Local Food Connections:
The Potential for a Food Hub in Washington, D.C.
Elisa Wilkinson
Blake Stok
American University
May 4, 2015
Table of Contents
I.
Executive Summary………………………………………………………………2
II.
Introduction………………………………………………………………………4
III.
Current Local Landscape…………………………………………………………7
IV.
Quantification of Local Food Economy in DC…………………………………..18
V.
Funding Available for Food Hub………………………………………………...18
VI.
Metrics of Success: Case study of Successful Food Hub………………………..22
VII.
Baltimore & Louisville: The up-and-coming food hubs to watch……………….24
VIII.
Overcoming Challenges: A Lesson from a Failed Food Hub, Grasshopper
Distribution………………………………………………………………………26
IX.
Policy Recommendations………………………………………………………..29
X.
Conclusion……………………………………………………………………….35
1
I. Executive Summary
Over the past five years the number of regional food hubs has increased dramatically. These
hubs serve to link small and medium sized farms with larger markets by creating economies of
scale through common aggregation and distribution points. In an effort to meet the goals
outlined in the District’s sustainability plan related to food issues, DC has opted to explore the
potential for the creation of a food hub. The District is looking to achieve two ends: 1.) create a
consistent supply of local food for large institutional purchasers and 2.) create jobs through a
vibrant and thriving local food economy. Over the course of four months, an extensive literature
review and numerous interviews were conducted with regional stakeholders in the local food
economy. The major findings from this research indicate that a traditional food hub model is
insufficient to address the existing gaps in DC’s market landscape. The District’s residents would
be better served by the creation of a model that operates as an aggregation and innovation point
for multiple food based businesses, services, and organizations. This model is often referred to as
a “food cluster” or a “food port.”
A review of the current landscape of the local food hub efforts, in particular of DC Central
Kitchen and Arcadia Center for Sustainable Food and Agriculture, highlighted a number of
challenges that would need to be overcome in order for a food cluster to be successful. These
include, a restricted capacity to meet the overwhelming demand for local foods due to storage
and processing space constraints, lack of access to capital, and seasonality. In order to combat
these issues both entities have undertaken creative strategies. For instance, both organizations
utilize some type of subsidized storage space, significantly reducing operating costs. Despite
this resourcefulness, both entities are unable to scale up to sufficiently meet the local demand.
This report aims to broadly outline common constraints faced by food hubs and assess how those
constraints will ultimately manifest themselves within the District.
Based on our findings, the report offers the following policy recommendations for the next steps
in exploring the potential for a food cluster:
Recommendation for the Policy Sphere:
1. Subsidized Land - Due to the high cost of real estate within the District and the critical
role space plays in contending with the common challenge of supply and demand
balance, we recommend the District seriously explore the potential to fully or partially
subsidize land acquisition. The Baltimore Food Hub and the West End Food Port in
Louisville, KY should be used as case studies.
2. Leverage Supply and Demand - Based on the success of the Federal New Market Tax
Credit in spurring economic growth and development of impact based businesses, we
urge the District to assess the feasibility of replicating something similar at the local
level. Additionally, we see a need to reduce competition among purchasers of “local,”
and find ways to consolidate the demand.
3. Food Policy Cohesion - We recommend an extensive internal policy and regulatory
analysis of the District’s food policies to make sure that there is cohesion between
different various guidelines currently being enacted within the District.
2
Recommendations on Working with Farmers
1. Farmer Support - Farmers ability to meet the demand of large institutional purchasers is
a critical component to the success of a food cluster. Because these large consumers often
demand strict minimums, have specific health and safety standards, and/or have specific
packaging requirements, farmers need logistical and technical support. DC should offer
some sort of training and technical assistance to its suppliers. This could possibly be
done through a program at UDC or in collaboration with USDA.
2. Environmental Standards - Just because food is being sourced locally does not mean
that it is more environmentally sustainable. Should a food cluster in DC be created, it
should adhere to triple bottom line requirements and focus equally on profit, social
benefit, and environmental protection. As the Food Safety Modernization Act goes into
effect, it will require all farmers working with intermediaries like food hubs to become
GAP certified. We recommend going one step beyond this and researching what are the
most appropriate environmental standards a food cluster within the District should adhere
to.
Recommendations for the structure/management of a food hub
1. Clear Objective - Food hubs are often thought to be a blanket solution to multiple
problems. Our research indicates that food hubs established without a clear objective
tend to face significant growth challenges. DC should conduct a feasibility study and
market landscape analysis to clearly identify existing gaps, and design the food cluster
organization to fill those specific voids.
2. Mission Driven Organization - By itself, a food cluster will not address the areas of
critical need, like food accessibility, within the District. But building a mission into the
organization can put the focus front and center, incorporating it into all facets of decision
making. We recommend that DC establish its food cluster as a mission driven socially
facing organization and structure it as either a nonprofit or B-Corporation.
3. Management Training - Due to the variable nature of dealing with perishable foods that
are subject to acts of nature, the food hub business requires a deep managerial capacity.
To ensure the longevity and success of the district’s food cluster, it is advisable to
establish a management training program tailored to contend with issues specific to food
clusters. This again could be done in partnership with UDC or other business schools in
the area.
3
II. Introduction
Overview: What is a food hub?
Over the course of the past 15-20 years, there has been a significant increase in attention
paid to the “farm to table” concept. Consumers have become far more conscientious of where
their food comes from and how it is grown or raised. This growing demand, until recently, has
been supplied by direct farm to consumer programs such as, farmers markets and consumer
supported agriculture (CSA). As the demand continues to grow at very rapid rates, larger
institutional purchasers like hospitals and schools are now looking to buy fresh local produce.
However, due to inadequacies in the local distribution network, suppliers have encountered
numerous obstacles in meeting this rising demand. To overcome these critical infrastructure
deficiencies and give small and medium sized farms access to larger markets at appropriate
economies of scale, regional food hubs have formed.
According to the USDA’s working definition, a food hub is “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.” 1 The enthusiasm for this concept has been
significant. As a result, there has been an explosion of food hub around the country over the past
seven years. In fact, as of 2013 62% of the 222 food hubs identified in the National Good Food
Network began operations within the past five years. 2 Many view a hub as a mechanism to
support rural as well as urban economic development, and increase food access to areas with
critical shortages. At the same time food hubs are believed to be promoting sustainable
1
Barham, J. (December 14, 2010) Getting to Scale with Regional Food Hubs . USDA Blog, Retrieved from
http://blogs.usda.gov/2010/12/14/getting-to-scale-with-regional-food-hubs/ April 1, 2015.
2
Fischer, M., Hamm, M., Pirog, R., Fisk, J., Farbman, J., & Kiraly, S. (September 2013). Findings of the 2013 National Food
HubSurvey. Michigan State University Center for Regional Food Systems & The Wallace Center at Winrock International.
Retrieved from http://foodsystems.msu.edu/activities/food-hub-survey
4
environmental practices. However, with this rapid rise in development on both the supply and
demand side, food hubs have come to realize that there are a number of common constraints the
sector faces, and that ambition alone will only take them so far.
Most food hubs are either established as nonprofit, for-profit, or cooperatives. No matter
what the structure, all face common operational and growth challenges. The most commonly
cited obstacles, according to the USDA’s “Regional Food Hub Resource Guide,” are managing
supply and demand, access to capital, price sensitivity, and managing growth. 3 This paper looks
to examine how these challenges have been dealt with in similar contexts to that of DC. We then
go one step further and propose policy recommendations that, we believe, could help avoid some
of these more common constraints to operations and growth.
