In the food-distribution business, it’s no longer a small, small world.
Food companies used to be able to buy small volumes of locally-grown products from area farmers — but no more. Minimum volume requirements shut smaller Minnesota growers out of wholesale food channels, according to an AURI market study released in June.
“We used to be able to buy 20 cases at a time, but we can’t anymore,” says one Minnesota distributor, who participated in the study. “No local farmers should have to throw away product, but they have to change how they move it. We need farmers to pool the supply, agree on prices among themselves and sell us multiple products.” A few Minnesota grower groups are already trying this, says Dennis Timmerman, AURI project manager in Marshall.
The Southeast Minnesota Food Network, with 90 farm members, collectively promotes, sells and distributes farm products to Twin Cities outlets. The cooperative sells dozens of items, including fruits and vegetables, eggs, poultry and meat.
Another example is Whole Farm Co-op, based in Long Prairie, Minn. The 30 member farms, mainly in Todd County, sell to consumers and natural foods stores in the Twin Cities. Part of Whole Farm’s mission is to give consumers “a clear senseof who and where their food came from,” its website states. Customers place their orders on-line, and the co-op delivers weekly to about three dozen drop sites.
The AURI marketing study looked at half a dozen of these local foods distribution networks around the Midwest. Although most have struggled to be profitable, Timmerman says, all “have successfully created or opened up new markets for members.”
The AURI report draws several lessons from these groups’ collective marketing experiences:
Big city advantage. Most distribution groups rely on a large, nearby urban market.
Dedicated leaders needed. Groups tend to rely on a few committed individuals who often work without pay, especially at first.
Decision-making key. Internal conflicts are common in marketing groups. Good communication and group problem-solving skills are essential.
Profitability uncertain. All the groups studied have struggled financially, especially in the startup years.
Sense of community strong. Farmer-based distribution groups build a sense of community, hope and common purpose, and their success should not be defined by
profitability alone.