FoodHub builds a bridge over the urban-rural divide

“We are out on the farm; we’re out in the country. It’s really helpful to have technology that connects us to the cities to be able to sell.”

That’s how folks at Unger Farms explained the benefit of using FoodHub to reach wholesale food buyers in the Portland metro market. Functioning much like an online dating website, FoodHub offers an online directory and wholesale food marketplace that helps local producers and wholesale food buyers find each other, connect and do business. Indeed, opening market access to far-flung rural producers has always been one of Ecotrust’s goals and the reason we founded FoodHub.

The numbers on FoodHub’s rural activity, to date:

• More than 20% of FoodHub’s membership in its six core states (OR, WA, ID, MT, AK and CA) is based in counties in which at least 30% of the population lives in rural areas.
• 55% of rural FoodHub Members are sellers, 82% of which are farmers, ranchers, or dairies. Remaining sellers include breweries, wineries, fishermen, processors/manufacturers or producers of specialty products.
• 30% of rural FoodHub members are buyers, of which 27% K-12 or Pre-K schools or school districts.

FoodHub Does the Legwork

FoodHub offers producers of all types a shortcut to finding potential buyers and reaching the right contact at target companies. Because FoodHub buyer memberships are open only to wholesale food buyers at restaurants, retailers, schools, hospitals and other institutions, the FoodHub member directory is a goldmine of highly qualified contacts, accessible 24/7 to any registered seller. Savvy producers leverage the technology to streamline the mundane and tedious parts of marketing and sales – determining the right contact, researching potential buyers’ needs and logistics, etc. – thus shortening the path to real relationship building. Those time-savers are particularly important given the sun-up to sundown demands of production.

“Any time we spend in the office is precious,” said Cassandra Timms of Deck Family Farm in Junction City, Oregon. “I think the biggest challenge for our farm is the time it takes to solicit the sales. On average I spend about 10 minutes a day on FoodHub. It has opened doors by word of mouth to chefs who have tried our products and then referred some of their friends to our farm,” she said. “We didn’t have to do the footwork or cold call them when they don’t have the time – they were just referred to us. That makes it worth those 10 minutes a day.”

New and beginning farmers and ranchers use FoodHub to leap up the learning curve and build their direct customer base quickly. New farmer Todd Birzer of Food Forest Foods in Beaverton, Oregon, explains: “I underestimated how much time and effort it would take to find buyers. I didn’t know some of the people we’ve been selling to and I wouldn’t have found them on my own. It was great to have an organized list of potential buyers, and be able to search for and contact them through FoodHub. I don’t know how else I would have done it.”

Members have also used FoodHub to glean market demand information and refine their product offerings as a result. Phil Greif of pd Farms in Elgin, Oregon, said, “We’re not planting more crops; instead we’re planting more of the crops that grow better here. We used to raise 30 different varieties to take to farmers’ markets. Now I grow 16 crops that do really well here and I sell it all because of the connections I’ve made on FoodHub.”

FoodHub and the White House Rural Council

All these stories and more will be shared by FoodHub’s director, Amanda Oborne, at a Forum on Regional Innovation in Rural America, to be held at the White House on Wednesday, June 13^th. Oborne was invited to demonstrate FoodHub for members of the White House Rural Council and USDA Rural Development to show how the site is being used by rural producers to reach wholesale food buyers both in their own communities and in urban population centers.

The White House Rural Council was created by executive order last summer and is focused on facilitating job creation and economic development by increasing the flow of capital to rural areas, helping open new markets for rural communities, creating workforce development opportunities, and expanding telecommunications, among other activities.

Rural Economic Development via FoodHub

Does FoodHub help drive economic development or create and retain jobs in rural areas? Based on the anecdotal stories from our members, we certainly believe so. Data to answer that question more comprehensively will be researched this fall thanks to funding from a USDA Rural Business Opportunities Grant (RBOG).

