Local Food Distribution: Regional food hubs need to break through the barriers to growth

Tuesday, February 5, 2013

Many of Ontario's food hubs are small-scale and driven by social justice agendas. But to become significant players in local food distribution, say some advocates, they will need to develop a working business model. And farmers need to be a part of that

by MARY BAXTER

The conference hall is so jammed with participants during London's first local food forum, held in November, that the only room left is in the balcony. Many participants represent the city's social services sector. Others are specialty food retailers, community activists, social entrepreneurs, bureaucrats and academics. But, despite being located in the centre of Ontario's main agricultural region, only five farmers attend the daylong forum (more had been invited, organizers say).

Discussion about what a sustainable local food system might look like zeroes in on social aspects: feeding public school students a soup made of local ingredients, for example, and developing a food processing cluster complete with employment training in London's challenged east end neighbourhood.

How to obtain locally grown product and how to distribute it to the local marketplace are subjects addressed briefly, mostly in passing. "We need food terminals," declares Debbie Field, executive director of FoodShare Toronto, a non-profit organization that runs programs to foster access to good, nutritional food.

Tom Schell, part of a London Training Centre team that recently produced a study on sustainable food systems, proposes an "aggregation facility" for London to consolidate local food distribution and address buyers' concerns about the quality, food safety and quantity of food produced on small and medium-sized farms.

A few weeks later, during an interview about the effort to establish a regional food hub in Simcoe County, John Hemsted interrupts a description of the London meeting with a slight testiness of tone. Hemsted chairs the steering committee tackling the Simcoe hub's feasibility study.

Establishing programming that ensures people's access to healthy food is a worthy goal and cannot be underrated, he says. But "for a food hub to effectively work, it has to be an economically driven model that functions." Bricks and mortar cost money. So does hydro. The London focus, described to him as being mostly about social justice, sounds "urban-centric."

As the local food movement grows, regional food hubs will play a key role in marketing and distributing agricultural products, predicts Phil Mount, a post-doctoral fellow at Wilfrid Laurier University and co-ordinator of the food hub and community food research group, Nourishing Ontario.

Support is growing for such hubs in the United States and a 2012 U.S. Department of Agriculture study found that, if the hubs make it to year three, they become self-sustaining, he says. Moreover, institutions and governments in Ontario are expressing greater interest in local procurement. "Actually, this is a pretty crucial moment as far as what the future is going to look like 20 years from now," he says. If funding for regional hub infrastructure becomes enshrined in a provincial local food act, "then you may see significant change."

There's a catch to all this promise of new markets for agricultural products. Mount notes that, while demand for local food currently outstrips supply in Ontario, that won't always be the case. Those who establish a hub, therefore, will shape the terms for future users. Hemsted's comments echo the growing recognition in Ontario's farm community that if farmers don't become a part of these conversations early on, production agriculture risks taking a back seat to social concerns and urban agendas. Regional hubs, in turn, may not be able to fulfill their economic development potential.

Valued partners
A food hub, as defined by the United States Department of Agriculture, is more than just a business venture. It involves a distributor who commits to buy from small to mid-sized growers, sees them as valued partners and works with them to meet buyers' requirements and to differentiate the product being sold.

Regional food hubs, according to the National Food Hub Collaboration in the United States, focus on the practicalities of food distribution and involve "a business or organization that actively manages the aggregation, distribution and marketing of source-identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail and institutional demand."

Currently, many of Ontario's hubs are driven by social justice agendas. The Stop Community Food Centre in Toronto is a case in point. Begun as a food bank several years ago, the centre has since added programs ranging from community cooking, community gardens, after-school activities, film nights and sustainable food systems education to community advocacy and a catering service. It also operates an extensive garden that's used to grow produce for its food programs and farmers' market as well as foster urban farmers.  

A similar vision is unfolding in Peterborough, spearheaded by the city's community food network, which is made up of organizations and faith groups that want to improve food access for all residents. "We really want a site to be downtown so it's easily accessible," says Joëlle Favreau, a community development and training supervisor with YWCA Peterborough, Victoria and Haliburton, one of the network's members.

On the wish list is enough room to house both a community kitchen for education and a commercial kitchen that could be used for employment training programs, space to help incubate businesses connected with local food production, a greenhouse and workshop space for education and community advocacy projects.

There is a regional aspect to the project. Favreau says the organizers are planning round tables to engage the county's townships and First Nations community, pointing out that the vision is to encompass the whole county, rather than just the city. The issue of food distribution "has been raised." In Peterborough, there's recognition that, in terms of the whole food system, "it really needs that component to see some significant changes," she says.

