Working with Farmers in the Middle, Northeast Foodhub Strengthens Local Food System via Produce Aggregation
July 10, 2013 | Pamela Ellgen
When shoppers pick up a head of locally-grown kale at the grocery store, they’re often perplexed to find that it costs more than what looks like the identical product trucked in from miles away.
“The consumer feedback is ‘Why isn’t it less expensive?’” says Laura Edwards Orr, director of Resource Development for Red Tomato. “It’s one of the great paradoxes—it’s so much more complicated. What the consumer doesn’t see is that the local farmer paid for a truck for the entire day, whereas larger growers can spread the cost of logistics over much larger volume. Logistics and cost are the key barriers in the local food chain.”
That’s where Red Tomato comes in, not only by making local produce more accessible and affordable to consumers, but also by creating values-based supply chains that connect farmers with aggregation and distribution.
“We fit into this new category, often referred to as food hub,” she says.
Domestic Fair Trade
After working on farms in college and participating in the co-op grocery movement, Red Tomato’s founder, Michael Rozyne co-founded Equal Exchange, a fair trade coffee company. After ten years with the organization, he wondered what it would look like to apply the concepts of international fair trade to local fruit and vegetable production in the Northeast.
Though his vision was progressive, Red Tomato was founded in a rather conventional way, procuring trucks, renting space, and running the non-profit by day and the business logistics by night. After five years, came a soul-searching moment when Rozyne realized that it was no longer a sustainable business model; the cost both in dollar figures and the human factor was too great.
In 2002, Red Tomato shifted its focus to product development and equipping growers to handle warehousing and trucking.
“That proved to be a really significant,” Laura says. “It enabled the team to maximize our capacity while maximizing the capacity of the growers and ended up being more advantageous to manage the supply chain at that higher level.”
Farmers in the Middle
Red Tomato works with over 40 mid-size growers in New England, New Jersey, New York, and Pennsylvania. For these farmers, farming is a full-time job, their farms are often multi-generational, they’re supplying the wholesale, and they’re in the most danger of losing their market share.
“If you look at agricultural statistics, small farms have grown significantly due to a surge in interest in local food, and big farms agribusiness are also doing well,” Laura says.
She and the others at Red Tomato see these “farmers in the middle” as particularly vulnerable, but also crucial to the growth of local food systems given their capacity to maintain the cold chain, their food safety certification, volume commitment, and wholesale pricing.
How it Works
Red Tomato creates and maintains customer relationships on behalf of its farmers, managing the logistics, maintaining the insurance policy, handling bookkeeping, and bearing the responsibility of aggregating a uniform supply.
“That’s where we really earn our keep,” Laura says. “We bear the burden for the farmer and meet the full demand of the customers all in one order.”
Because the responsibility to meet customer demand is spread over a few farmers for a given product, tomatoes for example, if one farmer experiences a yield that is less than expected, another may be able to meet the shortfall without jeopardizing the first farmer’s market share.
And that’s a big deal.
John Lyman of Lyman Orchards is a longtime farmer with Red Tomato and recognizes the value of aggregating supply. Typically, if a farmer has a lower yield, he will lose his place with the customer. “They don’t want to hear your problems; they just want to know if you have the product,” John says. “If not, they’ll go elsewhere.”
For Red Tomato, the aggregation of supply insures against poor weather and pest damage while creating a longer growing season.
Growing organic produce presents significant challenges for farmers in the Northeast because the region’s unique climate and pest pressures. As an alternative, Red Tomato has pioneered the Eco brand of produce. Eco means grown on family farms, by stewards of land, water and wildlife, and using natural methods and minimal spray. Ecological farming covers a spectrum of environmental and conservation practices including organic, biodynamic, and advanced integrated pest management (IPM). Since 2009, Red Tomato has successfully eliminated organophosphates from its Eco supply chain and now offers both Eco-Apples and Eco-Peaches in the market.
The organization is also working on a freshness initiative with two of its suppliers to shorten the distance from field to table. Typically, when you reach for a piece of produce at the supermarket, it could be five to seven days past the time it was picked. Paul Kneeland, VP of Produce and Floral for the 23 Kings Food Markets in New Jersey is working with Red Tomato on the Local Fresh 24/7 campaign to shorten the time from field to market to a mere 24 hours.