Burlington Food Hub: Innovative direct marketing opportunities

Final Report for LNE07-260

Project Type: Research and Education
Funds awarded in 2007: $98,429.00
Projected End Date: 12/31/2010
Region: Northeast
State: Vermont
Project Leader:
Glenn McRae
Intervale Center
Co-Leaders:
Travis Marcotte
Intervale Center
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Project Information

Summary:

Over three years, 21 farms have become active suppliers and participants in the development of the Intervale Food Hub, and the project is on track to reach financial self-sufficiency in 2012 with a target of $587,000 in sales. Total sales revenue is expected to reach $800,000 by 2013. Farmers are reporting increased production and increased sales as a result of participation in the Food Hub, as well as extra income and exposure to new markets.

In 2007, 300 farmers were mailed written surveys, and over 100 farmers responded. In this survey, 31% of farmers identified multi-farm CSA and/or enhanced brokerage as interesting alternative marketing avenues and a significant percentage of farmers in Chittenden County identified storage as a limiting factor for business expansion. In response, the Intervale Center (IC) launched a multi-farm CSA with over 20 farm suppliers and 120 subscribers in its first year. This program grew by almost 80% in its second year and has plans to expand by 40% in each of the next two years. The IC and twenty collaborating farmers are developing a local brokerage service that will aggregate, collectively market and distribute local wholesale farm product to restaurants, grocers and institutions. We have also invested in storage, resulting in extended availability of storage crops. To date, the Food Hub has grossed $280,000 in total, returning 70% to participating farmers.

Introduction:

As more Vermonters desire fresh, locally produced foods, farmers have a unique opportunity to increase profits by connecting with consumers by way of innovative, collaborative marketing strategies. In 2007, the Intervale Center sought to create and launch a direct, farmer-owned market outlet – the Intervale Food Hub – modeled after Community Supported Agriculture’s bundling or “pick-pack” system. Our goal was to meet demand for locally grown food, support sustainable agriculture in close proximity to consumers and help increase the share of the food dollar going to farmers. With the support of SARE, the Intervale Center has researched markets, created a model for collaborative marketing and launched a business whose mission is to connect farmers and consumers in ways that are convenient, profitable and equitable. Our research has informed the project and helped us modify our goals so that we are creating a business that responds to identified market gaps in ways that improve farmers’ bottom lines. It has also informed ongoing conversations with other organizations in Vermont through the Regional Food Centers initiative and with organizations beyond Vermont, such as the Local Food Hub in Charlottesville, Virginia, about how to rebuild local food systems by investing in agricultural infrastructure.

The Intervale Center is a nonprofit organization in Burlington, Vermont. Our mission is to develop farm- and land-based enterprises that provide economic and social opportunity while protecting natural resources. For twenty years, the Center has incubated farms, provided business planning and technical assistance to agricultural businesses, educated young people about food and farming, restored stream banks by planting native trees and shrubs, supported composting in Chittenden County and created a unique agricultural resource within the city limits of Burlington. We – along with hundreds of farmers and dozens of other successful organizations and initiatives working in Vermont – are creating sustainable community food systems that enhance consumer access, support thriving farm businesses and restore local economies.

Through the Intervale Food Hub, the Intervale Center works with Vermont farmers to develop collaborative marketing, distribution and storage solutions to increase farm profitability and consumer access to local food. Our goal, as originally outlined in our 2007 SARE proposal, is to build a Food Hub that aggregates local product and provides storage, marketing and distribution services to the local community in a way that values convenience, profitability and fairness. Indeed, the Food Hub is a direct response to the growing demand for local product and the need for critical infrastructure that will allow farmers to meet this demand.

Performance Target:

The performance target outlined in our 2007 SARE grant proposal states,

“Of the 300 farmers invited to participate in our project, at least 30 will supply the Food Hub and 12 will form an ownership team and develop the Food Hub, to be launched in 2009. By the end of 2011, the Hub will reach $1.5 million in sales and secure a 10% increase in profits for participating farmers.”

Over the course of this project, our objectives evolved so that pace of growth was aligned with our investment capacity and our ability to coordinate activities with a large group of farmers. This pace has translated into more modest and incremental investments that are in line with the outcomes of the project’s research components and on a scale appropriate for our organization and collaborating farmers. Nonetheless, farmers who have participated in this project have seen significant increases in gross income, and the Intervale Food Hub is projected to cash flow without grant support by 2012.

