Accessing Virginia's Regional Wholesale Market Sector: Fresh Produce .

Accessing Virginia’s Regional Wholesale MarketSector: Fresh Produce Food Safety ConsiderationsAmber Vallotton, Extension Specialist, Horticulture, Virginia TechAlexandra Battah, Undergraduate Student, Agricultural and Applied Economics, Virginia TechRyan Knox, Undergraduate Student, Food Science & Technology, Virginia TechAdrianna Vargo, Director Grower Services, Local Food HubThomas Archibald, Assistant Professor, Agricultural, Leadership, and Community Education, Virginia TechRenee Boyer, Associate Professor, Food Science Technology, Virginia TechNatalie E. Cook, Doctoral Candidate, Agricultural, Leadership, and Community Education, Virginia TechTiffany Drape, Assistant Professor, Agricultural, Leadership, and Community Education, Virginia TechDespite the growing demand and support forlocal food, there can often be significant barriersfor growers trying to tap into new markets,given specific food safety expectations, policies,and requirements. This trend is particularly truefor institutional buyers, who are oftenconstrained by far-reaching institutional and/orcorporate policies. While there are lots ofmarket opportunities in Virginia, navigating thelandscape for growers can be daunting, sincebuyer food safety requirements are not a “onesize fits all” standard for all markets. To betterunderstand current expectations and perceptionsacross multiple market sectors in Virginia, andhelp producers better align their on-farmpractices with these marketplaces, the FreshProduce Food Safety Team conducted a statewide market assessment survey in 2015-2016.The purpose of this factsheet is to provide youwith the results of that work, especially if youare considering selling produce to wholesalers.food products. On the other hand, a regionalfood hub is a business or organization thatactively manages the aggregation, distribution,and marketing of source-identified foodproducts primarily from local and regionalproducers to strengthen their ability to satisfywholesale, retail, and institutional demand.Regional food hubs provide an integratedapproach with many potential benefits,including expanded market opportunities foragricultural producers, job creation in rural andRegional Wholesale SectorIf you’re looking into selling to regional foodhubs and wholesale market distributors, thisinformation is for you! Let’s start off byclarifying the difference between a wholesaledistributor and a food hub: A regionalwholesaler is a centrally located facility with abusiness management structure facilitating theaggregation, storage, processing, distribution,and/or marketing of locally/ regionally produced2017Virginia TechPhoto: Amber VallottonHORT-271NPVirginia Cooperative Extension programs and employment are open to all, regardless of age, color, disability, gender, gender identity, gender expression, national origin, political affiliation, race, religion, sexualorientation, genetic information, veteran status, or any other basis protected by law. An equal opportunity/affirmative action employer. Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Instituteand State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Edwin J. Jones, Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; M. Ray McKinnie, Administrator,1890 Extension Program, Virginia State University, Petersburg.

urban areas, and increased access of freshhealthy foods for consumers, with strongpotentials to reach underserved areas and fooddeserts.As an example of a Virginia food hub operation,we’ve featured the Local Food Hub here (seeour resources listing for the Local Food Hub andother similar aggregators in Virginia). TheLocal Food Hub aims to partner with Virginiafarmers in order to increase community accessto local food; reaching out to them may be agood place to start! The Local Food Hubcurrently partners with more than 60 smallfamily farmers throughout Virginia and believesthat paying a fair price is the most importantthing they can do for farmers. They alsoemphasize the importance of how boththemselves and the growers should know thattraining, technical assistance, cost-shareopportunities, and networking are all critical tohelping reinstate small farms as the food sourcefor the community. Through the Local FoodHub, Charlottesville schools were able toprovide monthly lunches from the local farmerspartnered with Local Food Hub. While startingoff small in their produce supply to localschools, the Local Food Hub has a goal ofgrowing that supply each year. Because of theaggregation of products and their branding, theLocal Food Hub has been able to tap into manyother markets, which might have beeninaccessible for producers unable to meetvolume demands and other important logisticalconsiderations.Photo: Amber VallottonAs a producer, sourcing through a food hub ordistributor can be a great way to go since itprovides many advantages.Many farmers and ranchers are challenged bythe lack of distribution and processinginfrastructure of appropriate scale that wouldgive them wider access to retail, institutional,and commercial foodservice markets, wheredemand for local and regional foods continuesto rise. Regional food hubs have emerged as aneffective way to overcome these infrastructuraland market barriers. For those smaller and midsized producers who wish to scale up theiroperations or diversify their market channels,food hubs offer a combination of production,distribution, and marketing services that allowsthem to gain entry into new and additionalmarkets that would be difficult to access ontheir own. For larger producers, food hubs canprovide product-differentiation strategies andmarketing services that ensure the highest pricein the market place. Moreover, for wholesalers,distributors, retailers, and foodservice buyerswho would like to purchase larger volumes oflocally and regionally grown products, foodhubs lower the transaction costs by providing asingle point of purchase for consistent andreliable supplies of source-identified productsfrom local and regional producers.”James Barham, USDA Agricultural MarketingService, Regional Food Hubs: Understanding theScope and Scale of Food Hub Operations.Survey HighlightsAll of the respondents reported that they procuredaily during peak seasons for various produceitems. The main purchasing priorities forwholesalers were quality, third party food safetyaudits, availability, adequate liability insurance,and delivery capabilities. The barriers identifiedwith this sector included insufficient volume ofdeliverable produce, as well as corporaterestrictions that would otherwise hinder the saleof produce to the institution. Maintaining thirdparty food safety certification is often standard

