The “food hub” model is proving to be financially successful across a variety of legal structures and markets, according to a newly published report from the Michigan State University Center for Regional Food Systems and the Wallace Center at Winrock International.
“Food hubs are responding to increasing consumer interest in local and regional foods, and our findings show that a majority of them are doing so in a viable way” said Rich Pirog, director of MSU’s Center for Regional Food Systems.
Food hubs are businesses that aggregate and distribute source-identified food products. Established food hubs are thriving and new food hubs continue to open for business:
- 75 percent of food hubs are breaking even or better, an increase of 7 percent in two years.
- Almost all food hubs expect their business to continue to grow.
“This is the first time that national ongoing data of this caliber is available on food hubs,” said Michael Hamm, C.S. Mott Professor of Sustainable Agriculture. “The 2015 National Food Hub Survey findings are novel because they build on the 2013 National Food Hub Survey.”
In addition to revealing a promising business environment, the survey suggests that food hubs benefit local communities, local economies, and small and medium-sized local and regional producers:
- Food hub suppliers and customers are almost entirely regional. More than 9 out of 10 food hub farm or ranch suppliers are located within 400 miles of the hub, and 3 out of 4 food hub customers are located within 400 miles of the hub.
- Food hubs average nearly 80 farmer and food business suppliers each and more than 9 out of 10 food hubs source exclusively or mostly from farms and ranches with gross sales less than $500,000.
- Food hubs invest in community health and healthy food access. In their daily operations and programs, more than 87 percent work to increase access to healthy or fresh food and more than 95 percent work to improve human health.
But despite strong demand for their services and their positive impact on communities, food hubs are facing challenges. In particular, they expressed concern about maintaining product supply and keeping up with business growth.
“Food hubs bring great opportunity, but they face unique challenges that will require investment and innovation to overcome,” said John Fisk, Director of the Wallace Center at Winrock International. “More than 50 percent of hubs are concerned about securing more supply – and growth could be a liability for at least 40 percent of hubs because of barriers to adequate capital and limited delivery, warehouse and staff capacity.”
The full report is available online at http://foodsystems.msu.edu/resources/2015-food-hub-survey.