Despite the numerous constraints food hubs face, the number of regional food hubs in
existence continues to grow. As result, research efforts have begun to assess the economic
impact that food hubs are having on the communities they are housed in. One particular study
that is of significant importance is the “Assessing the Economic Impact of Regional Food Hubs:
the Case of Regional Access” completed by Todd M. Schmit. Becca Jablonski, and David Kay of
Cornell University. This study created an empirical impact assessment framework that is
replicable in other cases. In addition, the study provided two alternative impact assessment
models, one that includes additional data from farms selling to food hubs and another that
excludes this data. 4 The final data included in the report is a survey of food hub customers and
how purchases from food hubs increase the demand from local goods and services or if
purchases were substituted from one local source to another. 5
3
Barham, J., Tropp, D., Enterline, K., Farbman, J., Fisk, J. and Kiraly, S. Regional Food Hub Resource Guide. U.S. Dept. of
Agriculture, Agricultural Marketing Service. Washington, DC. April 2012. <http://dx.doi.org/10.9752/MS046.04-2012>
4
Schmit, T.M., Jablonski, B.B.R., and Kay, D. 2013. “Accessing the Economic Impacts of Regional Food Hubs: the Case of
Regional Access.” Cornell University. September. <http://dx.doi.org/10.9752/MS145.09-2013>.
5
ibid
5
Using the case of study of Regional Access, a food hub located in New York, the study
found that controlling for opportunity cost, the food hub had a gross output multiplier of 1.82. As
Schmit et al. explains, this means that “for every additional dollar of final demand for food hub
products (and no opportunity cost), and additional $0.82 is generated in related industrial
sectors” 6 The authors also estimated that for every $1 increase in final demand for food hub
projects, there was an $0.11 net offset in purchases from other sectors. In other words, other
wholesale products experienced a decreased demand as a result of the presence of a food hub. 7 In
other words, food hubs have the potential to make a big impact on the local economy.
As outlined in the District’s “Sustainability Plan,” by 2032 DC intends to increase
agricultural land uses within the district; ensure universal access to secure, nutritious, and
affordable food supplies; and develop the food sector into a strong and viable economic sector. 8
A food hub has the potential to achieve some of these goals, or at the very least, put the District
on a trajectory to nearing these goals. Based on the 12 interviews and the extensive literature
review conducted for this report, we have concluded that the there is significant demand for a
food hub-like organization within the District. However, we feel that the “aggregator, marketer,
and distributor” model may not be the most effective way of addressing multiple existing gaps in
the local food economy.
A project designed to cater to the already blossoming entrepreneurial food sector within
the District could provide the residents of DC with a more resilient food industry while at the
same time have the potential to add a far greater number of local jobs than would a simple food
hub model. This newer model, dubbed a “food cluster” or “food port,” could provide a broad
6
ibid
ibid
8
DC Government, Sustainable DC Plan (July 2011) Retrieved from http://www.sustainabledc.org/wpcontent/uploads/2012/10/SDC-Final-Plan_0.pdf February 2, 2015
7
6
array of services and set an example from the Nation’s capital of how to connect rural and urban
areas through community redevelopment projects focused on food.
This report begins by examining current food hub related activities within the District. It
then looks to quantify the existing demand for local food through a tool called MarketSizer. A
bulk of the paper is spent synthesizing the common constraints food hubs face, and creative
methods of overcoming these challenges. Finally, it offers policy recommendations tailored to
the emerging “Food Policy Council,” on how best to approach the next steps of the process in the
establishment of a food cluster.
III. Current Local Food Economy Landscape
This section gives an overview of the major actors currently operating in the local food
economy within DC. Of particular importance are two entities already working within the food
hub realm: DC Central Kitchen and Arcadia Center for Sustainable Food and Agriculture. Both
DC Central Kitchen and Arcadia were interviewed for this project to get a better understanding
of the challenges facing a food hub within the District’s borders. In addition, a brief description
is given of DC’s three kitchen incubators: Union Kitchen, EatsPlace, and Mess Hall DC. Finally,
the recent attempt to build a hydroponic farm in Anacostia is reviewed as a failure in the local
market due to environmental constraints. The main take away from the survey of the current state
of the local food economy is that the landscape is rich, vibrant, and has a significant potential to
grow.
DC Central Kitchen
The District of Columbia already has a food hub within its borders, DC Central Kitchen
(DCCK) that was included in last year’s National Food Hub Survey. 9 It is important to note that
out of all the entities that make up the current local food economy within DC, DCCK constitutes
9
A. Bachman, Interview, March 13, 2015.
7
the only official food hub under the conventional definition used by organizations like USDA or
the Wallace Center. Founded in 1989, DCCK was the result of Robert Egger’s frustrations in
relation to the well-intentioned, but inefficient and ineffective programs that focused on feeding
DC’s homeless residents. 10 Operations began when Mr. Egger took leftovers from George H.W.
Bush’s inauguration and delivered them to the different shelters throughout DC. Today, DCCK
is a non-profit whose revenue equaled $12 million dollars in 2013 with numerous different
programs.
In our interview with Amy Bachman, Procurement & Sustainability Manager, she
explained that a big portion of DCCK’s activities have been focused on the Healthy School Food
Initiative. As a food hub, DCCK has been able to bring local and nutritious food to two of the
most underserved areas of Washington, D.C., Wards 7 and 8. The Healthy School Food Initiative
began serving its first school in 2008 and currently, DCCK is serving 6,300 healthy, scratchcooked breakfasts, lunches, and suppers to low-income children at 10 public and private schools
daily. Eight of these 10 schools are located Wards 7 and 8. A large part of the food prepared for
school meals is sourced locally. In fact, 42% of their budget is spent locally and at a minimum
DCCK will include one local item in each meal, but often they are able to include two to three
local items. 11 This is one success that DCCK prides itself in. This is accomplished through
working with 28 different farmers, 15 of which DCCK works with directly. These farms are
located within less than 200 miles of the District of Columbia and are mainly located in
Pennsylvania, Virginia, Maryland, and West Virginia. Other activities focus on bringing healthy
fruits and vegetables into the corner stores of DC’s food deserts, as well as selling products to
grocery stores and other nonprofits.
10
11
History. DC Central Kitchen. Retrieved from http://www.dccentralkitchen.org/history/, 19 April 2015.
A. Bachman, Interview, March 13, 2015.
8
As Ms. Bachman explained, with DCCK’s help, schools “have been able to overcome
hurdles that most schools face serving “local.” Many schools do not have any processing
kitchens or the knowledge to prepare and chop food.” 12 This is a major problem for schools
trying to source locally since it typically entails receiving raw produce. DCCK, therefore fills a
market void for schools with its ability to prepare and process raw food into meals. This is
particularly beneficial when considering the issue of seasonality. Locally-sourced foods are
difficult to come by in the winter months here in the Mid-Atlantic. In order to overcome this
hurdle, DCCK purchases extra stock during the summer months from Shenandoah Valley
Produce Auction. They then process and freeze this stock in order to get through the winter
months. At the moment DCCK, is at capacity with the number of schools it is able serve,
however, demand is growing and DCCK is highly interested in meeting this demand.
