A recent report by the U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) discusses the distribution practices of eight producer networks and their partners distributing locally-grown food to retail and food service customers. This report shows how these networks take advantage of the growing consumer demand for local foods while, at the same time, creating new economic opportunities and expanding access to healthy food.
The study, entitled “Moving Food Along the Value Chain: Innovations in Regional Food Distribution,” explains how these organizations help local producers overcome bottlenecks in the food marketing system through transparent and collaborative planning and adherence to a shared set of operating principles.
AMS studied each of the eight network models over a three-year period. The models were in New Mexico, Oklahoma, Minnesota, Massachusetts, California, Florida, and Virginia, and fell into four groups: retail-driven, consumer-driven, producer-driven, and nonprofit-driven.
The report found four factors that influenced performance across all the case studies: First, the amount and timing of investments made in infrastructure are essential to the success and survival of food value chains. Second, informal farmer networks can give suppliers and buyers additional flexibility and allow food value chains to respond to the changing demands of specialty food markets. Third, preserving the identity of farmers on product labels is important for connecting with consumers, distinguishing the product from those of competitors, and providing traceability to the consumers. Finally, for-profit businesses, nonprofits, and cooperatives all have different strengths, and can enhance each other’s capacities and reduce the risk of failure by partnering with each other in food value chains.
The study goes hand in hand with the USDA’s successful investments in local agriculture detailed in its Know Your Farmer, Know Your Food (KYF) Compass. The KYF Compass is an interactive Web-based document and map showing local and regional food projects that the USDA supports. The Compass consists of an interactive map of the United States showing local food projects supported by the USDA as well as a narrative detailing the results of this work through case studies, photos, and videos.
The report came to several conclusions: First, the level of a food value chain’s investment in infrastructure should match the organization’s stage of development and capacity for marketing products. Also, value chains should ensure identity preservation from farm to market, i.e. identify on the product the particular farm or farmer that it came from. Another point is that “…distribution entities using informal producer networks are well suited to meet the constantly shifting demands of diversified, niche food markets.” These kinds of networks have more flexibility in deciding what to sell into the network than many cooperatives that require farmers to sell a major share of their products through the network. Finally, nonprofits and cooperatives can play key roles in the development of food value chains, but they should recognize their and weaknesses and try to take advantage of their strengths.
This information is good advice for food value chains selling local foods, whether the chains are run by for-profit businesses or nonprofits, and should also provide good background for young beginning farmers.