practice in the wholesale market, although withfood hubs, there is more flexibility and room foron-boarding. It is likely wholesalers andaggregators would increase their purchase ofVirginia-grown produce if more Virginiagrowers could meet requirements for food safetyand provide proof of liability insurance. Thissector in particular may be of interest to localproducers who lack adequate means to transporttheir product, or to maintain proper temperaturecontrol in relation to food safety regulation.Distributors often have access to advanced fooddelivery logistics, and in many cases cancircumvent some of the hurdles that a localproducer may encounter. Since product is beingaggregated, uniformity and consistency can bestreamlined and maintained—something that isespecially important for certain market sectorslike schools and institutions. The wholesaleroute can also remove much of the hassle factorfelt by producers when conducting multipledirect transactions with buyers.Purchasing Priorities QualityFood Safety CertificationAvailabilityGrower/Producer Liability InsuranceDelivery CapabilitiesBarriers to Purchasing Consistent communication with yourprospective wholesale buyer is critical toyour success in this market sector. Maintaining third-party food safetycertification is often standard practice in thewholesale market. It is likely wholesalersand aggregators would increase theirpurchase of Virginia-grown produce ifrequirements for food safety could be metby more Virginia growers. It is important to ask a potential buyerspecific questions about what audit schemesor sections of particular audits they require,and whether they have an on-boardingpolicy that allows for transition time toachieve higher levels of certification. Remember that some buyers may provideassistance to growers in the form of auditcost-share or training opportunities, so besure to ask! Make sure you are familiar with the FoodSafety Modernization Act (FSMA) ProduceSafety Rule (PSR) regulations and how theyaffect you as a producer. In many cases,wholesalers may want you to receive PSRtraining, along with any GAP certificationrequirements.Insufficient VolumeCorporate Requirements/PoliciesProduct ConsistencyLack of Product DiversityGrower Lack of Understanding of BuyerRequirementsRecommendations Larger distributors may work with smaller,local aggregators or food hubs to sourcelocally-grown food from small farms. Thus,consider working through a smallerintermediary aggregator.Photo: Mark Sutphin

Producer Checklist Have you considered the pros and cons bychoosing to sell your product to a regionalwholesaler or food hub? While there aremany advantages to selling via a wholesaler,there can also be disadvantages likeobtaining a lower price per unit. Since thereis less or no direct end-user interaction,explore whether or not that aspect ofmarketing is valuable to you—someproducers love the face-to-facerelationships, whereas others are happy tolet someone else handle that part of theprocess! What food safety policies does thewholesaler have? Do they require a 3rd party food safety audit,such as Good Agricultural Practices (GAP)certification? If they do not, are there otherfood safety requirements such asimplementation of particular GAPs likeregular water testing, handling, traceability,worker training, packaging, etc.? If they dorequire an audit, which particular scheme? Do they require training in the ProduceSafety Rule?Sources of fresh produce for wholesalers showing various access routes for producers. While product maymove from a regional food hub or wholesaler to a broad-line distributor, typically product is distributed toother markets, such as public schools, institutions, restaurants, and retailers.Graphic by Sarah Gugercin, Department of Horticulture, Virginia Tech.