We worked toward the performance target by following the milestones laid out in our original grant proposal. In 2007, 301 farmers were invited to participate through the producer survey, and an additional 60 farms were contacted through Intervale Center programs and at a NOFA-VT winter conference. In 2008, over 30 farms supplied the Food Hub and 21 of these farms began playing a larger role in the development of the Food Hub, attending meetings about enterprise development and ownership. Through the producer survey, we found that farmers were hesitant to make investments or take ownership of a new business until the market was demonstrated. This insight led us to launch the business ahead of schedule – in 2008 – in order to build markets and momentum. Today, a core group of 21 farms is working with the Center to determine future ownership and management strategies.

Our gross sales estimate has been adjusted to allow the business to grow at a more manageable pace. We now anticipate the Intervale Food Hub will be a self-sustaining, profitable enterprise by 2012, grossing $580,000. It has proven difficult to correlate increases in profitability among participant farmers to Food Hub participation because the Food Hub is one factor of many that contribute to farm profitability. Nonetheless, we have documented that participating farms are experiencing financial and quality of life benefits and expanding their farm production to meet Food Hub demand. In 2009, the average farm purchase was nearly $6,000, ranging from a low of $600 and a high of $22,423 per farm account and representing a substantial portion of many of the participant farms’ gross incomes. The Food Hub promises to continue to expand as a market for these growing farm businesses.

Additional changes in workplan are discussed in the Results section of this report and can also be found as an appendix in the full final report submitted to SARE.

Cooperators

Click linked name(s) to expand
  • Mandy Davis
  • Sona Desai
  • Jane Kolodinsky
  • Travis Marcotte

Research

Materials and methods:

Our project was designed to gather data regarding both consumer demand and producer needs to inform the development of the Intervale Food Hub. This research has enabled us to create a stronger project because we are confident that we are appropriately responding to an identified need. When we proposed this project to SARE, we were not sure what the finished product would look like, as reflected in our open ended project design. This design has allowed us to remain flexible to the needs of the market and our beneficiaries and has in the end made our project stronger.

This flexibility has also allowed the project to shift certain milestones in order to better respond to farmer needs. For instance, through the producer survey, a group of about 30 farmers were identified who requested enterprise analysis. When we reached out to these farmers to conduct this work, we received very low response rates. Meanwhile, another group of farmers was beginning to engage with us in the development of the multi-farm CSA. These farmers were receiving enterprise analysis and technical assistance as an informal aspect of their participation. The intention of the original grant was fulfilled through these sessions, though project design was not followed to the letter. In fact, we believe that the outcome of providing enterprise analysis to those farmers who were supplying the Food Hub during its pilot year was the best use of SARE resources and helped create trusting relationships between suppliers and the Center.

Similarly, farmers have responded to the project because we have shown them our sincerity and seriousness while clearly demonstrating market demand. In the survey, a majority of farmers expressed that they were hesitant to commit to shared ownership, asking instead to be shown the business first. We responded by launching the multi-farm CSA, and after one season of participation, farmers were asking about future models for ownership, taking a larger role in enterprise development and forming a strong coalition.

Research results and discussion:

The following discussion describes both our and our beneficiaries’ accomplishments as we worked toward the milestones outlined in the original grant proposal.  

PHASE 1A: RESEARCH
100 farmers and 400 consumers surveyed to identify potential product mix and volume, food supply gaps, shopping habits, spending levels and barriers to participation.

Milestone #1: 3,400 consumers mailed written demand survey and 400 consumers complete survey

In 2007, Center for Rural Studies (CRS) staff determined that a telephone survey would be a more effective methodology for this research. The consumer survey script, or codebook, was collaboratively developed by IC and CRS staff, and the survey was conducted in late 2007. In total, 1,030 eligible households were successfully contacted, yielding 412 useable completed questionnaires. This research found that though consumer interest in CSA and other direct, local marketing outlets was high, well over 90% of respondents listed a major grocery store chain as their primary shopping outlet. Analysis was completed in 2008 and can be found, along with the codebook, as attachments to this report.

Milestone #2: 300 farmers mailed written supply survey and 100 farmers complete survey

301 farmers received the Producer Survey in October of 2007. Intervale Center staff provided a follow up mailing and phone calls to farmers in order to solicit responses; in total, 113 farmers responded with useable surveys by December 2007. Survey results were analyzed in 2008 and were used to inform the development of the Food Hub’s marketing enterprises (i.e. the multi-farm CSA, brokerage model and storage facilities). Survey results in the form of three reports, as well as a copy of the survey template, can be found as attachments to this report. Participant farmers and other stakeholders were informed of final reports via a postcard mailing in 2008, and copies of the Producer Survey results can also be accessed through the Intervale Center’s website.  

