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Toward a Food Hub in North-Central Minnesota: Reframing the Conversation, Examining a Hub’s Regional Economic Effects.

Cureton, Colin.

The report investigates the economic development potential of new local food infrastructure for a five-county region in North-Central Minnesota. This highly rural region is older and poorer relative to the state average, with over one-third of residents living in a food desert. Solutions are needed that both increase the accessibility of healthy produce and generate regional economic growth. The region is at a tipping point of a more robust local food system, but additional infrastructure is needed. How can local actors best expand local food infrastructure, and what would the economic impact of this new infrastructure be?

This research occurs within the context of growing national demand for local food that surged to $7 billion in 2011. Though most small farms rely on direct-to-consumer marketing channels (i.e. road-side stands, farmers markets,, etc.), most local food sales overall occur through intermediated channels such as sales to local retail, restaurants, institutions, and regional distribution outlets. Despite this rapid growth, two structural impediments to the growth of local foods include challenges faced by “Agriculture in the Middle” as well as a lack of necessary infrastructure.

Innovative infrastructure models broadly known as food hubs are emerging to meet these challenges. The USDA’s Agricultural Marketing Service defines a food hub as, “A business or organization that actively manages the aggregation, distribution, and marketing of source-identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand.” USDA has identified over 150 food hubs around the country. On average hubs employ 12 people (7 FT, 5 PT) and generate $1 million in annual sales. These food hubs are situated within emerging supply chains that are more aptly described as “value chains.” Value chains emphasize a commitment to long-term relationships, coordination (rather than vertical integration or interchangeability) amongst growers and buyers, and often times a commitment to social & environmental ends in addition to economic profitability.

This North-Central MN region is used as a case study to examine the regional economic effects of a proposed local food hub. The responses from two recent local food surveys suggest that between 289 and 868 acres in the region are available for the hub, or a total of nearly 900,000 lbs. of produce. This could generate $2.2-$6.5 million in local food sales, which could in turn create a $6-$16 million multiplier effect. In addition to the direct hub employment, an additional 45-145 on-farm and off-farm jobs could be created. These estimates exclude large farms in the region and are thus conservative. Other key results are growers’’ interest in processing facilities and a hub’s that focuses on connecting to new buyers.

The report ends with recommendations for how local food advocates can strategically move forward the creation of a food hub in the region. These include shifting the conversation to food hubs, focusing on coordination, planning for a decentralized hub, and identifying a legal structure & core partners.

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Prepared in partnership with Region Five Development Commission by the Community Assistantship Program (CAP), which is administered by the Center for Urban and Regional Affairs (CURA) at the University of Minnesota.
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