A BUSINESS

OPERATIONS

GUIDE 

Running A

FOOD HUB

VOLUME TWO
Service Report 77, Volume II 

Issued July 2015

This report was prepared for the U.S. Department of Agriculture by Matson Consulting of Aiken, S.C.,

with the assistance of James Barham of USDA Cooperative Programs. Funding was provided by

VAFAIRS, a nonprofit cooperative and small business development office in Richmond, VA, and by

USDA’s Cooperative Research Grant Program, administered by USDA Cooperative Programs.

For questions or additional copies of this report, contact:

James.Barham@wdc.usda.gov or call 202-690-1411. This report and many others that may be useful

to food businesses are posted on the USDA Rural Development, Cooperative Programs website at:

www.rd.usda.gov/publications/publications-cooperatives 

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities

on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status,

familial status, parental status, religion, sexual orientation, genetic information, political beliefs,

reprisal, or because all or part of an individual’s income is derived from any public assistance

program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require

alternative means for communication of program information (Braille, large print, audiotape, etc.)

should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of

discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W.,

Washington, D.C. 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal

opportunity provider and employer.

Rural Development
Running a

Food Hub

A business 

operations 

guide

By James Matson, Jeremiah Thayer, and Jessica Shaw

Matson Consulting, Aiken, S.C. 

The authors thank James Barham of USDA Cooperative

Programs for his help in preparing this report. Thanks also

to Sasha Feldstein, a UC Berkeley graduate student

and intern at USDA, for her editorial assistance. 

VOLUME TWO
Contents

4 RUNNING A FOOD HUB

7 Introduction

8 Food Hub Definition and Functions

9 n Figure 1: Regional Food Hub Services

10 Food Hub Classifications

10 n Food Hub Tax Designation

12 n Food Hub Legal Structure

19 n Food Hub Operational Models

25 n Food Hub Challenges

33 Food Hub Operations

27 n Location

28 n Infrastructure

31 n Equipment

39 n Human Resources

40 n Labor Roles

43 n Labor Positions

48 Marketing

48 n Choosing a Sales Focus

48 n Promotion

Cover: Ilustration by Sharon Szegedy Graphic Design, Inc. Cover and book

design by Stephen Hall, Kota Design.
RUNNING A FOOD HUB 5

51 Producers and Suppliers

53 Products, Packaging, and Services

53 n Products

55 n Packaging and Labeling

57 n Services

59 Risks

62 Additional Considerations

62 n Business Transition and Succession

64 n Business Closure and Exit Strategy

65 Conclusion

66 Appendix A: Sample Staff Descriptions/Qualifications

67 n General Manager

68 n Production Manager

69 n Warehouse Manager

70 n Marketing/Sales Manager

71 Appendix B: Sample Equipment List

74 Appendix C: Sample Questions for Software Selection

75 Appendix D: Business Structure Comparison

APPENDIXES
6 RUNNING A FOOD HUB

These producers belong to the Sandhills Farm to Table Cooperative (SFTC), a 

multi-stakeholder food hub based in Whispering Pines, NC, with close to 40 

producer-members and more than 1,000 consumer-members. Photo courtesy of SFTC.
RUNNING A FOOD HUB 7

THIS REPORT is part of a multi-volume technical

report series entitled Running a Food Hub, with this

guide serving as a companion piece to other United

States Department of Agriculture reports by providing

indepth guidance on starting and running a food hub

enterprise. 

 In order to compile the most current information on

best management and operations practices, the authors

used published information on food hubs, surveyed

numerous operating food hubs, and pulled from their

existing experience and knowledge of working directly

with food hubs across the country as an agricultural

business consulting firm. 

 The report’s main focus is on the operational issues

faced by food hubs, including choosing an

organizational structure, choosing a location, deciding

on infrastructure and equipment, logistics and

transportation, human resources, and risks. As such, the

guide explores the different decision points associated

with the organizational steps for starting and

implementing a food hub. For some sections, sidebars

provide “decision points,” which food hub managers will

need to address to make key operational decisions.

Introduction
8 RUNNING A FOOD HUB

Food Hub Definition and Functions

USDA DEFINES a food hub as “a business or organization that actively

manages the aggregation, distribution, and marketing of source-identified

food products primarily from local and regional producers to strengthen

their ability to satisfy wholesale, retail, and institutional demand.”1

 In many cases, individual farmers and producers do not have enough

product to satisfy a large buyer, such as local grocery chains, restaurants or

institutions, including colleges, schools, and government institutions.

Conversely, large buyers struggle to find local producers that can provide a

consistent supply of locally grown food to meet consumer demand. By

providing aggregation, distribution, and marketing services, food hubs can

play a critical role in satisfying the needs of both farmers and buyers. 

 Food hubs can:

 • Provide a link between farmers, producers, and buyers. 

 • Give individual farmers and producers the means to market and sell

their products together as one larger entity, allowing them the

opportunity to sell to high-volume buyers. 

 • Offer farmers and producers the ability to receive fair and consistent

pricing for their products. 

 • Provide larger buyers with a supplier that can not only meet high levels

of demand, but can also consistently provide fresh local foods. 

 • Educate buyers about food and facilitate information flow and sharing. 

 • Help farmers extend their season which, in turn, helps provide buyers

with a more consistent supply of product. 

 The figure below shows the different elements of a food hub, how food

hubs function, and the variety of producer, operational, and community

services that a food hub can provide.

 Food hubs can provide opportunities for local growers to access buyers

that may otherwise be too large for individuals to access on their own. Food

hubs essentially function as a link in the logistical chain to help convey food

1 Barham, James, Debra Tropp, Kathleen Enterline, Jeff Farbman, John Fisk, and Stacia Kiraly. Regional

Food Hub Resource Guide. U.S. Department of Agriculture, Agricultural Marketing Service.

Washington, DC. April 2012. Publication can be accessed at www.ams.usda.gov/foodhubs.
RUNNING A FOOD HUB 9

products to mid-scale buyers who in turn provide the product for sale to the

end consumer. As illustrated in Figure 1, food hubs can provide many of

these services. 

 Along with providing core operational functions — including

aggregation, distribution, and marketing — food hubs often coordinate

efforts with producers in areas such as production planning and delivery

logistics. They also provide training in areas such as post-harvest handling

and packing, season extension, and food safety. At the same time, food hubs

often engage directly with their community through donations, educational

programs, and health-awareness campaigns. 

Figure 1—Regional Food Hub Services2

Producer Services

n Actively linking producers to

markets

n On-farm pick up

n Production and post-harvest

handling training

n Business management

services and guidance

n Value-added product

development

n Food safety training

n Liability insurance

Operational Services

n Aggregation

n Distribution

n Brokering

n Branding and market

development

n Packaging and repacking

n Light processing (trimming,

cutting, freezing)

n Product storage

Community Services

n “Buy Local” campaigns

n Distributing to “food

deserts”

n Food bank donations

n Health screenings, cooking

demonstrations

n Food stamp redemptions

n Educational programs

n Youth and community

employment opportunities

2 Barham, James, Debra Tropp, and Carolyn Dimitri. Regional Food Hubs and Food Value Chains:

Improving Market Access for Local Producers through Innovative Distribution. Presentation for National

Small Farms Conference, September 2012. United States Department of Agriculture,

Agricultural Marketing Service. Presentation can be accessed at www.ams.usda.gov/foodhubs.

Graphic by Samantha Bertini
Food Hub Classifications

AN IMPORTANT BEGINNING STEP in creating and implementing any

business is to determine how it will be structured. Though many of the

following classifications of a food hub are interrelated, they can be divided

into three broad categories: tax designation, legal structure, and operational

model. 

 The business structure of a food hub — or any type of business — will

determine many aspects of the operation, including tax liability, sources of

capital, general risk management, information

flow and sharing, and even opportunities for

growth and expansion. Basically, business

structure determines how the business

operates, both internally and externally. 

Food hubs can have as much, if not more,

variety in their operational structure as

other businesses. A food hub can be

privately held or publically held; can be a

nonprofit or for-profit. Ownership can be

divided, just as any other business, into sole

proprietorships, partnerships, corporations,

cooperatives, or LLCs (limited liability

companies). 

There is no single clear choice for the

“best” or “preferred” structure or operational model when forming a food

hub. The “best” for any individual situation can be chosen by closely

examining the needs of the food hub owners and stakeholders, as well as the

business environment in which the food hub will operate. 

Food Hub Tax Designation3

 The broadest division of entity types is determined by tax designation.

For tax purposes, entities can be for-profit or nonprofit at both the State

and national level. How the food hub is organized will typically influence

how profitability is determined. Nonprofit food hubs may gauge success

based on their capacity to fulfill the mission, while a for-profit organization

10 RUNNING A FOOD HUB

n Which business structure

is right for your food hub?

n How will the business be

organized? 

n Will the structure fill the

needs of all parties? 

DECISION POINT

3The following information is meant to provide general advice and information and is not

intended as a substitute for legal counsel. In the formation of any business, both State and

national laws must be considered, and entities wishing to legally organize are strongly

encouraged to consult an attorney familiar with business formation in their area. 
RUNNING A FOOD HUB 11

may determine success on its level of profitability.

For-Profit Organizations

 A for-profit organization may be formed to conduct lawful business

activities while also earning a profit. The majority of businesses in the

United States operate as for-profit ventures. The profits earned by this type

of organization can be used to pay operational costs and be distributed to the

owners. For-profit organizations are not exempt from paying Federal or

State taxes on profits. Any donations to the company are not tax deductible

for the donor. Assets of a for-profit organization belong to the owners of the

business. If the food hub dissolves, the assets are distributed to the owners of

the business, based on their level of ownership. 

 For-profit organizations have many options when it comes to gathering

funding. They can offer investors a percentage of the food hub ownership.

These investors can provide property, services, and money in exchange for

shares of the food hub’s stock. For-profits may still have the option to obtain

funding from grants and solicited donations. 

What’s the difference between a for-profit and a nonprofit organization? 

For Profit

Money returned to the owners

Not exempt from Federal or State

taxes

Assets distributed to owners after dissolution

Funds are raised by offering investors

a percentage of ownership

Nonprofit

Money returned to the organization

Typically exempt from Federal and

State taxes

Assets distributed to other nonprofits

after dissolution

Funds are raised by soliciting donations and applying for grants

Examples of For-Profit Food Hubs

n Cherry Capital Foods Traverse City, MI (Multi-Product)

n Eastern Carolina Organics Durham, NC (Organic Produce)

n Moore Farms and Friends Woodland, AL (Produce)
12 RUNNING A FOOD HUB

Nonprofit Organizations

 A nonprofit organization is created “for the purpose of serving a public or

mutual benefit other than the pursuit or accumulation of profits for owners

or investors.”4 Nonprofit organizations can, and do, still earn an operational

profit, but these profits can only be used for the operation of the

organization, such as paying employee wages, rent, utilites, etc. Typically,

nonprofit organizations raise funds by soliciting donations from other

businesses and individuals. These organizations may sometimes find it easier

to attract government and private grants. 

 Entities seeking nonprofit status must file appropriate paperwork and

undergo an application that can take months. During the application period,

the entity is often allowed to operate as a nonprofit pending a final

determination of its application.

 Nonprofit organizations may also qualify for State and Federal tax

exemptions, as determined by the Internal Revenue Service (IRS).

Donations made to a qualified nonprofit organization are also tax deductible

for the donor. If a nonprofit dissolves, the assets are donated to another

nonprofit organization.

Food Hub Legal Structure

 Whether for-profit or nonprofit, a business can be organized as any of the

following types of legal entities. Corporations, LLCs, and cooperatives are

the most common choices for food hubs. Brief descriptions of some of the

most common types of legal organization are presented below, and Appendix

D presents a chart comparing some significant issues related to different

business structures.

Examples of Nonprofit Food Hubs

n ALBA Salinas, CA (Produce)

n Common Market Philadelphia, PA (Multi-Product)

n Local Food Hub Charlottesville, VA (Produce)

4 Luckert, Kate. “Nonprofit Organizations (Definition and Examples).” Case Western

Reserve University www.learningtogive.org/papers/paper41.html
RUNNING A FOOD HUB 13

Corporation

 Of all the legal organizations discussed, corporations are most common

for large businesses in the United States. The structure offers the investor

(stockholder) limited liability protection. Any liability is limited to the value

of the stock held in the corporation. Businesses formed under this structure

require oversight by State regulatory boards, at a minimum, and in some

cases by the U.S. Securities and Exchange Commission. A corporation has a

perpetual existence. Owners can routinely sell or reassign stock (or

ownership) without disrupting ongoing operations. 

C-Corporation

 A C-corporation (as distinguished from an S-corporation) is taxed

separately from its owners. 

 Advantages and Disadvantages of C-Corporations

 • The C-corporation is the most complex of business structures because

it acts as a legal entity that exists separately from its owners. 

 •Control depends on stock ownership.

 • Stockholders are at risk only for money they have invested in the stock

of the corporation.

 • Capital can be raised more easily through the sale of stocks or bonds.

 • The C-corporation can continue to function even without key

individuals. 

 • Double taxation occurs because the business exists as a separate entity.

S-Corporation

 The S-corporation is a special tax designation applied for, and granted by,

the IRS to corporations that have already been formed. It is a legal structure

that can be used for so-called closely held corporations. To become an Scorporation, the business first must form a general or professional

corporation, and the company must complete Form 2553, Election by a

Small Business Corporation, and file it with the IRS. 

 Entrepreneurs and small business owners often take advantage of the Scorporation structure because it combines many advantages of the sole

proprietorship, partnership, and corporate forms of business. 

 Advantages and Disadvantages of S-Corporations

 • Taxes are passed through to the members of the corporation.

 • Restrictions on the number and type of ownership include: U.S.

citizenship or residency requirements; only real individuals can be
14 RUNNING A FOOD HUB

members; and one share class limitation.

 • There are limitations on passive income for the S-corporation.

 • S-corporations have many of the same basic advantages as a general

corporation (see above). 