DCCK has expressed interest in scaling up, however one area of constraint is their
limited storage capacity. Ideally, they would like to move into a new building to include a new
processing center and kitchen of 10,000 square feet, but due to the high cost of real estate it is
difficult for them to accomplish this goal. 13 In order to overcome this obstacle, DCCK has made
use of two different spaces for storage. First, they are using “free storage” space at the Walker
Jones Education Campus. In addition, DCCK is also renting storage space at flat rate per palate
fee and writing grants for more freezer space. 14 This issue of affordable real estate for nonprofits
like DCCK was echoed by other entities working within the market as a roadblock to growth and
meeting the market demand for local and healthy foods. Further discussion of the issue
surrounding affordable real estate will be discussed later in the paper.
12
ibid
ibid
14
ibid
13
9
Another major roadblock that DCCK mentioned in sourcing locally is the standards that
are set in relation to Healthy School Lunches. Ms. Bachman highlighted in our interview with
her that the the requirements to offer a different fruit and vegetable each day of the week is a
major roadblock to meeting the demand for locally sourced foods. 15 Given that locally sourcing
foods with the area the area is limited by seasonality DCCK must choose between sourcing
locally and meeting required nutrition standards. This emphasizes another area in which will be
further discussed later on in this paper under the policy recommendations and that is
cohesiveness of food policies.
It is important to note that while DCCK is working with 28 different farmers including 15
that they work with directly, they are currently not offering technical assistance. This does not
mean that DCCK will never offer technical assistance to its farmers. In fact, Ms. Bachman noted
that technical assistance to farmers is something that they are thinking about offering in the
future. In our discussion with James Barham, an Agricultural Economist at the United States
Department of Agriculture (USDA), it was highlighted that under the Food Safety Modernization
Act food hubs will be required to meet new safety standards. Of particular importance, farmers
now serving entities like food hubs will be required to have Good Agricultural Practices (GAP)
certification. 16 The logic behind this new ruling by the Food and Drug Administration (FDA),
Mr. Barham explained, is that small purchasing entities like restaurants have historically had
“lenient stance of food safety by not requiring as much as larger buyers do.” 17 This is imperative
for food hubs as smaller buyers like restaurants make up a large chunk of food hub sales. 18 In
15
ibid
J. Barham, Interview, April 10, 2015.
17
ibid
18
ibid
16
10
essence, new regulations under the Food Safety Modernization Act will increase the need of
technical assistance to the farmers working with food hubs.
Arcadia, Center for Sustainable Food and Agriculture
Another entity that is working within the realm of foods hubs inside DC’s borders is
Arcadia Center for Sustainable Food and Agriculture (Arcadia). Arcadia is an organization that
consists of its own farm in Northern Virginia, a mobile market, and is currently working to
establish a food hub in the Washington, D.C. area. 19 Arcadia has been operating for the past five
years and the center of its business surrounds its mobile market, which is entering its fourth
season. The mission of this Mobile Market (the Market) is “to improve access to healthy,
affordable food regardless of where you live or how much you earn.” 20 In order to fulfill this
mission statement, Arcadia’s Market make its stops in the low-income communities of Ward 7
and 8. Currently, Arcadia operates 19 different stops that exist the same time every week of
which the majority can be found in Anacostia.
In order to service its customers The Market sources one third of its product sold from its
own farm, while the other two thirds is supplied by 17-20 farmers within a 125 miles of DC’s
borders. 21 These other farmers also provide products such as eggs, meat, milk, yogurt, and
cheese. Despite the competitive advantage it has in owning its own farm, the Market is limited to
functioning for only six to seven months out of the year, typically between May and October.
This is due to Arcadia’s lack of capacity to process the food it sells. According to Benjamin
Bartley, Arcadia’s Food Access Director, “processing does not make sense unless done at a large
scale.” 22 In addition, he emphasized that because of the costs associated with processing food,
19
Our Programs. Arcadia Center for Sustainable Food and Agriculture. Retrieved from http://arcadiafood.org/, 19 April 2015.
ibid
21
B. Bartley, Interview, March 18, 2015.
20
22
ibid
11
most of their current customer base would not be able to afford the value added product even if
they sold it.
As most of Arcadia’s Mobile Market customers are low-income families, the Market
accepts all forms of payment included SNAP and WIC. In addition, Arcadia has created its own
subsidized form of payment called The Bonus Bucks program. The Bonus Bucks program
partners with organization like INOVA, Power Supply, the USDA, and Wholesome Wave to
meet its financial needs. In addition, individuals can make contributions through Arcadia’s
website through Paypal. 23 An individual donation of $100 matches 10 Market visits for SNAP,
WIC, and Seniors Farmers Market Nutrition Program customers. A donation of $50 will provide
these individuals with five Market visits, and a donation of $10 provides them with one Market
visit. 24 In other words, Arcadia has found a unique way to assist its customers in affording the
products it sells. Mr. Bartley stated that this even included catfish from a local producer during
last year’s season. 25
In addition to finding innovative ways to provide healthy and nutritious foods to lowincome communities, Arcadia’s Mobile Market also has proven that the demand for local food
exists in these same communities. Mr. Bartley emphasized that from their 2013 season to their
2014 season, two-thirds of the Market’s customer base returned. In addition, the Market has also
seen a 50% increase in its sales. This return patronage demonstrates as Mr. Bartley explains that
“low income customers want sustainably grown food and will use the little income they have to
pay for it.” 26 Put simply, Arcadia is highlighting that there is a demand in low-income
23
Mobile Market. Arcadia Center for Sustainable Food and Agriculture. Retrieved from http://arcadiafood.org/programs/mobilemarket, 19 April 2015.
24
ibid
25
B. Bartley, Interview, March 18, 2015.
26
ibid
12
communities for sustainable and healthy foods, and that entities entering the market to fill that
demand can be extremely successful.
Despite its success, Arcadia does not see itself as a permanent entity within the market to
fulfill the demand of DC’s low-income residents for sustainable and nutritious foods. Instead,
they view their operations and the Mobile Market as a bridge for something that operates at a
larger scale and is more permanent. 27 One effort that Arcadia has been focusing on to bring
permanence to its efforts to service low-income communities is the establishment of a food hub.
Arcadia envisions that its food hub will focus on three different program areas: food access,
education, and community engagement. While the food access program is focused on the
consumer, the education and community engagement programs focus not only on consumers, but
on producers as well. This is emphasis on the supply side of the market would build upon the
technical assistance that Arcadia is currently offering the farmers it works with.
As previously mentioned above, Arcadia sells products that are sustainably grown. One
particular standard that Mr. Bartley mentioned that farmers are required to meet is in relation to
fertilizers and pesticides. In order to sell products with Arcadia, farmers must use fertilizers and
pesticides that meet the Organic Materials Review Institute (OMRI) standards for such inputs.
While Mr. Bartley noted that the farmers Arcadia works with are eighty percent of the way there,
they need assistance in accomplishing the last twenty percent. Technical assistance in this
instance is highly important as there are more expenses that come from growing food using
sustainability standards.