Milestone #3: 50 farmers identified for enterprise analysis

Through the survey we identified 26 farm managers interested in on-farm technical support, but few responded to a follow up correspondence to participate. However, as the multi-farm CSA developed we discussed specific products with 30 farms and helped a number of these farms expand into new markets. For example, IC staff worked with a meat producer to explore local wholesale markets and provided guidance about proper billing procedures, wholesale packaging expectations and producer etiquette to participating farmers. This analysis and technical assistance were less formal than originally intended but in the end were true to the spirit of our original grant narrative and helped our core group of beneficiaries.

As new market channels were developed to complement CSA sales, we completed 10 specific enterprise analyses for farmers attempting to sell to institutional markets and collectively to restaurants. For example, in 2009, we discussed sales to the local hospital and learned that their price points for certain products would require the development of new enterprise budgets for interested producers, which we helped complete. This work has led to a more formal partnership between the hospital, producers and the Intervale Center.

PHASE 2: EDUCATION
50 farmers (which may or may not include all 30 farmers already committed to supplying the Food Hub in Phase 1) participate in 3 Shared-Ownership Structure Educational Workshops, and 12 commit to investing in the new business and join the “ownership team”.

Milestone #1: 100 farmers solicited from existing contacts during survey and analysis work

Of the 301 farms that received surveys, 113 completed usable surveys. 69 of these farms received follow up about technical assistance and/or enterprise development opportunities, as did over 60 additional farmers who were actively enrolled in Intervale Center programs.

Milestone #2: 100 additional farmers solicited at conferences, events and advertisements

In 2008, we presented at the NOFA-VT annual winter conference, posted notices on our website and shared the Food Hub concept with the over 60 farms associated with our incubator and business planning programs. We produced a “shared ownership” brochure that was available at events and distributed to 30 farmers, which is attached.

Milestone #3: 50 farmers total attend 3, 4 hour workshops over one year

In our 2007 survey of producers, farmers indicated a high level of interest in participating in the Food Hub, but without a demonstration of its impact they were less likely to invest. After the successful launch of the multi-farm CSA in June 2008, a group of farmers became interested in discussing ownership and the development of the Food Hub. In 2008 we held two educational workshops with 21 farms – the core group of Food Hub collaborative suppliers – participating. At a December meeting, we gave a presentation that highlighted four existing food aggregation and distribution models with different ownership strategies, and farmers became excited about discussing ownership models. The handout summarizing different models used at this meeting is attached.

After this presentation of different ownership scenarios, we decided to limit detailed conversations regarding ownership and resume them once the business reaches financial self-sufficiency. Nevertheless, we and our farm partners continue to have this goal in mind when making decisions about the collaborative. To this end, we are developing a fair and equitable system for crop allocation based on the need for this system when this business is farmer owned or managed. The collaborative has also discussed business name changes, whether we should create systems for new farmers to join the collaborative and how the decisions that we make today might impact a potentially farmer owned business in the future.

This core group of farmers has also been instrumental in the development of the concept of shared brokerage to access new markets. The wholesale component of this project will be piloted starting in June 2010, thanks in part to a SARE Sustainable Communities grant.

Milestone #4: 30 farmers total attend 4 formal, in depth training sessions about shared-ownership structure which will include pre-development work related to the Food Hub

No formal trainings including pre-development work occurred because the business was launched before conversations around shared-ownership took place; however, six meetings with farmers were held in 2008 and 2009 at which we discussed with farmers the details of business development for the CSA, the brokerage/wholesale component of the business, storage needs and the overall future of the farmer collaborative.

Milestone #5: Of these 30, 12 choose to invest in the new business (the “ownership team”)

Although this has not been formalized, we have indication from several participant farms that they are interested in investing in the Food Hub enterprise.

PHASE 3: RESEARCH AND IMPLEMENTATION
12 farmers (the “ownership team”) work to finish the business plan and launch the Food Hub, supported by appropriate business development consultants and investment partners.

Milestone #1: 12 farmers attend 6 3-hour Food Hub Business Plan Development Sessions.

Since 2008, farmers have attended a total of 8 Food Hub meetings that have each been over three hours in length. These meetings have addressed business development and provided fertile ground for farmer participation. In 2008, we completed a business plan for the first enterprise, the Food Basket, a multi-farm CSA, which has since been renamed Intervale Food Hub to allow consistency in branding. In 2009, we drafted a business plan for the Intervale Food Hub, incorporating feedback from participating farmers. This plan emphasizes market potential and business operations. We are currently updating it with new information on capital investment needs to inform the development of a facility that can accommodate growth. We anticipate that this business plan, which now serves as a working document, will be complete by May 2010.

Milestone #2: 12 farmers utilize additional 20 hours of training, development and trouble-shooting designed to support farmers’ implementation of the Food Hub.

