Wallace Center at Winrock International (Food Hubs)
May 2021 Impact Assessment II
Background
To gather data for this second impact assessment, we surveyed our network members and held a session with about 10 food hub leaders from our community of practice. We discussed how their businesses have been affected by COVID-19, the adaptations they’ve had to make (some of which they plan to keep in a post-pandemic world), and they’re recommendations for longer term shifts in the food hub ecosystem.
Compared to pre-COVID normal, are there dimensions of your sector that have experienced a sustained increase or reduction in activity? What aspects of Pandemic disruptions or adaptations were temporary, and which appear to be longer lasting? Do any appear to be permanent?
The most prevalent trend within the food hub sector is a major shift in their primary market channel. A plurality of hubs relied heavily on restaurant and wholesale markets prior to the pandemic, and most either created or grew direct to consumer markets to compensate for the severe disruption in those markets due to lockdowns and closures. For many hubs that responded to our survey, this led to a significant surge in revenue, particularly during the summer of 2020—some by as much as 500%. However, not all of this revenue was realized as profit as hubs had to make sizable investments and bear additional operating costs to adjust their operations to the direct to consumer market channel. Home deliveries, for example, increased transportation and labor costs. At the same time, these investments appear to be paying off long term in the form of sustained higher revenues. Some hubs noted that their restaurant and institutional sales are starting to rebound this spring, though restaurant sales remain lower as many independent restaurants went out of business and/or demand has not fully returned to pre-pandemic levels.
On the direct to consumer side, many hubs are seeing continual support from new customers, though slightly lower than the peak months of summer 2020. As one food hub manager put it, “It has surprised us that average cart size has not dropped from the peak of 2020. We seem to have more ‘grocery’ shoppers than ‘item’ shoppers.” A great deal of this commerce was conducted online, which was new for many hubs and appears to be a lasting shift.
Another major change was the emergence of the emergency food sector as a market channel and partner for food hubs. Many hubs, with the support of philanthropy and government programs like the CARES Act, USDA’s Farmers to Families Food Box, and local and state programs, began partnering with and selling food to local food banks, pantries, and community-based nonprofits focused on increasing access to healthy food. Some hubs noted how critical these partnerships were in terms of increasing access to critical supply chain infrastructure, like warehouse space, that food banks in their community had available. Many hubs hope to see this become a permanent part of their business model, with some hubs reporting promising signs such as long-term contracts with food banks in their regions. Though this is not a traditional market channel for hubs, many see its long-term potential and importance, particularly because these partnerships are values-aligned with hubs concerned about community food security and plays to their strengths of having strong ties to their communities.
What types of innovations, pivots, or adaptations have proven to be the most impactful or important for your stakeholders or sector?
Each hub’s response was different based on their supply chains, the seasonality of their region, their existing hard and soft infrastructure, their funding structure, and dozens of other factors that impact a hub’s business model and operations. No two hubs reacted to the disruption in the same way, but there were some trends that emerged through our conversations.
The ability to move sales online has been essential to reach new, individual households. Many hubs did not have online ordering systems in place and had to stand them up in short order to safely and conveniently reach their new customer base. Hub managers reported that customers are generally interested in being able to customize their carts rather than opting into a weekly produce box or other CSA-like products, which requires more sophisticated ordering systems, different packaging, and more labor. The investments in these systems appear to have been worthwhile as many hubs are retaining these customers and plan to continue to build up the direct to consumer market channel.
Prior to the pandemic, many hubs were informally communicating, or doing business with each other, but this inter-hub networking became much more commonplace and formalized as a pandemic response. Increased demand for local food required hubs to communicate, trade products, and share resources and infrastructure. The pandemic strengthened these ties and created new questions and challenges about aligning systems and processes like production planning and inventory management so hubs can work together more seamlessly.
Overall, new or enhanced partnerships were key to the success and survival of food hubs during this extraordinary time. “Schools started buying produce from us for the first time ever,” stated one hub manager who had initiated relationships with institutions but had not transacted with them prior to the pandemic. “Now that those relationships are set up, they’re more likely to continue.”
Relationships with new funders, new supply chain partners such as processers that allowed hubs to meet the specifications of new buyers, and new partners within the hunger relief ecosystem were essential to allow hubs to meet rapidly shifting demand and smooth out supply chain disruptions. These relationships may have been created as an emergency response, but many will be longer lasting and lead to new opportunities for the sector.
Given the innovations and adaptations you’ve seen, how would you say your stakeholders and/or your sector demonstrate resilience in during the pandemic?
The local and regional food sector was the epitome of resilience in response to the pandemic. While traditional, industrial supply chains were left flat footed as demand shifted, food hubs and local food supply chain businesses were much nimbler and quicker in their responses. Many hubs created online marketplaces within 72 hours of stay-at-home orders. Others activated partnerships with emergency feeding operations in a matter of days. Schools repurposed state funds to buy produce from food hubs for the first time to fill gaps left by traditional supply chains. Hubs relied on partnerships, relationships, and commitment to their missions in order to respond. This resiliency also had the added impact of increasing public awareness of food supply chains and created opportunities for new policies and programs that support more redundancy and connectivity in local food supply chains to reduce risk.
