This post is part of a blogging series by economics students at the Presidio Graduate School's MBA program. You can follow along here.
By: Chad Reese
San Diego County has a temperate climate, a population of over three million people and, according to the last US Census, is home to 6,687 farms. The county leads the nation in avocado and nursery crop production. Still, despite its moderate climate, multiple growing seasons, high national agriculture rankings and a $1.5 billion agriculture industry, nearly two-thirds of what’s grown in the San Diego region can’t be eaten. Local farmers are producing products such as sod and landscaping shrubs.
Major challenges to San Diego food production include increasing water costs and loss of agriculture land due to population growth. The shelves of mainstream San Diego grocery stores are stocked with products that have been shipped an average of 1500 miles from factory farm to grocery, and the typical prepared meal in the US contains ingredients from at least five countries outside of America. These are the unfortunate economics of industrial agriculture.
The "Good Food" Movement
In contrast, a recent national trend reveals increasing consumer interest in locally grown food. The Good Food Movement, as the trend has been dubbed, encourages consumption of local and organic or sustainably grown food from small- and medium-sized family farms.
With its heavy emphasis on local family farms that grow organically, San Diego well fits the "good food" trend. In fact, San Diego County is home to more organic farms than in any other county in the nation. However, most of the organic produce grown in the county is sold to wholesalers who aggregate and distribute to national markets. Some of the San Diego-grown produce is sold directly to local restaurants and stores, at produce stands, certified farmers' markets and CSA programs, but small farm production precludes selling to local institutional buyers like schools and hospitals that have minimum volume purchasing requirements.
In an effort to bridge the local production and distribution gaps, a group of San Diego food producers is banding together to create a local food aggregation and distribution system – a "food hub" – called San Diego Growers.
What is a Food Hub?
In September 2009, the United States Department of Agriculture (USDA) launched the “Know Your Farmer, Know Your Food” initiative to minimize barriers to local food systems development. A food hub, the initiative explains, provides small and medium farms access to capital including trucks, warehouse storage and processing facilities. Food hubs also offer marketing and business services to growers.
The formal USDA food hub definition:
"A centrally located facility with a business management structure facilitating the aggregation, storage, processing, distribution, and/or marketing of locally/regionally produced food products."
Growing it Forward
In the economics of traditional agriculture, the beginning of a growing season provides a premium to the first grower that harvests a crop, but soon other producers flood the market and drive prices downward for the rest of the season. In contrast, food hub participants have more bargaining power collectively than individually, and costs are allayed as risk and capital spending are spread among all participants. In the words of Ashley Colpaart, Farm to Institution Coordinator for the Tierra Miguel Farm and San Diego Growers, the regional food hub is "building a value chain instead of a supply chain."