TAKE-AWAYS

  • Values-based distributors committed to local food struggle to compete with the reliability and convenience provided by corporate entities like UNFI and Sodexo
     

  • Supply chain transparency and farm identification are key levers of change for distributors committed to sustainability and equity in the food system
     

  • Food distributors are likely to raise the bar on their producers as consumers and institutional buyers begin to require higher standards of both farming practices and labor justice
     

  • New forms of collaboration across distributors in both the for-profit and not-for-profit sectors could serve as a response to the consolidation of ownership in the food system  

Making Local Food Flow in the Hudson Valley

Contributor: Mark Phillips

The distribution of food—from farm to consumer—is an activity that occurs at varying scales through different (often competing) business models: from not-for-profit food hubs rooted in service to local food systems, to national-scale corporations with entire fleets of vehicles and distribution networks that span the continent.

In the context of local food distribution in the Hudson Valley, we spoke with stakeholders across the sector to better understand the complexity of this critically important part of our regional food system. Here, we highlight our conversation with Hudson Valley Harvest, which aspires to develop a values-based business model focusing on local, sustainable food systems that can compete with larger scale, national distributors. We also share the perspective of a not-for-profit food hub, Red Tomato, that supports mid-sized farms in the Northeast United States. We explore the importance of farm identification and supply chain transparency and review the emerging significance of farm labor equity as a priority for the local food movement.

Photo caption goes here.

Food distributors bear the behind-the-scenes responsibility of bringing food from farms to consumers via food service retail outlets, and other dropoff points. They typically function as the “middleman” providing transport and logistics on behalf of farmers (or value-added manufacturers) and the buyers of their products. Distributors committed to the local food system face business viability challenges that include a limited window of seasonally available produce and a distribution landscape dominated by companies like UNFI and Sodexo. The latter are businesses with national infrastructure and economies of scale that can provide on-demand access to extensive product inventories at the lowest available prices.

“It is no wonder that local food is struggling to gain traction,” shares Michael Waterman of Canopy Holdings, “no one has found a way to make it reliable and convenient to order with short lead times and high fill rates.”

Waterman serves as Canopy Holdings’ president, the parent company now responsible for managing a group of distributors throughout the region under the Hudson Valley Harvest brand. The goal of the business venture is to develop a distribution platform that is as reliable and convenient as the large, national distributors, while focusing solely on local, sustainably sourced food.

“Most local distributors are too small to meet the highly demanding needs of buyers,” says Waterman. “Large national distributors who may be able to provide the desired reliability and fill rates don’t do local well, given a lack of local farm relationships and no internal infrastructure to track farm of origin.” Fill rate refers to a distributor’s capacity to effectively meet customer demand with adequate inventory — an often challenging proposition for distributors committed to sourcing exclusively from a given state or region.
 

By organizing the existing infrastructure of several regional distributors — Field Goods, Local Bushel, and Angello’s Distributing — into one business entity, Hudson Valley Harvest aims to leverage for the local food system the wider geographic territories and economies of scale that currently advantage the larger, national distributors.

Perhaps ironically, the business is looking to industry-standard distribution models for inspiration in making their farmer-centric platform viable for the long term.

“I am working hard to make our business resemble traditional distributors as much as possible because that is a way to be a more sustainable business,” shares Kate Galassi, who recently assumed the role of President at Hudson Valley Harvest. “There are so many things that are attractive about traditional models,” says Galassi. “Having an investment in a warehouse and infrastructure, for example, and vehicles and a big team to properly market the produce.”

For Galassi, whose experience in the food system includes co-founding Quinciple, a CSA-in-a-box food delivery business, widening the geography that distribution companies source from could help address the limitations of local availability and the economic risks that result from unpredictable weather patterns. “Right now HVH is focused on farms in Hudson Valley but everyone in central New Jersey and Pennsylvania has everything a full month earlier than we do — from sweet corn to tomatoes — so it makes it hard to stay competitive. And then there are weather problems: Hudson Valley had horrible rain last season and that was true of a lot of the Northeast, except in Vermont where there was a drought. So if we pulled from a larger region that would make us much more stable as a business.”

Farmworkers Lesvia, Juan, Albert & Herman featured as a part of Red Tomato’s RighteousProduce.org, a project that seeks to make visible the many hands involved in bringing produce from farm to consumer.

The Schooner Apollonia is a 64-foot steel-hulled schooner built in Baltimore, MD in 1946. The vessel is being renovated and repurposed for modern sail freight applications along the Hudson River. Photo via Sam Merrit.

Preserving Farm Identity through the Supply Chain

As a part of its commitment to the local food system, Hudson Valley Harvest ensures that farm identification is maintained throughout its supply chain, from the farm gate to the end consumer. “Complete transparency,” emphasizes Galassi, “no product connected to a farm is sold independent from its source. It is a very important idea and has a lot of power for the end customer and it is something we can do to support farms and push forward the visibility of local food.”

