So WI Food Hub Study

Southern Wisconsin Food Hub
Feasibility Study
Dane County Planning and Development Department

SEPTEMBER, 2011
The Southern Wisconsin Food Hub Feasibility Study is a project of the Dane County Planning and Development Department.
The study was conducted in partnership with FamilyFarmed.org, Dane County UW Extension, UW Extension, and WI DATCP.
Southern Wisconsin Food Hub
Feasibility Study
CONTENTS
Glossary 4
Executive Summary 5
Project Background 5
Findings, Analysis, Recommendations 6
Project Impacts 9
Recommendations for Next Steps 9
Project Background 10
Purpose and Vision 10
Dane County Background 11
Agricultural Industry 12
Opportunities and Benefits 12
Feasibility Study Funding 13
Project Team 14
Study Methodology 16
Approach 16
Work Plan 16
Survey Results 18
Grower and Buyer Responses 18
Number of Completed Surveys 18
Nature of Respondents 19
Level of Interest in Packing House 20
Priority Crops 21
Supply and Demand 22
Seasonal Extension 23
Grower Practices and Buyer Requirements 24
Organic Certification 25
Buying Agreements 25
Interest in Ownership, Management or Investment 25
Services Needed 26
Grower Concerns 26
Engagement 27
Implications 27
Market Analysis 29
Industry Size, Growth Rate and Sales Projections 29
Industry Trends 29
Local Market Analysis 30
Competitive Landscape and Advantage 31
Business Analysis 33
Operating Model 33
Business Model 34
Facility 34
Financial Model 37
Economic and Social Impact 41
Business Operations and Structure 42
Ownership Structure 42
Management Team/Operator 44
Business Risks and Mitigation Strategies 44
Financing Options 45
Grant Opportunities 46
Loan Providers 47
Equity 48
Tax Credits 50
Recommendations for Next Steps 51
Appendix 52
Project Team Bios 52
Local Procurement Estimate for Wisconsin 54
Grower Survey Responses and Crosstabs 55
Buyer Survey Responses and Crosstabs 64
Site Request For Information 71
Bibliography 72
Endnotes 74
Figure 1: Unmet Demand for Locally-Grown Fruits and Vegetables - $8 Billion Leakage 30
Figure 2: Proximity to Major Markets 31
Figure 3: County Map of Potential Sites and Farms 36
Figure 4: Statewide Map of Potential Sites and Farms 36
Table 1: Number of Completed Grower and Buyer Surveys 19

Table 2: Grower Experience and Acreage Available 19
Table 3: Buyer Channels and Annual Purchases 20
Table 4: Grower and Buyer Level of Interest 21
Table 5: Top Crops Cited by Growers and Buyers 21
Table 6: Supply – Acreage Available to Packing House in 2012 23
Table 7: Demand – Buyer Pound and Dollar Volume 23
Table 8: Use and Interest in Seasonal Extension 23
Table 9: Grower Practices and Buyer Requirements 24
Table 10: Buyer Attitudes about Organic Certification 25
Table 11: Grower and Buyer Interest in Contracts and Crop Planning 25
Table 12: Grower and Buyer Interest in Ownership, Management, Financial Investment 26
Table 13: Grower and Buyer Interest in Services 26
Table 14: Grower Concerns Regarding Working with a Packing House 27
Table 15: Grower and Buyer Interest in Continued Dialog 27
Table 16: Specialty Produce Wholesalers in Wisconsin 31
Table 17: Site Specifications from RFI Submissions 35
Table 18: Facility Size and Throughput 37
Table 19: P&L Pro Forma 39
Table 20: Volume Sensitivity Analysis3 40
Table 21: Pricing Sensitivity Analysis 40
Table 22: Calculation for Expenditures on Fruits and Vegetables in WI and Chicago MSA, 2008 54
Table 23: Calculation for % of WI & Chicago MSA Fruit & Vegetable Sales Produced in WI, 2008 54
Southern Wisconsin Food Hub Feasibility Study
GLOSSARY
Aggregation – A single point of collection for agricultural products from a larger
number of area farms. Delivery to customers from an aggregation point can be more
efficient than point-to-point distribution from farms to customers.
Food Hub – A facility that centralizes the business management structure to facilitate
the aggregation, storage, processing, distribution, and/or marketing of locally/regionally
produced food products. A food hub may provide the core services of a packing house
(see below), and/or aggregate and distribute farm-packed cases. The Southern Wisconsin
Food Hub Feasibility Study examines a facility that will include core packing house
services. Since packing house is the traditional and more familiar term among growers,
the food hub was referred to as a packing house during the project.
GAP (Good Agricultural Practices) – A voluntary audit-based program, overseen by
USDA, focused on safe production, packing, handling and storing practices for fruits
and vegetables to minimize risks of microbial food safety hazards.
Local – Food that is grown within a limited radius from where it is purchased.
Definitions of local differ by customers and consumers, with typical ranges beginning
within 100 miles and extending to 300 miles or more for regional food systems. In
this report local refers to Wisconsin grown.
Packing House – A facility that handles raw produce immediately after harvest and
prepares it for delivery to customers. The core services of a packing house include
cooling, washing, grading, packing and storage. Additional services may include
harvesting, farm pickup, customer delivery, sales and marketing.
Processing – Altering fresh produce from its raw state through heat (e.g. canning),
freezing, acidification (e.g. pickling) or changing its form (e.g. chopping, pureeing).
Seasonal Extension Structure – Semi-permanent or permanent housing for the
production of fruits and vegetables during cold weather seasons. Types of structures
include hoop houses, greenhouses, glasshouses and indoor warehouses. These
structures and innovative heating technologies can extend the growing season of
some crops to 10 or more months per year.
4
Executive Sumary
EXECUTIVE SUMMARY
PROJECT BACKGROUND
Background: In response to overwhelming demand for local Wisconsin-grown
produce, the Dane County Planning and Development Department raised funds
for a feasibility study to determine the market viability for an aggregation, storage
and distribution facility that connects growers in southern Wisconsin to buyers in
southern Wisconsin and northern Illinois.
Purpose: The Southern Wisconsin Food Hub Feasibility Study tests the hypothesis
———————————
that agricultural production and economic activity in southern Wisconsin could be
fueled by the development of infrastructure to intermediate transactions between
Buyers demand
growers and wholesale customers. local produce ranging
Definition: This type of facility, traditionally called a packing house, is increasingly
referred to as a food hub, a business model defined by the USDA: “A food hub centralizes
from $18-26 million
the business management structure to facilitate the aggregation, storage, processing,
distribution, and/or marketing of locally/regionally produced food products.”1
per year and up to
Vision: The food hub was envisioned as the first of a multi-phased development project.
800,000 pounds
The food hub would begin aggregating conventional local fruit and vegetables to establish
the supply chain, and could be followed by the introduction of on-site processing,
per week
an organic line, proteins, collocation of existing niche aggregators and eventually an
integrated agricultural business center. These supplemental projects would serve the
———————————
broader needs of the agricultural community, food entrepreneurs and customers.
Funding: Public funds were sought for this endeavor to create a strategic platform
from which a public or private interest could continue business development. A core
team was assembled to write a grant proposal to secure planning funds. In late 2010,
the project secured a 2011 HUD Sustainable Communities Regional Planning Grant
awarding $75,000 for the feasibility study. In addition, Dane County and the City of
Madison each provided $5,000 and Madison Gas & Electric provided $1,000 toward
the completion of the study.
5
——————————— FINDINGS, ANALYSIS, RECOMMENDATIONS

