Business Matchmakers Pull Local Food Sector Together
Patty Cantrell, Regional Food Solutions LLC
Weekend phone calls, late nights, working out the details of a new farm-to-retail distribution venture. The entrepreneurs on either end of the line are Laura Edwards-Orr and John Brusie.
She is executive director of Red Tomato, a local food venture that’s been sourcing and marketing fresh produce from farms across the Northeast for 19 years. He is vice president of Ginsberg’s Foods, a century-old family business, and the last independent food distributor in upstate New York’s capital region.
The guy in the middle is Todd Erling, executive director of the Hudson Valley Agribusiness Development Corporation (HVADC). He’s trying to connect soaring demand for local foods with his upstate New York region’s bounty.
“We’re within a five hour radius of 60 million people, and New York City is just one-third of that,” he says. “New York state alone boasts an estimated $7 billion unmet demand for locally produced food and beverage.”
Standing in the way, however, are big gaps in processing, distribution and other market infrastructure. Most wholesale food supply chains are long, complex, and anonymous. They weren't designed to accommodate the wide variety, smaller quantities, and personal brand stories that are bottom line in the emerging “good food” sector.
Erling is among the growing group of community and economic developers bridging those gaps by finding, connecting and supporting entrepreneurs who are ready and able to innovate.
The result of the Ginsberg’s and Red Tomato pairing, for example, is the startup of an innovative distribution network for smaller food and farm businesses. The twist is that Ginsberg’s offers specialized food logistics without taking the small farm products into inventory, which is where overhead costs get prohibitive and farm-to-table customer service gets disjointed.
“We've been looking for this,” Edwards-Orr said. Wholesale customers increasingly want to work directly with Red Tomato, not through a third party distributor. The Ginsberg’s partnership cuts overhead and puts Red Tomato back in the driver seat.
“Now we can say ‘Yes!’” to those customers, she says.
Erling had to find a distributor who would say, “yes” first. That’s where locally owned and motivated Ginsberg’s Foods comes in.
“I grew up on a dairy farm and although I didn't continue on that path I've always wanted to find a way to help those who have,” Brusie says. “Being an independent distributor we can make decisions locally and do more of what we want.”
Community and economic developers like Erling call their work “value chain facilitation.” The supply chain they are putting together is linked together not just by transactions but also by values.
Values differentiate the products. Values sustain the business relationships. Values range from environmental protection to children’s health. The most common value in the emerging good food sector is a commitment to farmers earning enough money to lead a comfortable life in farming.
It shows up in the growth of regional food hubs — a new type of enterprise involved in helping local food farms move into larger markets by providing product aggregation, processing, and distribution. More than 300 food hubs now operate nationwide.
Most make smaller regional farmers and their rural communities a priority. According to a 2013 national survey, 76 percent of food hub respondents said all or most of their suppliers are small to mid-scale farms (gross sales less than $500,000). On average, 60 percent of a food hub’s total gross sales come from small and mid-scale farms’ products.
The return to communities is more local commerce, which helps keep a region’s people and places in business. It’s the reason New York Governor Andrew Cuomo recently lauded another Hudson Valley innovation.
HVADC shepherded this one, too. It’s a collaboration of two regional food businesses. One is Farm-to-Table Co-Packers, which does the slicing, dicing, canning, freezing, and packaging farmers need to get their “value-added” products to market. The other is Hudson Valley Harvest, a regional brand through which dozens of area farms sell their products.
The two now work hand in hand as the Hudson Valley Food Hub in Kingston, NY, combining supply from Hudson Valley Harvest with processing from Farm-to-Table Co-Packers. Together they are making new markets happen for 60 area small and mid-size diversified farms.
In 2014, the hub duo partnered with the food service company Chartwells Higher Education/Compass Group to supply 18 colleges. Another contract is with Blue Hill Savory Yogurts to produce flavorings from Hudson Valley vegetable farmers, the first identity-preserved flavorings in that industry.
“As this innovative program demonstrates, when New York organizations buy New York produce, everyone benefits,” Governor Cuomo said of the deal, which the state’s agriculture and economic development agencies supported with grant funding.
Agriculture’s economic development was the intention in 2007 when five Hudson Valley counties pitched in together to form and fund the HVADC. They were acting on recommendations in an American Farmland Trust study of the Hudson Valley that pointed to significant costs and lost opportunities without a focused farm business development effort. Now seven counties call HVADC their regional agribusiness office.
Erling brings a career in economic development and a passion for local food and farming to HVADC. He is a matchmaker, technical assistance provider, and resource prospector. With growth in the sector, his job now also includes channeling a steady stream of investors attracted to the Good Food economy.
“It’s a really exciting time to be involved in this work,” he said.
Making the Case for Good Food
A new tool HVADC is employing to size up the regional food and farming opportunity is the Local Food MarketSizer® by New Venture Advisors. It calculates unmet demand for local foods using built-in demand and supply data from across the country.
For the Hudson Valley alone that unmet demand is $335 million. “These numbers are enlightening and demonstrate the ever-growing importance for increased support and assistance to our local farms as well as refined infrastructure development for our local food system,” writes HVADC.
Todd Erling and other value chain facilitators talk about their role in the emerging Good Food economic development arena on this National Good Food Network webinar.