Often, hubs with a social justice focus promote food with certain attributes. "We really promote healthy farming and humane practices. Also, we're encouraging people to grow organic as much as possible and this is part of our criteria for selection when a producer wants to apply," says Stanislas Rochat, co-ordinator of the Ottawa Valley Food Co-operative, begun in 2007.  

The hub is regional in scope, but handles a tiny volume. Of the co-operative's 400 buyer and seller members, only 120 are active. It averages 80 monthly deliveries, mostly to households. Sorting takes place in a church space in Pembroke rented for $60 a month. Established delivery routes, which include stops at Deep River, Eganville, Killaloe, Renfrew, Barry's Bay and Arnprior, minimize overlaps in transportation. Twenty volunteers help with deliveries.  

"We consider that it's a very successful model so far, but there are a few challenges," admits Rochat. They suspect the monthly delivery is the reason why only a quarter of their membership actually places orders. The frequency is not enough to keep people aware of the service. A twice-a-month delivery pilot takes place this year, and there is interest in developing more educational programs, also part of the organization's mandate. But reaching these goals presents another challenge: how to grow without burning out their volunteers.

More of a business model
Moreover, there is increasing competition for grant money. Some of this competition comes from businesses. Last year, for example, the Greenbelt Fund allocated $265,000 to Gordon Food Service Ontario to create regional food service hubs in London, Milton and Ottawa so the company can provide its customers with local food options. A provincial news release announcing the grant says the food service estimates it will increase its local food purchases by 20 per cent or $7.6 million in 2013.

Recently, the co-operative underwent an internal review to begin laying plans for the future. There's recognition of the need to move "a little bit more towards a business model," Rochat says. They want to increase their paid staff and seek sponsorship and partners to share the cost of distribution. "Grants are great, but really our challenge is to reshape the organization so that it's long-term sustainable and that there is enough money coming in so that we can really serve the people in the best way possible."

To link customers with locally grown offerings, the Ottawa Valley co-operative uses an Internet website and specially designed Internet content management system software. So too does Kevin Belluz, a third-generation farmer near Thunder Bay, to operate his virtual food hub. There, the similarities between the two ventures end.

Belluz decided to develop his hub as an independent business venture in order to sell surplus production from his 300-acre Slate River farm where he grows, amongst other things, fruit and vegetables. He also wanted to help new growers boost their business.

Spearheading the venture himself made it easier to get started, he explains. "Co-ops have a lot more regulation in terms of how you have to be filed with the government, paperwork, meeting structure – all those sort of things."

He was also reluctant to create a structure that relied on volunteer power. Volunteers only have limited time and energy to dedicate to a project: "If you can't make it financially viable within a short period of time, you're going to burn out the energies of the people involved."

What makes his hub effort possible, he says, is the Internet site he uses that was created by a developer in Athens, Ga. It allows vendors to post and price their own inventory listings as well as permitting customers to order products from different vendors at once. It cost nothing to set up. Instead, the developer charges three per cent of all site sales. Belluz charges the other growers a further seven per cent on sales to offset the expense of co-ordinating and distributing orders.

It's a steep price for the 13 vendors that have signed up so far but, along with streamlining paperwork and taking away the headaches of website development, the approach eliminates duplication of deliveries. "We all are in the same area of the country, so we're all driving in separately," he explains. "Never mind the cost of that; for agriculture, for farms, it's time."

He runs two ordering cycles a week. Orders are co-ordinated either on his farm or at the farmer's market in Thunder Bay, enabling the customer to pick up everything and pay for it in one stop. He regards the ability to offer a simplified, easy-to-use method as key for attracting his targeted market: local, larger scale bulk buyers such as restaurants and institutions that are used to buying online.
The venture does show promise. One of the area's larger independent restaurants uses the service twice a week and two retirement homes have begun buying. Yet, out of 300 customers signed up, only about 60 have placed an order. Sales for 2012 will total just over $30,000.

"The logistics of it are fantastic; the sales have been not stratospheric," Belluz admits. More promotion and full-time marketing would likely help to grow the business faster, he suspects. Having a more rounded out product offering may also increase its use.

Meat and veg included
The vision for the Simcoe food hub, by way of contrast, is not only regional in scope, but also in terms of the partners involved and the volume and range of agricultural product handled. It's the first in Canada to propose including both meat and vegetables, Hemsted claims. If implemented, the hub could become a breakthrough. The project grew out of efforts by the Food Partners Alliance Simcoe County, an organization representing a wide range of community and industry groups, as well as local government and economic development organizations. It's chaired by Hemsted, a sheep farmer and former chair of the Ontario Sheep Marketing Agency. About two years ago, the alliance held a conference at Lakehead University's Orillia campus to discuss the health, production and sustainability dimensions of food with all the sectors involved. The conference sparked county support to develop a food and agriculture charter for the region. (A food charter is a community-developed document that establishes guidelines for developing food policy and programs and is endorsed by the community's decision makers.)