B-Corporation 

 Also known as a benefit corporation, a B-corporation is a type of

certification or designation that also falls under the umbrella of

corporations. A B-corporation’s goals include having positive impacts on

society and the environment, in addition to making a profit. Not all States

have legislation in place to recognize B-corps. Certification is issued by B

Lab, a nonprofit organization. 

Limited Liability Company

 An LLC's purpose is to combine the limited liability for its members

usually found in the corporate structure (and to limited partners in limited

partnerships) with the pass-through tax advantages of a general partnership

(any profits/losses pass through to the individual investor and appear on the

individual’s tax return). So, an LLC has some, but not all, of the

characteristics of each entity. An LLC may be formed by just one person but

it more commonly requires two or more persons. 

 LLC formation and liability characteristics are similar to that of a

corporation. To form a corporation or LLC, the necessary documents must

Examples of Corporation Food Hubs

n Capay Valley Farm Shop Esparto, CA (Multi-Product)

n Sonoma Organics Sebastopol, CA (Produce, Cheese, Mushrooms)

n This Old Farm Colfax, IN (Meat, Produce)

n Veritable Vegetable San Francisco, CA (Multi-Product)

Examples of Limited Liability Company Food Hubs

n Firsthand Foods Durham, NC (Beef and Pork)

n Sprout MN, LLC Brainerd, MN (Produce)

n Farm to Family Naturally Fairdealing, MO (Multi-Product)
RUNNING A FOOD HUB 15

be filed with the designated State agency. Unlike a general partnership,

shareholders are not personally liable. Other characteristics may be similar

to or different from corporate characteristics, depending upon how the LLC

members wish to structure the entity and comply with IRS regulations to

receive favorable tax treatment. 

 Advantages and Disadvantages of LLCs

 • Provides its members limited liability.

 • Allows members to escape double taxation.

 • Any “person,” either natural (an individual) or legal (another legal

entity, such as a partnership), can be a member. 

 • Members may actively manage the LLC without incurring personal

liability. 

 • Uncertain tax status. 

 • Drafting the agreement can be fairly complex. 

Cooperatives

 A cooperative is a business owned and democratically controlled by the

people who use its services and whose benefits are derived and distributed to

the users.5 The user-owners are called members. A cooperative is headed by

a board of directors, and members hold the voting power within the

business. Although this report focuses on agricultural cooperatives, this

business structure can be found in many other areas. According to the U.S.

Small Business Administration, “Cooperatives are common in the

healthcare, retail, agriculture, art, and restaurant industries.”6

 Statistics from the United States Department of Agriculture (USDA)

Cooperative Statistics for 2012 reports that there are about 2,238 farmer,

rancher, and fishery cooperatives in the United States. These cooperatives

had a combined membership of 2.1 million people and total gross business

volume of $235 billion. Collectively, cooperatives employed 129,000 fulltime employees and 56,000 part-time and seasonal employees.7

 Advantages and Disadvantages of Cooperatives

 • Maintain or increase market access.

 • Allow producers to have access to additional pricing and marketing

opportunities.

5 USDA Rural Development. “Cooperatives.” www.rurdev.usda.gov/lp_coopprograms.html

5 SBA. “Choose Your Business Structure: Cooperative.” www.sba.gov/content/cooperative

7 Ali, S. & Eversull, E. (2013). “Cooperative Statistics 2012.” USDA Rural Business-Cooperative

Programs Service Report 74.
16 RUNNING A FOOD HUB

 • Reduce risk.

 • Generate more profits. 

 • Reduce costs. 

 • Can be complex to organize.

 Cooperative Structure

 Cooperatives have a unique form of organization with distinct

characteristics, strengths, and difficulties. A cooperative is organized and

incorporated under applicable State laws. To qualify as a cooperative,

attributes must include:

 n Management controlled by a board of directors elected by the

members. One unique feature of a cooperative is that all, or most, of the

directors must be members of the cooperative. Thus, the leaders are regular

users of the business’ products or services.

 n Equity mainly comes from the members, rather than outside investors,

although cooperatives are allowed to raise equity from outside sources.

Equity is obtained by direct contributions through membership fees or sale

of stock, by agreement with members to withhold a portion of net income

based on patronage, or through retention of a portion of sales proceeds for

each unit of product marketed. If a cooperative fails, the liability of each

member is limited to the amount he/she has invested.

 n Earnings/losses on business conducted on a cooperative basis, often

called net margins, are allocated to the members on the basis of the use they

made of the cooperative during the year, not on the basis of equity held. The

allocations may be distributed in cash or retained in members’ accounts in

the cooperative, to be distributed at a later time. Members usually receive a

combination of cash and an allocation of equity.

 Multi-Stakeholder Structures

 The way a food hub and most businesses are structured typically gives

benefits to only one group of stakeholders; the benefiting class is determined

by whether the business is producer-owned, worker-owned, or consumerExamples of Cooperative Food Hubs 

n Idaho’s Bounty Co-op Hailey & Garden City, ID (Multi-Product)

n La Montañita Co-op Albuquerque, NM (Multi-Product)

n Tuscarora Organic 

Growers Co-op Hustontown, PA (Organic Produce)
RUNNING A FOOD HUB 17

owned. Many food hub ventures are experiencing increasing difficulty

successfully operating a single-stakeholder business. At times, the goals of a

food hub include benefiting multiple groups (i.e., farmers, consumers,

workers) within the same structure, which can represent a challenge for

some ventures and often makes operations for the hub more complicated as

the hub tries to balance the needs of the many groups working together. 

 To help address the diverse concerns of members, a unique organizational

format has arisen, mostly among food hubs organized as cooperatives, that

includes multiple membership classes, such as producers, workers,

consumers, community members, and investors, in the ownership of the

business, thus addressing all classes of stakeholders involved. A multistakeholder organization is often identified as containing at least two groups

of stakeholders. 

 A multi-stakeholder food hub balances the needs of stakeholder classes

 In the governance of such a multi-stakeholder structure, care must be

taken to balance the needs and interests among all classes of stakeholders.

Typical “one-member, one-vote” formats are often modified in some way,

with some groups utilizing directors as representatives for an entire class of

stakeholder in order to maintain the balance of governance. 

 This type of business approach doesn’t just balance the needs of

stakeholders, but also embraces their different needs. According to the

Cooperative Development Center at Kent State University, multistakeholder businesses “represent a diversity of interest, but a commonality

of need or aspiration on the part of the stakeholders, capturing a range of

types of interest and impacts that an organization has, while recognizing the

interdependency between them.”8 Put simply, multi-stakeholder businesses

8 Lund, Margaret. “Solidarity as a Business Model: A Multi-Stakeholder Cooperative

Manual.” Cooperative Development Center at Kent State University.

Workers Consumers Farmers &

Producers

Community

Members Investors

Food Hub
help create solidarity between groups that would normally have differing

sets of needs. 

 The multi-stakeholder approach creates unique challenges regarding

benefits and information flow. Membership within a multi-stakeholder

business can vary depending on the needs of the venture. Typically,

membership can be grouped into five main categories: Consumer

Membership, Worker Membership, Investor Membership, Community

Membership, and Producer Membership. Not all food hubs will have all of

these groups as formal members. For example, the food hub may work

closely with the community but may not have this group represented with a

membership class. Some food hubs may group or classify these members

differently.

18 RUNNING A FOOD HUB

Consumer

Membership

• Consumers

• Clients

• Families of Clients

• Institutional Purchasers

Community

Membership

• Schools

• Businesses

• Local Residents

Investor

Membership

• Private/Nonprofit

• Angel Investors

Worker

Membership

• Workers

• Professional

Employees

Farmer & Producer

Membership

• Producers

• Groups of Producers

• Intermediaries:

Producers,

Distributors, 

etc.

Membership

Examples of Multi-Stakeholder Food Hubs

n Sandhills Farm to Table Whispering Pines, NC (Multi-Product)

n Fifth Season Cooperative Viroqua, WI (Multi-Product)

n Nebraska Food Cooperative Belgrade, NE (Multi-Product)
RUNNING A FOOD HUB 19

Subsidiary Food Hubs

 Several U.S. food hubs have been formed as subsidiaries of an existing

company with a larger mission. These food hubs usually operate

independently, although technically they are a subsidiary of the parent

organization. There are examples of this arrangement with both for-profit

and nonprofit entities. 

 There are numerous examples of food hubs using this process. La

Montañita, a for-profit cooperative, began its Co-op Distribution Center

(CDC) to provide access for mid-scale farmers and producers that would

otherwise have difficulty accessing local markets. GrowNYC is a nonprofit

company headquartered in New York City that began a wholesale

distribution service, Greenmarket Co., to make local products available to

wholesale buyers. Seattle Tilth is a nonprofit organization located in Seattle,

the mission of which includes education and promoting a sustainable local

food system for the Seattle community and beyond. As part of this mission,

the association began the Seattle Tilth Produce food hub and offers a

community supported agriculture (CSA) program to area consumers. 

Other Legal Organizations

 While most food hubs in the United States are structured as

corporations, LLCs, or cooperatives, other legal structures exist, including

sole proprietorships and partnerships. These types of organizations have

traditionally been less common, due to liability issues and difficulties in

raising capital. 

 There are multiple factors to weigh when determining the best business

structure for a venture, which can vary depending on the type of structure.

For a better understanding of the differences between common business

structures, a comparison table has been included in Appendix D of this

document. 

Food Hub Operational Models

 While all food hubs are engaged in the aggregation and distribution of

food, they approach this function through many different methods of

operation. These methods, or “operational models,” can be categorized

based on what market the food hub is serving. Direct-to-consumer,

wholesale, and hybrid operations (which are a combination of these and

other methods of operation) are the three primary types of aggregation

ventures, as USDA defines a food hub. Within these broad divisions there

are numerous categories of food hub models. This section presents

descriptions of some of the most common operation models.
20 RUNNING A FOOD HUB

 Direct-to-Consumer Food Hubs

 Direct-to-consumer food hubs are intermediary service providers that

connect farmers with community members. Sale of farm products directly to

consumers is a fast-growing sector of the food economy. 

 In general, direct-to-consumer food hubs often have the following

characteristics: 

 • Usually are based on the sale of produce.

 • Customers usually pick up items from various drop-off locations.

 • Are operated by a mix of staff and volunteer labor.

 • Typically distribute directly to the end consumer.

 • Usually charge retail prices for their products.

 The following are some common examples of direct-to-consumer

operations.

• Community Supported Agriculture (CSA)

 In many CSA models, a consumer pays up front, as with a magazine

subscription, and then receives a share of product weekly or biweekly for the

duration of the season. A CSA manager (a farmer or hired staff) organizes

the aggregation of farm products, packs the individual orders, and

distributes the share orders to designated drop-off sites, which are often an

on-farm location, but may also be a community site.

 The idea behind CSAs, also known as “subscription farming,” originated

during the 1960s in Japan and Switzerland as a way for consumers to ensure

the health and sustainability of their local agricultural producers. The idea

has steadily gained momentum since being introduced in the United States

in the 1980s. While the Government does not track the number of CSA

programs, LocalHarvest.org lists more than 4,000 individual programs in its

directory.

 A CSA can be as varied as the communities it serves and the producers

who participate in it. While typically based around fruit and vegetable

production, CSAs increasingly include an array of farm-based products,

from vegetables, fruits, eggs, meat, and fish, to more processed items, such

as jellies and jams. 

 Though most CSA-type food hubs generally provide various types of

shares that CSA members can choose between, there may also be some

customization. Common options for customization include adding products

such as eggs; shelf-stable items such as jams, jellies or salsas; or even meats

and other protein foods. For some consumers, a weekly or bi-weekly share

can be overwhelming during the abundance of peak growing season. To
RUNNING A FOOD HUB 21

address this issue, some CSA food hubs permit consumers to donate

their shares to third-party charities.

• Virtual Food Hubs

 One type of direct-to-consumer food hub rapidly gaining popularity

is the virtual food hub, which can exist primarily online. Advantages of

a virtual food hub include reduced operational costs and more efficient

ordering and communication. A typical virtual food hub uses an online

platform where consumers can order local food from multiple area

farmers. Pickup of complete orders can be made at a central location. 

 This type of food hub often serves as a virtual, online farmers market

The Local Food Hub (LFH) in Charlottesville, VA, offers a wide array of local produce,

such as heirloom tomatoes, to retail grocery and institutional customers, including

schools and hospitals. Photo by Justin Ide, courtesy of LFH.

Examples of Community Supported Agriculture Food Hubs

n Good Earth Food Alliance CSA Farmington, IL (Produce)

n Common Wealth CSA Greenfield, MA (Produce)

n High Country CSA Banner Elk, NC (Produce)
22 RUNNING A FOOD HUB

or buying club. Buyers may pay an initial fee to join, but can order “a la

carte.” Producers set prices just as they would at a farmers market. The

aggregation of farm products, individual orders, and distribution to

designated drop-off sites (community sites, workplace, home delivery, etc.)

can be operated by members (either producers or consumers) or through a

third-party (hired) enterprise. 

 This model benefits farmers with limited staff who now have access to

large numbers of consumers without having to dedicate staff, time, and

money to being physically present at farmers markets. Consumers benefit

because they can shop with as many farmers as they like, at hours that are

convenient to them, and from the comfort of their home. Customers can see

exactly what is for sale at any given time without the necessity of physically

going to a farmers market in the hopes that a product may be available.

 A virtual food hub provides a way to personalize and guarantee delivery of

every order, but may be costly to initially implement due to the large startup cost of the software development.

• Box Delivery Enterprise

 This type of direct-to-consumer operation is typically operated by a forprofit entity that provides an online grocery store experience, with a strong

emphasis on locally grown or raised food products. Similar to the virtual

food hub, this type of operation may require initial fees to access the site or

require minimum orders. 

 Because this type of food hub often acts as a full-service grocery store, it

may offer both local and non-local products. The consumers pick the

products that they want included in their next food box delivery. The

enterprise organizes the aggregation of products, packs individual orders,

and distributes to the customer. While many of these hubs feature home

delivery, they may also use centralized drop-off points, such a churches,

schools, or community centers, as do other types of direct-to-consumer

operations.

