The New Local Middlemen

Middlemen are often derided as making a buck off the back of the little guy. What this simplistic picture misses is the vital role wholesalers play in creating markets for smaller, and yes, local, farmers who can't sell direct or who want to diversify their income stream.

This isn't a sexy business. You won't see stunning pictures of farmers in lush fields. More likely, just a steel warehouse with forklifts and trucks at the concrete loading dock. Some of these businesses, like Organically Grown Co., in Oregon, are working hard at reducing their carbon footprint by running trucks on biodiesel, retrofitting their warehouses, replacing lights, and migrating to reusable plastic produce bins instead of waxed cardboard boxes. Others I've come across include Co-Op Partners Warehouse in the Twin Cities, Veritable Vegetable in northern California, and Tuscarora Organic in the mid-Atlantic. There are many more, but not nearly enough.

Amid the din of the Iowa Caucus, NPR this morning profiled one start up in northern Michigan making a go at creating a local wholesale produce business. It's worth a listen. Expect more entrants into this niche as local food grows.

- Samuel Fromartz

Comments

[Farmer Troy]

Why is it that most of these cooperative venture between farmers fail?

I have seen three co-ops formed in Western Pennsylvania, and two died almost immediately, and the third one seems to be losing steam after less than a year.

I hope that we get some success for one in our area in NW PA, where we are about centrally located between Pittsburgh, Cleveland, Buffalo and Erie.

[Allan Balliett]

Farmer Troy -

There's a glib way of answering your question, but that homily eludes me this morning.

The bottom like is that non-profit organizations since about 1975 have attracted not people who want to support the mission of the organization but people who want to pull salaries from the process of serving that mission, or, in other words, seeing what you can take rather than what you can bring.

I don't know if we can ever recapture the sort of idealism that allowed people in the 30's to organize real cooperatives that served the coop members rather than the professionals employed by the cooperatives.

Unfortunately, in the current age, not even members want to put in the extra time and effort that keeping a coop working requires.

Our local food coop doesn't want volunteer helpl from the membership and yet, in 1975 it ran entirely on volunteer help. Sure it looked different, but, dammit, our prices were also different from today, WAY below retail. Plus, we got all the hard-to-get organic stuff.

But we all want it easier now and unfortunately, we all seem to have enough extra money nowadays to value our free time more than we value making a cooperative work.

But, Farmer Troy, I'm not blaming the farmer, if I had one group to blame for these failures I'd blame the 'professional managers' as the cause of failure of coops, even if you didn't hire managers, I bet in every case you had 'officers' who trying to become 'professionls,' placing their interests ahead of the groups...

[Ed Bruske]

Sam, I think what we need are markets that trade in goods from local farmers seven days a week, 12 months a year. Would that be a co-op or operated by middlemen? Would it look like Eastern market? I'm not sure, but we certainly need something to boost local food production.

[urban edge aggie]

What Fromartz points out is that the local food system wholesaler gets no respect. That’s no surprise given that neither the consumer nor the farmer really knows what the middleman is getting paid to do. What the dedicated local food consumer wants to see is the farmer’s pickup truck backed up to the door of the grocery store, while the local farmer bristles at the perceived haircut that the wholesaler imposes to handle his farm’s produce. Nobody loves the middleman, but everybody needs him more than they think.

Here’s how I see the economic landscape:
1) There is now excess demand for local foods, meaning farmers can grow more food and get a higher price for it; that’s good news for stimulating more supply and good news for long-term sustainability.
2) The costs have risen dramatically for anybody to collect, sort, pack, and deliver local food, whether it is a middleman or a farmer (using his pickup truck, for instance); that’s bad news for transmitting the market signal that the consumer wants more local food, because the delivery system isn’t up to the task.
3) Farmers are not likely to take on the investment in building additional infrastructure to collect, sort, pack, and deliver their own produce because of the expense (on top of all the farmland and crop growing expenses), because of the different skill sets involved (forgive the gross oversimplification, but growing a crop requires patient persistence, whereas food wholesaling requires hyperactive focus on moving perishables), and because most local food system farmers would have to shift to a much larger business platform to be able to profitably operate their own distribution systems; and all that’s bad news for stimulating investment in increasing the capacity of local food systems to deliver enough to meet demand.
4) Local food system middlemen supplying local/regional markets will soon be under competitive pressure from the nationally organized food distribution companies, who are also looking hard to find how they can sell local foods through their networks; that’s contrary to the goal of keeping a local food system locally owned from farm through wholesaler to retailer—but maybe not bad if it spurs opportunity for local farmers.

I believe inadequacy of the local food system distribution infrastructure is the biggest challenge to expanding the capacity and sustainability of local food systems. The middlemen who buy from local farms and deliver to local consumers can be the heroes of the local food movement if they invest in their own business capacity in order to increase the economic viability of delivering the local food consumers want to buy and local farmers want to grow.

[Samuel Fromartz]

I tend to agree with Urban Edge Aggie's statement: "I believe inadequacy of the local food system distribution infrastructure is the biggest challenge to expanding the capacity and sustainability of local food systems."

But I also believe, if people demand more local food, businesses will be created to deliver it. Great need can spur great solutions.