Like DCCK, Arcadia is also currently operating at capacity while the demand for its
services continues to grow. Another similarity between the two entities face is in relation to real
estate. As previously highlighted in the discussion on DCCK, this is particularly true of
27
B. Bartley, Interview, March 18, 2015.
13
necessary storage space to run such an operation. Currently, Arcadia has a rent-free warehouse
space that it uses thanks to a partnership with a restaurant group. Mr. Bartley strongly
recommends that if “The DC government is looking to support the activities of entities like
Arcadia there needs to be warehouse space that is accessible to low-income markets.” 28 In some
way, this warehouse space will need to be subsidized to be affordable to entities like Arcadia. As
a nonprofit, they are heavily reliant on fundraising to meet their needs, which included
fundraising $30,000 dollars to cover labor costs. While entities like Arcadia have proven that
their business model is viable, they will need assistance to take their efforts to the next level
particularly in relation to real estate. Given that two major entities working within the local DC
food economy both highlighted real estate as a roadblock to growth, affordable real estate will be
discussed heavily in the Policy Recommendations section of this paper.
DC’s Kitchen Incubators: Union Kitchen, EatsPlace, Mess Hall DC
Due to the time constraints surrounding this project, all entities operating within the DC
local food economy were not able to be interviewed. We felt it would be most useful to the
District government to focus on the entities already largely acting within the local food hub
realm either officially or with the intention of establishing a food hub. However, it is important
to highlight the work of a handful of other organizations working within DC’s borders, as they
could be potential stakeholders in the process of establishing a food hub. Of particular
importance are three kitchen incubators that have been established within the District’s borders:
Union Kitchen, EatsPlace, and Mess Hall DC.
Union Kitchen is by far the largest of the three entities. Operating out of a 7,300 square
foot warehouse the goal of Union Kitchen is “to build a platform and a megaphone for small
businesses by providing low-cost, low-risk, full-service kitchen for local businesses to grow and
28
ibid
14
establish their operations.” 29 In other words, Union Kitchen like other kitchen incubators tries to
assist in limiting the debt that is typically associated with starting up a business. Like other
kitchen incubators, Union Kitchen uses memberships in order to provide services to start-up
businesses. At the moment Union Kitchen has 63 members operating, however, 120 businesses
have passed through its doors since it opened in 2013. Fifteen of these business have gone on to
open their own store fronts. Co-founder of Union Kitchen, Jonas Singer, states that these
businesses have generated $40 million dollars of revenue and created 350 jobs. 30 This massive
success has led Union Kitchen to reach its capacity like DCCK and Arcadia. However, in the
Spring of 2015 Union Kitchen will open a brand new 15,000 square feet facility in Ivy City
allowing it to overcome the real estate issues both DCCK and Arcadia are facing. 31
However, like DCCK a major part of the success of Union Kitchen is its “guaranteed
revenue stream” that is diverse. The main source of revenue is provided by Union Kitchen’s
catering services. 32 This operation showcases the different businesses housed within Union
Kitchen’s space and allows them to build customer relationships. In addition to the revenue
earned from its catering business, Union Kitchen provides distribution services to its start ups
aiding them in getting their products sold in major grocery stores like Yes! Organic Market and
Whole Foods. 33 Finally, because of its success as an incubator Union Kitchen is now offering
consulting services to startup incubators on how to create a successful business model.
Union Kitchen’s success makes it an important player in DC’s local food economy
landscape. It is a business that could potentially be a customer of any food cluster that is
established within the District. In addition, it’s success in helping prop up local food businesses
29
About. Union Kitchen Retrieved from http://unionkitchendc.com/, 2 May 2015.
Jacob, A. (24 February 2015). Behind the success of DC’s unstoppable food incubator, Union Kitchen. Elevation DC.
Retrieved from http://www.elevationdcmedia.com/features/unionkitchen_022415.aspx, 3 May 2015.
31
ibid
32
ibid
33
Distribution. Union Kitchen. Retrieved from http://unionkitchendc.com/#distribution, 2 May 2015.
30
15
makes its knowledge about barriers and opportunities an important asset for the District of
Columbia. Simply put, Union Kitchen’s success has made it a valuable stakeholder within the
local food economy of DC. However, it is important that the District of Columbia also pay
attention to two other kitchen incubators, EatsPlaceDC and Mess Hall DC. EatsPlaceDC focuses
on providing space for chef’s to launch their restaurants through their chef-in-residence program.
They also provide kitchen space to start-up food processing businesses. 34 Like Union Kitchen,
Mess Hall DC is a membership based organization, however, the organization is very much in its
infancy. 35 Despite being in its early stages, Mess Hall DC is an important stakeholder in what
DC is doing right to support its local food economy and where barriers still exist.
Nonprofits focused on food issues within DC
There are number of nonprofits that are working in the realm of food access that are quite
noteworthy. This includes nonprofits like DC Hunger Solutions, Martha’s Table, and Food and
Friends. Each has a unique approach in order to combat the inaccessibility of food for DC
residents. Due to the scope of this project, we did not have the adequate time nor the resources to
map out this sector. However, we feel it is worth mentioning the organizations we believe will
benefit from the operations of a food cluster within the District’s borders. As a result, we
recommend that the Food Policy Council engage these nonprofits as local food economy
stakeholders.
DC’s Local Food Economy Failure: A Hydroponic Farm in Anacostia
While there are many success stories and positive movements in DC’s local food
economy, the District is not without its failures. One important failure worth mentioning is the
hydroponic farm that BrightFarms Inc. was interested in building. The farm was supposed to be
34
About. EatsPlaceDC. Retrievd from http://eatsplace.com/about/, 2 May 2015.
Mazzara, A. (20 October 2015). Chewing the Fat: Mess Hall Founder Talks Startups. Retrieved from
http://dcist.com/2014/10/chewing_the_fat_mess_hall_founder_a.php, 2 May 2015.
35
16
larger than the average Wal-Mart store at 120,000 square feet. Located in Anacostia, the farm
would have also “created two dozen good-paying jobs in a high-poverty area and provided fresh
local produce to neighborhoods that don’t have access to it.” 36 The project seemed quite
promising until the site chosen to house the hydroponic farm was discovered to have been used
as an unlicensed landfill. This landfill was made of massive piles of debris of multiple different
substances including rusting petroleum containers. In addition to the discovery of a landfill, the
soil was also found to be unstable and the building needed to be constructed on concrete support
piers. This instability would increase the construction cost of the building by $2 million, raising
the price from $5.5 million to $7.5 million.37 Even though BrightFarms Inc, requested a $1.5
million dollar grant to make up the cost, the District did not feel that the grant was justifiable,
and the company walked away with a net loss of $700,000 on the project.
The loss of this potential producer within the District’s borders means that a potential
supplier for the food cluster was lost. A farm the size of the hydroponic farm proposed would be
able to produce a steady supply of fresh produce to an entity as large as a food cluster would be.
As previously discussed with DCCK and Arcadia, one of the major gaps within the local food
economy is a year-round supply of fresh produce. The failure of the hydroponic farm also brings
into question the viability of urban agriculture within the District’s borders. It raises important
questions about the condition of other vacant lots. Are they equally as polluted? If so, what will
it cost in order to clean up these sites?
The cost to clean up the site highlights one final important point in relation to building a
vibrant and sustainable local food economy. The cost of building a local food economy is not
36
Nuckols, B. (23 December 2014). APNewsBreak: DC farm site is an ecological disaster. The Washington Times. Retrieved
from http://www.washingtontimes.com/news/2014/dec/23/apnewsbreak-dc-farm-site-is-ecological-disaster/?page=all, 1 May
2015.