 This type of food hub can face higher-than-average distribution costs

Examples of Virtual Food Hubs

n LuLu’s Local Food Richmond, VA (Multi-Product)

n FarmieMarket Online Albany, NY (Produce)

n Red Hills Online Market Tallahassee, FL (Multi-Product)
RUNNING A FOOD HUB 23

compared to the other operational food hub models; however, it offers

maximum choice for consumers.

 Wholesale Food Hubs

 Wholesale-type hubs focus on distributing food to other “intermediates”

in the supply chain, such as restaurants, schools, institutions, or retail stores.

The term “wholesale food hub” is an umbrella term that can apply to food

hubs with a variety of target markets. Local restaurants, individual or

regional grocery stores, large-scale grocery chains, and institutions can all be

considered “wholesale” markets. Typically, this business aggregates product

from multiple producers, and prepares the product for larger volume orders

to service distribution hubs and/or other specialty and foodservice

distributors. It then handles the delivery of the product. 

 Wholesale food hubs often have the following characteristics: 

 • May be more focused on retailers as the main customer base.

 • Offer a larger variety of products, which helps expand the seasonality of

sales.

 • Deliver products to end customers. 

 • Rely on staff to repack items and deliver product.

 • Often offer technical support services for producers.

 To facilitate larger scale aggregation and delivery, this type of food hub

often uses a packing shed or warehouse located close to major production

areas, and sometimes located on a farm. The products the hub receives from

producers may already be sufficiently packaged to fulfill orders, or the hub

may do sorting, grading, and packing onsite. 

 These types of hubs also frequently support producers by offering

training in areas such as production planning, food safety, sustainable

production practices, and strategies for extending their season. However,

because of their scale of activity, these hubs may end up in competition with

established supply chain intermediaries and brokers. This can result in

having lower markup margins on the food they distribute, as they strive to

Examples of Box Delivery Food Hubs

n The Produce Box Raleigh, NC (Multi-Product)

n Relay Foods Charlotte, VA (Multi-Product)

n Good Eggs San Francisco, CA (Multi-Product)
24 RUNNING A FOOD HUB

remain competitive.

• Small Wholesale Distributor Food Hub

 This variation of a wholesale food hub is more focused on selling to

smaller wholesale clients, such as restaurants and convenience and specialty

stores. These hubs tend to work with producers by offering the technical

support services mentioned above. 

• Institutional Distributor Food Hub

 These hubs target larger buyers, including schools and institutions, such

as hospitals, assisted-living facilities, or colleges. Buyers targeted by these

hubs increasingly require third-party food safety certifications for the hub

facility and from their producers. 

 Due to the scale of their operations, these types of food hubs may require

large minimum orders. They often have a warehouse facility that is located

closer to a higher population urban marketplace. They also tend to be more

sophisticated in their use of information technology (IT) in tracking,

inventory, and sales platforms. Services provided by these larger scale food

hubs are often oriented to buyers and end-consumers. These services may

include marketing, branding, “buy local” campaigns, and similar activities. 

 If there is a sufficient volume of sales and a strong marketplace, some of

these hubs may have facilities that provide a range of processing activities.

These may include light processing (slicing/dicing, bagging), preservation

(canning, pickling, fruit preserves, smoked meats), or product

transformation of value-added goods (sausages, sauces, purees, etc.)

 Hybrid Food Hubs

 A hybrid food hub combines functions of several other operational

models, often simultaneously. These hubs often sell products to wholesale

clients while also running a direct-to-consumer business. Combining these

two business models may enable the food hub to reach a larger, more diverse

customer base than the separate models could reach on their own.

 A hybrid food hub that starts as a wholesale hub can often infill sales

activity with direct-to-consumer sales and obtain higher profit margins from

retail pricing. Because of its existing wholesale activities and access to

infrastructure, it can often utilize existing space and delivery trucks to begin

new sales activities. Direct-to-consumer orders are simply included with

regular wholesale orders, and drop-off locations are added along the hub’s

current delivery routes. 

 A hybrid food hub often gets its start as a direct-to-consumer hub or a
RUNNING A FOOD HUB 25

wholesale hub. The easier transition is from wholesale food hub to a hybrid

hub, then to add direct-to-consumer sales. This is due to the certification

process and regulations already in place for a more structured wholesale

operation. This type of transition also allows easier adjustments in pricing

and profit margins.

Food Hub Challenges

 When choosing both legal and operational structures for a potential food

hub, there are several unique challenges that need to be addressed. In

addition to the standard considerations of tax benefits and ownership

concerns, operational structures can change and grow over time to meet

changing needs. 

 To increase sales, a food hub needs to increase its product supply. Food

hubs often face the challenge of building a network of producers who are

able to supply the quality produce consumers demand. Because a food hub’s

Tuscarora Organic Growers (TOG) Cooperative, a producer-owned food hub based in

Hustontown, PA, partners with New Morning Farm to transport organic produce to

markets in Washington, DC. Photo courtesy of TOG.
26 RUNNING A FOOD HUB

supply is often limited to only what is grown and produced locally, growing

the number of producers within the network may become problematic; as

more producers are added, the issue of competition among the hub’s

producer-members may arise. 

 Seasonality is another barrier that many food hubs face. No matter the

location of the food hub, producers are subject to seasonality and the

possibility of damaging weather. The food hub’s customers require products

throughout the year, so many food hubs have had to encourage seasonextending services, such as value-added processing, or to consider offering

products that still promote the hub’s mission, even if they are not locally

produced. 

 Along with an increase in a food hub’s network of producers, it will also

need to increase its customer base to facilitate growth. The food hub’s

strategy for expanding its customer base should involve making changes

and/or additions that better meet consumer needs. This may involve making

infrastructure and procedure changes that give consumers more control,

more variety, and more choice.

 To maintain consistent supply and sales, food hubs must decide what

incentives will be offered. Food hubs can have a tremendous impact on their

producer-members by returning a percentage of food dollars spent. 

 The food hub can also allow producer-members to receive prices that are

above the prices they would receive in a wholesale market. By selling

through a food hub, farmers can reduce the cost of hiring employees to sell

their products. Consumer-members benefit from a food hub’s ability to

bring together multiple producers and consistently deliver high-quality,

fresh local products. Consumers also have the opportunity to interact with

producers and learn more about how and where their food is produced. 

 Sharing information with food hub stakeholders and staff is an important

aspect of the business. An annual meeting can be an effective method of

information sharing with consumers, producers, and/or workers. This can

give consumers the opportunity to meet farmers and producers and continue

developing working relationships. A newsletter, website, or other form of

periodic correspondence can maintain open communication channels with

members. 

 As with any new business idea or venture, enthusiasm is often at its peak

in the early days of the venture. Over time, interest can wane and more and

more people can move towards casual involvement. A food hub must seek to

maintain membership classes and individual stakeholders who are highly

engaged and motivated to ensure the growth and long-term effectiveness of

the food hub. 
RUNNING A FOOD HUB 27

THE EVERYDAY OPERATIONS of a food hub will differ for each business

depending on the size, scale, and even location of the venture. As a smaller

venture competing with established food distributors, a food hub will likely

face higher costs; however, the food hub has flexibility in daily operations

that may prove to be an advantage, including how many days during the

week it operates and what type of products and services it provides. 

 For any size and scale of food hub, specific operational concerns arise. To

understand how a prototypical food hub operates, these concerns have been

highlighted below. This section will explore the various categories of general

operations, such as location and infrastructure, equipment, logistics and

transportation, human resources, business software, supply, product

selection and packaging, and funding. 

Location 

 Owners will need to evaluate the area in which they intend to open a food

hub and determine if the location has all the necessary components for

success. A good location is essential to establishing a successful business, as

the location often helps determine many

components for the business, including the

customer base, possible funding sources,

and transportation opportunities. To

facilitate the meeting of producer-members

and the efficiency of delivery to customers,

the food hub ideally should be centrally

located in the region which it intends to

serve. 

When determining the location of a food

hub, the owners and management should

evaluate the infrastructure in the area, such

as major roads and institutions. This will

help determine how easy it will be to

transport product in and out of the facility,

as well as the ease of customers accessing

the business. The facilities should be located

near a major roadway, and any visibility

obtained by the food hub’s location will also

benefit its community awareness and allow

Food Hub Operations

n What location would best

benefit the producers and

buyers?

n What location

requirements does the

food hub have?

n Will the structure fill the

needs of all parties? 

n What location would best

benefit the producers and

buyers?

n What location

requirements does the

food hub have?

DECISION POINT
28 RUNNING A FOOD HUB

for signage to function as a marketing tool for the food hub.

 Another consideration for the food hub’s location is the level of interest

within a community. Because agricultural businesses, including food hubs,

are seldom “9-to-5” operations, considering the community atmosphere

when locating a potential food hub is important. Depending on the

perception of the community, new businesses can often face “Not in My

Backyard” attitudes in a community, creating barriers and obstacles before a

hub has even been established. 

 Zoning

 When choosing a location, zoning requirements will play a role in the

selection process. Zoning is the enactment of county ordinances to regulate

land use to conform to State land conservation and development laws and

the county comprehensive land-use plan. Areas are typically zoned for

residential, commercial, industrial, or other uses. 

 All of the 50 States have zoning-enabling legislation for municipalities.

Many States also have zoning-enabling legislation for counties. Zoning laws

are found in virtually every municipality in the United States, affecting land

use, lot size, building heights, density, setbacks, and other aspects of

property use. 

 Zoning regulations become especially important when a business seeks to

expand its current operations through either the addition of production or a

physical increase in the building and/or property that will change the use of

the land and existing facilities. The current operation’s legality does not

guarantee the right of the owner to expand or modify in the future and is

subject to current zoning restrictions and codes. 

Infrastructure

 Once a location has been established, a business must determine what

type of infrastructure is needed. Many food hubs

operate in some sort of physical space that is

owned, rented, or leased. Many utilize office

space, trucks, and/or a warehouse in their

infrastructure. The site should have space to

handle the initial operations and room for

growth, should an increase in demand make

this necessary. 

Owners can choose to avoid the risks and

cost of new construction by instead finding

an existing warehouse and site that will meet

n What type of infrastructure

does the food hub require?

(Facility, trucks, etc.)

n Will the owners lease or

purchase the necessary

buildings and structures?

DECISION POINT
RUNNING A FOOD HUB 29

its needs while still allowing for future expansion. Repairs and/or

modifications may need to be made to an existing warehouse. These costs

should be compared to the cost of constructing a new building. The owners

may also encounter less regulatory hurdles, such as zoning requirements and

building permits, when using an existing building. 

 The typical work flow of a food hub begins with the arrival of product at

a facility. Depending on the logistic arrangements of the food hub, storage

may be kept to a minimum. Producers can drop off their product the

morning of, or day before, the product is delivered to the customer. It is also

possible for smaller producers to aggregate deliveries with other producers

in their area to consolidate delivery. This reduces costs for the producers

involved and allows the food hub to deal with fewer total deliveries. 

 A prototypical food hub site is a

warehouse of about 3,000-10,000

square feet with room for multiple

climate zones, coolers, a small walkin freezer, dry-storage space, and

office space. The general space is

typically used to handle reception,

loading, unloading, grading, repacking, and delivery of fresh

produce. Dry-storage space is used

to store materials such as boxes and

packaging as well as cleaning and

general-use items. Cold and freezer

room space can be used for both

short-term and long-term storage.

This may include subdivided

compartments to provide optimum

storage conditions for products that require specific temperature and

humidity conditions. Office space should be available for administrative

functions as well as other needs related to personnel and employees, such as

bathrooms and break rooms.

 Ideally, the building should include paved areas for receiving and cooling,

outside storage, parking for cars and trucks, ramps, and covered dock space.

Paved areas facilitate movement of product as well as the ability to utilize

product cooling equipment that does not have to be housed within the

building. Outside storage is necessary for various equipment. Adequate

parking for staff while still allowing for easy entry and exit of large delivery

vehicles is essential. 

Facility

n Reception/delivery

n Office space

n Retail Space 

n General warehouse space

n Dry-storage space

n Cold and freezer room space: 

 l Cooler units 

 l Wet-cold room

 l Dry-cold room

 l Dry-warm room

 l Freezer space

 l Bathrooms, break rooms, etc.
30 RUNNING A FOOD HUB

 Requirements for the warehouse space may include food-safety

considerations as well as separation of storage and fulfillment spaces. The

facility should be chosen with the mitigation of contamination risks in mind.

Logistical considerations include load-bearing requirements, climate

control, and storage- and packaging-space requirements. 

 The warehouse must also meet specific requirements for the optimal

storage of fresh produce. Excess exposure to the elements can cause

unfavorable effects, so the site should house sufficient cold storage for fresh

Regional Warehousing Costs

The cost of a warehouse can vary among different States and will

depend on the area in which the facility is located, both in regard to

real estate prices as well as region of the country. The following

warehouse costs are estimated through Reed Construction Data

using 2013 RSMeans data and are based on a 30,000-square-foot,

one-story building. Though this sample is larger than the average

food hub, it reveals the variations in warehousing costs across

different regions of the United States and how the location of a

warehouse can impact the overall cost.

As shown in the table above, warehouses located on the West Coast

and Midwest typically have a higher price per square foot than those

located in South and along the East Coast. Texas had the lowest

warehouse cost out of the five sample States, while Minnesota had

the highest. 

State Price per Square Foot Total Price of Warehouse

n California $112.39 $3,371,600

n North Carolina $83.56 $2,506,700

n Maine $94.88 $2,846,300

n Minnesota $115.85 $3,475,400

n Texas $80.73 $2,421,800
RUNNING A FOOD HUB 31

produce. The amount of storage needed in the food hub will depend on the

logistical agreements the hub has with the producers and suppliers. On one

hand, a “just in time” delivery model will mean the food hub does not need a

large amount of storage space. On the other hand, larger amounts of space

will be needed should the hub need the capability of storing product for

several days.

 Required inventory space — to accommodate both future growth in

volume handled as well as for producer services — should be addressed in

the site-selection process. The food hub may consider providing equipment

for washing, packing, cooling, and storage for its producer-suppliers, all of

which will likely impact future space requirements. Infrastructure (such as

access to transportation corridors, etc.) should factor into location decisions.

Equipment

 Most equipment purchased during the first year of operation is used to

provide for start-up operations. Additional equipment is added over time as

the business grows. While major pieces of equipment are often a central

focus of capital budgeting and cost projections, smaller items — such as

cleaning supplies, product-movement equipment, furniture, and other

general items — can add up quickly.

 A food hub will need to acquire at least a basic level of equipment and

operational supplies to function efficiently. The amount and type of

equipment necessary will vary, depending on the food hub’s intended

product (produce, fruits, meat, dairy, etc.) but also based on the intended

market (wholesale, retail, CSA). The amount and size of the equipment

needed will also depend on the scale of the food hub operation and the

services it will offer to producers. This could include equipment for

washing, grading, or re-packing.

 General Considerations

 • Installation and Setup — With equipment, especially larger equipment

that requires in-line installation or a dedicated power supply, the cost of

installation and setup can be significant. It may not be included in initial

quotes by equipment manufacturers. Additional costs may include

shipping, installation, setup, or training. These costs should be

considered when choosing whether to offer specific services or to

purchase additional equipment. 

 • Leasing versus Owning — Certain pieces of equipment are often available

for rent or lease, rather than purchase. Particularly in the sensitive start-
32 RUNNING A FOOD HUB

up phase, the flexibility provided by short- or medium-term leasing may

provide a way for a food hub to “test the waters” without investing in

significant fixed-cost assets.

 • New versus Used — Choosing whether to purchase new or used

equipment also requires careful consideration. While the lower prices

of used equipment may seem attractive at first, purchasing used gear

can carry hidden costs. While the initial purchase price for used

equipment will almost always be lower, the cost of disassembly,

retrofitting, upgrading, ensuring compatibility with other equipment

and maintenance costs – as well as efficiency and quality concerns – are

all factors that can add to the actual “bottom line” of purchasing used

equipment. New equipment may also offer other advantages, such as a

service/parts warranty or other guarantees. 

 General Equipment

 A food hub with a warehouse will typically need equipment for large-scale

product moving and handling, delivery, and storage. The table below lists

some sample items that a typical food hub may need for general

warehousing and storage. 

 While it is easy to remember larger items within each category that

represent a larger portion of a food hub’s total costs, such as trucks or

forklifts, the cost of many smaller items (mops, brooms, or cleaning supplies)

can easily add up when purchased in the necessary quantities. For example, a

basic smoke detector costing $20 seems like a minor expense. But

purchasing 25 of them for use throughout a facility or office can result in a

total cost of $500. In budgeting for items such as these, avoid the “lump

sum” mentality that often underestimates the total cost of an item. 

 Basic items — such as hand trucks, pallet jacks, tables, and storing and

Examples of General Warehouse/Storage Equipment

Forklift, Hose, Spray Nozzle, Misc. Cleaning Supplies, Misc. Tools for Maintenance,

Ladder, Boxes, Mop Bucket, Mops/Brooms, Walk-in Cooler, Curved Floor

Squeegee, Hand Truck, Truck, Pallet Jack, Crates, Trash Cans, Roller Conveyor,

Shelving, Pallets, Janitorial Cart w/Equipment, Work Tables, Water Hoses for

Cleaning, Thermometer Gun, Temperature/Humidity Indicator, Tarps
RUNNING A FOOD HUB 33

stacking equipment — are usually necessary in a warehouse. Daily

operational and cleaning equipment and supplies — industrial trash cans,

floor squeegees, mops, brooms, and consumables — are used on a daily basis

and require frequent replacement. 

 Along with warehousing and storage equipment, a food hub will also need

equipment to provide for the safety of employees, office equipment for

administrative functions, and items for the break room or other employee

areas. Typical equipment items associated with these categories are listed in

the tables below. 

 Some of the safety equipment listed are required by law. For example, the

number and type of fire extinguishers is often dictated by several factors,

such as the size of the facility. A business must be in compliance with the

Occupational Safety and Health Administration’s (OSHA) fire-protection

standards. These and other OSHA requirements will need to be taken into

account when purchasing and maintaining safety-related equipment. 

 Costs of maintenance and depreciation should be included in equipment

budgets. Machines of all types require regular maintenance to extend their

life. Costs to replace worn-out components must be considered. Lack of

attention to maintenance often results in equipment failure at the worst

possible times, such as peak sales seasons. All equipment has a useful life,

which should be considered when deciding whether to invest in used, rather

than new, equipment. 

 A designated area maintained for administrative functions will require

office equipment. Although an office may occupy only a small portion of the

space, its equipment needs still must be addressed. Typically, the largest

expenses will be related to computers and furniture. Office supplies

Examples of Safety Equipment

Fire Extinguishers, Exit Signs, Smoke Detectors, First Aid Kit, Carbon Dioxide

Detectors, Emergency Shower

Examples of Office Equipment

Desk, Filing Cabinet, Office Chairs, Air Conditioning Unit, Lamps, Telephone,

Shelving/Storage, Credit Card Processing Machine, Trash Cans, Computer,

Software, Vacuum Cleaner, Printer/Scanner/Fax
represent another recurring expense.

 Depending on the number of hours worked by employees and the

number of staff, areas for breaks may be needed. Break or lunch rooms

should be equipped with the necessary appliances and supplies for storing

food and eating. OSHA does not have specific requirements pertaining to a

designated break room or the equipment used.

 Direct-to-Consumer Equipment

 A food hub that makes direct-to-consumer sales will have different

equipment requirements than will food hubs that only deal with wholesale

accounts. Although some of the larger and basic equipment will be the same,

a food hub interacting with individual customers will need additional items

that are more customer-oriented. If the food hub operates any type of retail

storefront, this equipment could include tables, shelves, displays, and

registers, and will likely resemble the equipment found in a typical grocery

store.

 If a food hub is setting up pick-up locations, portable tables and other

items will be needed to maintain efficiency in handling groups of customers.

Some of the items listed above will be seen in most retail settings. A flat

screen TV, on the other hand, is one item that may not be associated for a

retail setting, but which could be useful for product displays or to

communicate information about the unique mission of the food hub or for

general promotion or education. Refrigerated display units and productdisplay shelving will be among the larger equipment purchases, particularly

Examples of Break Room Equipment

Coffee Maker, Tables, Water Cooler, Chairs, Misc. Paper/Plastic Dishware,

Microwave, Refrigerator, Misc. Bathroom Supplies.

Examples of Consumer-Oriented Equipment

Bags, Desk, Cash Registers, Point-of-Sale Software, Flat Screen TV w/DVD Player,

Refrigerated Display Case, Credit Card Machine, Folding Chairs, Refrigeration

Units, Storage Containers, Compressor, Product-Specific Display Shelves, Misc.

Bins, Sink, Industrial Shelving, Folding Tables

34 RUNNING A FOOD HUB
if the food hub will sell dairy, meat, or other cold-storage items. 

 Equipment and displays for fresh produce are much different than those

required for shelf-stable or locally produced canned goods. A food hub’s

product selection will have a large impact on the type of equipment needed.

The following section highlights some specific gear that may be necessary

for major product categories. 

 Software

 Food hubs use different methods for handling customer orders.

Customers can place orders directly, using special software, which helps

ensure the proper allocation of available products for customers. This can

ensure sufficient time to guarantee product is available and delivered on

time. 

 Depending on the software used by the food hub, customers may be able

to browse a dedicated site operated by the food hub

to see what products are available. Once an order

is placed, the food hub can use an order cutoff date to coordinate with the producers

for the hub and communicate the quantities

of product necessary to be allocated and

fulfill the week’s orders. 

A variety of software can be used to fulfill

the ordering and sales needs of a food hub.

Programs such as Delivery Biz Pro and

CSAware facilitate the management of

customer orders as well as the

implementation of inventory and allocation

procedures. Many existing food hubs have

foregone food hub-oriented software packages, such as these, and instead

created their own inventory and ordering programs, usually based on a mix

of general ledger software and Microsoft Excel spreadsheets.

n Will the food hub use

software to manage

customer orders, inventory,

and other functions?

n What ordering and

processing software best

suits the food hub’s size

and demand?

DECISION POINT

Examples of Food Hub Software

n Local Orbit n bcFood n Delivery Biz Pro

n CSAware n Entrée n Lulus

n Produce Pro n Blue Link ERP n FoodConnex

n MS Dynamics

RUNNING A FOOD HUB 35
 Transportation and Trucks

 One of the biggest decisions faced by food hubs is how to handle the

logistics of trucking and transportation. Vehicles are often used on a daily

basis for pickup of product from producers, delivery to customers,

movement of product from location to location, set-up and operation of

drop-off locations, and general supply movement. As a result, the food hub

becomes highly dependent on the reliability of these vehicles. 

 The cost of operating the vehicles represent all major cost categories

discussed for equipment: large up-front costs, regular and routine

maintenance costs, catastrophic failure costs, as well as consumable and

recurring costs for fuel. The heavy reliance of food hubs on transportation

and vehicles means that every decision affecting cost and operational

continuity is magnified in importance. The loss of a truck during peak

season can cripple the operation and damage the reputation of a food hub. 

 Choosing between leasing a vehicle and purchasing it can affect both the

upfront and future costs. Some food hubs seek to mitigate the upfront and

maintenance costs of owning a truck by leasing their vehicles. Repairs and

maintenance are typically covered by the leasing entity, and the user is not

financial responsible. Should a leased vehicle break down, the agency will

often replace the vehicle. The upfront cost to rent a truck is usually minimal

when compared to an initial purchase; however, depending on the time

period, renting a truck can become more costly in total than an initial

purchase would have been. 

Rent / Buy

Greater

Lifetime

Cost

Zero

Repair

Cost

Lower

Up-Front

Cost

Zero

Equity

Up-Front

Cost

Ownershipo

Lower

Lifetime

Cost

Repair &

Maint. Cost

36 RUNNING A FOOD HUB

Figure 2—Truck Decisions
 Depending on the relationship established with the leasing company, and

the proximity of the food hub to the nearest service center, leasing may

provide little relief from the issues related to maintenance and vehicle

breakdowns. Leasing also provides the ability to tailor the transportation

equipment used by a food hub to its seasonal needs. The number of trucks

necessary during peak seasons may not be the same number required during

slower sales periods. Leasing additional trucks, as needed, can help a food

hub keep costs to a minimum yet still operate efficiently. 

 Ownership, on the other hand, places the responsibility for upkeep and

maintenance squarely on the food hub. With financial resources quite likely

already at a minimum, the food hub may find it difficult to address

catastrophic repairs that may be necessary with trucks that experience heavy,

continuous use. However, food hubs that are able to purchase their own

vehicles outright are able to lower their monthly costs by not having to make

lease payments. Purchasing a truck also provides a tangible asset that may

prove beneficial in the future, and, when purchasing a new vehicle, a vehicle

warranty is often included.

 Interviews conducted with food hub staff indicate that regardless of

whether a hub chooses to purchase or lease a vehicle, the average costs over

a lifetime are often comparable. A potential food hub should carefully weigh

its options and circumstances to make the decision that best suits the hub’s

intended operations. The owners of the food hub will need to determine

what best suits the business. Many times, it can be beneficial for a business

to rent a truck during start-up, waiting until later to purchase one. The

frequency of use and cost of the rental will affect this decision. 

 Meat, Dairy, and Other Cold-Storage Items

 A food hub offering meat and dairy products will need cold-storage

equipment, including refrigerated display and storage units. Freezers may

also be required. If the food hub elects to deliver cold or frozen products or

to pick up the product from producers, a refrigerated truck will be required

to maintain the appropriate temperature. Wholesale food hubs that are

more focused on simple storage may simply use basic cooler and freezer

units. 

 Food Processing, Washing, Packing, or Grading

 Should a food hub — whether wholesale or retail — choose to offer

services to producers, such as washing, packing, cooling, grading, or further

value-added processing, additional large-scale, expensive equipment will

likely be necessary. The table below lists some common equipment related

to such activities. 

RUNNING A FOOD HUB 37
Fuel Costs

The cost of diesel fuel across the United States varies from State to

State and region to region, and over time can be quite volatile even

within one region of the country. Overall, diesel prices tend to be

lower in the southern region of the United States versus the

northern region, and pricing variations are influenced by the

proximity of the gas stations to refineries, as well as local and State

regulations and taxes. The following figures were captured during

the spring of 2014 and are intended to show the range of pricing

exhibited by different regions. There is an almost 30-percent

difference between the highest and lowest reported prices.9

Toll Costs

Depending on where the business is located and what delivery

routes drivers use, the business may need to account for the cost of

tolls. It is difficult to determine the regional variations of

transportation costs, specifically in terms of toll expenses. These

costs may change depending on the type of vehicle using the toll.

The above table shows the average toll cost for some of the States in

2014 for a two-axle vehicle with single rear tires.10

State Avg. Fuel Cost

n California $4.11

n Maine $4.27

n Minnesota $3.99

n Mississippi $3.75

n North Carolina $3.98

n Texas $3.74

State Avg. Toll Cost

n California $5.55

n Texas $0.62

n Delaware $3.33

n Virginia $3.01

38 RUNNING A FOOD HUB

09 Gas prices were reported from www.gasbuddy.com. 

10Toll costs were reported from www.costtodrive.com.
RUNNING A FOOD HUB 39

Human Resources

 Efficiently operating a food hub requires numerous roles to be filled. In

many cases, multiple roles are filled by one employee, helping a food hub

save on staffing costs. This approach has been taken in a number of food

hubs with staffs of less than 10 people and sales of up to $3 million per year.

In addition, full-time staff is frequently supplemented with both part-time

seasonal labor as well as volunteer staff. Because

food hubs often function based on an

underlying social mission, using volunteer

labor helps to engage the community and

provide cost savings for the food hub.

Staffing levels for a food hub obviously

vary depending on the size of the operation.

Smaller food hubs with average annual sales

of about $500,000 or less average two fulltime employees, two part-time employees,

and three seasonal employees. On the other

end of the scale, food hubs operating at $5

million-$10 million average 42 full-time

employees and 3 part-time employees.

