CBJ: Locavores connect with the Hub

Dick Proutt is a small farmer. A very small one. At Down Branch Farm, he raises chickens and quails and grows lettuce, squash, melons and tomatoes on about an acre. In high summer, his weekly haul might include just five dozen quail eggs, 40 pounds of tomatoes and 20 pounds of squash.

The Jefferson Area Board for Aging wants exactly that kind of food for the more than 3,000 meals it serves each week. But it needs 100 pounds of tomatoes, just for one day’s worth of salads at its 11 area senior citizen centers. Until now, JABA had only two options: Cobble together an order by making weekly pickups at several local farms, or call a one-stop national distributor.

But this month, Proutt’s tomatoes showed up in a salad at JABA’s Charlottesville day center. Proutt dropped off his harvest at the Local Food Hub, a new nonprofit group that aggregated his produce along with that of 20 other local small farmers and delivered it to JABA’s central kitchen.

Projects like the Hub are popping up nationwide. And they could be the missing link between supply of and demand for products grown close to home.

In Louisville, Grasshoppers Distribution sells the produce of 100 state farmers to 75 restaurants and schools. In Burlington, Vt., the nonprofit Intervale Center is aggregating produce from 20 farmers to sell to individuals and, this winter, to local restaurants, hospitals and universities. In Northern California, the pioneering Growers Collaborative estimates that over the past year it delivered 400 tons of local produce to Kaiser Permanente’s 19 regional hospitals.

Such networks also are a priority for the Obama administration, which hopes they will improve rural economies and promote healthful eating: “What we’ve got to do is change how we think about, for example, getting local farmers connected to school districts because that would benefit the farmers delivering fresh produce,” Obama told the Organizing for America health-care forum recently.

“There are so many new producers cropping up in America. Their best opportunity to expand is a local market,” said U.S. Secretary of Agriculture Tom Vilsack. “It’s enhanced if they can be joined together with other local producers so sufficient quality and quantity can be established for schools, hospitals, jails and other purchasers.”

The Local Food Hub’s director, Kate Collier, hadn’t intended to get into the wholesale produce business. She and her husband, Eric Gertner, own a gourmet food store here, Feast, and the produce has the lowest profit margins.

In April 2008, Collier spoke to a panel convened by local food advocates, outlining how a new distribution system could support small farmers. “I told them, ‘This is where I see the holes are,’” she said. “Everybody jumped on the idea. They said if there was one phone number to call, they’d do it.”

Collier raised $305,000 from local foundations and individuals, established a nonprofit group and hired a staff of five. She leased a 3,100-square-foot warehouse and bought a refrigerated truck and $3 million in liability insurance, a requirement to sell to large institutions.

The Hub began deliveries in July. Proutt, of Down Branch Farm, was the first to sign up. The former cabinetmaker, whose business had dried up with the building bust, decided to try farming and sold at the Charlottesville farmers market last spring.

“It was neat to talk to people. But for us, we have so much work to do out here, it was a waste of time. We can make more money in the morning with one delivery,” Proutt said.

Larger farms also see benefits. By selling to the Hub, Roundabout Farm’s Megan Weary spends more time farming and less time marketing and delivering.

For example, working with a company such as Whole Foods Market requires a mountain of paperwork. Weary has sold to the high-end grocer since 2006. This summer, it took six weeks to get her heirloom tomatoes into stores.

“It’s not a waste of my time. But the six weeks I spent chasing Whole Foods is six weeks I could have been selling them tomatoes,” Weary said. “So the Food Hub does two things: They consolidate my deliveries, which makes my life easier, and they consolidate the time it takes to build relationships with those bigger buyers.”

After six weeks in business, the Hub had signed up 30 customers, including independent grocery stores, restaurants and schools. Collier is negotiating to sell to the University of Virginia dining services, run by food service behemoth Aramark.

But the Hub can’t compete on price. National distributors and food service providers scan daily commodity market prices. In high season, zucchini sells for about 40 cents a pound; the Hub sells it for 94 cents a pound. And that 40-cents-a-pound zucchini can come washed, chopped and bagged.

“It’s a huge change for institutions,” said Judy Berger, JABA’s community nutrition manager. “When you fix thousands of meals, you want the quickest, easiest way to do it. Food from California that’s prepped and ready to go is, for crazy reasons, less expensive.”

Some institutions are willing to stomach the changes. JABA, for example, preps local produce for all its centers in its catering kitchen. And it directs proceeds from catering to cover higher produce prices. But regional distributor Cavalier Produce, which sells the Hub’s specialty items such as squash blossoms and purple potatoes to chefs, can purchase tomatoes from other Virginia farmers farther afield at the height of tomato season for less than half of what the Hub would charge.

“We’re trying to make it work, but we have to stay at the market price,” said Spencer Morris, Cavalier’s general manager. “If I went out to my customers at double the price, I’d lose business.”

Local distributors have one competitive advantage: The Hub knows the source of every item it delivers, a plus in an era of regular E. coli outbreaks. Still, it’s difficult to turn a profit.

“The distribution business is about economies of scale,” says Josh Edge, farm-to-institution manager at the 7-year-old Growers Collaborative in California. “We can’t compete with the national guys.” In 2006 the Collaborative tried to operate as a for-profit corporation but returned to nonprofit status last year.

The Obama administration plans to help. The Department of Agriculture is required to put at least 5 percent of its business and industry budget into developing local production. “That’s the floor,” Vilsack said. “What we’re looking at is how can we more effectively use [those funds] to create a whole new way of thinking about the rural economy. Be assured it’s one of our priorities.”

Collier projects that the Hub could turn a profit with revenue of $1.5 million annually. If all goes well, that could happen in six to eight years. Meanwhile, small farmers are taking advantage of the opportunity to find broad and steady markets for their products.

“It’s nice to know you don’t need to have 200 acres,” Down Branch Farm’s Proutt said. “You can still make it work.”