Regional Food Hubs: the key to improved farm profitability and rural economic development?

Regional Food Hubs: the key to improved farm profitability and rural economic development?

Summary

Assessing the economic impact of food hubs on participating producers is a timely topic as the number of food hubs (and proposed food hubs) proliferates throughout the U.S. As a result of this NESARE-funded project, and leveraged support from the USDA AMS, policy makers, extension agents, nonprofit personnel and economic developers are gaining the tools necessary to evaluate the impact(s) of food hubs. Our team at Cornell has completed our conceptual framework, and is almost finished building the first of two economic models. Utilizing a case study approach to test our methods, we have almost finished gathering the data needed to more accurately reflect farmers who participate in food hubs. Though the project is not complete, the Graduate Student Investigator has already published a number of articles to increase farmer awareness of local food distribution options throughout the State, and presented preliminary findings (including how to conduct economic impact assessments) at many meetings and conferences throughout the Northeast. Perhaps most significantly, at their request, she presented information from this project at a recent meeting of the NYS Council on Food Policy.

Objectives/Performance Targets

The first part of 2012 (through March) was spent completing analysis on the original local food distributor surveys (funded through the Cornell Small Farm Program), and integrating data obtained through the NYS Department of Agriculture and Markets through a Freedom of Information Act (FOIA) request of distributors in NYS with a Farm Product Dealers License. The resulting article was submitted to a highly-regarded peer-reviewed journal, but rejected for publication. We did, however, publish some of the results in a Cornell-based outreach publication geared at extension educators and economic developers (see attached).

One of the reasons that the publication was rejected was that we had to make too many untenable assumptions as our survey and FOIA obtained data did not provide enough of the requisite detail to reliably adjust the model. For example, the NYS Farm Product Dealers license data was the best we could find to get determine of the total size of the local food distribution sector in NYS (a critical piece of information for the economic model we built). However, the Farm Product Dealers license, in the end, did not prove a good proxy for the local food distribution sector. For example, some grocery stores get this license, and others do not, depending on the extent to which they distribute product for other businesses. Distributors of dairy and meat products get another kind of license. We did the best we could with the data we had, but recognize that it just was not robust enough to draw any hard conclusions. The silver lining of the initial project was two-fold: 1) it enabled us to develop relationships with distributors working with ‘local’ growers across NYS; 2) it helped us to develop a stronger survey protocol and methodology for the current (NESARE-funded) phase of the project.

Based on the rejection of the initial document, we decided that the next phase of the project, and the next generation of the economic model, needed to be more robust. We thus assembled a team of inter-disciplinary researchers across Cornell University (from the Departments of City and Regional Planning, Applied Economics and Management, and Development Sociology) and got additional funding from the USDA AMS, through a cooperative agreement. With more funding in place, since Spring 2012, we have gathered for weekly meetings and made tremendous progress. We completed a very detailed conceptual framework document, and anticipate the complete methodology will be available in the next few months.

Though the Cornell Small Farms Program Work Team on local foods/local markets has not met regularly this year, smaller groups of the work team have met, and the Graduate Student investigator continues to represent the on many boards/planning groups across the state. One of the developments that transpired since this grant was written is that local foundations have started to fund the American Farmland Trust (AFT) to provide leadership to expand farm-to-institution sales throughout NYS. AFT has established a tremendous advisory group (of which the Graduate Student investigator is a part) and is working to achieve many of the same objectives listed in this grant. For example, AFT is working to facilitate regional networking events for local food distributors/food hubs and farmers, so as to expand market access for growers throughout NYS. At each of the meetings, the Graduate Student Investigator provides insight into her food hub and economic impact assessment work – in this way, the projects are working in tandem and will best support the objective of supporting the viability of small, commercial producers without wasting resources.

Additionally, the Graduate Student Investigator and Cornell collaborators (funded through the USDA AMS project) have met with many extension educators and nonprofit groups across NYS interested in expanding food hub availability. There is no doubt that the information gleaned from this project is being effectively disseminated throughout the State.

As we are not yet finished with our modeling efforts, we have not developed policy recommendations for local, state and federal government. However, we have participated in several meetings across the State (including a December meeting of the NYS Council on Food Policy – presentation attached) about how to conduct an economic impact assessment.

