Farm Product Distribution

Small/Medium Farm Product Distribution
- A Feasibility Study


The premise of this feasibility study is that the traditional distribution system, while very effective for product produced on large Canadian farms and for product sourced internationally, does not work for producers with small/medium sized farms (SMF) where the land is 1 to 4 hectares.

The increase in demand for locally produced food is widely acknowledged by industry, non-profit local food advocates, and government. Three indicators back up this finding:

  1. 2014: The hottest restaurant trend for the fourth year in a row is “Locally produced and locally inspired dishes”.1
  2. 2012: 85% of British Columbians frequently buy local vegetables.2
  3. The number of BC farmers’ markets has increased by 147% in the past 6 years.3

Traditional, mainstream distribution services include the purchase, storage, transportation, and resale of products. Imported agrifoods from around the world are so prevalent that local farmers must compete on price and availability to have their products purchased. Local, SMFs find it difficult to compete at this scale. Chefs, grocers, and processors have indicated the gap in distribution is a barrier to buying local food directly from these smaller farmers.

The movement to create “Food Hubs” has a gained momentum as a way to fix the local food distribution gap. Emerging and established regional agrifood hubs (RSFH) are addressing the important issues hampering vibrant local food systems: aggregation, marketing sales, and distribution of local food. However, the lead time to establish a regional food hub can be measured in years, yet farmers and buyers are seeking promising solutions now.

Local food distribution is a service frequently provided by RSFH. It can also be a stand-alone business where storage and transportation solutions are provided by non-profit organizations, farmers and even grocers. A review of the new distribution systems reveals that some are Producer-Involved Distribution Systems (PIDS), where the business involves farmers and provides direct individual support to develop farmers’ business acuity along with strategies that enhance the marketability of their products.

Many SMF do their own distribution. The challenges of external distribution for SMFs include the additional cost of paying someone to do this work, the preservation of their farm’s brand, the potential for increased logistical complexity, and, if organized by farmers, the shared cost of additional infrastructure such as bigger trucks or the rental of temperature controlled storage. The benefits are that when distributors have the farmers’ interests at the centre of their mandate, farmers can focus on farming and caretaking their land rather than the business of product promotion and selling.

The distribution needs for restaurants and natural food stores interested in buying local food system can also be more complex than the services traditionally offered by distributors. Direct from farm branding, unique local products not carried by the large distributors because they require special handling, niche sizing such as small peppers, cucumbers and mini summer squashes, coordinated growing times to extend availability into the shoulder seasons are all examples of products and services that the new generation of local food distribution systems can offer to these buyers.

Buyers and farmers have many shared requirements including, trust and communication, preservation of farm identity and brand as well as pricing that supports a profitable business. The Feasibility Study for Small/Medium Farm Product Distribution in the Lower Mainland will, in six reports, compare the logistics and governance of successful distribution systems that support the sale of products from SMFs to buyers in urban centres.

The research will include:

  • Report 1: Compile information from existing reports on the needs, current shortfalls, and requirements for a Local Food Distribution System in the Lower Mainland of BC
  • Report 2: Review business systems and best Practices for distribution systems that include farmers, and in some cases buyers, in the planning and operations of the business
  • Report 3: Research bylaws, regulations, and funding sources that might affect or support the creation of small scale farm distribution systems
  • Report 4: Report on the needs of farmers from a distribution system
  • Report 5: Report on the needs of buyers from a distribution system
  • Report 6: Develop a distribution system model for local food

The intent is to encourage the development of a network of distribution systems that connect BC farmers to BC buyers. A pro forma will be developed in Report 6 that can be tailored to suit the distribution needs of different regions of BC.

1. National Restaurant Association’s (NRA) annual “What’s Hot” culinary forecast 2014
http://www.restaurant.org/Downloads/PDFs/News-Research/WhatsHot/What-s-Hot-2014.pdf

2. 2012 BMO study
http://newsroom.bmo.com/press-releases/bmo-survey-canadians-willing-to-pay-a-significant-tsx-bmo- 201209190820156001

3. Economic and Social Benefits of Farmers’ Markets November 2012.
Dr. David Connell, UNBC and BCAFM.