But while small farms (which the USDA defines as any operation with annual revenue below $350,000) typically rely on the “local” brand as a point of differentiation for their produce, mid-sized farms based in the region often struggle to preserve this competitive advantage when selling their produce into commodity markets. These are farms with annual sales between $350,000 to $1M, also referred to as the “agriculture of the middle,” and they often participate in direct-to-consumer, local food markets while simultaneously selling into the wholesale system.

Laura Edwards-Orr, who spent 11 years as Executive Director at Red Tomato before transitioning from the organization in Spring 2019, shared how local produce typically loses its identity once sold as a commodity: “One of the things that blew my mind the most when I started working at Red Tomato was talking to people and realizing that the growers we work with sell to [us], they sell to distributors, and they also sell to terminal markets…and that is often the moment where the point of differentiation, the farm ID, breaks down.”

Red Tomato is a Northeast food distribution non-profit that has carved out a unique identity for itself since its founding in 1996. As a food hub focused on Northeast mid-sized farms, the organization has centered its work on bringing equity, transparency, and sustainability through the regional supply chain, from farmers to consumers. Telling the story of their farm producers to consumers at the other end of the distribution system has been an important part of their mission, with farm identity being a key component.

“The very act of maintaining the farm name on commodity products as they move through the mainstream marketplace can be the bottleneck where that breaks down,” says Edwards-Orr, “never mind programming and certification, and all of those other pretty sophisticated efforts that people are undergoing. Literally just keeping the farm name on your product from Point A to your kitchen is a challenging proposition.”

The preservation of farm identification is important because all farms have unique growing practices and differing engagement with certification programs and labour standards. As the food system is currently organized, however, commodity markets anonymize farmers, contributing to a general condition in which consumers are disconnected from the people and places that grow our food. This dynamic minimizes accountability from consumers and reduces the incentive for commodity growers to improve their management practices.

Anatomy of Label: Hudson Valley Harvest strives to include as much information as possible when labeling the produce it distributes. Photo via Hudson Valley Harvest

Navigating Complexity: Organic vs. Local vs. Regenerative?

Distributors are also navigating supply chain transparency at a time when the meaning behind “organic” is ballooning out beyond its traditional emphasis on soil health while increased supply for industrial-scale, organic commodity produce continues to threaten the margins of organic  producers in the Hudson Valley and larger Northeast.

“How do we make a distinction [to the consumer] between organic and local,” asks Noah Sheetz of the Chef’s Consortium, “to understand that organic may not be regeneratively produced or distributed while a local food product that is not organic may be?”

As founder and farm-to-table coordinator for Chefs' Consortium, Noah creates partnerships with non-profit organizations and regional chefs — and he also has long standing experience as a chef seeking to support local, sustainable agriculture in the Hudson Valley. “The larger organic farms out of state can realize the economies of scale,” observes Sheetz, “and can compete against the biodynamic farm or smaller organic local producers.” 

Sheetz’s concern highlights the complexity that many buyers face when purchasing from distributors for their retail or food service outlet, particularly when tight margins across the food system require individual operators to make prudent financial decisions on behalf of their grocery store or restaurant.

Across the Hudson Valley (and throughout the country) small producers are increasingly turning to more sophisticated designations like biodynamic and regenerative to communicate a focus on agroecological farm practices that emphasize ecosystem restoration and efficient resource management.

“The whole reason for the regenerative food system is to enhance soil and the ecosystem, and thereby improve everyone’s overall quality of life,” emphasizes Phyllis Van Amburgh of Dharma Lea Dairy Farm in Sharon Springs, New York. “Soils and ecosystems need resources and attention and they are the things that are being shorted in all of our eagerness to be sure the entire system works financially.”

Van Amburgh operates Dharma Lea Dairy Farm and is working with Tim Joseph of Maple HIll Creamery to advance regenerative organic dairy production in the Northeast. Together, Van Amburgh and Joseph affirm the importance of integrity across the supply chain, particularly when it comes to communicating the management practices that build soil health over the long term.

“It is a concern I have as a producer. All along the way with the growth of organic and grass-fed practices the system is quickly absorbing the premium prices that were meant to come back to increase resources into the practices,” shares Van Amburgh. “The question is how do we protect the system against co-opting? We can’t rely on market forces to address this problem, because stealing resources is sort of baked into our current economic system.”

Labour Justice as the “Next Big Thing”

For Kate Galassi and Laura Edwards-Orr, fair labour practices are another critical dimension of supply chain transparency, and a missing piece of conversation for a local food movement that has often focused on the health of land instead of the people who manage it. Increasingly, the bar is being raised on how we define a regenerative food system to include not just soil health but also the quality and equity of labor all along the supply chain.

“I think that farm labor is probably the next big issue,” shares Galassi. “I hope it is the next one that captivates people in the same way that local and organic has.”