• Smart Marketing Article: June 2012

Accomplishments/Milestones

Our research team has made tremendous progress in building our economic models within IMPLAN. We decided to build two different types of models – the first utilizing significantly more secondary data (and less primary data) than the second. We are interested in comparing the results from the two models. If they are relatively close, then we can recommend that future researchers need not go to the trouble (and expense) of collecting the additional information. Our first model is now built and we are in the process of completing the requisite data collection (see 1b) in order to build model 2. We have much more detail about this process in the conceptual framework document that we requested and can make it available to NESARE staff upon request.

Once our research team started meeting regularly, we quickly realized that the level of data we needed in order to conduct an economic impact assessment of food hubs is extremely detailed and sensitive. Our approach requires information about the types, quantities, and locations of input commodities used by food hubs as well as detailed expenditure information from input supplying agricultural commodity producers. This information is not currently available from public sources. Thus, in order to obtain this information, we needed to collect a significant amount primary data. For the purpose of testing and building the model, we decided to utilize a case study approach focused on Regional Access, a food hub located in Trumansburg, NY. We chose Regional Access based on the interviews we conducted the previous summer with NYS distributors of locally grown products. Regional Access has been in business over 20 years, and has a deep commitment to working with large numbers of farmers throughout NYS.

Regional Access provided us with a comprehensive list of their financials, participating farmer vendors, nonfarmer vendors, and customers. During the summer of 2012, we conducted in-depth in-person interviews with 30 farmer vendors, and 20 nonfarmer vendors. The interviews had to be conducted in person, due to the detailed financial data we required in order to build our model and modify IMPLAN. We are currently in the process of surveying Regional Access’ customers. The data we need from the customers is not as detailed, and thus we determined that an online survey would be appropriate. The customer surveys are useful for two reasons. First, they enable us to gage the scalability of the food hub sector in NYS. Second, they help us to determine the extent to which Regional Access is increasing overall demand for locally-grown products, versus shifting sales from one market outlet to another. As we have now finished building our first model, the next few months will be spent integrating the primary data we collected into the second iteration of the model.

Since writing the initial SARE grant, new leadership has emerged to support and coordinate enhanced marketing and distributing of NYS grown products throughout the State. Thus the Graduate Student Investigator has not coordinated the activities originally intended in the application. However, the Graduate Student has conducted a significant amount of outreach, and written many publications. The Graduate Student Research has written a distributor profile in each of the Small Farm Quarterly publications this year (see attached) – to very favorable reviews from farmers, and also published information from the initial local food distribution study in Cornell’s Smart Marketing publication. During 2012, she gave presentations about this research to: the NYS Regional Food Hub Group (coordinated by NYS Governor Andrew Cuomo, Albany, NY); the American Association of Geographers (NY, NY), the Cornell Small Farm Summit (Ithaca, NY); Agricultural and Applied Economics Association’s Food Environment Workshop (Boston, MA); and the NYS Council on Food Policy (Kinderhook, NY). Beyond meeting with Agricultural Economic Development specialists, Cornell Cooperative Extension employees, and nonprofit leaders throughout the State about food hubs, the Graduate Student Investigator has been invited to join many working groups, including the Northeast Sustainable Agriculture’s Knowledge Ecosystem Project, and the American Farmland Trust’s Farm-to-Institute Project. She has been invited to disseminate the results of this project through many more publications, conferences, and presentations in 2013 – this is certainly a timely topic!

• Presentation to the NYS Council on Food Policy
• Small Farm Quarterly Article 3
• Small Farm Quarterly Article 1
• Small Farm Quarterly Article 2

Impacts and Contributions/Outcomes

To date, there are two main impacts of this project (we anticipate many more once the project is complete). First, the Graduate Student research has done a significant amount of outreach about how to conduct an economic impact assessment. This is an extremely important subject as many extension agents, agricultural economic developers, and nonprofit employees do not understand what metrics are needed. In order for policy makers to make informed decisions about resource allocation, we need good information. We are optimistic that already many people have gained knowledge about what data to track and what economic impact assessments really are about. Second, there has been very positive feedback from the distributor profiles that the Graduate Student Investigator wrote and published in the Small Farm Quarterly this year. She made an effort to profile very different kinds of local food distributors, and has received many emails from farmers who have benefited. For example, she received an email from a dairy farmer who had recently started an on-farm cheese-making business. The farmer was looking for distribution options as she did not have time to direct-market all of the product herself. She reported learning about many new wholesale options through the Small Farm Quarterly profiles.

Collaborators: