area. Therefore it is vital to the health of the small farms in the area to bridge the gap to the urban market. In the past many have struggled to deliver product to urban markets due to the inefficiency of the producer having to handle the production, logistics, and marketing to be a successful business. Through this project we will realize the efficiency required through better cooperation among producers and coordinated logistics tools to successfully and consistently deliver product to the urban markets while keeping the small scale producers profitable. We would like to develop a distribution system for a cooperative CSA between farmers in Wayne and nearby counties in Ohio. Our CSA will sell a minimum fixed dollar amount of produce, dairy and meat products. The produce baskets will be filled seasonally and customers will have a choice of meat products on a weekly basis. Eggs and dairy would be a regular weekly order. Customers will pay at the beginning of the season. Money generated from CSA sales will be will used to set up contracts with farmers. Farmers will apply for a contract by indicating the crop, or livestock produce they can raise and the amounts they can provide during the season. Contracts to farmers will be reviewed and awarded based on this information. For example farmers A and B would provide tomatoes during certain weeks of the season, farmer C would sell eggs, farmers D and E would provide chickens,etc. This system will allow farmers to focus on raising certain products in higher quantities and will help resolve the problem of everybody having the same products at the same time. Safeguards will be designed to help cover crop losses from one farmer by another. We will require a qualified manager hired by the cooperative to set up the initial heavy marketing emphasis and administrative set-up. From our collective experience selling at the Wooster local food cooperative we have found our market in this area to be saturated and would like to reach customers in the Cleveland/Akron urban area. Our goal is to target customers in concentrated points of delivery, such as hospitals and other institutions. This project will require the creation of customer CSA membership forms, farmer applications, contracts, an ordering system, electronic media communication, weekly newsletters and educational material for customers. Our goal is to let customers know where their products came from, who grew it, and what their farming methods are. It is essential for this project that we have the use of a refrigerated van. We would like to rent a vehicle for the experimental year of this project and work towards purchasing one later. Rental the first year will help us assess costs and determine what percentage of sales are needed to cover transportation costs. Eventually farmers will be paying a percentage of sales to cover both transportation and management of sales and marketing. The  refrigerated van could potentially also be used to pick up other products generating some income for the cooperative. We will require a sales outlet, and a location to receive product and sort orders for distribution. To this end we would like to partner with The Local Wooster food cooperative (DBA Local Roots Market and Cafe). They have agreed to provide us with warehousing space, use of cold room storage and help with digital media marketing. Additionally they have an on-line ordering system that we can adapt to our CSA. Sales for the CSA will be made through the Local Roots cash register. They can accept credit, debit,and SNAP sales. They will collect 5% commission of the sale and deposit the other 95% to a separate CSA account. Having this infrastructure already available to us will benefit the project and reduce costs. We will be concentrating our sales effort in the urban Cleveland area, in particular at areas where we can have drop-off points with many customers who are concerned about improving their diets for health reasons. Examples of drop-off points would be branches of the Cleveland Clinic, University Hospitals, various University departments or food services. Local Roots has over 100 producer members and we will initially draw from this pool of growers to meet our sales. Local producers are committed to growing practices that are sustainable and ecologically conscious, many being certified organic or naturally grown. Most producers in this pool are small, with market gardens and small livestock operations that are pasture-based. The retail space at the Local Roots Market is very limited and many of these growers only sell a small percentage of their product there. Local Roots wants to help promote the growth of our local producers but has a limited retail market in Wooster for the the perishable products. This distribution system would benefit not just the farmers who participate in the CSA, but also the ones who sell at the store by removing some of the glut of products at certain points during the growing season. Local Roots does not have resources needed to set up a  distribution system. Our cooperative CSA will develop the distribution model and the management of the CSA sales. Partnering with the local roots cooperative is essential because of the good working relationships, shared mission and complimentary benefits. If this project is successful we would like to incorporate it into the Local Roots Cooperative business, thus avoiding the legal costs of setting up a new cooperative and new expensive infrastructure. By combining resources and working cooperatively, we predict the food distribution costs will be much lower than if they are assumed by individual farmers. We will develop the management structure, determine costs and identify the challenges in working cooperatively with the distribution and sales of farm products. Having an economically viable way to distribute farm products will help farmers be profitable and will provide a direct link from consumer to producer. PREVIOUS RESEARCH There are several studies pointing to the need of a local food distribution system for the small farmer. Only 4 percent of the food purchased in Northeast Ohio is local. (Masi, Schaller, & Shuman, 2010). http://www.neofoodweb.org/sites/default/files/resources/the25shift-foodlocalizationintheNEOregion.pdf. The key to increase the share of the local food dollars to our area farmers is to address the distribution system. Clark et al have shown that logistics and distribution have significantly lagged in the past for the local food industry and is the major opportunity space for scaling up small farm operations. (Clark, Jill K., Shoshanah M. Inwood and Jeff Sharp. 2011. “Scaling-up Connections between Regional Ohio Specialty Crop Producers and Local Markets: Distribution as the Missing Link.” OSU Center for Farmland Policy Innovation: Columbus, OH.) SARE has been instrumental in funding and promoting different types of CSA. We found a particularly useful resource, Local Harvest, a multi-farm CSA handbook by Jill Perry and Scott Franzblau, published thanks to funding from SARE. This will be a valuable resource for us in establishing operational procedures for our cooperative CSA. Our goal is to merge with an established local food cooperative that can provide the legal requirements, accounting and insurance of a cooperative, so we won't be replicating what Local Harvest has already done. We will emphasize and establish the distribution aspect and the outreach to nearby large urban areas thus increasing the sustainability and marketing potential of the local farms. To be able to do this we will need the funding requested. OUTREACH We have requested funding for field days. This will be an opportunity for our customers to experience the farm environment and for our farmers to share with them the challenges and realities of growing food locally. Additionally we can make available a compilation of our weekly newsletters to other CSAs. This newsletter will have seasonal recipes that are an excellent addition to any CSA marketing and very useful to the consumers. Consumer knowledge on how to prepare and cook seasonal farm products will assure continued support of local CSA offerings. We will share farmer contracts, CSA agreements and strategy for establishing a cooperative distribution system with a short handbook that can be downloaded from the SARE website or our own website when we have one available. We will arrange to present our findings and share our experience at an annual Ohio Ecological Food and Farm Association conference. EVALUATION Our expectation is that when growers and livestock producers have a well defined and  guaranteed market that production and sales will increase for our local small farms. To measure this we will request crop production records for the year prior to participating in our distribution system.