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How the Local Food Economy Is Challenging Big Food

The Evolving Infrastructure Between Farm and Table

Story by Tracie McMillan

Illustration by Tim Pacific

Published on Apr 14, 2014

About 15 years ago, Jim Vansteenkiste got a phone call from Kroger that changed his life. It was 1997 or ’98, and the fourth-generation farmer had spent decades working the same Michigan land his father had worked before him, about an hour’s drive from Detroit. In winter the land turned into icy white tundra dotted with collard green stalks spiking up through the snow, but even in the middle of a storm he could tell you which field held eggplants the year before, and which held squash. In the summer it was lush and green, and covered in four dozen kinds of vegetables, stuff he’d been selling to Kroger and Farmer Jack — two big grocery chains — his whole life. But then he got the call from a Kroger buyer, telling him he would lose the contract and, with it, half his business. Tall and trim, with the sun-creased eyes of a life worked outdoors, Vansteenkiste knew that unless he figured something out, he could lose the farm, too.

The problem was that selling his food to Kroger and Farmer Jack was all Vansteenkiste had ever known. Since he was a boy, he’d helped his father grow a mix of grain and produce. He studied chemistry at the local community college, but the sterile lab life wasn’t for him. He wanted to be back on the farm, rumbling over the fields in a truck and getting his hands dirty. When the collards and zucchini came in, he’d load up a refrigerated semi and drive to distribution centers an hour away. He knew in advance how much each of his two customers wanted that day, and how much they would pay him for it. The chains would keep the produce cool on site before transferring it to trucks bound for stores scattered across the region, taking his collards and squash and eggplant and everything else across Michigan and to Ohio and Indiana, maybe even Illinois. This was infinitely easier than the way his grandfather had worked. Back then, a farmer had to hitch horses to wagon and ride into Detroit’s wholesale district at Eastern Market, selling to whatever buyers came along.

Then Kroger announced it was closing its Detroit office and moving distribution to a larger center in Ohio. To stay on as a supplier, Vansteenkiste needed to grow more produce — enough to serve a significant number of stores. What’s more, he would need to drive 250 miles to the distribution center, eating up gas money and precious field time in the summer. “When you see a chain of Krogers, one warehouse covers 150 to 200 stores,” he explained in January. “It’s hard for a small grower to belong to a major chain.”

Throughout the 1990s, medium-sized growers like Vansteenkiste went out of business as chains began to merge and consolidate. These bigger chains brought distribution in house to pare down costs and reach larger economies of scale. They needed bigger truckloads of produce, and small growers went out of business when they couldn’t compete. Between 1992 and 2007, 46,000 medium-sized farms in the U.S. disappeared, and growers like Vansteenkiste went from supplying more than one-third of the country’s food to one-fifth. The wholesale markets where farmers sold their wares shrank, too. When Vansteenkiste’s grandfather had sold produce at Eastern Market, nearly all farmers sold their food that way — in open, competitive markets. By the year 2000, 49 of the country’s 50 largest supermarket chains operated their own private distribution networks.

But Vansteenkiste didn’t know anything about that. All he knew was that he couldn’t give Kroger what it wanted. After talking to a few farmer friends, he had an idea: Why not truck into downtown Detroit and sell his food the way his grandfather had, at Eastern Market?

The Food Hub

A decade into America’s love affair with local food, the thorniest issue facing small farmers, urban planners and eaters writ large is not how to find a farmers’ market. It’s how to get fresh, healthy, locally grown food from farm to neighborhood at a competitive price, and how to strengthen local economies in the process. How to build, in other words, a food infrastructure. Want to keep smaller-scale, local farms in business? Want to eat dinner without relying on global shipping? Want to expand healthier food options and create local jobs? Getting there begins with food infrastructure.

“When you’re not selling directly… at the farmers’ market — when you get into wholesale markets where there’s other people involved — then infrastructure is essential,” says Jim Barham, an agricultural economist at the USDA’s Agricultural Marketing Service. Today, nearly all the food infrastructure in place — the trucking systems and warehouses, everything that links buyers with sellers — was built for big, industrial-scale growers and retailers whose primary customer base has been the suburbs. Small growers, independent markets and urban consumers don’t easily fit into that system.

