Consumer demand for locally and regionally produced foods is skyrocketing in the United States. The total number of farmers markets registered with the the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service’s (AMS) Farmers Market Database has risen from just 1,755 in 1994 to more than 8,000 in 2013. However, supplying enough locally produced foods to consumers is becoming increasingly difficult. For example, consumer and commercial buyer surveys collected in Louisville, Kentucky for Seed Capital Kentucky’s Louisville Local Food Demand Analysis found that there is currently $300 million of unmet demand for locally produced foods from commercial and residential buyers combined.
According to the USDA, food hubs facilitate “the aggregation, marketing and/or distribution of products from local farmers and ranchers to consumers (households, retailers, restaurants, institutions, and wholesalers) by developing scale efficiency and improving distribution.”
The primary role of a food hub is to increase market access for local and regional producers, because many local and regional farms lack the large-scale operations needed to gain entry to most foodservice markets. AMS found that there are several ways in which food hubs achieve this goal: by enabling small farmers and ranchers to overcome otherwise limited marketing options and revenue opportunities, limited distribution and marketing capacity, and high transaction costs; and reducing the barriers to entry to our large scale, international food system. By pooling harvests from farmers throughout the region, food hubs are able to create large, consistent, and reliable supplies of locally produced foods to distribute to retail, institutional, and commercial foodservice markets. Local Food Hub in Charlottesville, Virginia, for example, aggregates local food from more than 70 small, local farms and distributes the food to over 150 regional buyers. There are more than 200 other food hubs across the nation providing similar services.
Rich Pirog, senior associate director of the MSU Center for Regional Food Systems and co-convener of the Michigan Food Hub Network, points out in an interview with DBusiness magazine that as more markets—including hospitals, restaurants, schools, and grocery stores—seek increasing quantities of locally produced foods, food hubs will continue to play a pivotal role in supplying these markets with the desired products.