Excess Competition among Food Hubs

• Published in: Journal of agricultural and resource economics Vol. 44; no. 1; pp. 141 - 163
• Main Authors: Cleary, Rebecca, Goetz, Stephan J., McFadden, Dawn Thilmany, Ge, Houtian
• Format: Journal Article
• Language: English
• Published: Logan Western Agricultural Economics Association 01.01.2019
• Edition: 1835
• Subjects: Agricultural and Food Policy; agricultural resources; Agriculture; Business models; Carrying capacity; Census of Population; commodity markets; Competition; Competitive advantage; Consumption; Costs; Demand and Price Analysis; Distribution channels; Economics; Externality; Farm Management; farming systems; Farms; Food; food hub location; foods; Fruits; Government aid; Government grants; grants; issues and policy; local food; local food systems; Marketing; Markets; Mathematical models; Parameter estimation; Population; Profitability; Profits; Rural areas; Social capital; solutions; Sustainability; Underserved populations; Wholesalers; United States > US
• ISSN: 1068-5502; 2327-8285
• DOI: 10.22004/ag.econ.281317

Food hubs offer a novel solution to connect small and mid-sized local farms, which individually lack the scale to profitably market their products. Because many food hubs rely on grants and philanthropy to provide services and are not necessarily profit-driven, markets may unintentionally oversaturate due to overinvestment. We use a firm-entry model to estimate the average U.S. county population necessary for one, two, and three food hubs to break even. Our findings suggest that policy makers and philanthropists need to consider the carrying capacity of the local food environment and population prior to supporting additional food hubs.