Burlington Food Hub: Innovative direct marketing opportunities

2008 Annual 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

Burlington Food Hub: Innovative direct marketing opportunities

Summary

The Burlington Food Hub: Innovative Direct Marketing Opportunities Project was designed to enhance the understanding of the local food economy in the greater Burlington area and develop new ways to increase the amount of food sold by Vermont farms in this market. In this report we highlight progress toward our original performance target, detail progress on our milestones in 2008, lay out goals for 2009 and discuss our impact on agricultural research, farmer support and new enterprise development.

The Food Hub concept outlined in our project grew to be a new program of the Intervale Center (IC) with diverse funding and a goal of building a community food system that connects Vermonters in ways that are convenient, profitable and fair. This broader approach has allowed us to utilize the results of this SARE project to date to inform the development of enterprise solutions that can benefit farmers in the immediate term. To this end, in 2008 we piloted the Food Basket enterprise, a multi-farm food delivery program that operates as an enterprise within the larger Food Hub concept. Throughout this report, we will reference both the Food Basket (the multi-farm CSA) and the Food Hub (the larger research and development project in which the Food Basket is embedded).

The launch of the pilot multi-farm CSA has also significantly changed our original SARE project plan. We initially envisioned developing an ownership team that would then proceed through the feasibility and development of the Food Hub enterprise. Several factors impacted our decision to pilot one enterprise and build the larger Food Hub from there: a) the burgeoning interest in local foods by consumers warranted the accelerated development of the Food Basket enterprise; b) we secured funds dedicated to the development of a pilot multi-farm workplace delivery program that could be replicated in other parts of Vermont; c) our producer survey indicated that farmers were interested in the Food Hub concept but were not prepared to invest in an untested business model; and d) this model gives us more flexibility to learn how to aggregate and distribute food while opening doors to additional, potentially larger customers (i.e. delivering food successfully to employees of Fletcher Allen Healthcare (FAHC) and GE Healthcare has opened the door to providing product to their food service departments).

Despite this change in project implementation, in 2008 we continued to advance toward the goal articulated in our original SARE grant application. Our farmer survey is complete; data has been analyzed, reports have been written and made available on our website. Farmers’ responses have played a pivotal role in shaping the direction the project has taken. With our partner, the University of Vermont’s Center for Rural Studies (CRS), we have collected and analyzed consumer data on the demand for local, Vermont grown products in Chittenden County. We have offered enterprise analysis to farms participating in the Food Basket and made it available to all surveyed farm managers who expressed interest in receiving it. We have launched the Food Basket, a multi-farm CSA that since June 2008 has grossed over $94,000. We have fostered connections with institutional buyers in and around Burlington and will begin moving product to them in 2009. We have engaged a group of 31 growers who are now eager to explore ownership options and cultivate this new enterprise for the betterment of each farms’ bottom line.

Objectives/Performance Targets

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.”

Our producer survey indicated that farmers are interested in collaborative marketing, season extending storage and new brokerage services that can help them access Burlington area markets. In 2008, we launched the Food Basket, a multi-farm CSA inspired enterprise that served 120 customers at 7 drop off sites and grossed $68,000 in its first summer season and $31,000 in its first winter season with approximately $70,000 returned to 31 supplier farms (15 core and 16 additional suppliers). In 2009 we hope to at least double sales and develop appropriate storage and institutional marketing enterprises that will complement the Food Basket and address farmer identified constraints to selling more product. We have attended several meetings with FAHC and are now working collaboratively to design a system whereby we facilitate the negotiation of product sales between FAHC and farmers with the goal of supplying more local, fresh food for hospital menus. The development of this system can then be utilized to support higher volume sales in other institutional kitchens in the Burlington area.

Lessons:
In our original SARE proposal, we envisioned developing the business model with an identified farmer ownership team. However, through our survey work we discovered that though farmers were interested in investing in the development of the Food Hub concept, they needed to see some progress first. Since the launch of the Food Basket, we have seen an increasing interest in participation. This interest is in selling product, participating in discussions about expanding sales, developing stronger marketing services and determining how farmers can invest time and/or money in the long-term development of this business.

In our original proposal, we also envisioned dedicating a significant amount of time on-farm helping to develop enterprise budgets and marketing plans to get more products into the Food Hub. Through our survey we identified a number of farms interested in receiving on-farm support. However, when we contacted them, the response was very limited. We therefore provided support directly through the development of sales agreements for the Food Basket. For example, we worked with farmers to determine the most appropriate products to sell to the Food Basket, provided a weekly schedule that helped them plan the season and articulated the standards and delivery protocols for each farm. We also helped a handful of farms, such as a chicken producer and a mushroom grower, expand markets by matching them with meat and produce buyers at local health food stores and other CSAs in the area.