A study by Simcoe County Farm Fresh marketing association – Hemsted is the organization's secretary-treasurer – explored the barriers for local growers to reach public sector buyers. "We reviewed what resources we had, what institutional areas were around us and we talked to the large purveyors," Hemsted recalls. What became apparent was that farmers lacked a method of delivering food to the food services supplying the institutions.

With the Simcoe County Federation of Agriculture (Hemsted is the federation's representative on the hub's steering committee) taking the lead, the three organizations – the federation, the alliance and Simcoe Farm Fresh – established a steering committee of 14 members to study the feasibility of establishing a food hub. Bodies represented on the committee include the Ontario Ministry of Agriculture, Food and Rural Affairs; Holland Marsh Growers Association; Simcoe County Cattlemen's Association; Simcoe County Dairy Producers; District 11 Grain Farmers of Ontario; Christian Farmers Federation of Ontario Simcoe County district association; and area economic development departments.

The committee received about $70,000 from the Canadian Agricultural Adaptation program and raised a further $20,000 from local commodity groups. It has hired WCM Consulting Inc. to conduct the study. If considered feasible, it's hoped the hub can become a template for regional hubs in other communities. The study began in October and finishes in September.

The broad-stroke vision is to develop a facility along the lines of the Ontario Food Terminal that would offer a wide range of produce, including meat, with access to amenities like freezers. The goal is to increase the prosperity of farmers by opening up a new, local marketing opportunity and reducing the time and expense of transporting product into Toronto. It would draw on the agricultural region in and around Simcoe County. "In theory, it sounds wonderful," says George Schrijver, WCM's principal. There are geographic strengths. The regional farm community is well diversified. The location is accessible for those along the south shore of Georgian Bay, as well as for potential buyers in northern Ontario communities, and is close to Hwy 400.

Schrijver says the most important question he will be asking during the study is what farmers and buyers don't like about it. He plans to present an analysis of responses in March. While specifics have yet to be established, committee members do have some ideas on what they would like to see.

Hemsted envisions producers using the hub to maintain one-on-one relationships with buyers or expand the volume of their business through wholesale, while at the same time maintaining their individual, local brands. Not all producers want to be marketers, but many do come up with good ideas for value-added products, he says. The hub would provide a way to distribute these. For buyers, "it would be that place where the big, medium and small could come to purchase from known sources."

Jamie Reaume, executive director of the Holland Marsh Growers Association, chair of the Ontario Food Terminal and a steering committee member, talks about a two-way relationship between the Simcoe hub and the Ontario Food Terminal. Imported produce from the Ontario terminal could be shipped to Simcoe to round out the hub's offerings. In turn, excess product from the Simcoe hub could be moved to Toronto where the terminal there "acts as a main central division for all of this stuff." Eventually, other regional hubs could be established in the province to serve local demand and feed into a larger system, he says.

Committee member Ted van den Hurk, president of the CFFO Simcoe County district association, is a broiler chicken producer who grows 200,000 birds a year. He doubts he could sell his birds through the hub. Very few processors handle that sort of volume in Ontario and those who do would likely not consider selling through such a hub. But "if we could convince one of those processors to sell directly to the hub, then that would be something to think about."

Van den Hurk says it's more likely smaller producers would bring in their produce to the local hub because it's closer. But he hopes "most producers will at least send some of their product to this hub when it's running," either to sell there or to be transported to the Ontario Food Terminal for sale.

Structure unresolved
How to structure the hub and who would own it are other questions as yet without answers. If the objective is to increase the prosperity of farmers in the region, "then if it's not owned or controlled by the farmer it's less likely to achieve that," says Schrijver. On the other hand, he observes that the Ontario Food Terminal is owned by the government but is run by wholesalers. If the Simcoe hub is structured differently, then one of the challenges the regional hub will face is "how do you get the wholesalers to go there unless they're just local people?" Local demand may not be enough to maintain the hub, he asserts. "All of these things have to be figured out."

Van den Hurk says he favours a co-operative structure but questions if the structure still works in Ontario. "If it does, I think it's probably the way to go." He would also like to see membership open to both sellers and buyers. "It puts skin in the game, so to speak; it makes it theirs."

Offering some sort of social outreach programming could eventually be worked into the hub. Reaume uses the example of the Ontario Food Terminal opening its doors to the public in September as a fundraiser for FoodShare Toronto. Adding a retail outlet might be another possibility.

But both Reaume and Hemsted emphasize that the greatest public service in the promotion and nurturing of locally grown food is to first establish a method of distribution that can sustain itself. "This thing has to work and function in the world of economic realities," Hemsted says. Key to making it work is to ensure it is as inclusive as possible, with agriculture an equal presence at the planning table.

