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Startup Profile: Local Dirt Pairs Food Lovers with Local Farmers

July 12, 2011 |

local dirt matches local farmers with local consumersLocal Dirt (localdirt.com) is a site for suitors. However, instead of matching up locals who are looking for love, it matches up anyone who loves to eat local food with the farmers who are willing to feed them. The service is grounded in research that shows that given the choice people would prefer to eat food grown in their own community (even more than they would prefer to eat organic). And it is driven by the desire to help small farmers market their products without having to rely on the kindness of supermarket chains. “Farmers lose about 40% of their crops because they just can’t sell it,” says Heather Hilleren, who came up with the idea for Local Dirt in a social entrepreneurship course that she took while studying for her MBA. “The local foods movement has finally given me hope for the future of farming.”

Getting Farmers Online

Prior to attending the Wisconsin School of Business at UW-Madison for an MBA in Entrepreneurship, Hilleren spent several years working her way up at the Whole Foods Market in Madison, WI. When she started, the store had accounts with more than two-dozen local farmers. By the time she left almost ten years later, that number had dwindled to just two.

Hilleren knew exactly what the problem was: the farmers needed to get online. The store’s buyer would spend days on end playing phone tag with local farmers trying to verify crops lists and price sheets and changing inventory. “She would hope she could get them all by the time she needed them and never would,” says Hilleren. “When she got short on time or she went on vacation and someone was filling in or we got a new person in the position they would do the easiest thing, which was go online and buy from the regional center.”


Reliance on the regional center grew even though it was hurting the store. Customers would protest about mushrooms that didn’t arrive early enough, or sweet corn that had gotten starchy during travel and the store would lose money on the orders. Hilleren witnessed the Madison Whole Foods Market passing on prized morel mushrooms from a local farmer, because it would take two weeks for him to become an approved vendor—even though the store didn’t have any in stock and customers were asking for them daily. Additionally, the store had done research that showed that eating local was their customers’ primary preference, ranking higher than their preference for organic.

If only ordering from local farmers were as easy as ordering from the regional center.

Hilleren initially tackled the problem in her social entrepreneurship class by writing up a business plan for a Madison-based non-profit that worked with local farmers. The organization passed on the idea because it lacked the resources to implement it, but Hilleren couldn’t let it go. After graduation she passed on a lucrative job, cashed in her Whole Foods stock and launched the site.

When Local Dirt launched in early 2008 the idea was to connect local farmers with grocery stores. However, by 2009 the site evolved to connect sellers to local consumers as well.

How Local Dirt Works

A seller, namely a small or large farm, cooperative, distributor, or farmers market, first creates a profile page for the site with information about location and products including availability, quantity and delivery methods. Once a buyer locates a seller’s profile page and makes a purchase, the site generates a purchase order that the seller then fulfills. The site’s software also allows the seller to adjust and manage inventory accordingly.

For buyers, the site allows searches and purchases from sellers up to 500 miles away. Businesses and large organizations can have their orders delivered. Individual local consumers can search for a variety of businesses to patronize—restaurants that serve local food, farms and farmers markets—but will generally have to pick up their orders themselves. The site also allows group buying, for example, by buying clubs or farmers’ markets, with members of the group sharing a password.

 

Buying local food on local dirt

'Buying Local' Page on LocalDirt.com

Farmers who aren’t online savvy can call Local Dirt’s customer service headquarters in Madison and an employee will input their information into the site. Off-line buyers can also use the call-in method to find local food.

The Rules

Hilleren and six other full time-staff (the technical team is based in San Francisco) continuously adapt the site to address feedback from users. However, there are some strict rules. Local Dirt will not automatically add sellers even if they know they exist. It is the sellers’ responsibility to add themselves and to input and update their inventory. Additionally, all food sold on the site must be farm-identified. So farmers can only sell produce that they grow themselves, and seller-businesses like co-ops and restaurants must identify the farms that they buy from.

Challenges

Local Dirt began as a social entrepreneurship project but it is currently being run more like a non-profit. The business model Hilleren originally created depends on charging wholesale sellers and buyers a membership fee. However, the site has primarily been funded by a grant from the National Science Foundation, which has contributed more than a million dollars since its launch in 2008. Thanks to that funding nobody has paid a membership fee so far.

The site also does not take a commission from farmers. In fact Local Dirt doesn’t oversee any monetary transactions. Sellers and buyers exchange payment on delivery and pick-up. Hilleren says it’s important that the farmers don’t see Local Dirt as another huge overhead expense.

“Everyone was scared we would charge a 15% markup,” she says. “Not that long ago 444 farms where going out of business every week because they really didn’t have the margin. So it is very important that we are completely transparent on any type of charging we do.” Local Dirt has already decided that should grant funding dry up, the membership fee would be $360 per year. Currently, when signing up, wholesalers already see that they are getting a discount (the $360 per year price tag is crossed out on the site). Because of the prior notice and modest price, Hilleren says she doesn’t foresee many complaints when the membership fees finally kick in. For farmers, she says, “it’s cheaper than having your own website.”

Marketing

A greater challenge has been marketing. To encourage sellers to sign up with the site, Local Dirt must find innovative ways to get the word out about its service to as many farmers as possible.

To help spread the word, Local Dirt encourages local food enthusiasts and consumers to act as product evangelists by either telling their local farmers about the service or alerting Local Dirt to farms that the company should contact. The site has also formed a partnership with the popular smart-phone app Locavore (getlocavore.com). Hilleren says the app, which has had 50,000 downloads since an Earth Day promotion in April, has already raised their profile.

Once you eat local, you never go back

Hilleren constantly hears comments about the local food movement being a fad, “like eating low fat and margarine instead of butter.” However, she’s confident the movement is here to stay. “When you taste a locally-grown heirloom tomato it is so different,” she says. “The mass-produced tomatoes will never taste like a farmers’ market tomato. The stuff in the supermarket is not grown for taste.”

“It’s not a trend, because people have a taste and they just can’t go back,” She says. “It’s like ‘wow this is what a strawberry tastes like?’ I feel bad for people who taste what’s in the grocery store and think that’s what the food is supposed to taste like.”

So Hilleren will continue to hook up as many people as she can with their local farmers.

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