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Andrew Ellsworth and Greg Boulos, Hollmead Capital LLC.
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HmC LLC
Republic Food Enterprise Center
Building infrastructure for the regional food system of southwestern Pennsylvania
Presented By
HmCapital Partners
Greg Boulos & Andrew Ellsworth,
Managing Partners
HmC LLC
A REGIONAL FOOD HUB LOCATED IN THE HEART OF SOUTHWESTERN PENNSYLVANIA
REUSING A FORMER GROCERY DISTRIBUTION CENTER AND SUPPORTING
LOCAL AGRICULTURE AND BUSINESSES
Republic Food Enterprise Center
HmC LLC
What is a Food Hub?
According to the USDA’s food hub study group (2011) a food hub is:
“A centrally located facility with a business management structure facilitating the
aggregation, storage, processing, distribution and/or marketing of locally/regionally
produced food products”
HmC LLC
Republic Food Enterprise Goals
Bridge the divide between the region’s growers and the region’s consumers
Expand market for local food to include stabilized and value-added product that can be sold off-peak
Provide additional value and stability, and an outlet for extra/damaged produce to farmers
Fill demand in marketplace for locally-grown ingredientsLeverage relationships with large end market
organizations (Lutheran Services, Food Bank, Eat n’ Park, Giant Eagle) to inform farmers of products in demand
Provide jobs, economic development, and long-term wealth creation in an economically depressed area by building employee and farmer cooperative ownership
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Reconstructing the infrastructure
Growers
Aggregators
ProcessorsValue Added
Products
Consumers
Absence of infrastructure to sustain regional food systems prevents establishing a complete regional food business eco-system
Infrastructure needs to be based in markets and sustainable with normal market activity
Improvements in infrastructure can lead to better financial performance for farmers creating a healthy cycle
HmC LLC
Year Round Hub Strategy: Value Added
By aggregating, stabilizing and processing to Value Added Products (VAP) hubs take local year round
VAPs bring more value to growers, can use produce that otherwise gets thrown away
VAPs can provide local food businesses with local products when fresh is not
HmC LLC
IN ORDER TO MAKE THE CHANGE WE HAVE TO THINK DIFFERENTLY ABOUT OUR PLACE IN THE LOCAL FOOD SYSTEM – AND
THE PLACE OF ALL AROUND US
Switching from Supply Chain to Value Chain
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Supply Chain Value Chain
Supply chains favor large scale suppliers
Supply chain does not encourage smaller units of production – all push
Supply chains trickle down profits and squeeze the producers into smaller and smaller margins
Value chains integrate small producers, get scale thru collaborating
Value chains are demand driven (pull), involve customers early and often
Value chains respect the entire system and direct profits to the source of supply
Supply Chain vs. Value Chain
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Republic Food Enterprise Center – A CBSE
RFEC is a Community-Based Social Enterprise Solves a problem in an
existing regional supply chain which is market based
Provides value to both suppliers and customers
Will be owned by the employees and the community
Must be Sustainable and profitable
Growers
RFEC
End
Market
s
HmC LLC
Republic’s Community Benefits
Job &
Enterprise
•20 to 35 jobs on site by third year
•50 t0 100 jobs in related businesses
•Dozens of small food enterprises growing to scale
Direct Spending
•$4-5 million in farm purchases over four years processing millions of pounds of local produce for local markets
Shared Ownership
•Employee Owners
•Producer Owners
•Community Stakeholders
HmC LLC
DEMAND CURRENTLY OUTSTRIPS SUPPLY.UNLESS WE CHANGE THE UNDERLYING
ECONOMICS FOR THE GROWERS WE CANNOT CHANGE THAT CONDITION AND
LOCAL FOOD WILL NOT REACH ITS POTENTIAL TO CHANGE OUR LOCAL FOOD
SYSTEM
SourcingToday and in the Future
Regional Source Coverage: Eastern Ohio and Western PA
HmC LLC
Top Ten Vegetables
Rank VegetableTotal Harvested
Acres
#1 Sweet Corn 5154
#2 Pumpkins 1903#3 Potatoes 946#4 Tomatoes 823#5 Peppers, Bell 324#6 Lettuce 281#7 Beans, Snap 238#8 Peppers, Chile 144#9 Squash 136
#10 Cabbage, Head 95
Eastern Ohio Top 10 Vegetables
Rank VegetableTotal Harvested
Acres#1 Sweet corn 4357
#2 Potatoes 4393#3 Pumpkins 1298
#4 Cabbage, Head 600