Food hub will build Survey Results: Two parallel surveys were implemented throughout the region to
assess interest among growers and buyers in participating in the Dane County food
hub. There was strong participation in both surveys. Over 240 growers and 85 grocery
Wisconsin and foodservice buyers completed the surveys. Buyers indicated demand for local
local brand produce ranging from $18-26 million per year and up to 800,000 pounds per week.
Approximately 1,800 acres would be needed to meet this demand. Growers indicated
and profile a willingness to make up to 1,000 acres available to the food hub in 2012. Those
with the highest levels of interest could make 700 acres available. Nearly 90% of this
of Wisconsin acreage is owned by growers with more than six years of experience. These findings
suggest a strong base of large and experienced growers available at the outset, with
products willing buyers ready to buy.
——————————— Business Model: To determine if a food hub in Dane County can operate profitably,
a financial model simulating a pro forma profit and loss statement (P&L) was
developed. The financial model’s structure was based on the following operating and
business model, and inputs were derived from the surveys and operating data from
analogous food hubs.
The food hub will have three core functions: packing, marketing and distribution.
• The packing operation receives raw material from growers and packs it according to
customer specifications. Depending on the grower’s on-farm post-harvest handling
capabilities, the product is cooled, washed, graded, packed, palletized and placed in
cold storage until it is shipped to or picked up by customers. Farms that field pack
may bring pre-packed cases to the food hub for cooling and storage. On-farm pickup
will be offered to growers who do not have refrigerated transport.
• The marketing operation consists of buyers and salespeople who negotiate
transactions with growers and customers. They may conduct pre-season crop
planning with both groups to more consistently match supply and demand
throughout the season.
• The distribution operation handles logistics of farm and customer pickups and
deliveries. This function is often outsourced and is not included as a profit center in
the business model.
6
Executive Sumary
Revenue Model: The packing operation earns revenue by charging a flat fee for cooling
and packing. The fee schedule covers direct costs which vary based on packaging and
cooling required for each crop, indirect costs and a profit margin. The marketing
operation will handle two types of sales: consignment and direct purchase. In a
consignment sale the food hub facilitates the sale to a buyer on a commission basis
but does not purchase the product from the grower. In a direct purchase the food hub
buys the product from the grower at a set price and strives to sell it to a customer at a
profit.
Facility Scale: Since volume will be more constrained by supply than demand, the
facility was scaled to the 700 acres likely to be supplied and the resources needed
during peak season. This analysis suggests a facility of 25,500 square feet which can
accommodate 12 million pounds or 470,000 cases per year. This meets approximately
40% of customer requirements, suggesting the food hub can expand its existing
footprint or open a second location in the future.
Financial Analysis: The pro forma P&L shows net income of $637,000 and cash ———————————
from operations of $708,000. This is sufficient margin to weather pricing and volume
variances and provide a return of capital to investors. At full capacity using seasonal Up to six full time
extension strategies, the facility can achieve over $20 million in sales.
Risks: National local food trends and the survey for this study clearly indicate
and 16 part-time jobs
strong demand which exceeds available supply, so the greatest risk is lack of grower would be created at
engagement to provide the volume needed to efficiently operate the food hub. There is
also the pricing risk inherent in the produce industry which may squeeze margins and opening, and more
make it more challenging for the food hub to record profits.
than double that as
Recommendations: To mitigate these risks, the operating team should employ the
following strategies: the facility reaches
• Emphasize a strong relationship with growers and cultivate these to ensure
ongoing trusted communication, and a consistent quality supply that will
capacity
meet demand. This is particularly important in the first few years of the operation. ———————————
• Build a base of business with the highest end customers it can reach
efficiently. The company should seek customers in channels that are less price-
sensitive and can purchase in large quantities. Fine dining restaurants, high-end
hotels, premium grocery stores and specialty health food stores are the highest end
customers. Public schools and broad line supermarket and foodservice distributors
purchase very large quantities, but will be more price-sensitive. The food hub should
seek a mix of customers which emphasizes the higher end of this range.
• Make it a win for growers even if unprofitable at first. If it doesn’t work for
the growers in Year 1 there will not be a Year 2. This means giving growers the
price they need even if it cuts into or eliminates gross margin, and ensuring the
enterprise is well enough capitalized to cover initial losses.
• Secure a management team with experience in marketing and sales. An
experienced manager that oversees buying and selling with a deep knowledge of
production, perhaps a former grower, is critical for garnering trust and confidence
among growers and buyers. Growers will need assurance that they will be rewarded
with a better price if they deliver a better quality product, so the sales staff must
be able to effectively gauge and market quality to buyers to ensure an equitable
correlation between quality and price. Depending on the breadth of experience
7
———————————
The facility
would provide a new
market and new
revenue stream for
as many as
50 family farm
businesses
in communities
across Dane County
and the Southern
Wisconsin region,
adding value to
farmland within the management team, transportation and logistics should be outsourced
until the team has perfected marketing and sales.
——————————— • Build loyalty for the Wisconsin brand and tell the local story to customers.
There is real value-added in local produce which should command a better price:
local produce has a longer shelf life, better taste, is nutritional and many shoppers
and diners know the difference and will pay for it. Convey these benefits to
consumers at retail through farm identification and value added information on
signage, cases and PLU codes.
• Make it easy for customers to do business with the food hub. Deliver
consistent quality, packed the way customers demand, and offer an assortment
that will make them a valuable supplier to their customers. In time, the business
relationship will be based less on price and more on trust and simplicity.
• Establish a wide and cooperative network of growers. There should be a
core group of growers that participate in pre-season crop planning. Cultivating
relationships with a broader range of growers will also increase the likelihood of
filling gaps if weather or other unplanned events disrupt supply. These transactional
relationships can be the foundation for future partnerships as the business expands.
• Collaborate with other intermediaries and partners to strengthen the
market. This is a highly interdependent industry, one in which cooperation with
competitors can expand markets and support prices. As the business and new
relationships develop across the local food system, these stakeholders and other
intermediaries serving the same market should be open to opportunities that
could build efficiencies and strengthen markets. These intermediaries could also
become customers, and vice versa, and are a potential means for finding markets
and filling orders.
8
Executive Sumary
PROJECT IMPACTS ———————————

There could be significant positive economic and social impacts if a food hub is
developed in Dane County. Based on the scale of the facility operating at steady state, 2.2 jobs
the following benefits could be realized:
Jobs: In steady state the food hub employs six full-time and 16 part-time employees
are created
and require up to ten third party employees to handle distribution. Employment
would increase up to 250% (2.5x) as the facility develops seasonal extension
for every
capabilities and reaches capacity. Indirect employment will also result from the
enterprise. According to a recent UW-Madison study, 2.2 jobs are created for every
$100,000
$100,000 in local food sales.2 At the projected $20 million capacity, the facility
could create over 400 jobs in the local economy. Staffing would include positions in
in local
management, operations, sales, facilities, production, warehousing, and distribution.
food sales
New Markets: According to the average acreage among survey respondents, the
facility would provide a new market and new revenue stream for as many as 50 family ———————————
farm businesses in communities across Dane County and the Southern Wisconsin
region, adding value to farmland.
Farm Income: It is not known what crops are currently grown on the acreage
that would be committed to the food hub nor what new acreage will be put into
production. However, if just 10% of the facility’s volume at capacity comes from
acreage converted from commodity crops to fresh market vegetables, farm revenue
could increase by $900,000 to $1.8 million.3
Economic Multiplier: At a 2.6x multiplier, at capacity and on a retail sales basis, the
food hub would inject an additional $60 million into the local economy ($20 million
wholesale ~ $26 million retail x 85% not currently local x 2.6 multiplier).4 See page
66 of Appendix for an explanation of local procurement percentages, compared with
equivalent shipments of produce from more distant locations.
Environmental Impact: In steady state, the food hub will distribute annually
approximately 12 million pounds of produce in 400 tractor-trailer loads over an average
distance of 150 miles. This could reduce carbon emissions by 2.4 million pounds per year.5
RECOMMENDATIONS FOR NEXT STEPS

The Project Team outlined key next steps and should work toward the following
milestones subsequent to the publication of this report:
Q3 2011: Follow-up grower-stakeholder meeting in October to continue to identify
core group of growers which will form the supply basis for the food hub,
and possibly its ownership basis;
• Issue a request for proposal for a business plan consultant;
• Issue a request for proposal for an owner/operator to join with grower-
stakeholders and the Project Team as the new company’s entrepreneurial
management team.
Q4 2011: Identify owner/operator, complete business plan and begin fundraising.
Q1 2012: Identify funding and close on facility.
Q2 2012: Prepare for launch in June 2012.
9
PROJECT BACKGROUND
PURPOSE AND VISION
In response to overwhelming demand for local Wisconsin-grown produce, the Dane
County Planning and Development Department raised funds for a feasibility study
to determine the market viability for an aggregation, storage and distribution facility
that connects growers in southern Wisconsin to buyers in southern Wisconsin
and northern Illinois. The Southern Wisconsin Food Hub Feasibility Study was
undertaken to the test the hypothesis that agricultural production and economic
activity in southern Wisconsin could be fueled by the development of infrastructure
to intermediate transactions between growers and wholesale customers. This type
of facility, traditionally called a packing house, is increasingly referred to as a food
hub, a business model defined by the USDA: “A food hub centralizes the business
management structure to facilitate the aggregation, storage, processing, distribution,
and/or marketing of locally/regionally produced food products.”6
The food hub was envisioned as the first of a multi-phased development project.
The food hub would begin by aggregating conventional local fruit and vegetables to
establish the supply chain. Subsequent projects could include: the introduction of
on-site processing, organic and protein product lines, collocation of new and existing
niche aggregators, bringing together a number of allied businesses in one site. Public
funds were sought for this endeavor to create a strategic platform from which a public
or private interest could continue business development.
In June 2009, Dane County Department of Planning and Development began
discussions with FamilyFarmed.org about developing a food hub that would serve the
critical function of connecting agricultural producers in the region with customers in
Madison, Milwaukee, Chicago and surrounding areas.
10
DANE COUNTY BACKGROUND ———————————