Again, meetings with farmers continue, as we are developing the business, problem-solving common difficulties and working together toward profitability. Our farmer partners have benefited from countless hours of training on topics ranging from proper invoicing to models of collaborative ownership, and we are working collaboratively to advance the Intervale Food Hub social enterprise in ways that are convenient, profitable and equitable.

For a thorough evaluation of project process, please see the attached report prepared by the Center for Rural Studies, “Evaluation of the Intervale Center Food Hub: Documentation of the Process to Develop and Implement the Food Hub.”

Participation Summary

Education

Educational approach:

With the help of SARE, Maverick Lloyd Foundation, Windham Foundation and other funders, the Intervale Center and/or the Center for Rural Studies have developed the following reports.  

The Center for Rural Studies has produced:

Consumption Patterns and Demand for Local Food in Chittenden County, Vermont – Preliminary Report (2008) (attached)

Consumption Patterns and Demand for Local Food in Chittenden County, Vermont (2009) (attached)

Evaluation of the Intervale Food Basket: Perspectives from Participating Farmers (2009) (attached)

Evaluation of the Intervale Center Food Hub: Documentation of the Process to Develop and Implement the Food Hub (2010) (attached)

The Intervale Center has produced:

Shared Ownership Brochure (2007) (attached)

Vermont Farm Producer Survey: Preliminary Report (2008) (attached)

Expanding Local Food Production, Storage and Marketing Capacity in Vermont: Results from the 2007 Farm Producer Survey (2008) (attached)

Moving Food: How Farmers and Nonprofits Are Building Localized Food Systems for the Twenty-First Century (2007)

Estimating Food Expenditures for Chittenden County, VT (2008)

Maintaining Farm Identity through Alternative Marketing Practices (2008) (Attached)

Intervale Food Hub Business Plan (2010)

Ownership Models Handout (2009) (attached)

The Intervale Center has also supported the development of the following reports as part of a University of Vermont Going Local Colloquium and the Intervale Center’s internship program:

Determining the Feasibility of a Burlington Food Hub: CSA (Lauren Abda; 2007)

Determining the Feasibility of a Burlington Food Hub among Chittenden County Restaurants (Aaron Backer; 2007)

Food Systems: An Annotated Bibliography (Rachel Schattman; 2008)

Laying the Groundwork: A Snapshot of Regional Food System in Chittenden and Surrounding Counties (Beth McKellips; 2009) (attached)

The Intervale Center has created the following outreach materials for soliciting and retaining customers for the multi-farm CSA:

CSA brochure and supporting materials (winter and summer shares; 2008, 2009, 2010) (selected attached)

First CSA website – http://www.foodbasketvt.com (no longer available)

“Food Basket News” weekly newsletter (winter and summer shares; 2008; 2009) (selected attached)

Updated business website – http://www.intervalefoodhub.com

Theses reports and materials have been a great way to share what we have learned through SARE funded research with other groups. Our “Moving Food” paper is now being read by students at the University of Vermont, and CRS researchers are working on a paper to be published in an academic journal that more closely considers the Intervale Food Hub project and its impact on the viability of participating farms. CRS and the IC have also submitted a proposal for a workshop at the 2010 NAREA Conference entitled, “The Multi-farm Community Supported Agriculture Model: Assessing the Economic Impact of Combined Storage, Distribution and Marketing of Local Food Products for Small- and Mid-sized Farms.” We are active participants in Vermont’s Farm2Plate ten year strategic planning initiative, particularly focusing on distribution and marketing components of the value chain.

To access reports not attached to this document, contact the Intervale Center or visit our website at http://www.intervale.org.

Additional Project Outcomes

Project outcomes:

Impacts of Results/Outcomes

Over three years, 21 farms have become active suppliers and participants in the development of the Intervale Food Hub, and the project is on track to reach financial self-sufficiency in 2012 with a target of $587,000 in sales. Total sales revenue is expected to exceed $800,000 by 2013. Farmers are reporting increased production and increased sales in vegetables and beef as a result of participation in the Food Hub, as well as extra income and exposure to new markets.

Economic Analysis

Established in 2008, the multi-farm CSA reached $99,919 in sales from summer and winter CSA shares, and returned $60,919 to the 20 participating farms. In 2008, the individual purchases from farmers ranged from $180 to a high of $8,777, with an average purchase of $3,046 per farm. By 2009, the average farm purchase increased to almost $6,000 per farm, ranging from a low of $600 to a high of $22,423. This increase is tied to an overall increase in sales from 2008 to 2009.