Typically, larger food hubs tend to hire

more full-time employees. Food hub volunteers are more prevalent in

smaller food hubs. 

 While volunteer labor can help save on labor costs, using volunteers can

also have drawbacks related to efficiency and consistency. While volunteers

may be willing and enthusiastic, they frequently lack the agricultural

experience to take on key leadership roles that can affect the performance of

the food hub. 

 Another issue related to volunteer labor is that while it may provide a

significant cost savings that can help the venture achieve a successful start,

sustaining consistent volunteer labor over long periods of time can be

difficult as initial enthusiasm wanes or as normal issues and complications

arise. Particularly when a food hub reaches a point of consistent sales and

growth, having unstable or inconsistent human resources can prevent the

entity from reaching the next growth stage.

 As a food hub grows, it will require more work and organization to keep

up with the increases in production and commercialization efforts.

n How much labor is needed

for the food hub’s scale?

n At what point will

management add more

labor?

n What type of labor will be

used (part-time, full-time,

volunteer)?

DECISION POINT

11 Fischer, M., Hamm, M., Pirog, R., Fisk, J., Farbman, J., & Kiraly, S. (2013). Findings of the 2013

National Food Hub Survey. Michigan State University Center for Regional Food Systems & the

Wallace Center at Winrock International.
40 RUNNING A FOOD HUB

Therefore, it may be necessary to hire additional management and other

human resources in future phases of the operation as sales and the

infrastructure of the business grow. 

 The remainder of this section highlights some of the typical roles found

within a food hub. The personnel titles used are intended to represent a

potential role within the venture, along with associated functions. Staffing

roles that have been identified generally fall under the following categories

and sub-roles. 

Labor Roles

 General Management and Operations

 The general management of the food hub requires organizing,

overseeing, and directing the food hub’s day-to-day operations. In

combining duties from other roles, functions may also include developing

initial sales contacts for the food hub or answering customer inquiries. As

the business grows and takes on additional personnel, certain functions may

be passed on to other individuals. Other roles commonly found in this

category include: 

• Office Management

 Due to the volume of sales documentation and order processing, as well

as the addition of other administrative personnel, staff may be necessary

to oversee these internal functions. 

• Operations Supervision

 At some point in operations, it will likely be necessary to have supervision

of general labor staff. This role often ensures that management directives

are carried out. 

• Food Safety Oversight

 Depending on what food safety certifications the food hub intends to

acquire, this role entails maintaining compliance, including records and

plans, as well as readying the food hub for any audits or inspections

included in acquiring the certifications. 

 Sales and Customer Service

 Sales and customer service often involve the acquisition of new customer

accounts and growing the volume of existing customer purchases. This often

includes travel and face-to-face interaction with current and potential

customers. This work may also include addressing needs or concerns that

arise with customers, as well as coordinating the placement of orders for
RUNNING A FOOD HUB 41

products. Individuals fulfilling these roles will also need to closely

coordinate with the other personnel to organize the efficient movement of

product through the food hub to the end customers. 

• Order-Taking and Customer Interaction

 The function of this role is to serve as a contact point for customers

wishing to purchase products from the food hub. This includes receiving

and organizing orders from end customers, either by phone or online,

both in an office setting and in the field to communicate availability and

promote the purchase of additional volume. 

• Marketing

 Depending on the volume of customer orders and the outreach activities

of the food hub, the need may arise for dedicated marketing staff to

support sales staff. These functions often include carrying out various

marketing activities related to community awareness or increasing sales

volume. 

 Producer/Production Coordination

 Producer/Production coordination is an essential role in the operation of

a food hub. Functions chiefly include the coordination of supply for orders

and addressing any logistics or supply chain issues affecting the ability to fill

orders and make timely deliveries. Individuals in this role typically interact

with producers on a daily basis, both face to face and through other forms of

communication, helping to avoid large oversupply or undersupply of

product, based on seasonal changes. 

 Transportation and Logistics

 Another key function is the planning and coordination of product pickup

and order delivery routes and schedules. This position is chiefly responsible

for ensuring that products are efficiently delivered in a timely manner. 

• Product Pickup

 If producers are not responsible for dropping off their products at the

food hub’s aggregation point, this function entails coordination with

producers for scheduling product pickup. 

• Order Fulfillment and Delivery

 Food hubs in the wholesale business often require personnel to deliver

products to customers. This role includes loading, unloading, and

delivering product to customers, as well as fueling the truck, cleanup after
42 RUNNING A FOOD HUB

the delivery is complete, and light vehicle maintenance. 

 Financial Oversight

 Much like any other business entity, separation of duties is a key internal

control, especially in the handling of a food hub’s financial information.

Proper tracking information management can also provide key information

for managerial decisions.

• Bookkeeping and Accounting

 Maintaining and tracking financial information, both for reporting and

managerial decisionmaking is an essential role within any entity. Often,

this role includes general administration functions such as filing,

recordkeeping, tabulating sales, and maintaining customer files, including

products sent and returned. This is also a role that is frequently

contracted to an outside agency. 

 IT/Web Management

 Whether the food hub uses proprietary inventory and ordering software

or third-party software to track orders, inventory, and deliveries, managing a

food hub’s information system’s infrastructure will be necessary. Depending

on the food hub’s reliance on software, it may be more efficient to contract

for these services. 

 General Labor

 Several functions of the food hub will fall under the category of general

labor. Product reception, storage, handling, repacking, and fulfilling orders

are all examples of such activities. General cleaning and maintenance of food

hub facilities is also necessary. Other functions may also be necessary

depending on the individual food hub. 

• Product Movement and Handling

 Once product arrives at the food hub, it will require general movement

and storage or preparation for aggregation and other activities. 

• Maintenance 

 The food hub facility will require regular maintenance. Depending on the

level of equipment used, these activities may be performed by the food

hub’s general labor staff. Should the food hub use special equipment,

additional staff, maintenance contracts, or employee training may be

necessary. 
RUNNING A FOOD HUB 43

• Volunteer Labor

 Because food hubs are often established with a social mission or

community improvement mindset, they are frequently able to tap

community support in the form of volunteer labor. 

Labor Positions

 This section outlines a list of positions that are often involved in fulfilling

the general roles discussed above during the normal operation of a food hub.

The following information shows how different specific positions combine

to carry out the necessary responsibilities and tasks in day-to-day operations,

along with a sample hierarchy tree and more detailed position descriptions.

The information is intended to be representative and does not necessarily

describe the exact positions seen in any one food hub; rather, each individual

food hub will need to assess the roles necessary for efficient operation and

then determine the exact positions that will be required to carry out those roles.

 While the roles necessary for operations are generally similar from food

hub to food hub, the actual positions employed will vary widely based on

intended operations. Particularly during the startup phase of a new venture,

many of the roles that overlap are assigned to one individual, while mediumscale entities may require the division of functions among multiple

individual workers. Management roles — such as general manager, sales

manager, or production manager — are involved in nearly all daily aspects of

the operation. Growth in sales will likely necessitate more human resources

and a greater depth of organization. A food hub may require additional

management and human resources in the future, and options should be

carefully reviewed when considering any increase in costs. 

 The descriptions of duties that are included are generic and intended only

as a guide. While the information below is presented using personnel titles

that are based on the roles identified in the preceding section, these titles

will vary widely in application, as will their associated functions. In practice,

it is common for multiple positions to be fulfilled by a single full-time

employee, or for the duties of one position to overlap with another. Some

positions can often be filled by utilizing multiple part-time employees rather

than a single individual. The food hub leadership should consider its options

and choose a personnel plan that best suits its operations. 

 In addition to personnel that may be directly employed by the food hub,

there are also roles that can be filled by outsourcing or contracting.

Examples of these types of functions include accounting and bookkeeping,

legal counsel, Web administration, or IT activities. Listed below is a

business organizational chart. Basic job descriptions of the positions are

briefly included next.
 General Manager

 The general manager is a full-time employee who reports to the

owners/board of directors. Duties include organizing, overseeing, and

directing all food hub operations. This role is also responsible for

developing sales contacts for the food hub and serves as the liaison between

the board of directors/owners and the general staff. 

 Logistics Manager

 The logistics manager role will be responsible for the coordination of

delivery routes and the scheduling of delivery personnel in order to

efficiently deliver customer orders in a timely manner. During the startup of

the venture, this role may also include actual delivery duties, but it may

become a separate position as sales increase and greater time is required to

coordinate delivery routes and schedules. 

 Delivery Driver

 To move product to the customers, a delivery driver is employed to load,

unload, and deliver the produce. Numerous drivers may be required as the

venture expands. Delivery driver responsibilities include arrival in time to

load the truck with that day’s delivery, fueling the truck, and cleanup and

44 RUNNING A FOOD HUB

Logistics

Manager

Production

Manager

Volunteer

Coordinator

Sales

Manager

Office

Manager

Marketing

Manager

Delivery

Driver

General

Labor Volunteers

Outside

Sales &

Support

Office

Workers

Marketing

Suport

Driver

Helper

Food

Safety

General Manager Contractual

Labor

Figure 3—Food Hub Labor Organization Chart
RUNNING A FOOD HUB 45

maintenance of the truck. The driver should be able to lift at least 50 pounds

repeatedly and may be required at times to lift up to 100 pounds. 

 Delivery Driver Helper

 The delivery helper’s role will be to support the delivery driver in daily

responsibilities and assist with the loading, unloading, and delivery of

product to customers. 

 Production Manager

 The operations manager is responsible for coordinating the supply of

products for orders and for addressing producer service issues. This

employee implements policies and manages the production and supply

aspect of the food hub to ensure that there is sufficient product to meet sales

goals. This manager may also be responsible for the oversight of the general

labor staff of the food hub, especially ensuring that product is picked up and

brought to the food hub on schedule if the food hub offers this service to

producers. 

 General Labor

 General labor positions are responsible for receiving product deliveries,

storage, and handling to aggregate and move product to fulfill orders. These

employees also assist with loading trucks and perform some administrative

duties related to ensuring timely delivery of product to customers. 

 Food Safety

 This position, or a similar one, is responsible for maintaining protocols

and policies related to any food safety certifications or programs. Typical

tasks may include inspection of product received by the food hub, data

recording (such as temperatures and chain of custody), enforcing proper

handling procedures, and maintaining readiness of the facility for

inspections or audits. 

 Sales Manager

 The role of sales manager includes significant travel. The sales manager

may spend about 3 out of 5 business days on the road, visiting current and

potential customers as well as addressing any needs or concerns that arise.

The sales manager is also responsible for supervising the outside sales and

field-support staff.

 Outside Sales and Field Support Staff

 Field sales personnel work closely with existing customers to
46 RUNNING A FOOD HUB

communicate the availability of product, capture new sales, and work to

resolve customer issues in the field. They should report to the sales manager. 

 Office Manager

 The office manager is responsible for the oversight of all office staff,

including accounting and support staff, as well as customer

support/marketing and office sales/data-entry positions. This role will also

be responsible for tabulating sales and keeping track of the number of

products sent and returned.

 Office Workers 

 Office workers’ duties include accounting and general office support and

labor. Customer support/marketing staff work with other office staff to

ensure a positive customer experience. This includes resolving any

marketing issues. Internal sales personnel are responsible for order taking,

which includes inputting orders into software for allocation and delivery.

These positions are under the direction of the office manager. 

 Marketing Manager

 The marketing manager is responsible for all aspects of a food hub’s

marketing campaign. This includes working closely with any contract webservice providers to ensure that the co-op’s website is informative,

up-to-date and engaging. The marketing manager is also responsible for

other marketing materials, such as print ads and signs. 

 Marketing Support

 These individuals carry out the marketing activities under the direction of

the marketing manager. 

 Volunteer Coordinator

 The volunteer coordinator is responsible for ensuring that there are

sufficient numbers of volunteers to help the food hub accomplish its goals.

Specific duties may include recruiting more volunteers and the coordination

of volunteer meetings and training. 

 Contract Labor

 Some positions are outsourced to contract labor. These are often skilled

positions but not required on a full-time basis for the hub. IT/Web services,

maintenance, accounting, and legal help are all functions that are often

outsourced or contracted. 
RUNNING A FOOD HUB 47

Regional Wages and Labor Costs

A food hub’s location will greatly affect its labor rates and costs.

Information is compared below among States that were selected to

represent major regions of the United States and is intended to

demonstrate the variety of wage rates exhibited throughout the

country for the same job classifications. 

 Consider the following information regarding the “driver/sales

worker” position (Standard Occupational Classification System

(SOC) Code 53-3031). This position is described as a person who

drives trucks or other vehicles over established routes or within an

established territory and sells or delivers goods, such as food

products — including restaurant take-out items — or picks up or

delivers items, such as commercial laundry. This worker may also

take orders, collect

payment, or stock

merchandise at point of

delivery. This includes

newspaper delivery drivers.

It excludes “coin, vending,

and amusement machine

servicers and repairers”

(49-9091) and “light truck

or delivery service drivers”

(53-3033).

As is evident by the

table above, wages for the

position of “driver/sales

workers” can vary from

$11.66 per hour to $15.27

per hour, a difference of

$3.61 per hour. Totaled

over a year’s worth of

wages, one full-time individual working an average of 2,000 hours

could represent an increased cost of more than $7,000, a factor that

would need to be taken into consideration when determining labor

and wage rate costs for a food hub. The highest hourly mean wage

among the selected States is California, where the mean wage of

$15.27 is nearly 15 percent higher than the national mean.

State Wage Rates:

Driver/Sales Workers, May 2012

Area Name Hourly Mean Wage

n California $15.27

n Illinois $14.24

n Kentucky $11.66

n Massachusetts $14.79

n Minnesota $12.76

n New Mexico $12.80

n North Carolina $13.09

n Texas $11.97

U.S. National Mean $13.33
48 RUNNING A FOOD HUB

UNDERSTANDING THE MARKET is vital for a successful business. A

distinguishing feature of a food hub is its ability to adapt to suit the demand

of customers in a given region. This includes the ability to adapt its

operations to changes in the market.