For Hudson Valley Harvest, Galassi strives to prioritize business relationships with farmers who are known to actively support fair labor policies: “For me I try to visit farms I work with and meet the people who own them and meet farm workers to get a sense of how that works. In a perfect world we would see more distributors investing in those kinds of issues and being an advocate for those communities.”

Nonetheless, Gallassi recognizes that there are challenges to verifying the quality of labor practices in a way that can be replicated across the supply chain. “Either you go the route of certification across the board,” says Galassi, “which means third party audits, or you will be relationship-based and transparency-based.”

Red Tomato, whose Plainville, Massachusetts,-based operation was founded with the intention of bringing the principles and practices of the Fair Trade movement to agriculture in the Northeast, has been exploring the question of farm worker equity by looking to existing programs on the other side of the country.

“For the past several years we’ve been engaged in a pilot program with an organization called the Equitable Food Initiative,” shares Edwards-Orr “which does fair labor certification mostly on very large farms in California, Canada, and Mexico. We see incredible amounts of integrity with our growers definitely going the extra mile to be good employers…and we wanted to tell that story and find ways to add a verification of that relationship inside of our certification program.”

Part of Red Tomato’s programming to support mid-sized farms in the Northeast has been to weave marketing into the distribution of its produce, bringing the stories of its farmers across the supply chain to consumers at grocery stores. This story-telling, which relies on transparency and preservation of farm identity, provides a competitive advantage at the retail level for farms whose produce would otherwise become commoditized in the supply chain.

The exploration of new, shared ownership models—including land trusts, cooperatives, and hybrids—needs to be incentivized.

Cooperation as a response to consolidation in the marketplace

Efforts to support fair and sustainable agriculture take place at a time when the Good Food Movement is increasingly threatened by the consolidation of ownership in the food system, as reported in this blog post from Red Tomato. Mergers and acquisitions in both the retail and distribution sector have bolstered the power of corporations at the same time that the regional and organic identity formerly relied upon in the local food movement for competitive advantage is now dwindling as corporate players like UNFI and Wal-Mart have begun to enter the organic food marketplace.

For food hubs and agricultural service providers in the space, collaboration across organizations has emerged as one potential response. “The curiosity that I have in this work is asking, how might we use collaboration as a mission-based response to consolidation?” inquires Edwards-Orr. “And does that mean the shapes of organizations needs to change? Do we need to be merging or consolidating some shared services in search of a different model for collaboration that adds benefit rather than cost?”

Edwards-Orr has been involved in recent conversations around food hub networking as a way to bolster the viability of values-driven distribution throughout New England and the larger Northeast. While this research has largely centered around non-profit food hubs, the local, organic food distribution sector is a space that already operates with a significant degree of interplay between for-profit and not-for-profit entities.

At Hudson Valley Harvest, for example, information and infrastructure sharing is a daily reality: “We try to share and work with as many distributors as we can,” reveals Michael Waterman. “We buy from other distributors, we share information around harvest cycles, pricing and cross docking. We allow other distributors to cross-dock at Field Goods. Western New York distributors coming to the Hudson Valley drop off with us and have another distributor pick up. We could theoretically say no but there would be no benefit to that.”

The challenge in this space is organizing collaboration between distributors in a way that avoids jeopardizing each other’s business viability. For Hudson Valley Harvest, the merging of multiple distribution companies into one economic entity aspires to achieve the benefits of regional collaboration without such economic pitfalls. Whether the merger contributes to the same story of economic consolidation that is occurring throughout the food system writ large remains to be seen.

“I think it would be better for it not to be one company,” shares Kate Galassi, who is now well into the complex task of organizing several, formerly separate distribution companies into a more streamlined operation under the Hudson Valley Harvest brand.

Like Edwards-Orr, Galassi is curious about how distributors across the Northeast could improve networking in service to local farms throughout the region: “For me the dream would be to have a permanent resource that lived online that was a comprehensive directory of all the distributors in the country — because regions overlap. And to know which distributors are working where and with what farms and serving what cities and where they run trucks, on which routes.”

“The databases I would want to see I don’t think anyone has really mastered yet,” affirms Noah Sheetz. “You can get on the Hudson Valley Bounty website and look for, say, plums or dandelion greens and it returns some information about who is growing that, their contact info, phone number, and email address. We need something more comprehensive and more efficient. Say I am looking for Swiss chard, this ideal database would give information about who farms it, how they pack the product—24 heads to a case? Is it rainbow? Is it washed? It would give you ideas about how to order, where to pick up, and who they distribute through.”

The Hunts Point Terminal Produce Market in New York City, where produce revenues exceed $2 billion annually.

OLIVIA POP-UP.jpg

Annette Nielsen

Visit our sister site, The Field Guide to a Regenerative Economy, to read this story about the organizations and people who are collaborating to connect the local food supply chain into the institutional market. 

© 2018 by Hudson River Flows. 

For more information about Hudson River Flows contact arterianchang@gmail.com

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