Supporting agriculture has been a public policy and program priority for Dane County
throughout the last 30 years. The county has participated in the state’s farmland Approximately 1,800
preservation program since its inception, and continues to be an innovator in
developing and implementing policies that protect farmland and provide new market
acres would be
opportunities for farmers. needed to meet
In recent years, Dane County has been at the forefront of developing and adopting
farmland preservation and agricultural economic development tools. These include: demand
• Exclusive agricultural zoning with limitations on non-farm development, generating ———————————
approximately $1.2 million in state income tax relief annually for participating
farmers.
• A revised Agriculture-Business District was designed to provide for a wide range of
agriculture, agriculture accessory and agriculture-related uses, at various scales.
• A Transfer of Development Rights ordinance that allows farmers to sell
development rights in exchange for long term conservation easements to preserve
farmland.
• A small lot agricultural zoning district that provides opportunities for small scale
producers to acquire land for their operations at farmland values.
• Providing funding and staff support to start a farmers market in an underserved
neighborhood in Madison.
• Two state-certified Agricultural Enterprise Areas.
• Establishing the Dane County Food Council to advise the county board on strategies
to improve and strengthen the local agricultural economy and food system.
• Adopting a Local Food Purchase policy that encourages county purchases of locally
grown food at various facilities.
• A competitive grant program administered by Dane County UW Extension to
promote value added agricultural opportunities among small scale producers.
• Establishing the Institutional Food Market Coalition which conducts institutional
market development on behalf of Dane County and regional growers and local food
businesses.
Programs such as these help stabilize the agricultural land base and reflect the
numerous ways Dane County government helps farmers innovate and stay
economically viable. Despite being the fastest growing county in the state,
agriculture remains the predominant land use, accounting for 70% of the county’s
land base. The county’s commitment to agriculture is deeply rooted in its local
history and culture, and is home to the World Dairy Expo, and the nation’s largest
producer-only farmers’ market.
The food hub project builds on Dane County’s efforts and brand, and creates new
business opportunities and a market-based approach to work in conjunction with
county land use policies and regulations.
11
AGRICULTURAL INDUSTRY
As of 2010, Dane County had 535,756 acres of land in active farming use, representing
70% of the total land area of the county. That year, 3,331 farms, averaging 161 acres
apiece, produced over 15 different crops. Dane County continues to lead the state in
total market value of agricultural products. In 2007, Dane County products sold for over
$470 million, the highest for any county in Wisconsin, and in the top 2% for agricultural
counties nationwide. Traditionally a top dairy, grain and cattle producer, Dane County is
also in the top 25% of U.S. counties in market value of twelve different commodity groups.
Dane County has a growing market for small acreage production and direct sales of farm
products, including road-side stands, farmers’ markets, “pick your own” and Community
Supported Agriculture. In 2008, 246 Dane County farms generated over $2.5 million
in direct-marketing sales. Based on sales to individual households, the market for
locally grown produce has in recent years expanded to include restaurant, grocery and
institutional buyers. Between 2007 and 2010, Dane County’s Institutional Food Market
Coalition program worked with hundreds of local growers and institutional buyers
(including the UW Madison and UW Milwaukee hotels, hospitals and local and state
government facilities), facilitating over $2.5 million in local food sales.
Dane is one of eight counties comprising the Madison Region. This region’s $1.86
billion agriculture industry supports nearly 60,000 jobs and represents a major
——————————— strength and opportunity for the economy. The Madison Region counts 14,000
farms across its eight counties, representing some of the richest agricultural land
Over 1000 acres
in the world. The Madison Region lies at the epicenter of consumer-driven markets
for artisanal, organic, and local foods between Minneapolis, Chicago, Milwaukee
identified through
and Madison. It has a longstanding tradition of innovation and entrepreneurship,
survey developing sustainable bio-energy, creating successful infrastructure for value-
added products, and increasing the market for local foods.7
——————————— OPPORTUNITIES AND BENEFITS
In June 2009, Dane County Department of Planning and Development began
discussions with FamilyFarmed.org about developing a food hub that would serve the
critical function of connecting agricultural producers in the region with customers in
Madison, Milwaukee, Chicago and surrounding areas.
FamilyFarmed.org, Chicago, Illinois, has been developing markets for local food since
1999 through trade shows, farmer development and training and political advocacy.
The organization’s work has expanded to include the planning and development
of fresh produce aggregation businesses. This is in response to the inadequate
infrastructure in most markets for efficient relationships between local growers and
buyers, particularly in the wholesale channel.
FamilyFarmed.org assists some of the largest regional wholesale buyers in securing
local produce – Sysco, Compass Group, Whole Foods Market, Goodness Greeness,
Chipotle and other large scale buyers.
The demand from these large customers far exceeds supply from Illinois and Wisconsin
growers, and at this time there are few intermediaries that can aggregate regional
produce and supply it with the volume, quality, food safety, and consistency needed.
These issues are well understood by the Dane County Planning and Development
Department through its leadership of the Institutional Food Market Coalition, as well as
other county initiatives.
12
Based on its collective food systems experience including case histories published in a ———————————
2009 UW Madison report,8 the Project Team identified numerous potential economic,
social and environmental benefits. Food Hub will
Economic Stimulus: According to the 2005 Consumer Expenditure Survey (Bureau
of Labor Statistics), Dane County spends over 1 billion dollars annually on food.
distribute annually
A majority of the fruits and vegetables consumed are grown in California, Florida, approximately
Mexico and beyond. The economic impact of this trend is billions of dollars leaving
the region from across the supply chain over time. The facility could bring income 12 million pounds
to Wisconsin by replacing imports with locally grown produce. For every one dollar
spent locally, there is a 2.6 dollar multiplier effect.9
of produce in 400
Job Creation: Based on published case studies, it was estimated that a food hub tractor-trailer loads
could add 30 jobs for seasonal production and an additional 20 jobs with seasonal
extension. In addition, demand for farm labor could add 2-3 jobs for every acre over an average
converted to high-value crops, more with seasonal extension, plus construction or
re-development jobs for a new or existing site. Staffing would include positions in
distance
management, operations, sales, facilities, production, warehousing, and distribution. of 150 miles.
Tax Revenue: It was estimated that the facility could generate $20-30 million in
sales within three years, and increase beyond this level with seasonal extension This could reduce
strategies. These revenues would bring additional sales tax to the local economy.
carbon emissions
New Markets: Wisconsin farmers of all sizes and specialties interested in selling
wholesale fruits and vegetables could have a local distributor through which to sell. by 2.4 million
Increased Farmer Income: Growers could benefit from the significantly higher pounds per year
market value of fresh marketcrops by converting acreage from commodity crops.
Initial estimates of sales per acre for fresh market vegetables ranged from $5,000-
10,000 vs. $950 on average for commodity crops.10
———————————
Dane County, Wisconsin, Local Foods Brand: Opportunity to build the local
brand, raising awareness and driving demand for Wisconsin products throughout
southern Wisconsin and northern Illinois.
Environmental Impact/Emissions Reduction: Local produce distributed from
Dane County would travel approximately 150 miles to its largest customer base in
Chicago. Compared to the current average produce journey of 1500 miles,11 this
would reduce carbon emissions by 6,000 pounds per load (based on 5 mpg and 22.2
lbs CO2 per diesel gallon).12
Improved Health: With the pervasiveness of obesity, hypertension and many other
diet-related health issues and diseases, it is important not only to facilitate eating
fresh local produce for personal health, but also to reduce health care costs.
FEASIBILITY STUDY FUNDING

Based on the vibrant and diversified farming economy in southern Wisconsin and strong
demand identified from Chicago, FamilyFarmed.org and the Dane County Department
of Planning and Development began raising funds for a feasibility study to investigate
the financial viability of building a food hub in Dane County serving growers in Dane
County and southern Wisconsin and regional buyers. A core team was assembled to write
a grant proposal to secure planning funds. In late 2010, the project secured a 2011 HUD
Sustainable Communities Regional Planning Grant awarding $75,000 for the feasibility
study. As funding partners, Dane County and the City of Madison each provided $5,000
and Madison Gas & Electric provided $1,000 toward the completion of the study.
13
PROJECT TEAM
The Project Team was composed of three groups: a Core Team which participated in
all aspects of the study, a team of Technical Advisors who provided valuable input
for facets of the study relevant to their expertise, and an Advisory Board for project
oversight and stakeholder engagement. Biographical summaries for the Core Team
and Technical Advisors are provided on page 52 in the Appendix.
The Core Team leading the study included the following individuals:
Name Title Role/Expertise
Olivia Parry Senior Economic Development Project Director, study design, oversight
Specialist, Dane County and management, final report
Kathy Nyquist Principal, New Venture Study design, business modeling,
with FamilyFarmed.org final report
Carrie Edgar Director, Dane County University Grower outreach strategy and implementation
of Wisconsin Extension in southern Wisconsin
AJ Bussan University of Wisconsin Wisconsin horticulture industry, grower
Professor of Horticulture outreach, model development
Jim Slama Founder and President, Buyer outreach and overall project design
FamilyFarmed.org and strategy
Technical Advisors provided expertise for survey design, facilities and equipment
design, model, variables, and risks.
Name Title/Organization Expertise
Kelly Liddington Extension Agent, Agriculture Grower-led food hub development;
and Natural Resources, public/private partnerships
Virginia Cooperative Extension
Duane Maatz Executive Director, Wisconsin Grower networks; private, for-profit food hubs
Potato and Vegetable Association
Anne Reynolds Associate Director, UW Center Cooperative business models, strategy
for Cooperatives development
Kerryann DiLoreto Survey consultant Survey design and implementation
Laura Witzling IFM Coordinator, Dane County Identify and help develop and implement
buyer outreach
14
An Advisory Board was convened to provide project oversight and facilitate