Choosing a Sales Focus

 A food hub will often sell product at

wholesale, directly to consumers at retail

prices, through a CSA-type business model,

or through some combination (hybrid)

approach. Typically, a food hub focuses on

one or two approaches for sales, so food hub

owners will need to evaluate the area and

the potential of each market as well as the

viability of the food hub reaching and selling through these markets.

 A wholesale market for a food hub typically includes larger buyers, 

such as:

 • Restaurants;

 • Institutions, such as assisted-living facilities, hospitals, schools, and

colleges;

 • Resorts;

 • Military bases; 

 • Local or regional grocery store chains.

 A food hub focusing on direct marketing to consumers will either have an

actual location where customers can shop for and purchase products, or it

will facilitate direct sales through the use of online ordering and pickup

locations. With this model, the food hub is able to reach individuals,

families, and some larger buyers, such as restaurants. The customer base for

a CSA-type food hub also usually includes families or individuals. 

 CSA food hubs do not usually sell to larger buyers. Depending on the

scale of the food hub, it may have the potential to sell to many different

markets. Typically, a food hub will focus on one main market, but its leaders

should be cognizant of other markets in the area that could provide options

if more outlets are needed.

Promotion

 To stand out in the marketplace, particularly when faced with

Marketing

n What markets are

available to the food hub?

n Which markets will the

food hub use?

DECISION POINT
RUNNING A FOOD HUB 49

competition, a food hub must communicate its mission and commitment to

local foods by creating some form of contact with its producers and

customer base. 

 Price Sensitivity

 In general, marketing systems must be selected that generate

differentiated products that consumers demand. To enter into a quality,

high-end market, a food hub must promote the concept of product

differentiation and communicate why its products are different from others

available in the area. This can take place through production, processing, or

through attribute identification, such as “organic.” Three important features

that can be focused on may include:

• Local foods and the connection to family farms

 Surveys show that the American consumer has compassion for farmers,

especially local ones. The “locally produced by family farmers”

connection is a valuable marketing tool. Most consumers support smalland medium-sized producers who add to the quality of their rural

communities in many ways.

• Flavor and nutrition

 Because “local” is often viewed as a premium product that is fresher or

more flavorful than grocery store varieties of the same item, promoting

these attributes can result in higher prices for the food hub’s products. If a

product is recognized for quality and taste, sales will increase.

• Preserving open spaces/education

 In some areas, especially those near urban centers, viable small farms can

help slow the rate of urban sprawl and provide “close in” educational

opportunities for school field trips and other groups wishing to learn

about how food is produced. 

 Branded Products

 Consumer confidence and trust are directly contained in the brand name;

the value of this brand identity often goes well beyond the actual items being

sold. The higher the quality of the product, the more likely it can be

differentiated from competition. This can lead to less price sensitivity for

that product, resulting in higher sales margins. Some food hubs further

differentiate and promote their products through development of their own

brand/label. The brand and trademark ultimately chosen by the food hub

should be used in all communications materials. 
50 RUNNING A FOOD HUB

 Relationship Marketing

 The food hub should seek to cultivate relationships with its stakeholders

and customers. Establishing clear communication channels with producers,

customers, and the community can help the food hub respond to changing

needs, keep the customers informed about products and their specific

attributes, and provide awareness of seasonality, the quantity available, and

the timing of deliveries. Food hubs often cultivate this type of marketing

through face-to-face interaction with producers, consumers, and wholesale

customers. 

 Websites and Social Media

 Websites and social media outlets are other methods often used by food

hubs as a primary method of marketing. A website offers a way for a food

hub to explain its mission and provide customers with the hub’s history and

information about its products and services. Using social media as a

promotion platform can provide a significant cost savings over traditional

promotional methods and allow a food hub to reach a large audience. Social

media can also be tailored to reach core demographic groups such as the

hub’s supporters. Social media can also foster enthusiasm among

stakeholders to help spread the community mission and principles of the

hub. 

 Social media websites offer an ideal opportunity to connect with people

seeking local foods. They offer a more direct level of interaction between

businesses consumers than traditional marketing methods. People can “like”

posts made by the food hub; receive access to updates, pictures, and

comments from the hub; provide direct feedback; and leave comments about

the food hub for others to see, including recommendations, questions, or

compliments/complaints. 

 Social media websites also offer ways to increase sales by posting

promotions, coupons, and information about events to encourage sales of

products. In addition, links can be provided to the hub’s website or a

newsletter subscription page to increase traffic. All of these options are free. 

 Blog sites and micro-blog sites offer platforms where users can post

updates, share links, and connect with other users. They offer access to new

and changing consumer markets that may not otherwise be accessible. 
RUNNING A FOOD HUB 51

THE SUCCESS of a food hub can often hinge on its ability to develop

lasting relationships with producers and deliver high-quality products.

Getting producers engaged with the food hub is an important part of

establishing those lasting relationships that will, hopefully, lead to increased

commitment to it. 

 Food hubs play an important role in marketing food from small- and

mid-sized producers. The more producers a food

hub works with, the more options that hub has

when it comes to supply. The number of

producers a food hub will need will vary

depending on the size of the operation. As

found in the 2013 National Food Hub

Survey, hubs typically operate with about 36

producers and suppliers. 

A food hub will need to work with

producers to determine how much each can

supply and the frequency of delivery. This

will help ensure the food hub is able to offer

products consistently throughout the

growing season. The food hub may also be

able to help with activities that extend the

season, helping to ensure a consistent

product supply year-round. Helping

producers diversify their production will not

only help the farmers grow their farm, but will also give the food hub a

larger selection of products. 

 The quality of the products supplied by these producers is an important

factor to consider when forming partnerships. The farming and handling

practices producers use may have an impact on the customers that purchase

from the hub. Food hubs may work with producers to standardize such basic

practices as washing and grading. Others require producers to follow certain

food safety and certification practices, such as Good Handling Practices,

USDA Certified Organic, and Certified Naturally Grown. Many food hubs

prefer that their producers carry certifications or use certain production

practices, but they may not be required. Food hubs may also have a strong

preference for producers to use integrated pest management (controlling

insects and other pests with minimal, if any, chemical pesticides), or adhere

to total organic farming practices, although, again, these practices may not

Producers & Suppliers

n How much will each

producer supply?

n What are the quality

standards and will the food

hub require producers to

be certified?

n When and how much will

producers be paid? 

n At what point will more

producers be added?

DECISION POINT
52 RUNNING A FOOD HUB

be required to sell to the hub. 

 Another key decision is when

to bring more producers into the

food hub, how much they will be

paid for their products, and the

payment schedule. For the food

hub to attract producers, it will

usually need to at least meet what

local growers are earning from a

blend of retail and wholesale sales.

A food hub is typically just one

out of many product outlets for

producers. For producers to

expand or re-direct their

production (switching over to

organic production, for example),

prices offered by the food hub

typically must at least meet

wholesale prices. Produce farmers

typically operate on very slim

margins. Labor is costly and land

prices are high, especially for

small farms. So, any expansion

must provide some additional

benefit to be a viable option. 

 Some food hubs allow

producers to set their own price

and then simply add a margin

sufficient to cover the food hub

operations. Other food hubs

purchase product outright from

producers and maintain all the

risks of storage and sales. Some

hubs take a partnership-type

approach, in which a specific

percentage of revenue is set to be

returned to producers as payment

for their product. 

 Written agreements between producers and the food hub can help

alleviate any confusion over the requirements of the hub and help maintain

transparency. 

Examples of Certifications and

Agricultural Practices

n Marine Stewardship Council 

n USDA Certified Organic

n Integrated Pest Management

n Good Handling Practices Certified 

n Certified Naturally Grown

n Good Agricultural Practices Certified 

n Antibiotic-Free

n Free Range/Pasture Raised

n Chemical Free

n Practicing Organic 

n Certified Humane

n Fair Trade

Loading pallets on the back of a

Greenmarket Co. truck. Greenmarket Co., a

program of GrowNYC, was launched in 2012

with a focus on wholesale distribution of

locally sourced farm products. Photo by

Vitaly Piltser, courtesy of GrowNYC.
RUNNING A FOOD HUB 53

FOOD HUBS TYPICALLY OFFER more than one type of product, both to

supply the needs and demands of their customers and to diversify their

product line. But a feature that differentiates them from simple food brokers

is their focus on offering services that help producers and the community.

Products

 Food hubs can carry and sell a variety of

products, ranging from fresh produce to

alcoholic beverages. A food hub can choose

to focus on mostly one type of product, such

as meat and poultry, or a wide variety of

products. The variation of products for each

food hub will differ depending on the local

and regional consumer market, the types of

product local producers are supplying, and

the size and scale of the hub. Product

selection can impact other areas of the hub’s

operation, including the type of storage

space needed and the frequency of

deliveries.

 Diversifying a hub’s product selection can help combat “seasonality” and

provide consumers with more buying options, but it can also add to a hub’s

operating costs. Fresh produce is the most common product offered by food

hubs and usually accounts for the largest amount of sales. Food hubs also

may offer processed goods and produce, grains and beans, fish, alcoholic

beverages, baked goods, milk and other dairy products, as well as coffee and tea.12

 All products sold by the food hub may not be of “high-dollar” market

quality. Food hubs should thus have the flexibility to move surplus products

into high-volume markets. This means having separate strategies for the

various products handled. 

 The following list is of the major product categories sold by food hubs. 

• Fresh Fruits and Vegetables

 Fruits and vegetables make up the vast majority of products sold through

Products, Packaging, and Services

n What type of products will

the food hub carry?

n How many product lines

will the food hub offer?

n What type of services will

the food hub offer?

n Will a food hub offer

processing?

DECISION POINT

12 Fischer, M., Hamm, M., Pirog, R., Fisk, J., Farbman, J., & Kiraly, S. (2013). Findings of the 2013

National Food Hub Survey. Michigan State University Center for Regional Food Systems & the

Wallace Center at Winrock International.
54 RUNNING A FOOD HUB

food hubs, whether to individual customers or to wholesale customers. 

• Herbs and cut flowers

 Herbs and cut flowers can supplement a hub’s sales and heighten its

visibility. Because of low volumes, limited shelf life, labor-intense

production and extreme seasonality, these products typically cannot

sustain a venture.

• Baked Goods

 Bread and baked goods are increasingly popular items for food hubs.

About 73 percent of farmers’ markets sell some type of baked goods.

Fresh baked breads are popular items, as are desserts, such as pies, cakes,

and sweet rolls. 

• Canned Fruits and Vegetables (shelf-stable items)

 Increased health consciousness, combined with greater demand for local

foods, is not only creating new markets for fresh produce but is also

increasing demand in many markets for preserved fruits and vegetables.

Local preserved fruits and vegetables are popular items for many food

hubs, especially if minimal processing is used (such as no added chemical

preservatives). 

• Meat and Poultry

 A 2013 USDA Economic Research Service (ERS) report13 reveals that the

most cited barrier to bringing more local meats to markets is the lack of

local livestock processing facilities. If a food hub would like to offer

meats, it needs to evaluate local access to processing facilities. 

• Milk and Dairy Products

 Small-scale, direct-marketing ventures are becoming more prevalent as

demand rises for local foods. While fluid milk can present logistical

challenges for food hubs, cheeses are becoming increasingly popular with

food hubs. 

• Other Products

 To extend a food hub’s sales season, it may handle local grains and flours,

fair trade or organic oils and nuts, or locally finished items, such as locally

roasted coffee. 

13 Gwin, Lauren, et al. “Local Meat and Poultry Processing.” (June 2013). USDA Economic Research

Service. Report Number 150. www.ers.usda.gov/media/1131316/err-150.pdf
RUNNING A FOOD HUB 55

Packaging and Labeling

 In general, boxes and packaging should be suited to handling and storing

each type of product. Typically, this will include cardboard boxes for

vegetables, or more rigid plastic containers for “delicate” fruits and berries.

Most food hubs require that product delivered by producers be “ready for

sale.” However, product packaging can vary for different operations,

depending on the services and type of products offered. 

 A food hub focused on retail sales may require packaging suited for sales

to individual consumers, with appropriate sizes and that is visually attractive.

This packaging will often be similar to that used in more mainstream retail

grocery stores. Product labels may include information about the farm

where it was produced. Food hubs, like all food retailers, should ensure that

their labels and packaging comply with regulatory requirements.

 On the other hand, a food hub that is selling only to wholesale buyers will

need product packaging that can withstand shipping and can hold larger

amounts of product. Typically, a wholesale client will either repackage the

product for sale, or will use the product “in bulk” from the box. Labels for

wholesale packaging may not be as detailed or as “visual” as retail labels. 

Market Seasonality

Seasonality is an important issue for every agricultural venture

because the customer expects orders to be filled as they are placed.

All local produce has a specific cycle of production, and yet there is

a need to furnish products for sale all year if a food hub is to remain

viable over the long term. For the business to grow and thrive, the

food hub must be prepared to supply what its customers demand. 

 Seasonality is not just a concern within a given region, but also

between regions. The products that are available during a longer

growing season in U.S. southern or western regions are not likely to

be available for the same period of time in midwestern or northern

regions. To combat seasonality and to grow produce that is in

demand for a given region, food hubs may need to source products

with storage potential so that they can be sold outside of the

traditional seasons. This is often accomplished through the addition

of off-season, shelf-stable, or non-perishable items. Non-seasonal

product lines — including local dairy products, eggs, and broilers —

can significantly boost year-round sales totals.
56 RUNNING A FOOD HUB

 Product packaging for a CSA market can combine elements of both retail

and wholesale packaging. A typical CSA delivers boxes of produce to its

members, but the packaging still needs to offer basic product information

and be visually appealing when delivered. CSA packages may also include

newsletters or flyers with information about the food hub and the products

included. 

 Local Promotion Labeling

 Food hubs also often take advantage of local and State food promotion

programs to create consumer awareness and/or to participate in branding

and marketing activities on behalf of producers. State designations — such

as “Certified South Carolina,” “Virginia Fresh,” and “Kentucky Proud” —

are often used to designate products that meet the requirements to be

labeled as a product of a State or region. 