"It's really important," he says. There needs to be "some strong guidance" so farmers don't get overwhelmed. BF

A virtual hub for Ontario
OntarioFresh.ca, a website networking and marketing service to link institutional, retail and commercial buyers with growers, acts as a virtual food hub. Administered by the Friends of the Greenbelt Foundation, with funding from both the Greenbelt Fund and the provincial government, the website was launched a little over a year ago. Since then, 1,380 businesses have registered, of which 60 per cent are producers or processors and 25 per cent are buyers and distributors. Buyers range in size from small, such as a contract caterer, to large, such as Gordon Food Service Canada Company.

Megan Hunter, Friends of the Greenbelt's communications manager, describes the service as the equivalent of "LinkedIn," a popular business networking website, for local food.

"Right now, we're getting about 5,000 hits on the website a month and about 40 per cent of our members are logging in on a monthly basis," Hunter says. Since its launch, the website has facilitated about 500 connections between members. "That continues to increase as well," she says.

This year, the foundation is working with food service company Aramark Canada Ltd. (a division of Sysco Canada) and 100km Foods Inc., a small local foods distributor in north Toronto, in a pilot to explore how Ontario producers can aggregate product and get it into a main distribution system. The pilot will take place in the GTA's Greenbelt.

Right now, OntarioFresh.ca doesn't offer e-commerce options. The website's operators will look at how to connect the pilot with online components. "Maybe it is transaction fees, maybe it's integrating with the ordering systems of these distributors and finding ways for Ontario producers to aggregate their products more efficiently and get it into these more mainstream distribution channels," Hunter says. If the pilot is successful, the goal is to expand it to more locations throughout the province. BF

London offers funding for local food projects
In London, Ontario, what form a local food system will take is a subject that is just beginning to be discussed community-wide. In November, the London Community Foundation hosted a local food forum to kick-start the process.

Martha Powell, the foundation's president and chief executive officer, says the foundation is looking for funding applications in 2013. "We're challenging people to start thinking how can we work together, who needs to be at the table and what would we be funding."

The foundation puts about $100,000 into grants to do with the environment each year. Funding for successful proposals would come from this allocation. "So we would challenge participants and others to come to us with a collaborative opportunity to move our granting forward in this area and not just one time only but over the next several years to really make an investment in helping farmers, helping community. We have breakfast programs for kids, but we know we need more."

She notes that Community Foundations of Canada (there are more than 180 community foundations in the country) is keeping a close eye on the London foundation's local food system funding initiative.

"We're the first (community foundation) to do something like this," Powell says. "They are going to profile what we do here in going forward to show other communities what you can do." BF

Organic Central: an organic food processing hub
Food hubs are not just about primary agriculture. In eastern Ontario, for the past three years, a group of businesses involved in organic food have been working on establishing a business park. The initiative, Organic Central, is spearheaded by Tom Manley, an organic grain processor, seed cleaner, food-grade grains and feed mill operator and seller of other organic farm supplies.

Manley operates his business, Homestead Organics, with his wife, Isabelle Masson and their son, Yannick, in an old refurbished feed mill in the village of Berwick in North Stormont. "It's a small, old building and we've outgrown it. The organic sector is doing very well; we're growing by about 12 to 15 per cent per year," Manley says. Three years ago, they began exploring how to expand.

Manley encountered other organic processors facing similar challenges: "finding a decent location that's affordable and capable of handling their needs as the market continues to grow." Working together to find a location and share costs seemed a practical solution.

The idea is to share the capital cost of the infrastructure, he says. Acquiring an existing building would be cheaper, and would mean they could achieve an economy of scale. They could share facilities ranging from office space, a conference room and training space to loading docks, forklifts and human resources. "Then there's the whole value chain. Some of these businesses trade with each other, so instead of trucking stuff down the road, we can just haul it down the corridor."

With the Ontario Natural Food Co-op being one prospective partner, there's also the opportunity to access distribution for their products. "So lots of good reasons to share resources and to share supply chain and infrastructure and get access to economies of scale that we would not otherwise be able to," he says. Mountain Path Foods, an organic flour miller and the business development services of the Stormont Dundas Glengarry Community Futures Development Corporation are other partners listed on Organic Central's website.

Finding an appropriate property is a challenge. Manley has identified a few contenders, but "our stumbling block right now is capital." Not only do they have to come up with the funds to buy or lease a building, but also the capital to move there. He's estimated that it will take $1.75 million to move his equipment. And even though the organic sector has shown growth, a slow economy has made it difficult to obtain buy-in.

Conversations are in progress "but there's nothing more tangible than that at this time," he said in November. BF