Capital in context: Funding US Inland Northwest food hub development before and during COVID-19

Darin Saul,Christy Dearien,Soren Newman

doi:10.5304/jafscd.2021.111.016

Darin Saul, Christy Dearien + Show 1 more

Open Access

https://doi.org/10.5304/jafscd.2021.111.016

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Abstract

This study focuses on how 10 food hubs in the U.S. Inland Northwest resourced their start-up and development before and during the first year of the COVID-19 pandemic. Case studies include cooperative, government agency, nonprofit, and family-owned food hubs. Because of the prominence of nonmonetary values as drivers in food hub development, we used a social entrepreneurship framework to understand how people, context, and a social value proposition affected access to and use of capital resources. We found that each food hub had a unique mix of capital sources and profitability that reflected and shaped who was involved, their mission, and their available resources. All operating food hubs that we studied strengthened and grew their business during the first year of the pandemic. Two federal COVID-19-related programs—the Paycheck Protection Program and the Farmers to Families Food Box Program—played brief but instrumental roles in helping most organizations early in the pandemic, enabling several to pivot from heavily impacted markets (such as restaurants and educational institutions) to direct-to-consumer markets and food security efforts. For several, panic buying early in the crisis followed by a consistent large increase in demand fueled organizational growth. The food hubs adapted quickly, with some significantly changing their business model and expected trajectory as they weathered the first year of the pandemic, coming out stronger than before.

Highlights

Food hubs are becoming key players in developing and coordinating local and regional place-based food supply chains throughout the United States
We focus on the evolution of their business strategies before and during the first year of the COVID-19 pandemic to understand (1) how they funded the start and scale-up of their operations, (2) how they adapted during the pandemic, and (3) lessons learned that could support food hub success and survival throughout the country
Federal COVID-19-related programs were critical to the survival and growth through the first year of the pandemic for one family business, but not the other; and like Western Montana Growers Cooperative (WMGC), they both benefited from panic buying early in the pandemic and sustained increased demand in direct-to-consumer, food security, and wholesale channels

Summary

Introduction

Most aim to advance social and environmental goals: Bielaczyc et al (2020) found only 12% did not identify social and environmental goals as important Another form of nonprofit food hub is the community-based organization, which focuses on “developing the capacity of producers they support, and creating infrastructure that supports and maintains market access for them” One of the hubs studied by Avetisyan and Ross (2019) began as a profit-driven business and refocused on social values as it developed, demonstrating that different values may manifest at different stages Through this integration of long-term social goals and short-term business goals, food hubs can create social change and meet social needs, as well as offer financial opportunity for producers and other private businesses (Avetisyan & Ross, 2019). We conclude by identifying implications for practice and research

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