#5Tomatoes in the
open 571#6 Peppers, Bell 301#7 Beans, Snap 235#8 Squash 147#9 Peppers, Chile 86
#10 Cucumbers 73
Western PA Top 10 Vegetables
HmC LLC
Top Ten Fruits
Rank FruitsTotal Harvested
Acres#1 Grapes 12419#2 Apples 1725#3 Peaches 288
#4 Blueberries, Tame 202#5 Strawberries 116#6 Pears 94#7 Raspberries 69#8 Plums and Prunes 40#9 Cherries 39
#10Melons,
Watermelon 28
Western PA Top 10 Fruits
Rank FruitTotal Harvested Acres
#1 Apples 1849#2 Grapes 1138#3 Peaches 274#4 Melons, Canteloup 180#5 Strawberries 145#6 Blueberries, Tame 99
#7 Melons, Watermelon 72
#8Blackberries (include Dewberries) 41
#9 Raspberries 31#10 Pears 26
Eastern Ohio Top 10 Fruits
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Western PennsylvaniaCommodity Crops vs Top Ten Fruits and Veggies
1060396
1502012061Acres Harvested 2007
Commodity CropsFruitsVegetables
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RFEC Sourcing Strategy
Growers of fruits and vegetables report inadequate income to support their farms
RFEC has two goals in the sourcing strategy Ensure that growers are able to get the most revenues
for their harvests by decreasing the waste which results from either inability to take seconds to market or to sell firsts in a timely manner
Improve the economic return for growers so that there is an increase in the amount of acreage and yield of fruits and vegetables in the region’s farming community
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Seconds = $8.6 Million Opportunity
Based on the CMU study, the annual value-added products that could be produced off of seconds generated by southwest Pennsylvania farms could easily exceed $8.6 Million
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THE DEMAND FOR LOCAL FOOD AND FOOD PRODUCTS HAS NEVER BEEN HIGHER AND
IT CONTINUES TO GROW ACROSS ALL LEVELS OF THE CONSUMER POPULATION
Demand:Growing and Unmet
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Fresh Produce – In season
Value-added – Year round
Increasing the Value to Producers
HmC LLCSource:Specialty Foods Report
Consumers are more likely to prefer VAPs with local and eco-friendly content
Influences consumers most now
Will grow the most in the next few years
All NaturalManufactu
rer80%
Distributor88%
Manufacturer
51%
Distributor50%
Organic 46% 50% 32% 38%
Local 46% 50% 52% 50%
Eco Friendly 30% 13% 50% 44%
Sustainable 15% 13% 47% 56%
Fair Trade 4% 19% 13% 13%
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Servicing Large Regional Buyers
Lutheran Services Society (Meals on Wheels)Food BanksEat n’ ParkGiant EagleSchool DistrictsRestaurantsCorporate Cafeterias
It’s all about scale…
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RFEC IS A PLATFORM IN OUR LOCAL FOOD SYSTEM THAT WILL DO THREE THINGS
VERY WELL:•AGGREGATE•STABILIZE
•PRODUCE VALUE-ADDED PRODUCTS
What the Republic Hub Will Do
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Aggregator
Pre-planting negotiations with area growers
Simplify collection process around farmer’s markets
Emphasize collection of seconds as well as firsts
Non-farm aggregation as well such as auctions and produce wholesalers
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Stabilization
Process fresh produce soon after collection
Convert into common ingredients
Build sufficient inventories to carry the Hub’s VAP through the non-growing season
Use both shelf stable and frozen technologies
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Value Added Products
Hub develops lines of VAPs in partnership with End Markets (EMOs)
VAPs are derived primarily from the ingredients derived from local growers and producers
In general, the Hub will seek opportunities for VAPs that fit the “G-B-B” approach to retail (Good-Better-Best)
HmC LLC
Opportunity for Collaboration
Republic Food Enterprise Center can: Serve as the next step after shared-use kitchens for
food entrepreneurs Provide access/entry into larger commercial markets Serve help source local produce Offer training and experience on larger food
processing equipment Provide guidance and technical assistance to shared-
used kitchen start-ups
HmC LLC
Thank You!
This Plan is the exclusive property of Hollymead Capital Partners LLC
Any reproduction without the expressed written permission of HmCapital is prohibited
HmCapital Partners
6000 West Grove Circle
Gibsonia, PA 15044
www.hollymeadcapital.com
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