stakeholder engagement.
Name Organization
Grant Abert Slow Money
Amber Bennett Badgerland Financial
Bob Bloomer Chicago Public Schools
Leah Caplan Metcalf’s Market
Mike Daniels USDA Rural Development
Mark Daugherty Collaborative Energy Ventures LLC
Teresa Engel Wisconsin DATCP
Lois Federman Wisconsin DATCP
Michael Gay Office of Business Resources, City of Madison
Robert and Barbara Golden RE Golden Produce
Diane Hesselbein Dane County Board of Supervisors
Anna Maenner Wisconsin Fresh Market Vegetable Growers Association
Anne Reynolds UW Center for Cooperatives
Bob Scaman Goodness Greeness
Joie Schoonover UW Madison Housing
Brandon Schulz Wisconsin Grocer’s Association
Rick Terrien Iowa County Development Corp.
Jose Valadez Whole Foods
Todd Violante Dane County Planning and Development
Jim Welsh Natural Heritage Land Trust
Phyllis Wilhelm Madison Gas & Electric
15
STUDY METHODOLOGY
APPROACH
A five-stage business planning approach was initiated by the Project Team to ensure
adequate due diligence was conducted to instill confidence among future stakeholders.
STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
OPPORTUNITY FEASIBILITY BUSINESS FUNDRAISING LAUNCH
IDENTIFICATION ASSESSMENT PLANNING
Once an opportunity, idea or hypothesis has been identified for a successful business, a
feasibility study is conducted to shape the business concept and test its viability before
a significant capital investment is made. In a for-profit context the crux of the feasibility
study is a financial model that analyzes the potential for the business to earn a satisfactory
profit for owners and investors based on a set of reasonable assumptions. These
assumptions are derived from primary and secondary research conducted in the study,
often borrowing available data from analogous operations. If the study reveals sufficient
evidence that the business can be successful, a business plan is developed in the third
stage that adds further rigor to the assumptions and business model including complete
operations, marketing and financial plans. The business plan will identify the funding
needed from investors and project the level and timing of investor returns. As funding is
secured in stage four, the entrepreneurial team can prepare to launch the business.
The first two stages have been completed by the Project Team and are represented in
this report.
FEASIBILITY STUDY WORK PLAN

Based on the opportunity identified prior to receiving funding for the feasibility study,
the Project Team designed the study to address the following questions/areas:
1. Types of produce buyers demand, in what quantities, at what time of year, and their other
requirements
2. Number and characteristics of fruit and vegetable farmers interested in selling to the food hub;
quantity and type of produce
3. Number of acres of fruit or vegetable production growers could supply/add by 2012, 2013
4. Grower interest in seasonal extension and for which crops
5. Grower interest in a cooperative business structure vs. other models
6. Operating model: basic packing services, value-added services, private labeling, shipping, etc.
7. Optimal scale in terms of facility size and throughput
8. Potential size of the market and size of the business
9. Economics of the operation at breakeven and optimal capacity; sensitivity analysis for pricing and
volume
10. Location: evaluate potential sites in Dane County
11. Nature of current and potential competition and sustainable competitive advantages
12. Chief business risks and mitigation strategies
13. Composition of management team, skill set required
14. List of financing options – state, local, federal, private
16
To answer these questions, the Project Team developed a work plan that
encompassed stakeholder engagement, primary and secondary research, finalizing
recommendations and developing the report.
Invited buyers, County representatives, Ag Extension, ag associations and other stakeholders to

STAKEHOLDER participate on Advisory Board and convened 3 meetings
ENGAGEMENT Conducted extensive grower outreach and convened 2 grower meetings
Developed and implemented two surveys among growers and buyers

PRIMARY Held one-on-one discussions with key buyers, growers and investors
RESEARCH Conducted ad hoc focus group at June grower meeting
Issued RFI for potential sites in Dane County
Obtained market and trends data from USDA and syndicated sources
SECONDARY Analyzed operating data from published case histories and confidential data made available to Project Team
RESEARCH Synthesized all findings
Created financial model and conducted sensitivity analysis
Reviewed findings with Advisory Board
REPORT Wrote study and reviewed with Project Team
FINALIZATION Created and disseminated final report
Timeline of Activities Feasibility Study Completed:

Initiation Engaged Advisory Board with a kickoff meeting to garner support. Attended by 19
Advisory Board and Project Team members.
Initiation Began grower outreach with the Southern Wisconsin Fresh Produce Workshop at
the Alliant Energy Center. Agenda included workshops on production and marketing,
and a general session introducing the food hub development project. Attended by 94
growers and presenters, 39 of which completed evaluations. 100% found the workshop
worthwhile, and the food hub session drew the highest interest.
March-May 2011 Developed and disseminated grower and buyer surveys. The first assessed the available
supply, interest levels and concerns among area growers, and the second gauged buyer
demand for local produce. Both achieved extremely high response rates and revealed
complementary interests among growers and buyers.
April 27, 2011 Convened Advisory Board to review preliminary grower survey results and review buyer
survey for feedback.
May 2011 Developed and issued RFI for potential sites in Dane County. Six responses were
submitted and three additional sites were identified by the Project Team.
June-July 2011 Analyzed and synthesized research findings, built the financial model and began drafting
the report.
June 9, 2011 Convened grower meeting at Alliant Energy Center to present initial findings from
surveys, gauge interest, and discuss ownership and operating structures. Attended by
25 growers, two Wisconsin produce auctions representing over 100 growers, the Project
Team and Technical Advisors.
June 27, 2011 Final Advisory Board meeting to review a draft of the feasibility study and discuss the
team’s interest in continuing in the development of the project.
September 2011 Published and disseminated report.
October 2011 Action plan, business planning phase begins.
17
——————————— SURVEY RESULTS

Nearly three in Inregion
March, April and May, two parallel surveys were implemented throughout the
to assess interest among growers and buyers in participating in the Dane
ten quickservice also distributed in hard copy through a mailing and at grower events. The food hub
County packing house. Both surveys were available online and the grower survey was
operators serve was referred to as a packing house in the surveys because it is the more traditional
definition, and it also conveys that the core services offered by the food hub would
locally sourced include those offered by a packing house (see page 4 for Glossary).
items now The surveys were promoted through the following channels:
and nearly half Grower Survey Buyer Survey

2011 Southern Wisconsin Fresh Produce Workshop Institutional Food Market Coalition
believe these 2011 Wisconsin Fruit and Vegetable Conference Wisconsin Grocers Association
items will grow 2011 Midwest Value Added Ag Conference Something Special From Wisconsin
more popular 2011 Wisconsin Local Food Summit FamilyFarmed.org (Chicago markets)
in their segment Wisconsin Fresh Market Vegetable Growers Association

Wisconsin Apple Growers Association
in the future Wisconsin Berry Growers Association
——————————— Wisconsin State Farmer
DATCP
Dane County UW Extension
UW Extension
GROWER AND BUYER RESPONSES

The most consequential findings are presented below. The Appendix contains more
detailed response data.
NUMBER OF COMPLETED SURVEYS

There was strong participation in both surveys. Over 240 growers and 85 grocery and
foodservice buyers completed the surveys. To ensure the surveys captured responses
from a base ready to do business with a food hub, 137 growers who do not currently
grow fresh market vegetables were removed from the sample; however, one-third of
these respondents expressed an interest in diversifying their farm, indicating the pool
of ready growers may increase in the future. The remaining 104 grower responses and
85 buyer responses provided robust data from which to draw implications.
The response rate among buyers was surprising to the Project Team given the survey’s
detail and comprehensiveness. One buyer noted that it required three staff people to
fully answer the survey.
18
TABLE 1: NUMBER OF COMPLETED GROWER AND BUYER SURVEYS

Grower Survey Buyer Survey
When the survey Available from March 1 to May 17, 2011 Available from April 7
took place to May 17, 2011
Number of 241 completed surveys and 104 are included in results 85 completed surveys
completed 104 (43%) currently fresh market growers and comprise are included in results
surveys the maximum number of respondents for questions below
137 (57%) not currently fresh market growers; however,
approximately 1/3 of this group indicated an interest in
diversifying their farms
Note: While these numbers represent the total possible sample, not every respondent
answered every question. Some findings may be drawn from a smaller sample,
particularly those drawn from cross-tabbed responses.
NATURE OF RESPONDENTS
Growers: Approximately two-thirds of respondents are experienced farmers with six
or more years growing produce. The least experienced group is the largest segment
by overall number of respondents and interest level; however, the most significant
segment has six to ten years of experience. Together, this group represents more than
half of the acreage that could be made available to the food hub in 2012. Notably,
the high level of interest among newer farmers and those not yet growing produce
highlights substantial long-term growth potential for the food hub as these growers
increasingly participate.
A number of growers, including large commercial growers, have expressed their
interest to the Project Team since the surveys closed in May. The sample would be
weighted toward higher experience and acreage if they had been included.
TABLE 2: GROWER EXPERIENCE AND ACREAGE AVAILABLE
Years # Respondents Total acreage Ave. # Interested*
growing that could be acres/farm
produce available in 2012
0-5 34 116-149 4 27
6-10 24 577-579 24 20
11-20 21 111-121 6 18
21-30 10 49-84 7 7
31-50 11 71-101 8 8
50+ 2 10-15 6 1
TOTAL 102 934-1049 81
*Cited “somewhat, very or extremely interested” in doing business with a packing house
19
Buyers: The large majority of respondents buy produce for foodservice outlets
or distributors: 80% when counted together with buyers who purchase for both
foodservice and grocery outlets. Most respondents have total annual produce
purchases of less than $100,000, but 6 buyers report purchases exceeding $5 million.
The total amount of produce purchased by this sample ranges from $45 to $145
million per year. With the market sized at $10 billion wholesale (see page 29 of
Market Analysis), this sample represents a small portion of the total opportunity.
Not believed to be represented in this sample are buyers from independent
restaurants, since the survey was neither sent to the Wisconsin Restaurant
Association nor that target market.
TABLE 3: BUYER CHANNELS AND ANNUAL PURCHASES
Buyer Channel Annual Total Produce Purchases
11 (12%) buy produce for grocery stores Majority (60%) purchase less than $100,000/year
in total produce
48 (56%) buy produce for foodservice outlets • 11 (20%) purchase less than $10,000
22 (26%) buy for both channels • 15 (25%) purchase between $10,000-$50,000
• 8 (15%) purchase between $50,000-$100,000
19 (30%) purchase between $100,000-$5 million
6 (10%) purchase more than $5 million/year
Total: 81 respondents Total sample buys from $46 – $145 million per year
LEVEL OF INTEREST IN PACKING HOUSE