The way to bridge that disconnect, Barham says, is the “food hub.” It’s a locavorian take on the cluster theory of urban economic development, which argues that productivity rises when related businesses are in close proximity to each other. Food hubs are essentially a collection of institutions and buildings that coordinate the processing, distribution and sale of local food. They offer farmers, shoppers and everyone in between a place and way to do business. The USDA first floated the idea of a “regional food hub” in the late 2000s, using the term to describe grassroots and advocacy work that had popped up across the country to plug the hole left by the withering of traditional wholesale.

“When you see a chain of Krogers, one warehouse covers 150 to 200 stores. It’s hard for a small grower to belong to a major chain.”

“Those [traditional] systems are designed for larger scale… the pressures are driven around price and commodification of the food,” says John Fisk, director of the Wallace Center, which funds food systems work nationwide. “The food hub is designed to be outside of that. Yes, it’s about price, but it’s about a win-win, as opposed to ‘what’s the lowest I can buy for, and the highest I can sell for?’” That combination has helped food hubs boom in the last decade, more than tripling in number since 2004, most of them in cities. It has also opened a new frontier for planners and economic developers, who see food infrastructure as a way to boost both rural and urban economies.

All of that starts in places like Detroit’s Eastern Market, where Vansteenkiste began to take his produce when Kroger left town. To most casual observers, Eastern Market is a vestige of a food system that relied heavily on local farmers. But to observers like Barham, it is precisely the kind of institution they want to see thrive. A collection of six massive sheds spread across 14 acres, Eastern Market is best known locally for its year-round farmers’ market on Saturdays. One shed features regional producers, but many of the dozens of vendors simply resell offerings from the city’s produce terminal, a second public market where tractor-trailers bring in produce from East Coast ports and California. Direct sales like this are one piece of food infrastructure.

But another, crucial piece only exists during harvest season for Michigan growers: the wholesale market. From June to October, mid-sized growers like Vansteenkiste set up shop as early as midnight. Though he pays a modest fee to be there, Vansteenkiste gets one-stop access to a swath of buyers for the region’s independent grocery stores — places that buy more than he’d sell at a farmers’ market, but don’t require the volume of a massive chain. As morning nears, buyers come in from the suburbs’ fanciest grocers, others from modest markets in the city. The crowds are no accident. Eastern Market staff helps broker relationships between grocers and growers, giving tours to retailers trying to boost their supply of local produce. When Detroit’s first Whole Foods opened up last year, it carried kale and collards from a regional farmer the store’s buyers had met at Eastern Market.

Dan Carmody, the group’s president, made that Whole Foods connection. Though Carmody built his early career on economic development and Jane Jacobs-y placemaking in the Midwest, his work in Detroit has made him a national voice urging cities to consider public markets as engines that can create urban jobs, bolster rural economies and increase access to healthy local food. In practical terms, that means keeping local farmers in business by giving them access to a relatively predictable market. It’s too risky for growers, he told me, to rely just on a farmers’ market. They need to supply grocery stores and restaurants, even hospitals and schools, too.

“If you’re just relying on direct retail sales to consumer, whether it’s through a CSA or a farmers’ market, there’s too many hills and valleys there” to run a viable business, Carmody says. But link a grower with a stack of independent markets, and you give them a reliable volume of demand and a broader customer base.

That helps farmers, according to Carmody, but it also starts to address the problem of bringing healthy food to underserved neighborhoods. Between Eastern Market and the produce terminal, he says, Detroit’s problem is “not that the food isn’t getting into the region. It’s that you destroyed the retailing and distribution in low-income neighborhoods.” Detroit, he says, isn’t a food desert so much as a dried-out valley beneath dammed rivers. To open up the flow of food, Eastern Market has opened pop-up farmers’ markets in struggling neighborhoods and has helped a local food bank launch a low-cost CSA-style program that distributes food boxes at sites throughout Detroit — bids at recreating small-scale distribution infrastructure while diversifying farmers’ sales base. The infrastructure problem, then, cuts both ways. Smaller farmers need it to survive, and eaters need it to access good food.

Tellingly, Vansteenkiste’s greens are sold across Detroit and its suburbs. One of his repeat customers is E&L Supermercado, a grocery in Detroit’s Mexicantown neighborhood. Piñatas dangle from high ceilings, tamale pots line the top of coolers, and even in January collards are just 69 cents a pound. When I visited, the greens were coming from California and Mexico, but by summer they will come from Vansteenkiste via nights spent at Eastern Market.

