Progress report for FNC25-1465
Project Information
New City Neighbors (NCN) is a community development organization that runs an urban farm and value-added commercial kitchen social enterprise. Both provide first-time employment and training for urban youth in the food sector.
The farm enterprise, New City Farm, is entering its 12th season. It is a 4-acre diversified vegetable farm that uses organic small-scale production methods to serve 250+ families through its CSA program. Additionally, through grant-funded partnerships, 25% of its produce goes to 9+ local food pantries. Farm sales for 2024 were $155,000.
NCN’s second social enterprise, New City Cafe, makes value-added products like soups, salads, and wood-fired pizzas from our farm produce. Most of these products are sold through a weekly pop-up seasonal restaurant at the same time as our CSA pick-up. The cafe also offers a Soup Share, a CSA share add-on where customers pick up a quart of prepared soup with their vegetable share. In addition, the Cafe does small catering jobs and sells prepared deli sides as a wholesale product to a local food pantry. Cafe sales for 2024 were $80,000.
Project Participants will be:
Lance Kraai, Operations Director, NCN: Lance will be the project lead. He has 10+ years of experience in vegetable production, has presented at several Small Farm conferences across Michigan and Indiana, led multiple farm trainings and workshops, and is a well-networked member of several farm groups.
Luke De Haan, Cafe Coordinator, NCN: Luke has 10+ years in farm-to-table production. For this project, he will develop an efficient meal kit system that pairs recipes with seasonal vegetables grown at New City Farm and other local ingredients. He will record lessons learned through working with the health department and determine the cost of production for ten trial meal kit recipes.
Joanna Walters, Farm Customer Service Manager, NCN: Joanna has 5+ years of experience servicing our farm customers. Joanna will develop recipe cards with step-by-step instructions for this project and survey customers to gain customer service satisfaction data.
Farm Apprentice, NCN: New City Neighbors, in partnership with the USDA Farm Service Agency, has a farm apprenticeship program designed to train historically underserved and beginning farmers. We will designate one farm apprentice to develop and execute a crop plan for meal-kit production. The apprentice will also record data on the cost of production for each meal kit as they lead the weekly assembly of the kits.
In our twelve years of experience farming, we see the following challenges in small-scale agriculture and value-added production:
- Decreased small-scale farm sales: The current marketplace for vegetable sales is becoming increasingly competitive through innovative options offered by larger grocery chains and corporations, such as HelloFresh, which don’t typically use local produce. This has led to decreased CSA shareholders and local farmers' total market revenue. Additionally, small-scale farms have difficulty competing with the ease of grocery delivery options because of time, labor, and access to equipment.
- Difficult to make a living in small-scale farming: Farms often lack the efficiency needed to generate sustainable revenue and provide fair wages to employees. Further, small-scale farms cannot offer full-time employment due to a lack of work during the winter.
- Small-scale farms have excess produce resulting in food waste: Food waste is a common problem for farmers because it is challenging to distribute produce seconds and surplus produce during peak season.
- 4. Customers lack time to prepare meals using fresh produce: While our current customers value fresh produce, they frequently cite in year-end surveys that they need more time and knowledge to prepare meals from scratch.
Our innovative wintertime meal kit model will lead to the following solutions:
- Meal kits for small-scale farms will offer greater convenience to its customers, expanding the market reach of small-scale farms: For this project, we will pilot an 11-week winter meal kit plan from February to April, with our farm producing a total of 50 meal kits per week. Meal kits will include fresh produce, a recipe card, and portioned ingredients to prepare the meal. We will pilot ten different meal kit recipes, track sales data for each kit, and conduct customer surveys. The pilot will help determine which kit will lead to greater sales, creating a model prioritizing customer ease and meal preferences.
- The meal kit model will make small-scale farms more profitable & sustainable: We expect this model to increase profitability by reducing food waste and increasing revenue in the winter season. The model will use fresh winter crops, storage crops, and crops dehydrated or preserved from peak season. We will measure the hours required to harvest the produce needed for the meal kits, time spent washing and storing the produce, the cost of packaging, how long it takes to assemble and deliver boxes. Data collected will make clear how profitable and sustainable meal kit boxes can be for a small-scale farm to determine if other farms should replicate the meal kit model.
- Meal kits will provide customers with food knowledge and convenience: A meal kit would include multiple vegetables grown in different seasons, some being fresh produce from winter high tunnel production and some being preserved from the summer. For example, a kit might include sun-dried cherry tomatoes, stored potatoes, and tunnel-grown arugula. Meal kits will also include step-by-step instructions on how to prepare everything in the kit along with the portioned ingredients required for the recipe. Additionally, each kit will help customers gain knowledge about how to prepare seasonal fresh produce. Further, customers will be able to purchase products from small-scale farms without the season-long commitment of a CSA or weekly visits to their farmers market, especially in the winter season when it is difficult to access local produce.
- Farmers will gain knowledge about how to enter value-added production: This project will help small-scale farms learn how to enter the value-added marketplace. Our Cafe Coordinator will lead product development and will work with our health department to ensure the model is fully food-safe compliant. We will also test commercial vegetable processing equipment appropriate for small-scale production. As we gain knowledge, we will conduct multiple farmer workshops and field days and put information on our website so that growers can learn what it would take to enter value-added production through their own commercial kitchen or an incubator kitchen.
This project will lead to the following objectives:
- It will determine the profit margin of meal kits for a small-scale farm
- It will measure the amount of excess produce that are utilized in the kits
- It will evaluate the demand for meal kits and which particular recipe is the most popular
- It will survey customers to determine if the kits lead to increased food preparation knowledge
- It will increase farmers' knowledge of value-added production as we share findings with other farmers, food producers, and educators through field days, regional farm groups, presentations at small farm conferences, and social media posts
Research
During this period, we developed and implemented a Meal Kit Cost of Production Calculator to evaluate whether meal kit sales can be a viable revenue channel for our organization and potentially for other small-scale vegetable farms. The tool tracks both variable costs — including labor for food prep, packaging, storage, transportation, and ingredients — and fixed costs, such as product development labor and specialized kitchen equipment.
We are calculating and verifying cost estimates in real time as production occurs to ensure accuracy. This enables us to determine the per-unit cost of meal kits and model the break-even point — the number of kits that must be sold for revenue to cover all variable and fixed costs.
This analysis is helping us understand cost drivers, refine pricing assumptions, and assess whether the meal kit model could be replicated by other small farms seeking diversified market channels.
Learning Outcomes
A few things have changed since we submitted our project proposal. Although we had anticipated a decline in our CSA sales and in CSA participation overall, 2025 turned out to be a record sales year. One of the original drivers of this project was to create a new market channel in case we were unable to meet our sales goals; this unexpected outcome reduced the urgency for our operation to pursue a more complex meal kit model.
That said, we still have excess produce and underutilized “seconds” that are not being maximized. We also have surplus labor capacity in the winter, as several of our permanent farm staff that we want to retain are not fully occupied during that season. As a result, we pivoted the meal kit plan to a shorter, winter-only “share.” We are now in the final stages of pricing, product development, and marketing, and plan to launch a winter Meal Kit Share for five weeks in February–March, utilizing produce that we chopped, froze, and processed in summer 2025. Our main question is whether these products will sell at a price that covers costs.
This shift allows us to test whether preserving produce through freezing and other methods is feasible, and enables us to focus more attention on the project when we have capacity during the slower winter months.