There is extremely high interest among both growers and buyers in doing business
with a packing house in Dane County. Among growers and buyers respectively, 75%, a
virtual unanimity reported to be at least “somewhat” interested in doing business with
a packing house; one-third and more than 60% respectively were “very” or “extremely”
interested. The presence of selection bias in the sample – those most interested
will go to the effort to complete a survey and skew findings favorably – is made less
consequential by the quantity of data provided, which permits quantitative analysis
within the sample rather than applying percentages to a broader data set.
With two-thirds of the most interested growers having six or more years of
experience, and these representing as many as 700 acres that could be made
available to the food hub in 2012, the early involvement of a core group of large and
experienced growers appears likely, and will be a platform for the food hub’s success.
Level of buyer interest did not vary from the total sample averages by channel or
level of current purchases. While buyers individually tend to be on the smaller end of
the range, together they represent significant purchasing scale. Those expressing any
interest purchase approximately $96 million in total produce today, and those most
interested, $78 million.
20
TABLE 4: GROWER AND BUYER LEVEL OF INTEREST

Grower Survey Buyer Survey
Total citing “somewhat,” 75% are interested in selling 97% are interested in buying from a
“very” or “extremely” interested to facility packing house
2/3 have been farming for Represent approx. $96 million in total
6+ years annual produce purchases (midpoint of
range)
Would make approximately Roughly equivalent interest among retail
1,000 acres available to the and foodservice buyers and among small
packing house in 2012 and large buyers
“Very” or 33% are extremely/very More than 60% are extremely/very
“extremely” interested interested in selling to facility interested in buying from facility
2/3 have been farming for Represent approx. $78 million in total
6+ years annual produce purchases
Would make approximately
700 acres available to the
packing house in 2012
PRIORITY CROPS
Generally, there is high synergy between the specific crops that buyers demand and
those growers wish to supply. Of the fruits and vegetables growers highlighted as most
likely to be sold through a packing house, five were also flagged by buyers as crops they
would be most likely to purchase locally: tomatoes, cucumbers, peppers, apples and
strawberries.
TABLE 5: TOP CROPS CITED BY GROWERS AND BUYERS
Top Grower Crops Top Buyer Crops
(% of growers offering) (% of buyers demanding)
Whole Whole Processed
Vegetables Butternut Squash 42% Carrots 72% Carrots 35%
Acorn Squash 40% Peppers 72% Lettuce 33%
Tomatoes 38% Cucumber 68% Peppers 32%
Cucumber 35% Tomatoes 67% Onion 31%
Peppers 34% Onion 65% Broccoli 29%
Pumpkins 34% Broccoli 64% Cauliflower 27%
Fruit Apples 22% Apples 72% Cantaloupe 29%
Strawberries 21% Strawberries 62% Apples 27%
Watermelon 18% Cantaloupe 61% Honeydew 26%
Crops in red are cited by both growers and buyers
The data reveals differences in the degree and level of interest between growers and
buyers. Buyers tend to be generally interested in purchasing almost any local crop
type, and interest level differences between major types of produce are relatively
minor. For example, locally grown collards, which generated the least interest among
buyers, are still in demand by 21% of buyer respondents. On the other hand, grower
interest in selling different crops is more diffuse and based on what they are currently
producing. This is a positive trend, indicating that growers currently producing fruits
and vegetables can confidently continue to focus on their specific crop type knowing
that they will find an interested buyer.
21
As noted in the complete summaries in the Appendix, 80% of grower respondents

grow both retail grade (US No. 1) and seconds (US No. 2). This, along with the
relatively high buyer demand for processed produce highlights the potential for a
strong processed seconds line offered by the facility in a future phase.
SUPPLY AND DEMAND

Supply: Approximately 1,000 acres could be made available to the food hub in
2012 according to survey results. This equates to approximately 14 acres on average
per respondent. The median acreage per farm is four acres, signaling a majority of
smaller farms and a fewer large farms among respondents. Notable in the data is
greater-than-the-average acreage among the most interested growers and a positive
correlation between acreage and interest: 41 and 18 acres among those “extremely”
and “very” interested, respectively. These growers could make 700 acres available
to the food hub in 2012. Also notable is a positive correlation between acreage and
experience, and the indication that 620 acres could be made available among the
most experienced and interested growers. This suggests a strong base of large and
experienced growers could participate at the outset.
Demand: Buyers indicated they would purchase 800,000 total pounds of local
produce per week if it were available. Of this volume, 750,000 pounds would be
whole fresh produce and 50,000 pounds would be processed. This suggests 30
million pounds of throughput during the 40-week local season – more with seasonal
extension – if the food hub handled 100% of customer demand in the sample for
whole local produce. Buyers indicated they would purchase an average of $22 million
in local produce if available, which is consistent with the pound volume noted above.
Top crops in demand based on weight include potatoes, apples, onions, cucumbers,
broccoli and cauliflower.
Based on survey response alone, the weekly demand for local fruits and vegetables
would require the facility to aggregate produce from over 1800 acres (see page 23
of Business Analysis) and growers could make 1,000 acres available to the food hub
in 2012. These figures could be considerably higher since the survey only captured
a sample of the potential universe of growers and buyers. This discrepancy between
buyer demand and immediate supply reflects the packing facility’s long-term growth
opportunity. After a successful first year aggregating from a smaller acreage base and
securing several major buyers, the facility would have significant growth potential by
expanding its acreage and grower base, and then selling to new large customers.
22
TABLE 6: SUPPLY – ACREAGE AVAILABLE TO PACKING HOUSE IN 2012

Grower Survey Grower Acreage That Could be Available to Packing House in 2012
Total all respondents 1,000 total acres (lo-hi range 940-1050)
14 acres average per farm
4 acres median per farm
“very” or “extremely” 700 total acres
interested 24 acres average per farm vs. 16 acres for all respondents to this question
“Extremely interested” 41 acres on average
“Very interested” 18 acres on average
“Somewhat interested” 10 acres on average
700 acres among those with 6+ years experience
Total with 6+ years 860 total acres
experience 13 acres average per farm vs. 10 acres for all respondents to this question
700 acres among “very” or “extremely” interested
TABLE 7: DEMAND – BUYER POUND AND DOLLAR VOLUME

Buyer Survey Buyer Volume
Total pounds 800,000 avg. pounds per week (750,000 whole + 50,000 processed)
purchased from Suggests 30 million pounds of packing house volume in 40-week season
packing house in 2012 Highest cited:
• Potatoes 125,000 lbs/week
• Apples 105,000 lbs/week
• Onions 70,000 lbs/week
• Cucumbers 64,000 lbs/week
• Broccoli 62,000 lbs/week
• Cauliflower 47,000 lbs/week
Total dollar amount Currently purchase $95 million per year in total produce ($45-$145 million range)
of produce purchases Would purchase $22 million per year in local produce if available ($18-$26 million
range)
SEASONAL EXTENSION
Both grower and buyer responses indicate that seasonal extension would be a viable
strategy to pursue. The majority of growers already use extension structures and
would invest further if the market were assured. This is highly likely as half of buyers
indicated that if available they would purchase produce grown or stored in seasonal
extension facilities year-round. Seasonal extension is one of the most effective
strategies a food hub can employ to grow sales and profit.
TABLE 8: USE AND INTEREST IN SEASONAL EXTENSION
Grower Use Buyer Interest
Interest in seasonal 60% use seasonal extension structures Half of buyers would buy local produce
extension 70% would invest further in seasonal year-round if available
extension with secure market Peak interest in May, September, October
Top crops: apples, carrots, tomatoes, onions,
peppers, potatoes
23
GROWER PRACTICES AND BUYER REQUIREMENTS