Indeed, prior to the multi-farm CSA, in 2007 farm gross sales ranged from $24,000 to $2,000,000.  Because the sales from the largest grower was substantially higher than most of the other participating farms, his gross sales figures have been excluded from this summary in order to provide a more balanced representation. With this in mind, 2007 gross sales for farms averaged $85,085 in 2007 (range of $24,000 to $223,000) and that average grew to $117,206 in 2008 (range $25,000 to $475,000) and an estimated $135,237 in 2009 (range of $18,000 to $475,000). This represents nearly a 60% increase in gross sales over a three season period for farm businesses supplying the Intervale Food Hub.

In sum, through participating in the Intervale Food Hub project, most farmers have observed an increase in their farm’s production of food, sales in vegetables and beef and total farm income. This is critical because our goal is to ensure more food is being produced to meet market demand and not simply to shift product from one market to another. Participation appears to have had the most significant impact on smaller farms, and farmers are enthusiastic about growing the business. For a more comprehensive analysis of the economic and other impacts of the program on participating farms, please see the attached CRS-produced report, “Evaluation of the Intervale Food Basket: Perspectives from Participating Farmers (2009).”

The impact of project results includes not just the demonstrated positive financial impact for participating farmers but the impact of the project’s research and education on other groups around Vermont who are developing similar models. The Intervale Center is working with groups throughout the state as part of the Vermont Food Centers initiative to support farm-centric food distribution, warehousing and marketing initiatives, restoring local agricultural infrastructure and rebuilding our rural economy. Our work has also influenced the Local Food Hub in Charlottesville, Virginia and has been highlighted in both national and local press. We have given presentations of the Intervale Food Hub multi-farm CSA and other components at conferences in Vermont, Massachusetts and Maine.

For information about participating farms, please visit the Intervale Food Hub’s website at http://www.intervalefoodhub.com.

Farmer Adoption

The Intervale Food Hub project has had lasting impacts on participating farmers. An evaluation conducted by CRS of 18 of the 21 current suppliers of the multi-farm CSA found that the project provides a comfortable, low pressure environment in which farmers are respectful of one another and willing to collaborate. Farmers identified the following benefits of the program: mitigation of risk through collective marketing; ability to reach new markets; ability to focus on one crop instead of having to grow many varieties; and the creation of a support and resource network among diverse producers. Farmers rated project implementation highly. For more information about this evaluation, please see the attached paper, “Evaluation of the Intervale Food Basket: Perspectives from Participating Farmers” (2009).

Impact on individual farms is harder to quantify, as farm scale and market diversity varies. However, as stated in the CRS report, most farms affirmed that they have increased production to supply the multi-farm CSA, increased sales in vegetables and beef, earned extra income and gained exposure to new markets. Farmers also noted that this project has been a great learning tool, as they have been able to test the profitability of wholesale markets with limited risk. Finally, the CRS report concludes that,

“Compared to other accounts, farmers noted that the Food Basket [multi-farm CSA] is more innovative, consistent, reliable, larger and less sporadic. The Food Basket also shows more growth potential than other accounts, specifically for farms with a smaller production” (pg. 15).

In this way, participant farmers anticipate a long term relationship with this program, which has provided them with a convenient, consistent and expanding market, and which has strengthened their sense of community among diverse growers.

This sense of community and its real world significance must not be underestimated. Farmers in the program have developed friendships, providing practical production and marketing assistance to each other. A group of producers is buying boxes together this year and the group has discussed making other shared equipment investments. They are partnering with each other to contribute “add-on” products to each other’s CSA programs and exploring a myriad of other opportunities to collaborate.

Many additional farmers are interested in learning more about and supplying the Intervale Food Hub. At this time, the Food Hub is not allowing new farmers to enter the program unless they have a completely new product to sell. We are, however, working with existing farmers to develop a protocol for how to allow new farmers into the program in the future and can provide technical assistance to other groups looking to start similar social enterprises through the Intervale Center’s Consulting Services, including farms looking to start collaborative CSA and marketing programs in their locales.

Assessment of Project Approach and Areas of Further Study:

Areas needing additional study

This project has helped us identify a range of topics that would benefit from additional research in order to support small and medium-sized farmers as they grow their businesses to serve local and regional markets, including:
• CSA customer demographics, CSA retention rates and the true market opportunity for CSA;
• Feasibility of institutional buying and understanding of scale of production required to access regional institutions, supermarkets and other large markets;
• Asset mapping for slaughter and value-added production;
• Feasibility of light processing (such as freezing, chopping or triple washing);
• Consumer eating habits in Vermont; and
• Feasibility on any number of topics to aid farms transitioning from conventional dairy to new market opportunities.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.