In the meantime, we do know that rural FoodHub members who responded to our 2011 Annual Membership Survey pegged the economic value of new connections made on FoodHub at between $200 and $20,000 last year. That’s a great early indicator of FoodHub’s success at opening market access and helping catalyze the financial viability of rural producers.  More generally, as a technology innovator in the growing local food sector, FoodHub has helped propel the industry forward and created opportunities for rural communities to realize the economic benefits of building robust regional food economies. Although the impact is difficult to quantify, we believe there is ample evidence to suggest the contribution from regional food systems is significant.

“Retail Agriculture” Captures $8 Billion Industry

In research funded by the Farm Credit Council, Alan Hunt & Gary Matteson coined the term “Retail Agriculture” to describe diversified agricultural production that leverages primarily direct channels such as farmers’ markets, CSAs, farm stands and others to sell differentiated products to local buyers. Those products may be differentiated based on product type, production method, value-adding, branding/product information, marketing channel diversification, or a combination of these strategies.[1] Data from the 2007 Agricultural Statistics Service shows the combined total of organic, direct, and “local” sales, a reasonable proxy for Retail Ag, are estimated at $8 billion. That total is higher than the combined sales of commodities cotton and rice!

As Matteson explains, economic impact for this sector has been difficult to quantify based on the available data because the USDA tracks commodity products rather than marketing channels. “If the direct-to-consumer marketing channel were counted as if it were a commodity product, then it would be the fifth most common farm activity by number of farms.”[2]

At FoodHub we find Retail Ag to be a useful term in that we primarily serve small to medium sized producers of the type included in its broad umbrella – those who are responding to consumer demand for “local”, “regional”, “good”, “clean”, organic, grass-fed, pastured, humanely-raised or other niche specifications – and often leveraging technology and multiple channels of distribution to reach them. FoodHub doesn’t dictate a definition of “local” to its buyer members, nor does it limit seller membership based on production practice, but rather makes product attributes transparent and provides robust search and filtering tools to allow members to find and connect to good potential partners. The term allows us to quantify the total economic impact of this emergent group.

Local Food is a Regional Economic Driver

In its 2010 paper, Local Food Systems: Concepts, Impacts and Issues, the USDA cites empirical research that has found that expanding local food systems in a community can increase employment and income in that community[3]. Studies suggest the economic impact of regional food systems are most likely felt in the form of income and employment growth, particularly where import substitution – either of regional food products or of regional food services such as processing – results in more money staying within the region as opposed to being diverted to products or services bought outside the region.

These findings align with Ecotrust’s own study examining the economic benefit of regional procurement. In the 2008-2009 school year, Ecotrust examined the economic impact of bringing more regionally produced food into school cafeterias. With private grant funding, the Ecotrust Farm to School Program invested an additional seven cents for every meal served in two Oregon school districts. During an initial 12-week period, $66,193 was invested for the express purpose of buying local foods for the lunch room. This initial investment inspired $225,869 in total local food purchases.

Ecotrust analyzed the economic benefit of having $225,869 circulate throughout the Oregon agricultural economy and found that, in addition to the initial 241% return on investment, the $225,869 had an economic multiplier effect of 1.87, which suggests that every dollar spent on local school food encourages an additional $.87 of spending amongst suppliers and households. We were further encouraged to find that  resources used to buy school food ended up affecting or showing up in 401 of 409 economic sectors within the Oregon economy.[4] Since FoodHub’s launch in 2010, it has become one of Ecotrust’s primary means of helping K-12 and Pre-K school foodservice directors access local product.

The Mission: Fresh, Delicious, Local Food Everywhere

The mission we are on at FoodHub is to leverage technology to make it easy for local producers to connect with wholesale buyers in their food shed in order to build robust regional food economies. We believe doing so will result in financial viability and success for producers of all kinds, driving economic development and job creation, especially in the rural communities that are home to agriculture, and attracting new and beginning farmers and ranchers to the field. For individual producers already using FoodHub, the benefits are clear: time savings and profitable relationships.

Perhaps most importantly to all of us who eat, FoodHub helps make it possible for consumers in the Western US to enjoy fresh, delicious food anywhere they go by connecting the restaurants, schools, hospitals and groceries in their area with local producers.