We have benefited from support and advice from different organizations along the way, such as Red Tomato, White Dog Foundation, Growers Collaborative, ALBA Organics, Penn’s Corner, Appalachian Harvest, Black River Produce, UVM Center for Sustainable Agriculture and the Vermont Small Business Development Center. Two lessons that they have shared have come up a lot and are now imbedded in our planning:

1. It takes twice as long and costs twice as much. We have made significant progress, but we also realize that we have a lot of work ahead of us. Not only are we seeking to launch a successful food marketing business, we want to see effective involvement and/or ownership from farmers.

2. Be careful when you invest in trucks and buildings. Although we are still investigating developing appropriate storage and warehousing infrastructure, we are very aware of the challenge that other organizations have faced once they invest in hard assets. Our goal is to develop alliances with existing enterprises wherever feasible and to ensure we very thoroughly understand the costs of developing infrastructure or purchasing vehicles before we invest.

Accomplishments/Milestones

This project has focused primarily on the research and education components as they relate to the development of the Food Hub. We have made significant progress on the research side of this project and the implementation of the business enterprise itself. In 2009 we seek to invest more time in the development of the organizational structure, ownership team and long-term investment plan for the venture. The following outline highlights progress and goals for the 3 phases of the project outlined in the original grant.

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: 3400 consumers mailed written demand survey and 400 consumers complete survey
• 2008 Progress: Survey analysis complete. Journal article on consumer cluster analyses drafted by Dr. Kolodinsky.
• 2009 Projected: Consumer analysis paper(s) will be circulated and published.

Milestone: 300 farmers mailed written supply survey and 100 farmers complete survey
• 2008 Progress: Survey results analyzed with reports available on IC website; results used to inform development of marketing enterprises (i.e. Food Basket).
• 2009 Projected: Finalize reports and circulate back to participant farmers and other stakeholders. Explore with UVM the possibility of linking producer and consumer analyses.

Milestone: 50 farmers identified for enterprise analysis
• 2008 Progress: Through the survey we identified 26 farm managers interested in on-farm technical support. However, few responded to a follow up correspondence to participate. We did find that as the Food Basket enterprise developed we discussed specific products with 30 farms and helped a number of these farms expand into new markets. These analyses were less formal than we intended, but each farm determined what mix of products would be most appropriate for them to supply.
• 2009 Projected: As new market channels are developed to complement Food Basket sales, we anticipate a greater need for specific enterprise analyses. For example, we are already discussing sales to the local hospital and know that their price points for certain products will require the development of new enterprise budgets for interested producers. In 2009, we will work with suppliers and purchasers to determine appropriate price points based on information from farmers and purchasers.

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: 100 farmers solicited from existing contacts during survey and analysis work
• 2008 Progress: Of the 301 farms that received surveys, 113 completed usable surveys. 69 of these farms received follow up about TA and/or enterprise development opportunities. More importantly, information solicited from farmers through the survey resulted in an adjustment in our original proposal to develop the ownership component once the business model had been created.
• 2009 Projected: NA

Milestone: 100 additional farmers solicited at conferences, events and advertisements
• 2008 Progress: We presented at the NOFA-VT 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.
• 2009 Projected: We will continue to flesh out different ownership possibilities to engage the Food Basket farmers.

Milestone: 50 farmers total attend 3, 4 hour workshops over one year
• 2008 Progress: In our survey of producers, they 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 Food Basket in June 2008, we now have a core group of farmers interested in discussing ownership and the development of the Food Hub. We have held two meetings with about 20 farms 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.
• 2009 Projected: We will advance the ownership model discussion in 2009 with the current suppliers of the Food Basket and present a summary of 4 or 5 different scenarios based on existing enterprises (private and non-profit managed) to current suppliers. We will engage the support of a collaborative marketing specialist to facilitate this discussion.

Milestone: 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
• 2008 Progress: No formal training has occurred at this time.
• 2009 Projected: We anticipate holding these trainings.

Milestone: Of these 30, 12 choose to invest in the new business (the “ownership team”)
• 2008 Progress: Although this has not been formalized, we have indication from several participant farms that they are interested in investing in the Food Hub enterprise.
• 2009 Projected: See above.

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: 12 farmers attend 6 3-hour Food Hub Business Plan Development Sessions.
• 2008 Progress: We have developed a business plan for the first enterprise: The Food Basket.
• 2009 Projected: The larger Food Hub feasibility and business plan development will occur with the goal of housing the Hub at the Intervale Center.

Milestone: 12 farmers utilize additional 20 hours of training, development and trouble-shooting designed to support farmers’ implementation of the Food Hub.
• 2008 Progress: No additional hours have been used at this time.
• 2009 Projected: As the ownership team develops we anticipate bringing more specific support to them.

PERFORMANCE TARGET
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.

