Farm collectives, food co-ops, and food hubs are powerful farm business models, revolutionizing the way local food systems operate. They transform how food is produced, distributed, and consumed, creating a win-win scenario for producers, farmers, and consumers.
According to a 2022 USDA Local Food Marketing Report, local food sold directly by farmers totalled $9 billion, up 3% from 2015. This surge reflects a growing preference for locally sourced and sustainably produced food. As demand for local, transparent, and sustainable food continues to rise, these farm business models bridge the gap between farmers and consumers in innovative ways.
To learn more about the benefits, challenges, and differences between these three farm business models, read on to find out! We also include a brief step-by-step on how to start either one of these approaches.
Farm collectives are essentially farms that are run by multiple farmers. They pool resources (i.e., tools, equipment, labour, marketing efforts) to increase individual success, access larger markets, and reduce individual costs. Here’s a list of the pros and cons of running a farm collective.
To help manage farm collectives, a farm e-commerce tool like Local Line can play a major role. From managing orders to inventory management, Local line takes the stress out of operating and selling as a farm.
Farm collectives can easily be run on Local Line using the vendor management feature. Connections are part of Local Line’s vendor management feature. This allows farms to connect with each other and with hubs to sell farm products and produce online.
As a vendor, you can be a Managed connection, where you don't need a Local Line account and the hub takes care of adding and managing all vendor products and inventory. Alternatively, you can be a Connected/Shared connection, where you create a Local Line account, sell your products directly on your own storefront, and connect with multiple hubs. This feature is also used for food hubs (more on that below).
Food cooperatives (or food co-ops) are grocery stores partially owned by consumers in the community. They tend to prioritize locally sourced and ethically produced food. This farm business model lets members influence the types of products sold, pricing, and overall store policies. Below is a list of the pros and cons running a food co-op.
With a mission to foster a healthier community and a vibrant local food system, Portland Food Co-op has grown to serve 7,000 member-owners and the general public for nine years.
Since using Local Line for their local food sourcing, Portland Food Co-op has saved about 20% of time on their labour. Having this system allows staff to spend more time engaging with customers rather than handling backroom administrative tasks. This shift enhances the overall shopping experience and operational efficiency.
Food hubs are intermediaries that connect local producers with consumers by managing the aggregation, distribution, and marketing of locally-sourced products. Food hubs make it easier for small-to-medium-sized producers to reach larger markets and for consumers to access fresh, local food. See below for the pros and cons of operating a food hub.
“Running a food hub will require dedication, perseverance, and a willingness to adapt to ever-changing circumstances. Here is my unequivocal advice: be flexible, prioritize funding, partnerships, and technology above all else.” - Tandy, Siskiyou Farm Co.
At Local Line, we want to help farmers, producers, and food hubs sell successfully. Which is why we create a whole collection of food hub-related blogs dedicated to successfully running a food hub.
From tips and advice to how you can leverage Local Line (i.e., vendor management, fulfillment), learn how to start and grow an online food hub:
Now that you know the difference between all three, choosing between a farm collective, food co-op, or food hub will depend entirely on your goals, resources, and plans. Here’s a summary of each farm business model:
Starting either of these initiatives requires careful planning and a clear understanding of the chosen model. Here’s a general step-by-step guide on starting a farm collective, food co-op, or food hub.
These steps are only the basics! For additional information and guidance, we recommend doing further research and contacting local agricultural organizations/farms or industry experts. Connecting with others who have successfully launched similar initiatives can offer valuable insights and help you navigate potential challenges.
Selling online is a grand opportunity for these business models. With tools like point of sale (PoS), customizable price lists, streamlined inventory management, and more, Local Line empowers these farm business models to drive a more robust and resilient local food system.
Whether you’re starting a farm collective, food co-op, or food hub, we’ve got resources to equip you with the tools and knowledge needed for success. From marketing templates to selling guides, we’ve got you covered.
Food hubs, farm collectives, and food co-ops all support local farmers by offering ways to collaborate, market, and sell their products.
Farm collectives let farmers share resources and reach wider markets together. Food hubs handle the fulfillment process of getting farm products to buyers (small or big). In contrast, food co-ops create a direct link between farmers and consumers, ensuring that farmers receive fair prices and that consumers get fresh, local products.
The main difference lies in their focus and structure. A farm collective is a group of farmers working to share resources and market their goods. A food co-op is a member-owned grocery store that prioritizes locally-sourced products. Meanwhile, food hubs are a central point that aggregates and distributes local farm products to different buyers.
Most food co-ops are open to everyone, though joining typically involves purchasing a membership share. This gives you a stake in the co-op and often includes other benefits like discounts, a say in store decisions, and a share in any profits.
Even if you don’t want to become a member, many food co-ops allow non-members to shop, though without the extra perks listed above.
Operating a food hub will require a lot of dedication. This is because solid infrastructure, such as storage, transportation, and logistics, is needed to aggregate products from multiple farms. Food hubs also have to balance their operational costs while providing fair prices to both farmers and consumers. These factors may be challenging, but they are a rewarding endeavor.
Finding a local food hub, farm collective, or food co-op is easier than you might think! You can reach out to your local community (i.e., farmer’s markets), check out online directories, or simply search online using keywords like "local food hub near me"
Marketing your farm collective, food hub, or food co-op effectively requires a mix of online and offline strategies. Use social media (i.e., Facebook, Instagram) to showcase your products and tell your story. You may also engage with your local community through events and partnerships.
With Local Line, you can create a standout a website and storefront to connect more easily with buyers and consumers. Whether you leverage social media, email marketing, or go all-in on your website– focus on building a strong brand that reflects you and your goals.
Food co-ops will typically set their prices based on the cost of goods, operational expenses, and the need to provide fair compensation to local farmers. Members often have a say in pricing policies while aiming to keep prices fair for both producers and consumers. Some co-ops may also offer member discounts or bulk buying options to further reduce costs.
The profitability of a farm business model depends on various factors like location, market demand, scale of operations, and if they leverage other business models (i.e., using subscription to sell food on a scheduled basis and get recurring revenue).
Farm collectives can be profitable by reducing costs through shared resources, while food co-ops can benefit from strong community support and direct sales. Food hubs, with their access to larger markets, can be highly profitable if managed efficiently. The most profitable model for you depends on your specific goals and resources.
Food co-ops often offer competitive pricing, especially on locally sourced and organic products. While some items might be priced higher due to their quality and sourcing, co-op members often enjoy discounts and profit-sharing, which can make shopping there more affordable over time. Plus, the focus on sustainability and supporting local farmers adds value that goes beyond just price.
The key difference between a food co-op and a regular grocery store is ownership and purpose. A food co-op is owned by its members, who have a say in its operations and share in its profits. Co-ops prioritize local, sustainable, and ethically sourced products. In contrast, regular grocery stores are typically for-profit businesses owned by individuals or corporations, with a primary focus on maximizing profits.
Local Line plays a crucial role in helping farm collectives, food hubs, and food co-ops streamline their operations. We offer tools for vendor management, CRM tools, 50+ reports and analytics, and so much more. By connecting farmers directly with consumers or larger markets, Local Line helps you build a more efficient and profitable business.