This line of questioning was designed to determine if current growing practices and
food safety protocols are consistent with the requirements of buyers. Fewer than
10% of growers in the sample are currently GAP certified (there are just 60 GAP
certified growers in the state of Wisconsin),13 and about 50% of buyers require
certification. Fortunately, there is a high degree of interest among growers in pursuing
the necessary certifications. Of all respondents, 75% would consider certification if
required. Among the 24 “very/extremely interested” growers who have been farming
for at least six years, 19 (roughly 80%) are either certified or interested in pursuing
certification and could make 625 acres available to the food hub in 2012.
Other food safety and regulatory compliance requirements are more often required
by buyers. The large majority require traceability, liability insurance, a farm food
safety plan, compliance with labor laws and HACCP certification. About two-thirds of
growers are familiar with safe handling protocols.
A key to success in the wholesale channel is removing field heat quickly and
maintaining the cold chain throughout distribution. Only 30% of growers have cooled
transportation; however, the larger growers are those with refrigerated trucks so
there may be a large enough supply with cooled transport. The additional logistics of
arranging pickups will also need to be considered.
TABLE 9: GROWER PRACTICES AND BUYER REQUIREMENTS
Grower Practices Buyer Requirements
GAP certification Overall: Less than half require GAP
• Fewer than 10% report being GAP certified certification
• Top certified crops are potatoes,
cucumbers, peppers and tomatoes
• 75% would consider certification if needed
Of 24 very/extremely interested with 6+ years
farming experience:
• 3 with 140 acres combined report being
GAP certified
• 16 with 485 acres combined would pursue
certification
Other handling 65% are familiar with safe handling protocols More than 70% require
30% have refrigerated delivery trucks, and • Traceability
these are the larger growers (avg. 25 acres) • Liability insurance
• Farm food safety plan
• Compliance with labor laws
• HACCP certification
24
ORGANIC CERTIFICATION
To most buyers certified organic is “somewhat” or “not very” important, suggesting
that their primary demand is for conventional local. This corresponds with the vision
of creating a food hub for conventional local produce and possibly adding an organic
line over time.
TABLE 10: BUYER ATTITUDES ABOUT ORGANIC CERTFICATION
How Important # Responses % Responses
Extremely 3 5%
Very 8 14%
Somewhat 23 40%
Not Very 17 30%
Not At All 6 11%
Total 57 100%
BUYING AGREEMENTS
Growers and buyers are both highly interested in pre-season crop planning and
establishing contracts. This is a particularly positive trend because growers are more
likely to invest in infrastructure and pursue necessary certifications if more formal
buyer agreements are in place.
TABLE 11: GROWER AND BUYER INTEREST IN CONTRACTS AND CROP PLANNING
Grower Interest Buyer Interest
Interest in pre-season 80% would participate in pre-season 80% would participate in pre-season
crop planning crop planning crop planning
Interest in purchase About 50% would prefer at least some 90% are interested in contracts
contracts of their sales to be on contract
10% currently grow on contract, and have
larger acreage vs. average (22 vs. 14)
INTEREST IN OWNERSHIP, MANAGEMENT OR

INVESTMENT
When asked if they would be interested in ownership, management or financial
investment opportunities with the packing house, the majority of buyer and
grower respondents cited interest only in a traditional supplier/customer business
relationship. Growers’ primary focus is that they are being treated fairly and given
fair market prices for their products. Approximately 35% of growers claim their
interest in participating in the packing house would increase if it were a grower-
owned cooperative. Of this group, 80% representing 400 acres were only “somewhat”
interested, so the co-op structure might solidify a significant amount of acreage.
Approximately 40% of buyers are interested in ownership of, investment in or
management of the packing house. This percentage was the same among small and
large buyers.
25
——————————— TABLE 12: GROWER AND BUYER INTEREST IN OWNERSHIP, MANAGEMENT, FINANCIAL INVESTMENT
Approximately Grower Survey Buyer Survey
Those not 60% do not care about ownership 60% are interested only in a supplier/
40% of buyers interested structure so long as price is fair customer relationship
60% of these cited “very or
are interested extremely interested” and represent
in ownership of, Those interested approx.
800 acres
35% would be more likely to 40% are interested in ownership, investment
investment in or participate in a grower-owned
cooperative. 80% of these cited
or management
Similar ratio among largest buyers ($2M+/year
management of the “somewhat interested”
approx. 400 acres
and represent of local produce)
packing house. This

percentage was the SERVICES NEEDED
same among small Growers: There appears to be a strong initial base of large, experienced growers
with the knowledge and infrastructure required to meet wholesale customer packing
and large buyers requirements (cooling, washing, sorting, packing and labeling). On the other hand,
there are many smaller growers that would either prefer or require these packing
——————————— services. As well, the logistics for on-farm pick-up will need to be determined for many
growers to assure proper cold chain management from field to customer.
Buyers: Close to half of the buyer respondents would be interested in private labeling
products received through the packing house, and could add a profitable service to the
food hub.
TABLE 13: GROWER AND BUYER INTEREST IN SERVICES
Grower Interest Buyer Interest
About half may need core packing house services, and these are About 40% are interested in
smaller growers as compared to the 14 acre average of all respondents: private labeling
50% not familiar with grading standards (avg. 7 acres)
45% do not have washing facilities (avg. 10 acres)
45% do not have storage capacity (avg. 4 acres)
70% would deliver to packing house, but only 30% would use
refrigerated trucks, and these are the larger growers (avg. 25 acres)
GROWER CONCERNS
While there are many positive signals in the survey data, pricing, GAP certification
and availability of farm labor are highlighted as the top grower concerns, even among
the largest and most interested growers. Grower respondents also have a myriad of
broader uncertainties – about their potential yields, insurance, labor, delivery and
storage. While some of these concerns will be further addressed in the business
planning phase, these responses demonstrate the need for consistent and ongoing
communication and education efforts between the County, Extension, the future
food hub owners and growers through each stage of the process from planning to
development and launch.
26
TABLE 14: GROWER CONCERNS REGARDING WORKING WITH A PACKING HOUSE

Grower Concerns # of % (out of # “Extremely # with 40+
Respondents 80 growers) Interested” Acres
Have doubts about pricing 50 63% 5 7
Lack knowledge about GAP 30 38% 5 3
certification
Lack of farm storage 28 35% 1 1
Lack of farm labor to harvest 27 34% 5 3
Unsure if I grow enough 26 33% 4 2
Unsure about liability insurance 23 29% 0 0
Unable to deliver to packing house 22 28% 2 1
Cannot afford GAP certification 21 26% 1 0
Unsure about signing a contract 15 19% 3 2
Questions about labor laws and 10 13% 2 1
farm labor management
Unsure about when to harvest 8 10% 3 3
for a packing house
ENGAGEMENT
Overall, many growers are interested in moving forward – beyond initial discussions.
Over 70% provided contact information and expressed interest in being contacted
for further discussions. This demonstrates that many are genuinely invested in the
packing house concept and may be open to collaborating in order to address the
concerns and obstacles surfaced by the study.
TABLE 15: GROWER AND BUYER INTEREST IN CONTINUED DIALOG
Grower Engagement Buyer Engagement
Gave permission 70% provided contact information and many 75% gave permission to be contacted
to be contacted gave explicit permission to be contacted regarding their interest
342-428 acres among those who gave explicit
permission to be contacted
Average of 10.4 acres per respondent who is
willing to be contacted
IMPLICATIONS
Overall, the results of the buyer and grower surveys provide strong evidence
supporting the development of a food hub in Dane County. The food hub would
address a gap in Wisconsin’s current food supply chain, enable growers to further
expand and diversify their crop base, meet some of the high demand for locally grown
produce and provide farming communities with more stability, jobs and economic
growth opportunities.
The survey highlights a high level of immediate interest among buyers and growers
in the services that would be provided by a food hub. Growers of all sizes, experience
levels and crop types have demonstrated interest. Collectively, a core group of
experienced growers would likely devote a substantial amount of acreage to the facility
in early years.
27
Additionally, the survey results reveal a high potential for early success and long-
term growth. Buyer demand would outstrip grower supply in early years. The food
hub could bring on new growers each year with confidence that there will be a strong
market for this additional supply. Seasonal extension will also be a very viable growth
strategy for the food hub, and its individual producers, to pursue. The tasks of
bringing on new growers and helping them invest in seasonal extension infrastructure
will be greatly facilitated by the fact that buyers are open to establishing contracts to
guarantee fair market pricing and help farmers hedge against some of the inherent
risk associated with growing produce.
The food hub would certainly face many challenges, especially in its earlier years, but
these are surmountable. In addition to building out food hub infrastructure, developing
sales strategies and providing a conduit for this overwhelming demand, if the facility
is to assist in growing the agricultural base it will be important to provide highly
trained field management to provide support and guidance to help growers crop plan,
establish proper cold chain management protocol and receive certifications necessary to
successfully sell to wholesale customers.
These up front investments would pay off over time, for both growers and food hub
owners. Buyers are extremely interested in a variety of different crops, and their
demand is likely to exceed the food hub’s supply for at least several years.
In addition to emphasizing seasonal extension and adding private labeling services,
other like businesses have already expressed interest in co-locating with the food hub
and could provide additional future income to the facility.
28
MARKET ANALYSIS
INDUSTRY SIZE, GROWTH RATE
AND SALES PROJECTIONS
The U.S. wholesale fruit and vegetable industry reached $71B in revenues in 2010,14
a 12% increase from $63B in 2007.15 The 5-year growth projection is 8%, and is being
fueled by health and wellness trends, greater awareness of sourcing and food safety,
and growing cooking and eating trends inspired by food connoisseurs/gourmets and
ethnic groups.16 Retail statistics from the Organic Trade Association suggest the size
of the wholesale organic fruit and vegetable industry is $8B, grew 11.4% from 2008-
200917 and is projected to grow at an annual rate of 13% through 2012.18
The U.S. has been a net importer of fresh produce since 1998.19 According to the
USDA, approximately 15% of all vegetables and 45% of all fruit consumed in the U.S.
comes from foreign sources, a 50% increase since 1983.20 Growth has been driven
by demand for year-round supply and facilitated by favorable trade agreements and
handling methods that extend shelf life.
———————————
INDUSTRY TRENDS Chefs surveyed
Demand for local food is strong and increasing. According to the market research firm
Mintel which tracks consumer purchase and lifestyle trends, “Local procurement is a
fast-growing category with tremendous promise, and marketers that are aware of the
by the National
many dynamics at play can generate significant revenues.”21 Mintel found that one out Restaurant
of six Americans will go out of their way to buy local products. Locally-sourced fruits
and vegetables was the product category with greatest consumer interest, with 31% Association ranked
purchasing this product category from local sources at least once per week.22
locally-grown
The trend is similarly strong in the restaurant industry. Chefs surveyed by the
National Restaurant Association ranked locally-grown produce as the #1 menu trend produce as
of 2010,23 and the editors of FoodChannel.com rank “Locavore” (person who eats local
food) as first among the top food influencers of the decade.24 According to National the #1 menu trend
Restaurant Association research, “89 percent of fine-dining operators serve locally
sourced items, and nine in 10 believe demand for locally sourced items will grow in
of 2010
their segment in the future. Close to three in 10 quickservice operators serve locally
sourced items now and nearly half believe these items will grow more popular in their
———————————
segment in the future. Seventy percent of adults say they are more likely to visit a
restaurant that offers locally produced food items.” 25
The political climate for the development of local food enterprises is extremely
favorable. According to the USDA Economic Research Service, “Federal, state, and
local government programs increasingly support local food systems. Many existing
government programs and policies support local food initiatives, and the number of
such programs is growing.” 26 One prominent example is the $4.5B Healthy, Hunger-
Free Kids Act, a federal program signed into law in December 2010 which provides
schools with incentives to source local foods. 27
Compared with many other states, Wisconsin has supported increasing its specialty
crop production and distributing produce locally. Wisconsin instituted the Buy Local,
Buy Wisconsin (BLBW) competitive grant program in 2008 to strengthen Wisconsin’s
agricultural and food industries by reducing the marketing, distribution, and
29
processing hurdles that impede the expansion of sales of Wisconsin’s food products
to local purchasers. The program contributed significantly to many producers, retail
markets, school lunches and statewide local produce marketing efforts. In 2010,
the program received 37 pre-proposals requesting over $1.5 million in funds. Five
projects were funded, and $177,700 was awarded. Dane County’s Institutional Food
Market Coalition was among the top recipients funded. Additionally, a network of
farmers, communities, educators and government entities have come together to
form the Wisconsin Local Food Network, an organization focused on connecting and
supporting different stakeholders in the local food supply chain.
FIGURE 1: UNMET DEMAND FOR LOCALLY-GROWN FRUITS AND VEGETABLES –

