Food hubs offer an exciting bridge between food producers and consumers, providing a mutually beneficial relationship across both ends of the food system.
As defined by the National Food Hub Collaboration, “a food hub is a business or organization that actively manages the aggregation, distribution, and marketing of source identified food products primarily from local and regional producers in order to satisfy wholesale, retail, and institutional demand.”
Food hubs present an opportunity for communities to make healthy and local food sourcing a profitable enterprise for producers, distributors, retailers, and other business types (e.g., worker-owned co-ops). Similar to more traditional food distributors, food hubs provide the wholesale infrastructure and often, the logistics needed to serve at-scale customers who are seeking to procure locally and regionally grown foods. Food hubs act as value-chain facilitators by adopting a values-based approach to moving food along a supply chain to ensure that all actors in the supply chain—from farmers and farmworkers to consumers—benefit from the business model.
Unlike farmers markets, in which farmers and other producers engage in direct sales to customers, food hubs typically operate to support wholesale customers like institutions (schools, hospitals, universities) that are able to purchase at scale. For example, food hubs can provide a single point of aggregation for small- to mid-sized producers that may otherwise not be able to access larger markets. Food hubs may also provide transportation of products, assume costly liability insurance requirements on behalf of their producers, and/or provide customers with education and marketing materials. Food hubs can improve access to healthy foods in low-income or underserved areas by making it easier for farmers to offer their products in these areas by assuming costs associated with infrastructure and logistics. Food hubs may also provide additional value added services like freshcut operations for fruits and vegetables, or may serve as a business incubator for small-scale food producers.
Food Hub Obstacles
While food hubs can have a wide range of positive and equitable impacts, starting and operating a food hub comes with obstacles, even if you are reconfiguring a current farmers market or wholesale distribution center into a food hub.
Startup, administrative, and operational costs. Finding the capital to start and maintain a food hub can be challenging. Given the complex nature of food hubs, overhead costs can arise at all points on the operational chain, from the intake of local produce to the sale of goods to distributors and/or consumers.
Site development. Similar to supermarkets, food hubs require strategic site development to ensure that they efficiently and equitably connect producers to distributors and/or consumers in a specified geographic area. Food hubs often necessitate cold storage and space for processing, distribution, and marketing, so choosing a site suitable for a food hub requires knowledge of the local food system.
Economic sustainability. Depending on the model, food hubs have to attract food producers, distributors, and/or consumers to be sustainable over time. Food hubs can take several years to achieve financial profitability.
Key Strategies for Successful Food Hubs
Rely on proven and documented business strategies. Similar to other forms of healthy food retail, food hubs can benefit from comprehensive business plans. These enterprises can tap into targeted technical assistance programs that advise participants about how to increase their earning potential. Existing small business development training programs can also help food hubs improve their marketing strategies to increase their profitability.
Develop unique financing/funding packages for each specific food hub project, with long-term stability in mind. Although support from any available funding source is critical at the early stages of development, food hub operators should also develop a plan for long-term sustainability. Nonprofit food hubs, in particular, often rely on multiple sources of funding in addition to revenue, including grants and contributions, and must anticipate potential changes in these funding sources. However, given that food hub financing tends to reflect long-term, slow, management growth, this structure sets up the stage for long-term sustainability of the sector as a whole.
Collect high-quality operational and financial data. Investing in data systems and processes is important to track progress, evaluate performance, and make improvements each year. As food hubs grow over time and in experience, data can help to strengthen operations and inform decisions around pricing and staffing.
Develop policies to support food hubs. In addition to city and statewide financing initiatives that support fresh food projects across the country, non-funding policies also support food hubs in underserved communities.
Build support among local partners. Food hubs can work with various partners, including local farmers’ associations, schools districts, and established food distribution centers, to establish distribution agreements to increase their market footprint. These partners can also help with advertising and marketing efforts.
Choose a space strategically. The location of a food hub matters for growers, buyers, and the communities it serves. Selecting a site for growing, processing, or distributing in a low-income neighborhood, or a community of color, will maximize the benefit for these residents. In addition to improved food access, locating your hub in a low-income community will facilitate local hiring, workforce development, and if done well a commitment from the community to support the hub.
Find your spot in the market. Engage and remain engaged with residents of local communities, restaurants, and institutional buyers to find out which products are most desirable. Engaging the community will help you create a culturally relevant product line that attracts local customers, and creates a base of buyers who view themselves as partners in the food hub. The most profitable food hubs often reach a diverse customer base through a broad range of buyers, including small grocery stores, restaurants, and K-12 food services.
Grow Your Business with Equity. Food hubs have the potential to create a more equitable food system that values quality jobs, healthy food access, local economic growth, small business development, and sustainable agriculture. Food hubs designed with these equity considerations can provide opportunities for growers and producers, aggregators and distributors, and the consumer. Below are strategies for developing profitable, equitable food hubs that foster more just, fair, and inclusive food systems and local economies.
Engage residents and community groups in the food hub planning process. Involve diverse community members in food hub planning from idea to implementation. Residents and stakeholders can provide crucial insight into issues such as location, hiring, and product mix.
Connect to small- and mid-sized farmers and producers. Locate farmers and growers in the region who have had difficulty accessing broader urban markets, especially low-income farmers, because these growers may be looking for new aggregation, marketing, and distribution opportunities to scale their production.
Prioritize local farmers of color. Identify and reach out to farmers and vendors of color to support historically marginalized producers and strengthen a diverse regional farm economy. Immigrant farmers and farmers of color may grow culturally appropriate foods that will meet consumer demand in their communities.
Choose a location that maximizes equity benefits. Select a site in a low-income neighborhood, or a community of color, to maximize benefits for these residents. In addition to improved food access, siting your hub in a low-income community will facilitate local hiring, workforce development, and if done well a commitment from the community to support the hub.
Employ members of the community. Local hiring can help unemployed or under-employed residents of underserved communities benefit from the economic development brought by the food hub. Food system jobs are often an opportunity to employ workers who have previously been excluded and overlooked.
Invest in higher, family-sustaining wages for employees. The recent Counting Values: Food Hub Financial Benchmarking Study found that the highest-performing food hubs were those that paid their staff higher-than-average wages and benefited through overall better performance per full time employee. Higher wages translate into healthier and more productive workers, which has positive economic impacts for food hubs in the long run.
Assess demand for different products. Engage residents of local communities, restaurants, and institutional buyers to find out which produce items and value-added products are most desirable. Understanding customers’ product preferences and creating a culturally relevant product line ensures that food hub products will have a dedicated customer base.
Make the food hub a community asset. Make the food hub an inviting, appealing asset to the community. In addition to offering healthy food, the physical appearance of the food hub can help revitalize a neighborhood. If possible, engage your community by providing broader services such as educational opportunities and community programming.