Taking a More Holistic Approach to Food Hub Feasibility: Measuring the Impact of Value Chain Coordination

In this 3-part series, Ag Innovations is examining food hub feasibility in a non-traditional way. This series weaves together insights from a growing body of food systems research and past experience in food hub development. In our first post, Efficacy of Food Hubs, we agreed on the USDA’s current definition of a food hub, then called for practitioners to expand their thinking about how their projects affect other parts of the food system. In our second post, we called on practitioners to build collaborative processes into their planning phases to reduce risk and create thriving partnerships. This final blog in our series shines a spotlight on the importance of value chain coordinators (also known as market facilitators) in food hub development and operation, and illustrates the need to measure the impact of their efforts.

Measuring the Impact of Value Chain Coordination

This month. Lucy Norris, Ag Innovations’ Director of Regional Food Systems, participated in a panel discussion on the role of technology in local food systems at the 4th Annual Seedstock Conference held at UC San Diego. Central to the discussion was the question, “What happens to the people involved in local food production as technology plays a greater role in facilitating transactions and replacing face-to-face communication?”

If we value local food because it shortens the distance between producer and consumer, supports small and mid-sized farms and strengthens rural economies, etc., then wouldn’t we use technology to support our relationships instead of replacing them? We want technologies that can help us collect and analyze data that we can then synthesize into new ideas. And, wouldn’t those actively facilitating connections and leveraging relationships to solve problems along supply chain be as important as innovative technology to the future of local food systems and food hubs?

The 2014 WealthWorks Initiative and Tellus Institute paper Financing the Evolving Role of the Value Chain Coordinator lists 5 primary roles of the value chain coordinator. They are the holder of valuesconnectorresearcher and big picture holderleader/innovator and communicator. These are human characteristics that no computer can mimic. The impact of such work is difficult to measure, but we believe it is valuable – we just don’t fully understand the full range and benefits of their impact.

The following story illustrates value chain coordination (also known as “market facilitation”) at work.

Once upon a time, a hospital food service director had a friendship with a farmer and expressed interest in working with more farmers to supply fresh, local food to their cafeteria. The farmer introduced her friend to a market facilitator who worked for a nonprofit organization working to identify and create markets for regional farms. The market facilitator contacted the director (who was also a chef) and learned about the hospital’s Healthy Food In Health Care Pledge to increase local food procurement over the next 2 years. She learned that the hospital was responding to staggering costs of treating patients with diet-related illness and antibiotic resistance, and that the food service department had recently pledged to create healthier menus and source as many fresh ingredients as possible from local farms to bring delicious, healthful, and affordable food to their patients and employees.

A team from the nonprofit organization visited the hospital to conduct an assessment to identify the most appropriate path for starting a local food procurement program given barriers such as kitchen infrastructure, staff capabilities, administrative and contracting limitations, and constrained budgets. The organization developed a plan to help the buyer overcome these barriers by identifying a starting point, or “gateway to local,” implementing a weekly Farm Fresh Friday menu that would be almost 100% locally sourced and feature the farms on each menu. The market facilitator then communicated this sales opportunity to 15 local farmers in her network who could meet the low-volume needs and budgets of the buyer to create a healthy and delicious lunch special. In this way, the market facilitator was the matchmaker, nurturing new business relationships between the farmers and buyers, supporting purchasing negotiations and logistics and participating in ongoing communications with the buyer and farmers. A year later, the hospital won a national sustainability award.

The market facilitator’s work didn’t stop there. The nonprofit reached out to the regional representative for Healthcare With Out Harm, the organization behind Healthy Food In Healthcare Pledge, to discuss their services. She went on to meet with other hospitals working to overcome challenges to increasing their local food procurement goals. The first hospital’s success inspired other institutions wanting to create their own local food procurement programs.

At the end of the year, the market facilitator learned that the hospital’s chef was spending approximately 4 hours each week completing individual check requests to pay farmers. The facilitator concluded that many institutions, such as preschools and senior centers, had similar challenges and a more efficient way to pay invoices was needed. That insight led to the development of a new food access program in an underserved area of the city. To make this process even more affordable and efficient for farmers and this “new” institutional market, efforts to share marketing, aggregation, distribution, and online transaction tools were subsidized and piloted a year later, then rolled out to serve even more farmers and more institutional buyers.

This relationship inspired the development of a decentralized food hub network that, 5 years later, enables hundreds of businesses and institutions – from hospitals, corporate dining services, restaurants, preschools, catering companies, and even wholesale distributors – to purchase products from over 40 farms across 5 counties, pay 1 invoice and receive 1 delivery. Subsidies are slowly being reduced as sales increase.

The organization’s team used information gathered from a variety of relationships along the value chain, then set about weaving together the desires of farmers, businesses, and partner organizations to develop a unique food hub to increase farm sales, reduce costs and waste, address regulatory requirements, improve food safety standards, and increase access to locally produced food. Ultimately, these partnerships helped the team implement new and innovative strategies to connect farms to institutions like never before.

Do we fully understand the economic impact of value chain coordination?Typically, we might look at increased farm sales, number of new customers, new jobs created or maintained, etc., to begin evaluating their benefit to local economies. What about other indicators, such as acres of farmland preserved because farms found a way to stay competitive in the marketplace and increase revenue? Or, how many trucks were removed from traffic (saving time, reducing emissions, and degradation to transportation infrastructure) due to shared aggregation and distribution? What about the ton of food waste diverted to institutional buyers instead of ending up in landfills? Studying the impact of value chain coordination on our local food economy would deepen our understanding and strategies of how we plan and finance endeavors to effect positive change in our future food system.