 Universal Product Code (UPC)

 The use of UPCs may be necessary if a food hub deals with a large variety

of items, specifically such shelf-stable items as jams and canned goods. UPCs

may be more common in a food hub with a retail location, since they can

help with customer transactions and inventory control. 

 Universal Product Codes are a 12-digit identifier used mainly with pointof-sale devices to enable more efficient sales transactions. UPCs are

constructed and sold

by GS1 US, a

nonprofit group.

Purchasing new UPC

codes entails paying a

membership fee to

GS1 US, as well as an

annual maintenance

fee. Some companies

re-sell previously

issued UPC codes,

charging for each

UPC purchased.

Some customers

require that UPC

Examples of State Agriculture Marketing Programs14

n California CA Grown

n Maryland Maryland's Best

n Maine Get Real. Get Maine!

n New York Pride of New York

n Connecticut Connecticut Grown

n New Jersey Jersey Fresh

n Texas Go Texan

n Louisiana Certified Product of Louisiana

14 Adapted from “Catching the ‘Local’ Bug: A look at State Agricultural Marketing Programs.” Choices

Magazine. Retrieved from www.choicesmagazine.org/magazine/article.php?article=112 6-3-14.
RUNNING A FOOD HUB 57

codes be used for product designation, inventory management, and sales. 

Services

 Payment Processing 

 The administrative burden of billing and payments, particularly if a

farmer is attempting to sell products to a variety of customers, can be costprohibitive for smaller producers. A food hub is able to achieve better

efficiency while handling such functions in aggregate for many producers.

This, in turn, allows producers to focus on farming or other operations,

rather than administration. 

 Safety Certifications (group certification for GAP)

 At the time of publication, this program is still in the pilot phase with

USDA, but it is intended to be available to food hubs. Given the interest in

food safety and the rise of certification and auditing activities, such as GAP

(Good Agricultural Practices), food hubs provide a possible avenue for

group certifications. In this case, a centralized entity (the food hub) serves as

a repository for agreed-upon food safety protocols that are followed by all

member-producers of the hub. Certification and auditing takes place in a

corporate, rather than individual, format, decreasing the often prohibitive

expense of auditing and certification. 

 Washing, Packing, Grading

 Food hubs often work with producers to provide access to equipment for

basic washing and packing. Smaller producers are often unable to afford the

equipment or infrastructure to perform these activities on their own. Many

food hubs provide these services, helping smaller producers to supply better

quality products to the marketplace. 

 Processing

 Depending on the infrastructure, food hubs are able to provide access to

equipment needed to further process fresh farm products. Some food hubs

do flash freezing and individual quick freezing (IQF) to further extend the

selling season of fruits and vegetables for their producers. Other light

processing activities may include slicing, washing, chopping, or alternative

packaging.

 Further processing, or “value-added” processing, is used to preserve items

or to incorporate them as ingredients in (for example) salsas, chutneys, or

pickled vegetables. They may also be used in sauces or other flavorings.

Some food hubs produce their own salad mixes. 
58 RUNNING A FOOD HUB

 Education and Training

 Many food hubs provide education and training for their members and

the broader community. These activities can include cooking and canning

classes and recipes in the hub’s newsletter or website that highlight healthy

nutrition. Information for producers may cover basic food safety training,

Good Agricultural Practices (GAP), and Good Handling Practices (GHP)

— even general production techniques. Some food hubs operate educational

or incubator farms intended to increase urban access to land for cultivation

as well as to encourage new farmers. 

 Storage

 Food hubs with unused space in their facilities often provide storage

space for their larger producers, or lease space to other agricultural entities.

Inside La Montanita’s Co-op Distribution Center in Albuquerque, NM, where they take

advantage of a multi-tiered racking system to optimize storage capacity. Photo courtesy

of La Montanita.
RUNNING A FOOD HUB 59

IT IS THE RESPONSIBILITY of business owners to be familiar with

Federal, State, county, and local laws governing their business. Failure to do

so may result in penalties, fines, and cessation of business. Following is a

general overview of the registration and regulatory aspects of a business, as

well as associated risks that could affect a food hub. 

 Capital Risks

 With any new business, there is always a capital risk. Insufficient access to

capital is a major reason new businesses fail. Unexpected cost overruns can

endanger a venture. Depending on the nature of the food hub’s operations,

significant capital may be needed, especially for equipment. 

 Cash-Flow Risks

 Even with a for-profit food hub, there are periods of the year when the

venture may experience negative cash flow. Business liquidity should be

closely monitored. A small change in price or payment period could quickly

turn a profit into a loss. Because of the perishable nature of most food hub

products, there is the potential for large revenue losses resulting from

spoilage or other loss of inventory. 

 Management Experience Risks

 The selection and oversight of management is critical for business

success. It is thus imperative that management have experience in the

industry. Since food hubs are a relatively new industry, there are fewer

sources of information regarding the operation and administration of the

business. The food hub may be subject to a “trial and error” approach

during the startup and early years of operation. 

 Legal Liabilities and Risks

 The venture will face legal liabilities and potential risks due to the

perishable nature of the product, food safety and transportation issues,

worker safety, and environmental risks. These issues need to be properly

addressed. Risk should be reduced with insurance and written policies,

where possible. 

 Regulatory Risks

 There are a large number of regulatory risks and hurdles that the venture

must address as it moves forward. These factors could substantially affect the

Risks
60 RUNNING A FOOD HUB

ability of the venture to operate profitably. Regulations are in constant flux.

Regulations that may not affect the operation today could have a dramatic

impact on it in the future. 

 Market Development Risks

 A food hub will need to establish itself as a vendor in a competitive

industry with previously established players. There is no guarantee that a

newly established food hub will succeed in attracting sufficient buyers. It is

assumed that the hub has determined that consumers actually have an

interest in a food hub and that these consumers are prepared to pay for local

products. 

 Price Risks

 While consumers are becoming far more interested in how and where

food is produced, the local foods industry will continue to evolve according

to consumer demand. For this type of growing market, it is not unusual for

prices to go through wide swings and periods of significant price depression. 

 Food Contamination Risks

 Concern over food contamination has been on the rise in recent years,

with a number of major incidents making major headlines. Bacterial

contamination can cause illness, product recalls, and damage to a brand.

Care should also be taken when the food hub supplies product to retail

outlets. Careless handling and storage techniques by the retailer could also

introduce such risks. 

 Product Supply Risks

 Because quality outputs are dependent on the quality of inputs, the

interaction of weather and terrain are very important. Weather variables can

affect the ability of the food hub to source sufficient quality product. 

 Inventory Risks

 If sales fail to meet projections, inventory may increase and lead to

negative cash flow. A food hub may then be unable to comply with shortterm obligations. In addition, because the food hub handles perishable

products, holding of inventory longer than planned carries the risk of

product loss.

 Contingency Planning

 No matter how thorough and complete it is, startup plans rarely proceed

according to plan in every aspect. Every business should consider
RUNNING A FOOD HUB 61

incorporating contingency planning into its long-term strategy. Flexibility

allows a food hub to take advantage of new opportunities, as well as to deal

with unexpected obstacles. 

 In the event that sales expectations are not met or that implementation

does not proceed according to plan, a food hub should have a fallback plan

that could allow it to operate as a smaller or different type of hub operation. 

Ryan Ploch of Ploch Farms in Vineland, NJ, checks on a field of green onions. Ploch

Farms is one of more than 40 farms that works with Red Tomato, a food hub based in

Plainville, MA. Photo by Diane Stalford, courtesy of Red Tomato.
62 RUNNING A FOOD HUB

ALMOST ALL BUSINESSES face a crisis at some point. Major changes in a

business can represent a risk, even if the change is made to accommodate the

growth and further success of a business. Most businesses will face one, or

both, of the two situations discussed below at some point. 

Business Transition and Succession15

 During the life-span of a business, there will be changes in personnel and

operations. These transitions can occur when the leadership changes, when

the owners decide to sell a business, or when new opportunities dictate a

different direction for the business. In some cases, leadership is aware that a

transition will need to take place. At other times, transitions can be

unexpected. Food hubs should carefully consider how they will handle such

transitions to minimize the impact on sales and to reduce the risk of failure. 

 When a food hub faces a leadership transition, the institutional

knowledge and working relationships staff have developed over time will be

of primary importance. Those who have worked at the food hub, especially

during the critical startup phase, often have established relationships with

producers, customers, and community leaders that are difficult to replace.

They also have a wealth of knowledge, based on experience. 

 There is no “one-size-fits-all” plan for business transition or leadership

succession. But there are key principles that can be adopted to minimize the

effects of these events. According to SCORE (Service Corps of Retired

Executives), a group of small business counselors, there are five main steps in

developing a succession plan,16 several of which have been adapted below. 

 The first step of developing a succession plan is to determine a successor

— the individual who will replace the current leader. This includes hiring

new personnel for any essential position, such as an outgoing director, or

sales or production manager. Often, the successor comes from within the

current labor pool of the food hub. This decision process is not always easy,

but using a board of directors or a search committee may help with the

process. This process may take some time as an immediate successor may

not be evident. The process should begin as early as possible during the

transition so that a qualified individual can be found. 

 After choosing an individual as a successor or replacement, the next step

Additional Considerations

15 Small Business Administration. “Plan your exit.” Getting Out. www.sba.gov/content/plan-your-exit 16 SCORE (2013). “Developing a Succession Plan.” www.score.org/resources/developing-successionplan
RUNNING A FOOD HUB 63

is to create a formal plan to train the new employee. This training period

provides the opportunity to pass along institutional knowledge, information

about operational lessons learned, and to help the new leader establish

relationships that will ensure a successful transition. The training plan

should allow adequate time to focus on all of the main functions of the

business. The training plan should allow the successor to develop his or her

17 Office of Advocacy (2012). “Frequently Asked Questions.” Small Business Administration.

www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf 18 Office of Advocacy (2011). “Frequently Asked Questions.” Small Business Administration.

www.sba.gov/sites/default/files/sbfaq.pdf

Producer-members of the Fifth Season Cooperative (FSC), a multi-stakeholder food hub

based in Viroqua, WI. Many of the producer-members use growing season-extending

technologies, such as this “high tunnel,” to ensure they can service Wisconsin school

districts — one of the co-op’s primary markets. Photo courtesy of FSC.
own management style. 

 A succession plan should also include a timetable that maps out how long,

and when, training should occur and how best to transfer decisionmaking

duties. Setting clear time goals will help alleviate confusion between current

owners, management, employees, and the successor. The final step for

developing a succession plan is to install the successor and notify the other

employees in the company that the new leader’s official duties have begun. 

Business Closure and Exit Strategy

 Since 2007, more small businesses have closed than opened. The survival

rate of small businesses is typically associated with the firm’s age. According

to the Small Business Administration, about half of all new establishments

survive 5 years or more; only about one-third survive 10 years or more.17

According to census data, survival rates for small businesses were similar

across all States and major industries.18

 An exit strategy should be included as part of the normal planning process

of a business. Such a plan can provide guidelines or serve as a strategy in the

event that the owners need to transfer ownership or dissolve the business.

Exiting a business does not always have to be a negative experience. Exiting

can also entail selling the business, going public with stock offerings,

retiring, or simply ceasing operations for a variety of reasons. 

 A major part of the exit strategy should include resolving any financial

obligations the owners or the business may have. The distribution of

revenue after the dissolution of the business will depend on how the business

is legally structured. For example, if the business is a nonprofit organization,

the assets may be distributed to other nonprofits; a for-profit business would

distribute assets to its owners. 

 On the “Small Business and Self Employed” portion of the IRS website,19

there is a checklist to complete when closing a business that helps ensure

that all financial issues are covered. 

 The social-based missions of many food hubs also may affect how a

business is closed. Leadership should look for ways to transfer the

knowledge and contacts cultivated by the food hub to another entity with

similar goals. Producers who have depended on the food hub as a sales

channel may need help in finding other outlets for their production.

Customers should be made aware of other local food sources. Whenever

possible, a food hub should seek to provide solutions to these issues and

minimize the effects of its closing. 

64 RUNNING A FOOD HUB

19 Internal Revenue Service (March 2014). “Closing a Business Checklist.”

www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Closing-a-Business-Checklist 
RUNNING A FOOD HUB 65

Conclusion

THE LONGEVITY of a business ultimately depends on

its ability to adapt to the changing factors surrounding

it. Taking time to develop a plan can help avoid serious

problems later. While not all circumstances can be

planned for in advance, sound business practices — such

as preparation, documentation, follow-through, and

reassessment/adjustment — can dramatically improve

performance. 

 In addition to this guide, leadership should seek help

from additional resources. Professionals and experts in

specific areas can help the leaders of the business gain a

deeper understanding of business issues and

opportunities, improving the odds of success. 

 Every entity will face different economic, social, and

business environment circumstances. Thus, the path to

implementation, operation, and success will be unique

for each venture. Each of these stages presents new areas

of focus, new challenges, new opportunities, and

obstacles that will need to be evaluated and acted upon

as the business grows. 
Appendix A

Sample Staff Descriptions / Qualifications

When establishing human resource guides and

protocols, leadership should develop staff descriptions

that include duties, qualifications, and desired skill sets

to serve as a guide for hiring employees. The following

examples are provided as samples and include basic staff

descriptions, with qualifications. Each entity will need to

determine its own position descriptions and required

qualifications based on its unique requirements and

operations plan. 

66 RUNNING A FOOD HUB
General Manager

 Duties and responsibilities:

 The general manager will be responsible for planning, directing,

and coordinating all food hub operations. He or she will be

responsible for developing policies, managing the daily operations

of the business, and planning for the most efficient use of inputs and

human resources. Also, the candidate shall be held accountable for

the accuracy of financial reporting for the business. 

 The general manager will be part of an energetic and progressive

team with a passion for quality and the environment. The manager

believes in a commitment to customer service and exhibits a high

level of professionalism and integrity.