One hub manager noted “Our investments in systems, staff development, and fostering a grower network allows us to come together to move forward through change. We are small so collaboration is important in many ways, between food hub partners, farmers and urban and rural communities, and distribution partners (food banks, food distributors, food pantries, homeless shelters).” Another shared, “Resilience means having the people who can meet unexpected and uncertain circumstances with innovation and flexibility, having multiple channels to bring food to market, having trust-based partnerships with producers and other key stakeholders that allow organizations to move quickly together without getting bogged down in bureaucracy, and having a variety of funding sources that allow room to meet the needs at hand without being constantly under financial stress.”
The resiliency of the food hub sector stemmed from the fact that most hubs are driven by their commitment to supporting farmers and increasing the availability of fresh food which guided their decision making in shifting sands. Many hubs discussed how the pandemic allowed them to take a more intersectional, systems-based view of their work and their approach to building sustainable food systems and businesses.
What data did your sector find most useful in navigating pandemic disruptions? Please share any survey findings, sales data, or other data/metrics related work that you, your partners or stakeholders conducted during the pandemic.
As shared in above, our survey responses yielded some interesting data points on increased sales across our network, although we have yet to formally capture new benchmarks among the food hubs. We did have members note that findings reported in the Consumer Food Insights, particularly in interest in food boxes and a shift to online purchases, were also experienced across the food hubs. And, the increase in food insecure households did increase demand in the food assistance network, affording our members an opportunity to support partners in connecting local foods with the food insecure households that emerged during COVID.
Hubs relied heavily on partners and national networks to stay abreast of best practices, emerging opportunities like federal funding programs, and how to adapt to changing rules and safety protocols. Open lines of communications are critical for hubs as much as quantitative data.
Are there groups or sub-sections of your sector that are currently experiencing disproportionate negative impacts from pandemic-disruptions? Are there groups or sub-sectors that face disproportionate challenges in recovering or re-establishing operations as pandemic-disruptions dissipate?
Hubs that traditionally had direct to consumer programs were generally able to pivot and enhance those systems more quickly. Hubs with a heavier reliance on institutions and restaurants had a harder time finding household customers and building the systems to reach them. Newer hubs that didn’t have the web of relationships and strong connections to the farmers they work with also had a harder time responding. Also, and this is certainly not limited to the food hub sector, communities of color bore the brunt of the health and economic impacts of the pandemic, so hubs located in communities of color, and with staff of color, faced a disproportionate impact from these crises.
How have questions of equity, access, diversity and inclusion shaped your sector in the past year, and what efforts (if any) are in place moving forward? Please provide as many specific examples as you are able.
Increasingly, white-led food hubs are beginning to understand their role in perpetuating, and potentially dismantling, racism in the food system. The pandemic had an outsized impact on people of color, both from a health standpoint and economically. One hub manager noted “The pandemic exposed the weakness of an economy based on inequality and racism. Patient community building and forging relationships of mutual trust was always our central strategy and it was very useful in maintaining a flexible stance that allowed us to pivot.”
For some hubs, their response to the pandemic cannot be separated from unrest and an outpouring of support for the Movement for Black Lives last summer, and in some cities the violent uprisings that followed the murder of George Floyd. Some hubs created pandemic responses that were specifically aimed at addressing both the acute and historic impacts that racism has had on our food system. A prime example of mission-oriented initiatives is the LEAFF program, which The Good Acre in Minneapolis helped create, which you can learn more about here.
In general, many hubs are dedicated to continuing their partnership with food security and food access organizations and are unpacking how to design and fund programs that are led by the communities most impacted by racism and the pandemic. A growing number of hubs are working with new partners to create sustainable programs that supply locally grown food to food insecure communities. Hubs selling direct to consumer experimented with how to accept SNAP payments for online transactions. While many of these programs existed before the pandemic, there is a growing understanding, given the supply chain shocks we experienced in the spring of 2020, that local supply chains are critical to community food security and can be key partners in addressing hunger. Government and philanthropic support of these programs will be critical not just for the remainder of the pandemic, but in perpetuity. Hubs and hub supporters noted how instrumental these programs were in taking a more systems level approach to both small farm viability and food security, rather than considering them as opposing goals.
Looking to the 2021 season, what issues are top of mind for your stakeholders or your sector? Are there areas where cross-sector technical assistance (e.g. choosing the right online platform, partnering with emergency food agencies) would be timely for your sector?
There are many remaining questions for the food hub sector as we move into this phase of the pandemic. Generally, hubs are still asking for support about technology platforms, particularly those that will help them maintain and grow their direct to consumer market share. Many hubs with direct to consumer programs are interested in using SNAP online and see it as an essential tool for reaching food insecure families, so advocacy and eventually technical guidance on that front will be valuable. There are also lingering questions about food hub networking and mutually beneficial collaboration in general.
Some local food hubs who participated in USDA’s Farmers to Families Food Box Program are interested in how to engage with federal procurement on a longer-term basis. These programs are evolving and as they do, hubs will likely need a great deal of support to ensure that they are able to participate in any federal procurement programs that include fresh food. Operationally, food hubs are well positioned to provide fresh product to USDA Foods and other government procurement efforts, as they excel at handling specialty crops and highly perishable products. However, they are generally unfamiliar with federal contracting processes and tend to work with growers whose markets have not required GAP certification. Support around GAP certification, logistical challenges associated with scaling up, and navigating federal procurement systems would be welcome.
