WASHINGTON, D.C. — When it comes to finding locally grown produce, don’t automatically head to the farmers’ market.
In fact, many local growers would rather focus on wholesale and are banding together in co-ops, or “food hubs” to give them more marketing muscle.
“Farmer’s markets are not the right solution for many local growers,” said Jim Crawford, owner of Hustontown, Pa.-based New Morning Farm and president of the Tuscarora Organic Growers co-op. “They are too far from where they are or maybe they don’t want to sell to the public or diversify their crops that much.”
Crawford participated in a panel discussion on local produce at the U.S. Department of Agriculture’s Outlook Forum on Feb. 24.
However, local growers face multiple obstacles when it comes to selling their produce anywhere other than farmer’s markets.
“Farmers continue to be challenged by the lack of distribution, processing and marketing infrastructure that would give them wider market access to larger-volume customers,” said USDA economist and session panelist Jim Barham.
“The problem is particularly acute for operators of mid-size farms who are too large to rely on direct marketing channels ... but too small to compete effectively in traditional wholesale supply chains,” he said.
Co-ops and food hubs are increasingly popular solutions to those challenges, Barham said.
Barham has tallied 168 regional food hubs around the country and most of them are recent — 60% established in the past five years, and 45% in the past year. The co-ops are averaging nearly $1 million in sales annually and that number is projected to rise, which is impressive considering the sluggish economy, he said.
Co-ops and food hubs allow growers to pool resources, aggregate produce and market and distribute to wholesalers, retailers and foodservice operators, he said.
Retailers are the largest customers of food hubs, followed by co-ops, universities and distributors. Schools, senior centers, hospitals, processors and caterers also buy from food hubs.
The Tuscarora Organic Growers co-op, which has a 10,000-square-foot warehouse in Hustontown, sells primarily to retailers and restaurants in the Washington, D.C. area. Customers include natural foods stores and restaurants such as Restaurant Nora, a certified organic restaurant, and several owned by celebrity chef Jose Andres.
The Tuscarora co-op’s most important functions, Crawford said, are pooling produce, planning future production, sharing expertise for crop improvement, and group ordering of seeds and supplies.
“This efficiency helps our members focus on what they do best,” Crawford said.
It also reduces competition among local growers, which “helps make the selling process easier,” he said.
Growers who participate in food hubs typically increase sales by 25% and often receive up to 80% of their produce’s sale price, Barham said — as opposed to the USDA-reported average of 15.8% of each food dollar that most producers receive.