37
ibid
17
cheap. Building, maintaining, and growing the entities operating in a local food economy
requires significant financial capital. As the case of DCCK, Arcadia, and the hydroponic farm
highlight, obtaining this necessary financial capital is often a problem. One major looming
question is how DC can assist entities in obtaining the necessary financial capital in order to
bolster the activities already occurring within its local food economy. This section highlighted a
number of entities that are working within the local food economy to make its landscape rich and
thriving. The next section explores the available information at the present moment in order to
quantify the market.
IV. Quantification of the Local Food Economy in DC
One of the major gaps in research facing the local food economy in DC is the lack of
quantification of the market as it already exists. The tool Market Sizer provides an estimate of
the local food economy demand in dollar amount. It does not provide how much of the demand
is met or unmet. This is the major gap in data that needs to addressed as a part of any feasibility
study of a food cluster. Below are the estimates of unmet local demand in the DC area according
to MarketSizer:
We would also like to point out that in a study conducted by FamilyFarmed.org in collaboration
with the Wallace Center at Winrock International and through the support of Triskeles
18
Foundation, it was estimated that $16.8 billion is spent annually on fruits and vegetables in the
tri-state area surrounding and including Washington DC (Delaware,Maryland and Virginia), and
less than 7% of that expenditure is currently produced in the region 38. With demand amongst
individual consumers readily apparent, and larger institutional purchasers looking to source more
“local,” a slight movement in the direction of regionally produced food could translate into
substantial sums.
V. Funding Options for Food Hubs
Between the two local food hub case studies and the nascent food incubators that have
recently arrived on the local food scene, we can see there is momentum behind the growth of the
local food economy. Based on our interviews and extensive literature review, we are in
agreement with the USDA that one of the main hurdles food hubs must overcome is the lack of
access to capital 39. In this section we look to identify the major sources of funding a food hub
could tap to establish or scale up operations. A diverse array of funding options exist, however,
we will focus on the most salient and widely used; tax credits, federal and philanthropic grants,
impact investment “friendly” loans, and traditional equity debt.
According to Greg Heller, CEO of American Communities Trust, the most helpful source
of funding for fledgling food hubs has been The New Markets Tax Credit (NMTC) Program,
enacted by Congress as part of the Community Renewal Tax Relief Act of 2000 40. This program
permits individual and corporate taxpayers to receive a credit against federal income taxes for
making Qualified Equity Investments (QEIs) in qualified community development entities
38
Slama, J., Nyquist, K., Bucknum, M., (August 2010) The Local Food Assessment for Northern Virginia Referenced from
http://newventureadvisors.net/pdf/LFS-Assessment-No-VA.pdf (May 2, 2015).
39
Barham, James, Debra Tropp, Kathleen Enterline, Jeff Farbman, John Fisk, and Stacia Kiraly. Regional Food Hub Resource
Guide. U.S. Dept.of Agriculture, Agricultural Marketing Service. Washington, DC. April 2012.
<http://dx.doi.org/10.9752/MS046.04-2012>
40
United States Government, Internal Revenue Service, (May 2010) The New Market Tax Credit Referenced from:
http://www.irs.gov/pub/irs-utl/atgnmtc.pdf Accessed on April 30, 2015
19
(CDEs). Community development is defined as projects that are expected to make an
improvement in the lives of “low-income” populations. This program was later amended to
target “populations” that traditionally lack access to loans or equity investments. The tax credit
received, equals 39% of the investment and is claimed during a 7-year credit period. This tax
credit provides significant incentive for investment into socially facing, mission driven
enterprises that have the potential to positively impact traditionally underserved populations.
One could assume that a food cluster within DC would almost certainly aim to service the
requirements for this incentive. This credit is a good way to attract private financing to a food
cluster project and is a main driver for organizations dealing exclusively in social impact
investing.
Traditionally, venture capital firms seek only to find the greatest possible return on their
investments. However, as more companies continue to focus on being good stewards within
their communities and environments, a new version of investment firm has emerged. The social
impact investment sector has grown significantly over the past 10 to 15 years and is taking a
values based approach to capital investment, partly looking to “transform the way the world
interacts with money.” 41 Two such organizations working within this arena while focusing on
the food sector are Streetsense Capital and RSF Social Finance. Both operate under different
models, but ultimately look to invest financial and/or intellectual capital into socially facing
mission driven non-profits or for-profit organizations that are dedicated to improving the wellbeing of society or the environment. Between the new market tax credit and social impact funds,
mission driven food industry organizations appear to have more funding options than they once
did.
41
Purpose & Values. RSF Social Finance. Retrieved from http://rsfsocialfinance.org/values/purpose-values/, 3 May 2015.
20
With the recognition that food hubs have great potential to add value to the current food
system, the federal government has taken significant interest in supporting the development of
this nascent industry. The USDA has established multiple grants and loan programs to help
communities scale up local and regional food systems. The Community Food Projects
Competitive Grants Program (CFPCGP) is one such grant aimed at supporting community
outreach, increasing food access and self-reliance of communities, and providing support in the
form of equipment and marketing services 42. Depending on the structure of the food hub,
whether it have partial farmer ownership or operate direct to consumer functions, the food cluster
in DC may be eligible for grants such as the Value Added Producer Grants and/or the Local
Food Promotion Program. Additionally, if the hub intends to implement a farm-to-school
program, it could be utilize another USDA grant that provides support for planning,
implementation, and training for such programs. As of March 2015, the USDA had allocated
$96.8 million in grants to fund innovative projects designed to support specialty crop producers,
local food entrepreneurs, and farm to school efforts. 43 Any organization looking to establish a
food cluster should seek to utilize this pool of resources to their fullest.
These are but a few of the multitude of funding options that exists for the establishment
and/or the expansion of the local food distribution network. A local food cluster has the
potential to be a community partnership enterprise. Whether funding comes from federal, state
and local governments, philanthropic organizations, community of local food consumers, or
through traditional debt equity, a number of opportunities exist for an operation to access
42
Community Food Projects Competitive Grants Program. United States Department of Agriculture. Retrieved from
http://nifa.usda.gov/funding-opportunity/community-food-projects-competitive-grants-program-cfpcgp, 3 May 2015.
43
USDA, March 16, 2015. USDA Announces $97 Million Available to Expand Access to Healthy Food, Support Rural
Economies. Referenced from: http://www.fns.usda.gov/pressrelease/2015/006415 Accessed on: May 1, 2015
21
capital. 44 An overview of the relationship between time and capital sourcing options throughout
an organization’s maturity is presented in figure 1.1 below. As one of the key challenges that
food cluster must overcome, innovative ways of accessing capital will be a core issue that any
organization will be required to contend with.
Figure 1.1
VI. Metrics of Success: Case studies of Successful Food Hubs
This section looks at a highly successful food hub in operation with similar geographic
and urban conditions to that of Washington, DC: Common Market in Philadelphia. We will
briefly examine the major successes of their operations and how they overcame some of the
common challenges faced by food hubs. It is important to note that there is wide variety of
metrics by which success can be determined. Economic success tends to be the most commonly
used measurement, but depending on the mission of the organization, other metrics could
include, by no means limited to; number of people employed, amount of people serviced from
44
The Wallace Center, October 20, 2011. Financing Food Hubs Referenced from: http://www.ngfn.org/resources/ngfn-clustercalls/financing-food-hubs/Financing%20Food%20Hubs.pdf Accessed on: April 15, 2015
22
low income communities, or number of acres preserved. We briefly highlight a few of these less
common metrics in addition to the economic impact statement associated with Common Market.