Creating Jobs off the Farm

Although food hubs can be located anywhere, they have thrived most in cities. Some of that, says the Wallace Center’s Fisk, is simply because there are more people in cities interested in organizing food hubs. But much of it has to do with cities’ core traits: Dense populations mean lots of shoppers at farmers’ markets, supermarkets and restaurants, as well as many institutions, like schools and hospitals, that serve food.

There’s no template for food hubs, and every one is different. Some focus on working with retailers, gathering food from local farms, branding it and then selling it to grocers. Others partner with growers. The Agriculture and Land-Based Training Association in California’s Salinas Valley, for instance, began by consolidating produce from growers and coordinating distribution to stores in 2001, later adding farmer services like education and crop planning. By 2011 it had sales in excess of $3 million. Others still are expanding into light processing. Last summer, Eastern Market began buying excess produce from farmers at the end of market day during peak season and freezing it for resale over the winter.

Today, the USDA recognizes 263 food hubs in 39 states. Roughly three-quarters of them are in major metropolitan areas, with each grossing roughly half a million dollars in annual sales.

What makes local food infrastructure so important, says Barham, who has authored numerous studies on the topic, is that it can function as an economic force. For every dollar spent on local food procured through a food hub, another 81 cents of income is generated in related sectors, according to recent Cornell University study of Regional Access, a food hub operating in upstate New York. That’s higher, says study author Todd Schmit, than comparable industries like wholesale trade and truck transport.

The infrastructure problem cuts both ways. Smaller farmers need it to survive, and eaters need it to access good food.

Most of that increased economic activity stretches back to each farmer and beyond. The hub aggregates demand, which usually means farmers need to produce more. To produce more, they buy more seed and fertilizer and equipment and gas, and hire more labor. “You see all these indirect or induced effects when a food hub is setting up shop,” Barham says. “And on the consumer side, the benefits are immense as well, [because you get] the benefits of eating healthier produce.”

The real jobs engine for cities, though, lies in the light processing and small food businesses that spring up around thriving food hubs. Today, planners are starting to talk about “food innovation districts” that comprise farmers and loading docks and storage; food prep spaces that wash, cut and pack produce for large-scale buyers like hospital kitchens or even jam makers; restaurants and community kitchens that food start-ups can use; food pantries and educational kitchens; and even public spaces for holding festivals. All those components, from restaurant kitchens to cleaning up after a festival, bring in jobs.

Common Market, a Philadelphia food hub founded in 2008 with two paid employees and $105,000 in sales, is trying to figure that piece out, says founder and executive director Tatiana Garcia Granados. Common Market’s biggest business comes from institutional sales: Produce for hospitals and schools and big commercial kitchens. Institutional sales are a focus for many food hubs, mostly because it’s a natural fit. “Food service staff have so many constraints, they can’t be spending time coordinating 30 different farmers to get eggs,” Garcia Granados says. “So they need somebody like us.”

Institutional kitchens also need the kinds of products that industrial suppliers typically sell: Chopped onions and bagged lettuce and shredded potatoes, and any number of lightly processed fruits and vegetables that make cooking go quickly. And small food producers like bakers and jam makers can use it, too.

“Where you can create a lot of jobs is in the actual food prep,” Garcia Granados says, because it’s more labor intensive and demands less capital than distribution. Overall, an innovation district brings together so many different functions — including, but also going beyond the food hub — that it can generate an impressive number of jobs. One study by Michigan State University projected that building comprehensive food infrastructure and processing for smaller-scale food and agriculture businesses could generate 69,000 jobs statewide.

The Logistics Behind Your Kale Salad

One of the seductive things about Detroit’s Eastern Market is its long, deep roots in agricultural business, but the majority of food hubs were started in the last decade. Many of those have been led by local food acolytes. When Kate Collier and her husband first opened Feast, a specialty foods store in Charlottesville, Va., she was doing it for a very foodie reason: She wanted better food. With a background in specialty food distribution, built during a stint in San Francisco, she quickly racked up suppliers for the cheese and meats that made up the bulk of the business. But when it came to the kinds of things people wanted to go with charcuterie and wheels of pungent Roquefort — delicate lettuces in spring, heirloom tomatoes in summer, crisp apples in fall — she had to start from scratch. “We did a lot of driving around the countryside and finding farmers,” she said. “Our goal was to have as much local produce as we could.”