 Qualifications and Experience: 

 The candidate for this position must have the following:

 n A bachelor’s degree (BA) or equivalent; MBA is preferred;

 n A “hunter” attitude to generate new business and leads; 

 n Sales experience in specialty products in the food industry is

desired; 

 n Agricultural and food-industry-related experience is desired; 

 n Well-developed skills for negotiation and project and account

management; 

 n Good judgment and the ability to make timely and sound

decisions;

 n Strong organizational, problem-solving, and analytical skills; 

 n Excellent written and verbal communication skills; 

 n Ability to make successful presentations to individuals and/or

groups at all levels of an organization; 

 n Ability to work independently and as a team member; 

 n Ability to calculate figures, including discounts, interest,

commissions, and percentages; 

 n Proven ability to handle multiple projects and to meet

deadlines; 

 n Proficient with basic computer software, including Microsoft

Word, Excel, PowerPoint, and Outlook; 

 n Valid State driver’s license. 

RUNNING A FOOD HUB 67
Production Manager

 Duties and responsibilities:

 Under the direction of the General Manager, the Production

Manager is responsible for efficiently and effectively assisting with

the planning, directing, and coordination of all producer-related

operations. The Production Manager will assist in coordinating

farmers with each other and the food hub to maximize their ability

to meet the demand of customers and to prevent the oversupply of

products for the entire season and during short periods to minimize

waste. 

 Qualifications and Experience:

 The candidate for this position must have the following:

 n Ability in customer service and working with the public;

 n Strong organizational skills and attention to detail;

 n Knowledge of the agricultural and food industries, including

safety regulations;

 n Professional appearance and demeanor;

 n Must be at least 21 years old;

 n 3–5 years’ related experience preferred;

 n High school diploma or equivalent desired;

 n Basic skills in Microsoft Office, including Word and Excel;

 n Ability to stand and walk for long periods of time; 

 n Must be able to lift up to 50 pounds repeatedly.

68 RUNNING A FOOD HUB
Warehouse Manager

 Duties and responsibilities:

 Under the direction of the General Manager, the Warehouse

Manager is responsible for efficiently and effectively assisting with

the planning, directing, and coordination of all daily food

distribution operations. The Warehouse Manager will schedule

delivery with farmers and customers for all food hub products. The

Warehouse Manager will also oversee the receiving and delivery

schedules, as well as monitor the quality of the product as it arrives

and leaves the warehouse. He or she will also make sure all drivers

and line workers have the appropriate safety training and

certifications.

 Qualifications and Experience:

 The candidate for this position must have the ability to:

 n Supervise the activities of workers engaged in receiving,

storing, testing, and shipping products or materials;

 n Interview, select, and train warehouse and supervisory

personnel;

 n Plan, develop, or implement warehouse safety and security

programs and activities;

 n Prepare or direct preparation of correspondence; reports; and

operations, maintenance, and safety manuals;

 n Confer with department heads to coordinate warehouse

activities, such as production, sales, records control, or

purchasing;

 n Review invoices, work orders, consumption reports, or

demand forecasts to estimate peak delivery periods and to

issue work assignments;

 n Inspect physical conditions of warehouses, vehicle fleets, or

equipment and order testing, maintenance, repairs, or

replacements;

 n Schedule or monitor air or surface pickup, delivery, or

distribution of products or materials;

 n Lift up to 50 pounds repeatedly;

 n Perform basic tasks in Microsoft Office, including Word and

Excel;

 n Stand and walk for long periods of time.

RUNNING A FOOD HUB 69
Marketing/Sales Manager

 Duties and responsibilities:

 The Marketing/Sales Manager will work to expand distributor

sales and develop a new product area. He or she will be responsible

for furthering the food hub’s image and sales. This position will be

“hands-on” and responsible for all aspects of distributor sales. This

manager will spend at least about one-fourth of the time traveling

to support the distributors. 

 This manager is also responsible for preparing and executing the

marketing plan, fulfilling the general manager's objectives. He/she

will do marketing research and collaborate with the rest of the team

to identify those products that best suit the needs and tastes of

customers. This manager will provide innovative marketing

solutions to increase the overall profitability of the food hub. 

 The ability to create sales plans, formulate wholesale pricing,

evaluate distributor performance, manage compliance, construct

promotional budgets, understand and evaluate market

demographics, and make tactical sales decisions will all be necessary

components of this position. 

 Qualifications and Experience:

 The candidate for this position must have the following:

 n Degree in business/marketing or equivalent related

experience;

 n Four or more years of experience in “brand” marketing in the

food industry; 

 n Strong analytical, written, and verbal reasoning skills;

 n Proven negotiation and relationship-building skills;

 n Minimum 2-year distributor management experience, desired;

 n Five years, minimum, experience with distributor sales, and

familiarity with individual distributors in various States;

 n Ability to lift heavy boxes (50 lbs.);

 n Ability to travel extensively with overnight stays.

70 RUNNING A FOOD HUB
Appendix B

Sample Equipment List

The following list provides examples of some of the

items likely to be needed for starting a food hub. The

actual required equipment will depend on the unique

circumstances of the food hub, including: whether or

not facilities will be shared, what level of services the

hub will provide to producers, how sales will be

conducted, etc.

General Warehouse/Storage Equipment Qty

Forklift 1

Truck 1

Pallet Jack 3

Work Tables (60" x 30") 6

Used Walk-In Cooler (800 sq. ft.) 1

Cooling Tunnel 1

Water Hoses for Cleaning (100') 4

Hose Connectors 2

Hose Spray Nozzle 4

Curved Floor Squeegee (3-Pack) 6

Hand Truck 6

Janitorial Cart w/Equipment 3

Extra Mops 8

Extra Mop Bucket 3

Extra Brooms 8

Misc. Cleaning Supplies 1

Internal Use Crates (pack of 10) 3

Boxes variable

RUNNING A FOOD HUB 71
Sample Equipment List

General Warehouse/Storage Equipment Qty

Roller Conveyors 3

Shelving (12' x 8' x 42") 20

Pallets (48"x40", 2200lb) 50

Tarps (40' x 40') 5

Misc. Tools for Maintenance 1

Trashcans (50 gal) 12

Ladder 5

Thermometer Gun 10

Temperature/Humidity Indicator 4

Retail Equipment Qty

Bags (Cases) 15

Misc. Wood Bins 20

Produce — Display Bin 8

Prepackaged Item Shelves 60

Refrigerated Display Case 2

Refrigeration Units 1

Shelving 6

Inventory Software & Hardware 3

(cash registers, credit card machines, etc.)

Sales Racks 5

Stereo System 1

Industrial Shelving 1

Safety Equipment Qty

Fire Extinguishers 5

Smoke Detectors 20

Carbon Dioxide Detectors 20

Exit Signs 4

First Aid Kit 4

Emergency Shower 1

72 RUNNING A FOOD HUB
Sample Equipment List

Office Equipment Qty

Used Office Desk and Chair 4

Used Office Chairs 4

Lamp 6

Shelving 2

Trashcan 4

Vacuum Cleaner 2

Used Filing Cabinet 4

Air Conditioning Unit 1

Telephone 2

Credit Card Processing Machine 2

Computer/Printer/Scanner/Fax 1

Break Room Equipment Qty

Used Tables 2

Used Chairs 8

Used Microwave 1

Used Refrigerator 1

Used Coffee Maker 1

Water Cooler 1

Misc. Paper/Plastic Dishware 2

Misc. Bathroom Supplies 2

Build-Out Costs Qty

Outdoor Floodlights 4

Camera/Basic Security System 1

Pallet Scales 1

Portable Fan for Staff Use (36") 4

Additional Build-Out Costs 1

Unforeseen and Misc. 1

RUNNING A FOOD HUB 73
Sample Questions for Software Selection

 n Does software already exist that meets our needs? 

 n What do we need software to do? 

 l Take orders?

 l Track inventory? 

 l Perform general ledger functions?

 n What is the total cost?

 n One-time purchase or ongoing payments?

 n Is the software well suited to our current operations? (Is

it a good fit?)

 n Is the software easy to implement? 

 n Will it work with our existing business software?

(General ledger, current inventory tracking, etc.)

 n Does the software offer a trial evaluation period?

 n Will the software allow for expansion of services in the

future?

 n Is the software well supported by the manufacturer? 

 n What are the intangibles? (saving time, professional

presence, customer relations)

 n Should we consider custom software creation?

Appendix C

74 RUNNING A FOOD HUB
Appendix D

Business Structure Comparison

The table on the following page was prepared with the

assistance of Lenhart Obenshain Attorneys at Law, a

firm familiar with the legal organization of businesses in

the Commonwealth of Virginia and with a long tradition

of representing agribusiness, their managers, and

owners. The table compares the differences between a

partnership, LLC, corporation, and an agricultural

cooperative. Business attributes explored in the table

include the type of taxation for the entity, governing

documents required, and many other considerations. 

 The information is intended to be general and does

not represent legal advice. Entities interested in legal

formation should consult legal experts familiar with

their specific locality and the nature of their business. 

RUNNING A FOOD HUB 75
Comparison of Common Business Structures20

76 RUNNING A FOOD HUB

Formation 

Limited Liability

for Owners

Taxation

Transferability of

Interests 

Securities 

Governing

Documents

Partnership

General partnership: No

documentation required.

Limited partnership:

Certificate of Partnership.

General partnership: No

Limited partnership: Yes, for

limited partners.

Pass-through entity —

owners are taxed, not the

entity. Pass through of

taxable income to owners

cannot be delayed.

Partnership interests are

freely transferable unless

limited by agreement

(typically called a

Partnership Agreement).

Yes, partnership interests are

securities.

No statutory requirement,

but Partnership Agreement

advisable.

LLC

Articles of Organization

Yes

Pass-through entity —

owners are taxed, not the

entity. Pass through of

taxable income to owners

cannot be delayed. 

Membership interests are

freely transferable unless

limited by agreement

(typically called an Operating

Agreement). 

Yes, membership interests

are securities.

Must have at least “short

form” operating agreement;

if more than one owner,

should have full operating

agreement.

20 Adapted from “Virginia Business Legal Structures.” (2011). Virginia Foundation for Agriculture,

Innovation & Rural Sustainability.
RUNNING A FOOD HUB 77

Corporation

Articles of Incorporation

Yes

C corporations: Corporation pays

corporate tax and stockholders pay

income tax on dividends (so-called

“double tax”).

S corporations: Pass-through entity.

Pass through of taxable income to

owners cannot be delayed.

Stock is freely transferable unless

limited by agreement (typically called a

Stockholders Agreement).

Yes, stocks are securities.

Must observe more formalities than the

LLC, including having bylaws and annual

meetings. If more than one owner,

should have Stockholders Agreement.

Agricultural Cooperative

Articles of Incorporation

Yes

For tax-exempt cooperatives, the

cooperative is generally treated as a

pass-through entity — owners are

taxed, not the entity. Non-exempt

cooperatives may have tax at corporate

level. Pass through of taxable income to

members can be delayed by using

nonqualified allocations. 

Stock is freely transferable unless

limited, typically by the cooperative’s

bylaws.

Yes, stocks are securities; special

exemptions available.

The governance and economic “rules”

of a cooperative are typically set forth in

the cooperative’s bylaws and its

contract with member-patrons.
Comparison of Common Business Structures

Management 

Owners 

Classes of

Ownership

Tax Treatment of

Annual Earnings

Incentive stock

options, ESOPs21

Partnership

General partnership:

Managed by one or more

general partner(s).

Limited partnership:

Managed by general partner.

Partner voting is typically

based on percent ownership

in the partnership.

Anyone (referred to as

“partners”).

Very flexible — may create a

variety of classes of

ownership.

All distributions to an active,

individual owner must be

treated as self-employment

income. Typically, this means

general partners must pay

self-employment income.

No

LLC

May be managed by one or

more managers or members.

Member voting is typically

based on percent ownership

in the LLC. 

Anyone (referred to as

“members”).

Very flexible — may create a

variety of classes of

ownership.

All distributions to an active

owner who is an individual

must be treated as selfemployment income.

No

21 ESOP stands for employee stock ownership plan.

78 RUNNING A FOOD HUB
Corporation

Must have a board of directors and

officers. Stockholder voting (including

the election of the board) is based on

how many shares of stock the

stockholder holds.

For S corporations, only up to 100 U.S.

residents and citizens (referred to as

“stockholders”).

S corporations may not have more than

one class of stock (but non-voting stock

doesn’t count as a second class). 

Opportunity to classify payments to an

individual owner as salary or general

corporate earnings not subject to

employment taxes. This presents slight

tax advantage over an LLC. 

Yes

Agricultural Cooperative

Must have a board of directors (at least

one of whom must be a public director)

and officers. Member voting (including

board elections) is per capita — one

vote per member — not on percent

ownership in the cooperative. 

Agricultural producers, commonly called

“members.” Non-ag producers may

invest, but they cannot vote.

May have more than one class of stock,

but only common stock may vote

(common stockholders are the members,

as above). 

All qualified distributions to individual

members must be treated as farm

income. 

No

RUNNING A FOOD HUB 79
Comparison of Common Business Structures

Fiduciary Liability

Capitalization

Partnership

General partnership:

Managing partners are

fiduciaries.

Limited partnership: General

partners are fiduciaries.

No limit on investments

LLC

Yes, managers are

fiduciaries.

No limit on investment

80 RUNNING A FOOD HUB
Corporation

Yes, directors and officers are

fiduciaries.

No limit on investment

Agricultural Cooperative

Yes, directors and officers are

fiduciaries.

Only agricultural producers may be

common stockholders. Non-ag

producers may invest but dividends are

limited. 

RUNNING A FOOD HUB 81

Running a Food Hub: Lessons Learned From the Field, SR 77

This report is part of multi-volume, technical report series:

Running a Food Hub. This first volume compiles a number of best

business practices for starting or expanding a food hub

enterprise. It includes operational profiles of the food hubs

profiled in the report.

For hard copies (please indicate title, publication number and

quantity needed), e-mail: coopinfo@wdc.usda.gov, or call: (202)

720-7395. Or write: USDA Co-op Info., Stop 0705, 1400

Independence Ave., SW, Washington DC 20250. To download from

the Web, visit: www.rurdev.usda.gov/rbs/newpub.htm.

NE W TECHNICAL REPORT SERIES

Running A

FOOD HUB

VOLUME ONE