Common Market and its 18 employees, 68% of which are people of color, moved $1.3
million of locally produced food in 2013, a significant amount of it reaching families and
children in underserved, low-income communities. Since it’s founding, Common Market has
sold more than $5 million worth of produce to its 200+ customers including schools, hospitals,
and senior centers. This was no small accomplishment. To get up and running, Common Market
received funding from three regional partners: the Commonwealth of Pennsylvania, the Claneil
Foundation and Jefferson University Hospital. Additionally, over the course of operations
Common Market has been the recipient of a grant from USDA, equaling $300,000, a $1.1
million grant from W.K. Kellogg Foundation, and various lines of credit, one of which was from
RSF Social Financial that allows them to pay farmers while waiting from payment from
customers. Despite this significant amount of funding from a diverse set of sources, the food hub
still had to operate in an arena with slim margins and variable supply/demand issues. They
quickly realized that in order to be successful they were going to need to deal in a tremendous
amount of product “in order to pay for ourselves and to have impact on both the farm side and
the community side.” 45
To help achieve costs savings, partnerships were formed with existing food distribution
infrastructure. For its first four years of operations, Common Market co-located with Self-Help
And Resource Exchange (SHARE) Food Program, a nonprofit that addresses food insecurity
through a regional network of food banks and community organizations engaged in hunger relief.
We found these kinds of logistical partnerships to be to be a relatively common strategy for non-
45
W.K. Kellogg Foundation, Common Market: A Case Study. Referenced from: http://policylink.org/sites/default/files/wkkf-common-marketcase-study.pdf Accessed on: February 22, 2015
23
profit food hubs. Both DC Central Kitchen and Arcadia use some sort or partnership agreement
to access operational space at reduced costs or free of charge. For Common Market, these kinds
of formal and informal partnerships have been key to overcoming scaling and demand issues.
After finding that the small and medium sized farms that Common Market was working
with, though sophisticated, could not meet the rapid rise in demand, the organization worked
closely with the farmers to provide technical assistance and logistical support. They did this by
creating refrigerated aggregation points within their farm network, informally planning crops for
coming seasons, helping farmers diversify crops and/or extend their growing season. As
Benjamin Bartley from Arcadia farms attested to us, managing supply and demand is “part
science, part art.” Any food hub looking to overcome these challenges should use the case study
of Common Market as an institutional knowledge resource.
VII. Baltimore & Louisville: Up-and-coming Food Hubs to Watch
In both Baltimore & Louisville, food hubs will begin operations in 2015/16 that are worth
noting here. Neither is merely an “aggregator, marketer, and distributor,” though each will
certainly serve this function, they will also attempt to service numerous alternative gaps in the
local food systems. These projects mark a recent trend in movement away from the standardized,
USDA defined form of a food hub, to a more function based approach of a “food cluster” or
“food port.” Multiple cities across the country, including Baltimore and Louisville, are investing
heavily in these food based community redevelopment projects. This section gives a brief
overview of the public-private partnerships that took place to make the deals happen.
In Baltimore, American Communities Trust, the non-profit in charge of the $16 million
deal planning to build a commercial kitchen, urban farm, food truck & commissary space, along
with two flex spaces and coworking space, purchased 3 ½ -acres of land for $500,000 and was
24
only required to put a $50,000 dollar down payment on the land. It essence, this gave the food
cluster $450,000 grant to begin its operations and set up. In addition, nearly all of the mortgage
would be forgiven if the full scope of the project comes to fruition. The city will hold the
$450,000 mortgage until certain benchmarks are reached. According to Kerry DeVilbiss of the
Baltimore Development Corp., this project is expected to create 100 jobs while servicing
multiple gaps in Baltimore’s local food system. 46
In terms of size and scale, Baltimore’s $16 million project will be dwarfed by
Louisville’s $50 million 24-acre food campus. Titled “West Louisville FoodPort,” this project
will incorporate a kitchen incubator, food truck plaza, demonstration farm, classrooms, and even
an anaerobic digester to convert the facility’s organic waste back into usable energy. 47 Funding
is in the process of being secured through a variety of sources including state, local and federal
grants, tax credits, corporate and private foundation grants, partner equity and others. 48
SeedCapital KY, the non-profit developer of the food port, must raise $14 million of the
estimated $30 million for phase one of the project before they can break ground. In a real estate
deal with similarities to Baltimore, Louisville Metro’s Economic Development team to found a
parcel of city-owned land that would suit the many needs noted above. Mayor Greg Fischer
granted a 24-acre vacant parcel of land in the West End worth $1.2 million to developers of the
project. 49
46
Wenger, Y. November 27, 2014. The Baltimore Sun. Food production campus aims to help entrepreneurs get started.
Referenced from:
http://www.baltimoresun.com/news/maryland/baltimore-city/bs-md-ci-food-hub-20141127-story.html Accessed on: March 17,
2015
47
Gan, V. March 17, 2015. City Lab. Referenced From:
(http://www.citylab.com/design/2015/03/why-louisville-is-betting-big-on-a-massive-food-wonderland/387697/ Accessed on
May 1, 2015.
48
Hickman, M. (25 February 2015). West Louisville FoodPort is food-economy boosting architectural stunner. Mother Nature
Network. Retrieved from, http://www.mnn.com/your-home/organic-farming-gardening/blogs/west-louisville-foodport-is-foodeconomy-boosting, 3 May 2015.
49
Downs, J. and Shafer, S.S. (19 September 2014). Food hub job-generating machine for West-End. Retrieved from
http://www.courier-journal.com/story/news/local/2014/09/18/west-end-parcel-become-louisville-food-hub/15828353/, 3 May
2015.
25
In both projects, along with others in St. Louis and New Orleans that have served as
models, significant public-private partnerships have been formed. Often, some form of land
acquisition through subsidized measures or outright granting is a crucial component for the deal
to move forward. These “food clusters” are seeking to capitalize on the enormous demand for
locally sourced foods while redeveloping blighted sections of cities and providing significant
economic activity directed at some communities poorest populations.
VIII. Overcoming Challenges: A Lesson from a Failed Food Hub, Grasshopper
Distribution
Despite the success of entities like Common Market and the potential for the food
clusters being built in Baltimore and Louisville, the USDA highlighted a four major issues that
food hubs across the country are facing in its report Regional Food Hub Resource Guide. These
challenges are as follows: access to capital, supply and demand balance, price sensitivity, and
managing growth. 50 Grouped together these challenges have the ability to make a food hub fail.
The case study of Grasshoppers Distribution in Louisville, KY particularly highlights the
importance of having access to capital, the need to manage growth, logistics & quality control,
and price sensitivity.
Grasshoppers Distribution was started in 2007 as a for-profit entity by four producers
“who saw a need for agricultural diversification in a post-tobacco era and burgeoning
opportunity in regional and sustainable food market.” 51 This need for transition was highly
important in a state that was number two in terms of tobacco production and number one in
terms of tobacco growers and quotas. Starting with $40,000 of revenue in 2007 Grasshopperrs
50
Regional Food Hub Resource Guide. 2012. United States Department of Agriculture. Retrieved from
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5097957, 3 May 2015.
51
Brislen, L., Wood, T., Meyer, L. and Routt, N. Grasshopper Distribution: Lessons Learned and Lasting Legacy. University of
Kentucky, College of Agriculture, Food and Environment..