As Collier got familiar with local growers and her business grew, she started to gain a reputation as the go-to source for local produce. When caterers had to prepare benefit dinners with local ingredients, they called up Collier. “We were finding ourselves in this unofficial capacity of connecting farmers with buyers,” she says. Meanwhile, she’d hear the farmers’ side, too: More business was great, but big buyers wanted liability insurance and refrigerated truck delivery to their back door, things small producers couldn’t afford. “It was clear to me that the missing infrastructure link was a place that could aggregate farmer produce,” Collier says. She ended up working with a colleague, Marisa Vrooman, to found the Local Food Hub, housed in a once-abandoned factory outside Charlottesville.

Here, their factory-turned-warehouse operates, roughly, like a Fresh Direct or Peapod for the wholesale market. Each week, LFH staff post a list of what their farmers have in stock. They speak to the farmers about what they expect to harvest next week, and relay expectations from restaurants, institutions like hospitals and schools, and grocery stores. From there, the growers drop it off. The hub, in turn, packs up its own refrigerated trucks and makes a round of deliveries. (LFH also offers its growers liability insurance.) At the same time, LFH tracks its sales to help predict what it will need next year. It shares that information with growers, the same way a chain might tell a contract farmer what it may need next season. Buyers seeking local food no longer have to copy Collier’s early example of driving around the countryside to find farmers. And growers get ready access to a larger market — along with help from LFH with marketing and telling their story, so buyers know exactly where their food comes from. “A food hub is a liaison,” Collier says. “We are opening a market [to farmers] that previously was not open to them.”

Collier’s point gets at the essence of the infrastructure problem: It’s about relationships, and not necessarily the trucks and buildings that go with them. “It’s somehow very tantalizing to everyone to own their own trucks and warehouses,” says Sue Futrell, director of marketing for Red Tomato, one of the country’s oldest local food networks. Founded in Plainville, Mass. in 1996, Red Tomato started as a brick-and-mortar distribution hub. But over time, its staff realized that farmers might as well drive their food right to where it was going, instead of stopping off at Red Tomato’s warehouse. What’s more, without a fleet of trucks to run and a warehouse to manage, their small staff could focus on building relationships with growers and buyers instead of fuel costs and refrigeration problems.

Today, Red Tomato works with logistics companies and coordinates sales between dozens of growers and retailers across the Northeast. The stores’ buyers don’t have to manage myriad small growers to keep their shelves stocked, and instead get direct delivery from the farmers, whose transportation costs are factored into the prices that Red Tomato charges. This way, Futrell says, “the produce is going out as quickly as possible from the farm to its end location… We can coordinate the really tight supply chain at very competitive pricing because we are using [physical] infrastructure that’s [already] in place.”

Economics of Change

When I last saw Jim Vansteenkiste, it was blustery winter day with a snowstorm settling in. His fields were blanketed in snow and ice, and on a tour of half a dozen low-slung greenhouses we could hear the eerie sound of snow skittering across the plastic. It was hard to imagine, in the low winter light, with Jim in three layers of clothing capped off by a denim coverall, that in six months it would be lush and warm enough to sprout greens.

When Jim got the call from Kroger saying his contract would be killed, he wasn’t angry. With the stoicism of a man whose fortunes depend on the weather, he told me it was just economics, nothing personal. “In the long run you understand,” he told me, but “it hurts at the time because you think you’re going to lose your livelihood.”

In other cities, where the wholesale markets have shut their doors — or where there never were any to begin with — that could have been the end of Jim’s farm, and he knew it. And in a way, he told me, Kroger closing had been a bit of a blessing. Without that, he’d never have figured out how to work with Eastern Market, or how to get his greens to E&L and the suburban independent markets sprinkled through the region.

“We’re kind of happy with the way things turned out. It actually made our life more calm,” he said. “I’m dealing with the local guys now and not having to go way over the road to truck it so far. It would take me a whole day to make a round trip delivering my produce, you know? We don’t look back at it negatively any more. “

Our features are made possible with generous support from The Ford Foundation.

A working-class transplant from rural Michigan, Brooklyn-based writer Tracie McMillan is the author of the New York Times bestseller, The American Way of Eating: Undercover at Walmart, Applebee’s, Farm Fields and the Dinner Table. Mixing immersive reporting, undercover investigative techniques and “moving first-person narrative” (Wall Street Journal), McMillan’s book argues for thinking of fresh, healthy food as a public and social good—a stance that inspired The New York Times to call her “a voice the food world needs” and Rush Limbaugh to single her out as an “overeducated” “authorette” and “threat to liberty.”