$8 BILLION LEAKAGE
$5 B $8 B GAP $13 B
LOCAL (NOW TOTAL
WIS IMPORTED) DEMAND
LOCAL MARKET ANALYSIS

According to population-adjusted national labor statistics, consumers in Wisconsin
and the Chicago metropolitan area spent $100 billion on food in 2008. Approximately
$17 billion of this was spent on fruits and vegetables ($10 billion in wholesale terms).28
Adjusting for tropical varieties, the region is capable of producing 85% of this volume,29
and according to market research firm Mintel, 90% of consumers would buy local
produce if it were conveniently available;30 therefore, in 2008 the region could have
reaped approximately $13 billion in revenue from locally-grown fruits and vegetables.
Conservative estimates suggest 15% of this is currently produced in Wisconsin (see
calculation on page 54 of Appendix), so the potential unmet need for local produce is
approximately $8 billion ($6 billion in wholesale terms). With 2.2 jobs created for every
$100,000 in local food sales, this represents 175,000 potential jobs.31 And while it is
unknown how this investment would scale within the food system, there is significant
potential for innovation and job creation by directing these resources locally.
Although a relatively small sample compared to the total buyer universe within
Wisconsin and northern Illinois, the results from the feasibility study buyer survey
reinforce these trends. Respondents indicated demand for local produce ranging from
$18-26 million per year. This represents as much as 40% of their total annual produce
purchases, suggesting the large majority of their volume during the six-month harvest
season would be local, if available. Additionally and importantly, the survey was not
distributed through the Wisconsin Restaurant Association, so a large and profitable
segment of the buyer universe is not represented in these projections, nor is the
potential for expansion into the Minneapolis market.
30
FIGURE 2: PROXIMITY TO MAJOR MARKETS
COMPETITIVE LANDSCAPE AND ADVANTAGE

Wisconsin is home to small-scale operators, large-scale distributors and startup
ventures focused on connecting wholesale buyers and growers. Each has a varying
degree of commitment and success, and none are solely aggregating Wisconsin local.
Many of these entities could be perceived as competitors to the Dane County food
hub. However, it is common practice, particularly at this stage in the development of a
local food system in Wisconsin, for competing intermediaries to work collaboratively
during the season, often trading with each other to find markets and fill orders. For this
reason, many of these so-called competitors are not currently perceived as threats and
could likely serve as highly beneficial partners. This is particularly true given the survey
results, which clearly highlight the existing gap in overall supply and available facilities
to aggregate and distribute produce for growers in southern Wisconsin. In fact, Sysco,
Neesvig’s, R.E. Golden Produce and large produce auctions participated in the packing
house meetings and demonstrated a willingness and interest in cooperation.
Specialty produce distributors who could be perceived as direct competitors to the
Dane County food hub now or in the future are listed in Table 16 below. At this time,
none offer the same products, services and benefits as the Dane County food hub
would. National broad line distributors such as Sysco are also potential competitors
and many are currently building local food programs.
31
TABLE 16: SPECIALTY PRODUCE WHOLESALERS IN WISCONSIN

Company Name City Sales Employees Some Diverse Near So. WI
($000) Local Local Growers
Dane County Food Hub TBD TBD TBD 4 4 4
Potato King La Crosse 73,656 108 4
Dean Kinkaid Palmyra 68,200 100 4 4
A Gagliano Co Milwaukee 51,150 75 4
Schroeder Brothers Antigo 34,100 50 4
Farm
Appleland Fredonia 34,100 50 4
Loffredo Madison 34,100 50 4 4 4
Fresh Produce
Maglio & Company Milwaukee 20-50,000 100-249 4 4
R.E. Golden Produce Madison 2,500-5,000 5-9 4 4 4
Catalano Produce West Allis 2,500-5,000 5-9 4
Parrfection Monroe n/a n/a 4 4 4
Produce
5th Season Coop Westby n/a n/a 4 4
Produce Auctions Various n/a n/a 4 4 4
Alsum Farms & Friesland 82,000 120 4
Produce
While the current competitive landscape does not appear to be aggressive, it is