26
closed its doors with nearly $1 million dollars in revenue in 2013. In order to try and make the
business successful, the owners changed the model multiple times. For instance, the original
business plan submitted in 2007 positioned the food hub as a business trying to address the issues
of food access and food security. A year later the business model stated that the mission was to
develop a regional food system. 52 In its six years of operation Grasshoppers Distribution was a
subscription produce box service, an online specialty grocery delivery store, a trucking service,
wholesale aggregation and distribution point, value-added food manufacturer, and production
consulting service. 53 This constant changing of the business plan left the organization without a
clear vision and ultimately aided in its shutting down. The constant need to continuously change
the business model also highlights a lack of knowledge of where the market gaps existed in the
local food economy of Louisville. Knowledge of where the gaps exist within the market is an
important component in the operation of a successful food hub or cluster, and is included in the
policy recommendations for the District.
Another area that caused Grasshoppers Distribution to close its doors is the lack of
expertise within its management staff. This caused major problems in managing the growth of
the business. Due its complex nature, Grasshoppers Distribution “required a high level of
expertise in a number of specialized fields for tasks such as setting up protocol and logistics
systems, inventory and warehouse management, as well as day-to-day operations of a
subscription delivery service.” 54 A major roadblock in obtaining this highly skilled management
was a lack of adequate working capital to make the investment. As a result, the food hub
experienced high staff turnover. This eventually affected Grasshoppers Distribution’s
52
ibid
ibid
54
ibid
53
27
relationship with its customers and the overall performance of the enterprise. Customers could
not depend on Grasshoppers to deliver the services they demanded. 55
Logistical issues for Grasshoppers stemmed mainly from the complexity of its
distribution network. In fact, “At times, 70 farmers were involved; at one point more than 1,400
individual customers and 34 drop-off locations...” 56 The scale of this distribution network left it
prone to multiple hiccups. Of particular importance were the issues surrounding coordination and
communication. One major complaint from former buyers of Grasshoppers products is that there
was no reliability. For instance, restaurants working with Grasshoppers felt that the lack of
timely communication on what products were available made it difficult to plan their menus.
Coupled with logistical issues is the issue of quality control on the production side of the
food hub. This was due to “a lack of comprehensive cold-chain management from field to
client.” 57 It is important to remember that Grasshoppers developed during a time period when
Kentucky was transitioning from tobacco farming to the production of produce. As a result,
many new farmers working with the food hub lacked not only on farm-protocols as well as the
infrastructure such as walk-in coolers and refrigerated transportation. This infrastructure is not
cheap and requires significant investment by farmers. Many beginning farmers lack the access to
the capital to invest in this infrastructure and lack the technical knowledge on farm-protocols.
This case of quality control highlights once again that technical assistance to farmers is of high
importance to the successful operation of a food hub.
The final issue area worth noting in the Grasshoppers Distribution case study is the issues
surrounding pricing. Grasshoppers used a pricing system in which it relied on pricing
benchmarks being set once a year, and remained the same throughout the year, with the
55
ibid
ibid
57
ibid
56
28
exception of winter in which a different set of prices was offered. 58 While price benchmarks are
not necessarily a problem, the rate at which Grasshoppers were setting their prices was an issue.
This is because they were using farmers markets prices as benchmarks, which from a business
perspective is “rather inexplicable for an enterprise required to work on tight margins and low
cash flow.” 59 In other words, the business suffered from prices that were too high and
discouraged potential customers from buying. Even producers working with Grasshoppers
recognizes that the price they were receiving for their goods was too high. 60
The case of Grasshoppers distribution provides an excellent example of what it means for
a food hub to fail. We would like to point out that a similar failure has taken place within DC’s
borders. Arganica was a food hub that operated in DC and was eventually sold and became
Relay Foods. Due to the time constraints of the project and limited information available, it was
not possible for us to investigate the case. We recommend that the District speak with Caesar
Layton who was the president of Arganica. Mr. Layton’s contact information will be provided at
the end of this report.
IX. Policy Recommendations
Based on the interviews and research conducted for this study, numerous
recommendations have been created for the District. The authors envision that these
recommendations will inform the initial objectives and goals of the Food Policy Council that is
being established by the DC government. For clarity purposes the recommendations have been
grouped into three different categories: recommendations for the policy sphere,
recommendations on working with farmers, and recommendations for the structure/management
of the food cluster.
58
ibid
ibid
60
ibid
59
29
Recommendation for the Policy Sphere:
During our interviews with two of DC’s biggest entities within the local food economy,
DCCK and Arcadia, one particular issue was mentioned by both as a major roadblock for
growth. This is the issue of affordable real estate within the District’s borders. In order to
operate, both DCCK and Arcadia have some sort of storage space that is subsidized. Both
mentioned that a key to their future growth relies on affordable real estate in order to expand
their operations. In the case of DCCK, they are looking for more freezer space in order to store
more products for the winter season. Arcadia would like the space in order to expand their
mobile market operations. While DCCK is not limited in operating all year round, Arcadia is.
Potential storage may extend the time that Arcadia is able to service its low-income customers.
The District needs to consider whether affordable real estate is a gap in the local food economy
and as such inhibits further development and growth within the market. Should this be the case,
the authors recommend investigating whether some form of subsidization is available for the
acquisition of land. Further investigation into the deal that was struck in Baltimore may be
warranted and the authors highly recommend seeking out Greg Heller for further information.
We have seen numerous examples of the federal government's New Market Tax Credit
being used to incentivize financing for food hubs around the country. We propose that the district
mimic this credit to help offset some of the costs of nascent food businesses that tend to be very
capital intensive. Additionally, for the food cluster to be ultimately successful, demand will have
to be solidified. We found that purchasers often compete to see who can source more local food.
This is especially true within the restaurant industry where food based branding and marketing
tends to be more of a focal point. To leverage the demand, DC could implement a district wide
Environmentally Preferable Products and Services Act targeted at food purchasing for large
30
institutional buyers. By creating an institutionalized demand, suppliers could rely on guaranteed
consistency to scale up operations. As previously mentioned, food clusters and food suppliers
require access to significant amounts of liquid capital. A policy signaling the District's support
could reassure creditors, potentially opening up access to revolving funds or favorable loans.
The final recommendation in relation to the policy sphere for the District is to make sure
that there is cohesion between its different food policies currently being enacted. Of particular
importance is cohesion between nutrition policies under the Healthy Schools Act and trying to
source locally. DCCK would be able to provide much more locally sourced food to the 10
schools it is servicing if the nutritional standards were based on nutritional content and not the
need to offer a different fruit and vegetable every day of the week. Due to seasonality issues, any
food cluster operating within the District’s borders will have trouble sourcing a number of
different vegetables during any given time of the year. This makes providing local food that also
meets the District’s nutritional standards difficult. In other words, under current District policies
there is no marriage between locally sourced foods and nutrition policies. Cohesion needs to be
built into future food policy initiatives in order make sure the local food economy is working
towards a well-defined goal or goals rather than being built upon a number of fractured policies
that potentially undermine each other.
