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Local Produce Locker: Exploring the Financial Feasibility of Small-scale Local Food Processing in South Central Minnesota

Meschke, Linda & Sam Johnson

We will explore the Financial Feasibility of a produce locker to gain information that will inform an overall feasibility study for small-scale food processing of local produce.

Background: The market for locally grown produce is increasing both nationally and in South Central Minnesota. The growth of the market has been strong, but tempered by a lack of supporting infrastructure such as aggregation, transportation, and processing/manufacturing at a scale small enough to be accessible to local producers. While aggregation and transport can be coordinated by local producers without significant additions of equipment or time (exemplified by the success of local farmer’s markets), processing/manufacturing opportunities are unavailable to local growers due to consolidation within the food processing industries, economies of scale, and government regulations. Currently, this produces a barrier for small-scale farmers to reach markets to sell their product, specifically when current demand within the growing season from larger institutional partners and other potential customers is contingent on the availability of produce outside the growing season.

Successfully developing a produce locker would overcome this barrier as local small-scale producers would be able to dedicate a portion of their harvest to third-party processing which would result in: scaling up local food offerings; extending the season of locally grown produce; creating a more stable supply of local foods for institutions looking to purchase local produce in the winter; and creating alternative markets for local farmers to sell their product.

Objective: The goal of this report is to provide the beginning framework for the financial feasibility of a produce locker that can help determine the scale of operation for which a food processing business can be successful. Our hope is this beginning framework can inform future feasibility studies on business development of local food systems.

Methodology: The report relies on previous complete feasibility studies on local food processing systems by Colorado State University Extensions (Hine, S. & Umberger, W. 2002) and the University of Wisconsin Madison (Boyd, D. 2004), and other reports on food processing systems. It also relies heavily on the example and input given by The Western Massachusetts Food Processing Center (FPC) and local food processing industry experts. Both helped clarify the basic needs and reasonable inputs necessary to beginning a food processing venture.

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Prepared in partnership with Rural Advantage 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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