• 2008 Progress: 301 farmers have been invited to participate through the producer survey. Over 30 farms have already supplied the Food Basket and several of these farms are interested in playing a larger role in the development of the Food Hub. Sales since June 2008 are just over $94,000. We have not completed profitability analyses, but farmers have indicated that the combination of good prices and marketing support provided by the Food Basket has resulted in greater profitability.
• 2009 Projected: Grow Food Basket sales to over $200,000 and initiate sales to at least one institutional market. Increase sales with existing producers. Advance the farmers’ and IC’s understanding of potential ownership options and develop the team.

Impacts and Contributions/Outcomes

Though our SARE-funded project is not complete, we have already made significant contributions to farmers’ bottom lines, have contributed to the conversations around local food and enterprise development in the state of Vermont and are beginning to engage on a more regional and even national stage on topics related to our work. A summary of our contributions to date follows.

a) Consumer and Producer Research
The Intervale Center and/or the Center for Rural Studies have developed the following reports.

The Center for Rural Studies has or will produce:
– Preliminary Results from the 2007 Consumer Survey (2008)
– The Chittenden County Consumer Survey Final Report (2009)
– A Cluster Analysis of Local Food Shoppers in Chittenden County, VT (2009)

The Intervale Center has produced:
– Vermont Farm Producer Survey: Preliminary Report (2008)
– Expanding Local Food Production, Storage and Marketing Capacity in Vermont: Results from the 2007 Farm Producer Survey (2008)
– 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)

The Intervale Center has also supported the development of the following as part of a University of Vermont Going Local Colloquium and internship program:
– Determining the Feasibility of a Burlington Food Hub: CSA (2007)
– Determining the Feasibility of a Burlington Food Hub among Chittenden County Restaurants (2007)
– Food Systems: An Annotated Bibliography (2008)

b) New Local Market Opportunities
We have developed strong alliances and trusting relationships with both local farmers and local businesses, thereby increasing our capacity to facilitate the development of new market opportunities for local food. Through the Food Basket, we are now collaborating with 8 new local markets and 31 farms as we work to develop a sustainable local food marketing business. These enhanced relationships allow us to collect critical market information and impart this information to farmers, empowering the producers with the knowledge to successfully meet the needs of the local marketplace. As an agricultural development service provider, we can leverage these new, effective and trusting relationships to create additional markets for local farmers.

c) Network Development
Our Food Hub work has enabled us to connect to growing networks of nonprofit and for profit businesses that are building local food systems across the country. In the state of Vermont, we have worked with Allen Matthews and the Center for Sustainable Agriculture and shared survey results and information with groups like Foodworks and the Rutland Area Farm and Food Link (RAFFL). We have also met with representatives from the Vermont Agency of Agriculture to discuss opportunities for replicating the Food Basket in central Vermont and eventually in counties around the state. Last winter, we participated in a Sustainable Traders meeting and have fostered connections with organizations such as White Dog Foundation, Red Tomato and Penn’s Corner. In November, a member of our team attended the Wallace Center’s National Good Food Network Convening in Chicago and connected with groups around the country exploring regional aggregation and distribution models. This winter, another member of our team will attend a CSA conference in Maine to talk about our work.

We have also solidified our relationship with the Center for Rural Studies (CRS). Their involvement in the project as consumer surveyor and project evaluator has been critical. To date, CRS staff has collected qualitative data for the process evaluation to document the development of the Food Basket CSA and other SARE grant activities through two, two-hour focus groups with project staff on November 14, 2007 and April 16, 2008. Questions asked of staff addressed how the project is being implemented, challenges faced, ways to address challenges, grant accomplishments and activities and next steps. Facilitated discussion was documented during the sessions and analyzed by searching for common themes and trends/changes in implementation over the course of the grant. This process of reflection has been tremendously useful to us, as it has helped us clarify our roles and responsibilities and work well as a team. Furthermore, CRS documented a December 10, 2008 meeting with Food Basket farmers to capture feedback from farmers about the project to date, feedback that was overwhelmingly positive.

d) New Enterprise Development
Through these expanding conversations, we have gathered knowledge and learned from the experiences of others. We have come to see our work as part of a larger trend, as many nonprofit and for profit entrepreneurs are exploring different ways to engage in aggregation, marketing and distribution services. At the heart of our work are the farmers we serve; their ideas and enthusiasm, combined with the lessons that others have so willingly shared with us, inspire us to create our own sustainable model for moving food.

Collaborators:

Travis Marcotte

[email protected]
Director of Agricultural Development Services
Intervale Center
180 Intervale Rd.
Burlington, VT 05401
Office Phone: 8026600440107
Website: http://www.intervale.org
Mandy Davis

[email protected]
Administrative Contact
Intervale Center
180 Intervale Rd.
Burlington, VT 05401
Office Phone: 8026600440108
Website: http://www.intervale.org
Sona Desai

[email protected]
Agricultural Development Associate
Intervale Center
180 Intervale Rd.
Burlington, VT 05401
Office Phone: 8026600440112
Website: http://www.intervale.org
Jane Kolodinsky

Co-Director of the Center for Rural Studies
University of Vermont
Burlington, VT 05405