Business Support for Food Producers: Gaps in Entrepreneurial Programs

Elizabeth Schuster, Environmental Economist – While much research has been conducted around tech business startups, there is a clear knowledge gap when it comes to helping food businesses start and grow. Entrepreneurial support for food businesses and farmers is as critical as agriculture and food production are a foundation for many rural economies.

Further, in the US, the most conservative estimate shows that family farms, i.e. where the principal operator and her or his spouse provide most of the labor used on the farm, represent 86.1% of all US farms and are accounting for 47.4% of all US farm production.* While large-scale producers have the resources to negotiate directly with corporations and to influence markets, small-scale food producers, especially “startups” in their first three years of operation, are at a high risk of failure.

It has been hypothesized that nonprofits may be uniquely suited to fill the gap with entrepreneurial support for food producers, due to their ability to generate revenues through philanthropic donations, grants and fees. Nonprofit entrepreneurial centers are well suited to support development of local food supplies and value chains because they can work with small-scale producers to customize services offered in balance with adjustable fee structures. These centers can then serve as business “incubators” helping small-scale producers grow and learn in a safe environment thereby allowing them to hit the ground running as they roll out innovations.

The Catalyzing Food Entrepreneurship Project

To better test the role of nonprofits as food business incubators, a team of researchers and community partners is currently leading the Catalyzing Food Entrepreneurship (CaFE) project. This project is partially funded by a grant from The Ohio State University’s Initiative for Food and AgriCultural Transformation (InFACT), a Discovery Themes program in combination with several in-kind contributions. 

The research team spearheading the CaFE project consists of partners from The Ohio State University, The College of Wooster, and Sustainable Economies Consulting (a firm based in Wooster, OH). The team is also leveraging a recent feasibility study completed for the Local Roots Market & Café (co-operative also in Wooster, OH) as a case study to inform the design of the study. 

The first phase of research was completed in May 2021 and encompassed 5 focus group sessions with 36 farmers and food producers. These sessions were designed to understand what trainings and programs would be most helpful for food producers or farmers, with an emphasis on value-added agricultural production. Findings from the focus groups will inform a future survey targeting more than 1,500 food producers. Focus group participants were recruited with the help of several project partners including Farm Bureau, Local Roots Market and Café, Countryside Conservancy, ACE-Net, the Center for Food Innovation, and OSU Extension. 

Findings From the Focus Groups

Focus group participants ranged from beginning farmers/food producers (in operation for 1 year or less) to experienced farmers (in operation for more than 2 generations with extensive distribution and outlets) and included producers covering several niche products such as hops, specialty crops, heirloom vegetables, heritage-bred livestock, and certified-organic products and coming from different cultural background. Despite the uniqueness of participants, there were several themes emerged across the focus group sessions.

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Figure 1. A Word Cloud showing the most common food products sold by participants in the focus groups, with the ones that are listed more frequently in larger font sizes.

Five lessons learned from local food producers in Ohio related to training and programmatic needs for their business:

  1. Time is a very limited resource often leading to limited capacity.

Businesses and food producers have an incredibly low tolerance when it comes to the risk of wasting time on an ineffective training. Food producers are willing to pay more, and are more willing to participate, in trainings that (1) have been recommended by peers or trusted experts; (2) are led by an individual who has proven success in their business/industry; and (3) lead to tangible actions that will directly improve their business.

  1. Community-based trainings that understand local context are important.

Producers consistently noted that they would be more likely to attend a training or program if the person leading the training had some local knowledge. It is more effective if a trainer understands local markets, conditions and can even connect producers with local contacts. Such context ensures the training is customized to the local situation.

  1. Producers need support with information overload

Producers spend a lot of time every week Googling and making phone calls to hunt down information. The information may be available, but it is hard to sort all the available information efficiently, which leads to a lot of time lost. Nonprofits and other support organizations can help the producers access information and save them time.

  1. Producers see trainings as networking opportunities.

Many, many producers shared stories of winter being conference season allowing opportunities to meet other producers and share information. They also ranked “learning from peers” as the most appealing format for learning new information about their business. Designing trainings and programs that also help producers network is recommended.

  1. Producers are interested in programs that help them access resources

While there was some interest in traditional business trainings around marketing, cash flow, and accounting, producers are not only interested in conventional business trainings. They also experienced a need for more support around programs that help them access resources, which include grants, low interest loans, and help finding and vetting seasonal employees.

These results are, of course, preliminary and more research is needed to understand the factors influencing the programmatic needs of food producers and their subsequent willingness-to-pay for trainings. Still, this emergency of consistency across the focus groups helps guide the next steps in the CaFE project as focus shifts to broader surveys and testing of potential trainings offered within a food business incubator.

*USDA ERS. (2014). Family Farming in the United States. Accessed October 15, 2020: https://www.ers.usda.gov/amber-waves/2014/march/family-farming-in-the-united-states/.

Acknowledgements: We would like to thank CaFE project team members which include from Ohio State University, Dr. Wuyang Hu (PI), Dr. Lyda Garcia, Dr. Steve Lyon, Dr. Richard Moore, and Dr. Elena Plaksenkova; from College of Wooster, Dr. Amyaz Moledina; and Elizabeth Schuster and Tiffany Leeper from Sustainable Economies Consulting.

Cover Image by Natalie Friedrich

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