As the demand for locally-produced, environmentally friendly, and socially ethical food continues to rise, consumers are looking to the food industry for new solutions.
Due to the high cost of marketing for small food suppliers, direct-to-household sales are often not an option for many. Food hubs offer a platform for food suppliers to get brand exposure and guaranteed sales. They are a great place for communities to come together over the love of fresh, local food, while also supporting the local economy.
Food hubs are often started by a group of farmers looking for a better way to sell their produce. Take Click Fork for example: after the closure of a local co-operative grocery store, four farmers lost a major sales outlet. Instead of continuing to lose business, they decided to join forces and create Click Fork, a Northeastern Online Farmer’s Market.
“We all have the same mindset and approach to how we’re growing food, and that’s based on ecological and/or organic principles, and we all direct market.” – James Morin, Owner of Kipling Ridge Farms in Verner, Ontario.
Since starting a food hub, these farmers have seen an increase in their sales and have saved money on marketing and distribution. This platform allows them to thrive in their market, while continuing to do what they love. For more on Click Fork and how they got started, check out this article.
Does this sound like something that fits for your business? Where should you start?
What is a food hub?
According to the USDA Food Hub Resource Guide, 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 other words, a food hub is a centralized platform where consumers are able to purchase local food direct from the farmer through a business or organization. The hub acts as the overarching body that lets all of this happen.
In order to be considered a food hub by USDA standards, the hub must:
- Aggregate, distribute and market primarily locally produced foods from multiple suppliers and sell to multiple outlets.
- Provide technical assistance to producers when needed to reach buyer requirements.
- Consider the suppliers as valued business partners (they cannot be interchangeable) and commit to buying from mid to small sized producers.
- Use product differentiation strategies to help suppliers get a good price. These include marketing, branding, and food transparency.
- Have a positive social, environmental, and economic impact on the community by promoting suppliers that carry out production practices or environmental services.
Food hubs are essential. It is hard as a small food supplier to make the jump from selling at farmer’s markets to selling to large grocery chains and restaurants. Food hubs provide a platform for farmers to sell into a new market and reach more customers. Two (or many) is always stronger than one.
If starting a food hub or becoming a part of one is something that interests you, it’s important to know your stuff. Here are 6 tips we found important to know:
This tip is pretty straight-forward. All food businesses must adhere to the Health and Safety Standards set in place by the local government. In a food hub, you have a longer supply chain than a farm-to-customer system, as there might be warehousing and increased travel involved. Make sure to always be on top of the regulations and implement them successfully into your distribution and processing procedures.
Treat your farmers
When you go back to the principle of a food hub, it all comes down to the farmers. They are the lifeline of the business and the reason you may have started it in the first place. Be sure to maintain and grow healthy business relationships in order to ensure success for all in the long run. Unhappy farmers = unhappy business.
As a food hub owner, you need to know everything about your business. A local food hub is run on the principle that you are sourcing the freshest and best quality produce a customer can get. Customers are taking more effort and buying into the system that is better for them, their local economy and the environment, so you need to make sure they know why they came in the first place. You need to be the expert of everything you buy and everything you sell.
Not only do you need to be an expert, but the knowledge must seep into every aspect of your business. Whether that’s your sales personal selling to customers, the warehouse crew (if applicable) packaging and sorting through products, or the delivery team bringing products door to door, you need to empower your employees to be able to answer questions and vouch for your business at all times.
Sell all year long
Like market season, a lot food hubs only operate in the summer months due to the high influx of beautiful produce and warm weather. This is a mistake. The issue with skipping the winter months is the loss of exposure in the 6 months your business isn’t operating. Customers still eat in the winter, so give them something to order. Be seasonal and diversify your product range to match demand.
Grow one inch at a time
Success happens over time. It takes a while to grow a customer base and increase your sales. Most failure is seen when a business tries to grow too quickly. Take everything one step at a time. Start with a few different suppliers and offer a few pick up locations. As demand rises, get customer feedback and consider adding more stock and more suppliers. This way your business will grow organically and continue to support the local food economy.
Track everything in one place
When you are running a business where you are sourcing from multiple people and selling to multiple people, there is a lot of room for error.
Make sure you keep track of all orders (incoming and outgoing), all deliveries, and all inventory in one place, so you can never lose anything! The best place to start is using an online platform. This allows you to automate many actions such as taking orders and tracking inventory in real time, which saves you from having to do it manually.
There is a lot that goes into starting and running a successful food hub and we’ve barely scraped the surface. If there is one take away, always remember to take one step at a time and to know your stuff. Starting a food hub and growing a successful business takes time.
You’ll have to try out a few different things before you figure it out, so don’t get discouraged!
We've put together a free guide to help food producers and small-scale farmers sell their food online.
It outlines who to sell to, how to sell to them, and where to get started.
Nina Galle is Local Line's Content Marketer, creating blog posts, templates, free tools, and other helpful resources for local food suppliers.