Recommendations on working with Farmers
One of the most important aspects of a food cluster is that it a potential symbiotic
relationship between the rural economy and the city economy. Wholesale food buyers “often
have strict requirements for their orders, including package size, product consistency, and food
safety guidelines.” 61 Given this aspect, the District cannot ignore the needs and constraints of the
61
Food Grown Close to Home. National Good Food Network. Retrieved from http://www.ngfn.org/LFH_3yrReport_NGFN.pdf,
2 May 2015.
31
potential farmers the food cluster will work with. This is why it is extremely important for any
food cluster starting out to a have clear idea of what certification standards its farmers need to
meet. As previously mentioned in this paper, the Food Safety Modernization Act will require all
farmers working with intermediaries like food clusters to become GAP certified. Therefore, the
district should examine precisely what these requirements will entail and how best to support
farmer compliance.
In relation to environmental standards, it is important to note that sourcing locally grown
foods does not necessarily mean you are sourcing an environmentally sustainable product. In
fact, numerous studies are beginning to highlight that the concept of food miles is not having a
major impact in terms of reducing the environmental harm agriculture causes. 62 The real issue is
related to the production side. As the World Resource Institute highlights in its article
“Everything You Need to Know About Agricultural Emissions”, 65% global agricultural
emissions come from two main sources: (1) cattle belching and (2) the addition of natural and
synthetic fertilizers and wastes to soil. 63 Therefore, if DC is truly looking to build a local and
sustainable food system, it is recommended that environmental standards be included as
requirements for its farmers to meet. For instance, should the District require its farmers to meet
OMRI standards like Arcadia does? Choosing the appropriate environmental standard for the
food cluster will require further research and it is recommended this research begin early on in
the process.
Another issue surrounding the supply side of a food cluster that needs to be addressed is
the availability of technical assistance to the farmers working with the food cluster. Agricultural
62
Weber, C. L. and Matthews, H.S. 2008. Food-Miles and the Relative Climate Impacts of Food Choices in the United States.
Environmental Science Technology, 42, 3508-3513.
63
Russell, S.(29 May 2014). Everything You Need to Know About Agricultural Emissions. World Resources Institute. Retrieved
from http://www.wri.org/blog/2014/05/everything-you-need-know-about-agricultural-emissions, 2 May 2015.
32
certifications like GAP and OMRI are cost intensive for farmers. In addition farmers also face
costs in scaling up, logistics, and managerial training. In order to make the food cluster function
properly, the District needs to consider the type of support farmers will require. Therefore, it
highly encouraged that any food cluster created within DC offers technical assistance to its
farmers. This technical assistance will be extremely important should the food cluster be
designed to serve institutions like the universities and hospitals of DC. These buyers are going to
desire bulk products that are consistently of the same quality. Technical assistance has proven to
be essential to meet the needs of these buyers.
Recommendations for the structure/management of a food hub
While the policy sphere and working with farmers are extremely important areas to
building a viable food cluster, there are numerous structural and management issues that need to
be addressed. The failure of Grasshoppers Distribution as a food hub highlights that a food
cluster cannot function without a clear objective. One major issue surrounding the food cluster
that the Food Policy Council needs to answer is, what is the objective of building a food cluster
within the District’s borders? This objective needs to go beyond bringing more local food into
the District. Of particular importance is making sure that this objective focuses on asking: What
is the gap in local food economy? This question then needs to lead to the following question:
Will a food cluster successfully fill that gap? This last question will be intrinsically important for
building a vibrant, successful, and sustainable food economy in the future.
Related to having a clear objective, this study finds that is significantly important for
food clusters to be mission-oriented. It is therefore recommended that any food cluster created
within the District be set up as a B-Corporation or a non-profit. Through the case studies
evaluated in the report, it has been shown that a successful food cluster has a mission statement
33
that drives the food cluster in a certain direction. It is important that whatever the mission
statement may be that statement aims to fill the gap within the local food market. Without this
direction the potential to fail is greatly increased.
At the outset of this project we thought that a food hub appeared to be an ideal solution to
linking small and medium sized farms to the growing demand in urban centers. As we looked
more closely at the most commonly used models, we realized that there were a number of
constraints that needed to be addressed in order for a food hub to fulfill the existing gaps in the
DC market while at the same time achieving the main goals of DDOE. Our objective then
became to understand how we could find a model that maintained the basic structure and
function of a food hub, but design it in such a way that it ensures its success according to our
unique metrics. In Summary - do we think a food hub has potential in DC - Yes. Would a simple
model work best for DC - no. Based on the case studies we’ve looked at, the linear model is
limited in its scope and function. We feel that a food cluster would be the most appropriate way
to achieve a reduction of risk and variability, while at the same time fill numerous existing gaps
in the local food economy. We define a food cluster as an aggregation and innovation nucleus
that can adequately serve a variety of businesses, services, and organizations through the
connection of wholesalers, retailers, entrepreneurs, consumers, and suppliers.
As the case study of Grasshoppers Distribution shows, a fourth recommendation for
anyone interested in setting up a food cluster is to focus on managerial capacity. A successful
food cluster requires highly skilled managers who have a clear understanding of issues like
wholesale distribution and aggregation. Without such skilled management any food cluster is
doomed to repeat Grasshoppers Distribution’s mistakes. One potential avenue for ensuring that
the managerial skills necessary to run a food cluster are available within the market is to work
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with one of the local universities to establish a Food Cluster Management certificate. Since the
University of the District of Columbia already has a certificate program in Urban Sustainable
Agriculture, a Food Cluster Management certificate program may be able to be created as
extension of that program.
X. Conclusion: Future Research Recommendations
This report argues that there is a potential for a food hub to serve the District of
Columbia. The current local food economy landscape within DC is already supporting one
successful food cluster, DC Central Kitchen. The economy could potentially support another
entity, but further investigation into the issue needs to be completed before a definite answer is
able to given to this question. It this therefore recommended that the Food Policy Council begin
its endeavors by focusing on quantifying the local food economy within DC’s borders. Questions
surrounding the quantification of the local market should include: What percent of food being
sold in the District is currently sourced locally? From that percentage, what is the amount of
demand that is being unmet? What gap in the market is causing that demand to be unmet?
The next step in research would be to do a feasibility study of building another food
cluster. Based on the research of this report, one question DC needs to consider in relation to
feasibility is whether a food cluster is the best option for filling whatever gaps exist within DC’s
local food economy? Is there a better way to fill those gaps without building a food cluster?
Answering this second question will involve actively engaging with the stakeholders currently
operating within the local food economy. It may be best to ask: what support do the entities in
existence need in order to better operate or grow?
Another important question related to feasibility is how many food hubs or food hub-like
entities can the region support? Two bordering counties in Maryland are also in the process of
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setting up a food hub within the region. How will the existence of these two food hubs impede
DC’s ability to source local food from farmers? Will the food hubs be in direct competition with
each other? Or is there an opportunity for collaboration in order to meet the demand for local
food throughout the greater Washington, D.C. area? In case competition does exist, a final follow
up question surrounds the definition of local food as within a 100 mile radius of DC’s borders.
Given all the activity going on within the District and just outside its borders, is it feasible to use
such a narrow definition of local?
Finally, research needs to be conducted on whether a food cluster is going to solve food
access issues that plague the residents of areas like Wards 7 and 8. It cannot be assumed that the
creation of a food cluster will alleviate this problem. With major players like restaurants,
universities, and hospitals as potential buyers from the food cluster, they very well may price the
food insecure customer out of being able to take advantage of the food cluster’s services. Is there
a better model in order to serve the needs of the food insecure? This question and the others
presented in this section are beyond the scope of this study, but provide a blueprint of how the
District should plan to move forward in terms of further research.
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