important to understand the features that could provide competitive advantages for
the Dane County food hub in the future. There are several:
• As the first entrant, the Dane County food hub would have the opportunity to
engage and solidify relationships with a chosen group of growers. Given the
constraints in supply, a large base of skillful and loyal growers is a key competitive
advantage, and potentially more important than secure relationships with buyers.
• The Dane County project enjoys a high level of stakeholder engagement including
key partners that can enable rapid scale-up: University of Wisconsin Extension,
Wisconsin Potato and Vegetable Growers Association and DATCP to name a few.
There are many other very well developed agencies which are not yet organized
around this initiative but have strong interest in the initiative and ties to the Project
Team and Advisory Board.
• There is a wide network of distributors and market specialists (e.g. Institutional
Food Marketing Coalition, Something Special from Wisconsin, Wisconsin
Innovation Kitchen) within which to form marketing and distribution partnerships.
• There is also an extensive network of large-volume buyers identified through the
collective work of the Project Team. They are interested and ready to begin sourcing
local produce.
32
BUSINESS ANALYSIS
To determine if a food hub in Dane County can operate profitably, a financial model
simulating a pro forma profit and loss statement (P&L) was developed. The financial
model’s structure was based on the operating and business model described below
and could differ from the business model chosen by the future owner/operator. Model
inputs were derived from the surveys and operating data from analogous food hubs as
noted under Methodology on page 8.
OPERATING MODEL
The food hub will have three core functions: packing, marketing and distribution.
• The packing operation receives raw material from growers and packs it according to
customer specifications. Depending on the grower’s on-farm post-harvest handling
capabilities, the product is cooled, washed, graded, packed, palletized and placed in
cold storage until it is shipped to or picked up by customers. Farms that field pack
may bring pre-packed cases to the food hub for cooling and storage. On-farm pickup
will be offered to growers who do not have refrigerated transport.
• The marketing operation consists of buyers and salespeople who negotiate
transactions with growers and customers. They may conduct pre-season crop
planning with both groups to more consistently match supply and demand
throughout the season.
• The distribution operation handles logistics of farm and customer pickups and
deliveries. This function is often outsourced and is not included as a profit center in
the business model.
33
The initial phase of the project assumes packing, marketing and distribution of U.S. Grade
No. 1 produce only. Since focus is a key success factor in entrepreneurial strategy, this
limitation in scope is to allow the operator to master buying, packing and marketing the
largest and most profitable product line. Over time the team can introduce new offerings
such as leased storage, private labeling, seconds, retail facility, organic, proteins, processing
and more. These future opportunities are not reflected in the business model.
BUSINESS MODEL
The packing operation earns revenue by charging a flat fee for cooling and packing. The
fee schedule covers direct costs which vary based on packaging and cooling required
for each crop, indirect costs and a profit margin. The marketing operation will handle
two types of sales: consignment and direct purchase. In a consignment sale the food
hub facilitates the sale to a buyer on a commission basis but does not purchase the
product from the grower. In a direct purchase the food hub buys the product from the
grower at a set price and strives to sell it to a customer at a profit.
As a general practice, product packed at the food hub is sold on commission and
product packed by the grower is purchased directly. In the first case, the grower
receives the remainder of the price paid by the customer less commission and
packing fees. This transaction can take a few weeks to settle. In a direct purchase, the
Perishable Agricultural Commodities Act requires that the grower receive payment
within 10 days of delivery to the food hub unless other terms are agreed to in writing.
This for-profit business model incents the food hub to maximize price and volume,
and to boost profit margin by minimizing direct and indirect overhead costs. Growers
are incented to improve quality to attract a higher price and increase percent pack-out
for product graded and packed at the food hub.
FACILITY
The ideal facility is located close to a core group of committed grower-suppliers and
near a major transportation route leading to a large customer base. The interior will
have zoned refrigeration, ambient storage, a packing floor and offices. The exterior
will have at least two raised loading docks that tractor-trailers can easily access for
shipping and receiving and a back lot or access road for truck overflow. Technical
requirements include commercial or industrial zoning, access to an abundant supply
of clean water, adequate electrical service, preference for natural gas and adequate
weight limits on access roads.
If an existing structure in an ideal location with refrigeration can be leased, it may
be advantageous to begin operations as a leaseholder to minimize capital expense
and location risk should the core group of growers change its locus of concentration
in the first few years of operation. The Dane County Planning and Development
Department issued a request for information (RFI) to all Dane County communities
regarding existing facilities of 10,000 to 25,000 square feet that meet specific
criteria. Presented below is a summary of responses and additional sites from
commercial listings researched by the Project Team. Some may be well matched to
the requirements. Site visits will be conducted in the business planning phase to
determine the viability of these and other possible locations. The RFI is included on
page 71 of the Appendix.
34
TABLE 17: SITE SPECIFICATIONS FROM RFI SUBMISSIONS

Community/Address Size Cost Advantages Comments
Cambridge 1,000- $6.10 per Refrigerated warehouse space in a 5 year old Warehouse space charging by pallet,
520 Verburg Street 50,000 sf pallet per facility. Landlord pays all utilities and keeps additional of $6.00 per pallet for moving
(East of Madison) month temperature at 38 degrees. Slightly farther in and out of storage.
highway access, but located in between major
highways (39/90 and 94).
De Forest Up to $3.55/sf Ample space for lease, 5 dock doors, semi and Does not have refrigeration currently
4355 Duraform Lane 41,440 sf office parking available, plenty of utility capacity. available. Current tenant is warehouse/ food
(North of Madison) available Agriculture-based/supported community, located distributor with refrigeration and freezer,
for lease in industrial park close to major highways so adding refrigeration may be possible.
(39/90/94) that lead to major cities.
De Forest Build $128,502- New construction, built to suit. Plenty of utility No existing facility. Commercial lots for
North Towne to suit $189,486 capacity with new well system online in 2011. sale ranging from 36,000 – 1 million sf.
Corporate Park per acre Agriculture-based/supported community. Located Currently agricultural land planned to
(North of Madison) in industrial park close to major highways convert to corporate park.
(39/90/94) that lead to major cities.
De Forest Build Negotiable New construction, built to suit. Plenty of utility No existing facility. Currently agricultural
De Forest to suit capacity with new well system sited and land planned for industrial use.
Business Park – approved. Agriculture-based/supported
Burton Blvd community. Located in industrial park close to
(North of Madison) major highways (39/90/94) that lead to major
cities
De Forest 35,000 sf $3.00- Agriculture-based/supported Existing facility with 1 dock door. May
4160 Anderson Road (2 adjacent $7.00/sf community. Close to major require additional utility capacity. Adjacent
(North of Madison) buildings highways (39/90/94) that lead to commercial zoned parcel of 6.63 acres
17,500 sf each) major cities. also available.
Edgerton Build Negotiable; New construction, built to suit. Agriculture- No existing facility; commercial lots
Edgerton Business to suit list based/supported community, supportive of for sale ranging from 3.0 - 15.5 acres
Park (Southern $29,900 business development and expansion. (flexible lot sizes). Currently agricultural
Dane County) per acre Close to major highways (39/90) that lead to land converting to corporate park.
major cities. Southerly position favorable for Will require additional sewer capacity.
access to Chicago and farms with earlier harvest
Edgerton 15,000 sf Unknown Close to major highways (39/90) that lead Existing Energy Star certified facility with
111 Interstate Blvd to major cities. Southerly position favorable office and warehouse space with 3 dock
(Southern for access to Chicago and farms with doors.
Dane County) earlier harvest.
Mazomanie 24,000- $2.00/sf Large facility with 19 dock doors, large office 15 miles away from highway (90/94).
711 Synergy Place 348,000 sf space, own rail spur and loading doors. Formerly corporate headquarters
(Northwest of Agriculture-based/supported community. for Sunny Industries (printing press).
Madison)
McFarland 23,850 and $4 million Reestablish business in vacant facility. Close Currently used as lumber yard; would
4412 and 4414 49,560 sf for 18 acres; to major highways (39/90 & Beltline Hwy) require rezoning. Only has 1 loading dock
Terminal Drive willing to that lead to major cities. door.
(Just south of subdivide
Madison)
35
Presented below are maps of the facility locations and interested growers at the
county and state level. Food hub locations are plotted in red and farm locations are
color-coded by the acreage that could be made available to the food hub in 2012.
FIGURE 3: COUNTY MAP OF POTENTIAL SITES AND FARMS
FIGURE 4: STATEWIDE MAP OF POTENTIAL SITES AND FARMS
36
FINANCIAL MODEL
The following assumptions were used to create a financial model simulating a P&L pro
forma of the food hub in steady state. Steady state is the point at which the business
has broken even and is operating at a self-sustainable level. Sensitivity analyses were
run to model the effects of volume and price on net income to simulate performance
during scale-up and supply/pricing shocks.
Volume and Facilities: Facility size imposes a constraint on volume, so demand
and supply were analyzed to determine the optimal size of the food hub. Buyers
identified approximately 750,000 pounds/week of demand for whole local produce.
This represents 30 million pounds over the 40-week local season. One acre yields
an average of 25,000 pounds of the top crops mentioned in the survey, and
approximately two-thirds of the yield is U.S. Grade No. 1; therefore, approximately
1,800 acres would be required to meet 100% of customer requirements. Growers
identified approximately 1,000 acres that could be planted for the food hub in 2012.
The growers most interested in doing business with the food hub identified 700 acres.
Since volume is more constrained by supply than demand, the facility should be scaled
to the acreage likely to be supplied.
Facility size is determined by the resources needed during peak season. The food
hub will handle 75% of its volume in the 14 weeks between the summer solstice
and autumnal equinox (late June to late September). Cooler capacity is the greatest
resource constraint, so the cooler is scaled to accommodate peak case volume, and
the total facility is scaled to accommodate the cooler. The cooler can accommodate
an average of four cases per square foot per week, and the cooler accounts for
approximately 20% of the total facility area. (This deployment of space assumes
the food hub is processing large volumes through its packing lines. If the operation
handles mostly farm-packed cases, a greater proportion of area should be allocated to
coolers.) Using these metrics, the chart below shows a range of facility sizes up to the
maximum needed to satisfy 100% share of customer requirements (SOR).
TABLE 18: FACILITY SIZE AND THROUGHPUT

Acres Facility Size (sf) Annual Pounds Annual Cases Customer SOR
150 5,500 2,512,500 100,500 8%
300 11,000 5,025,000 201,000 17%
500 18,000 8,375,000 335,000 28%
700 25,500 11,725,000 469,000 39%
1,500 54,000 25,125,000 1,005,000 84%
1,791 64,500 30,000,000 1,200,000 100%
A facility of 25,500 square feet was selected for the financial analysis because it can
handle 700 acres of supply, 30% less than the total identified through the survey. This
acreage will be confirmed with growers during the business planning phase to ensure
it represents a goal achievable within 2-3 years of operation. A facility of this size can
accommodate approximately 12 million pounds or 470,000 cases per year, roughly
40% of customer requirements, suggesting the food hub can expand its existing
footprint or open a second location in the future.
Mix: Based on grower survey responses regarding on-farm packing capabilities, it is
assumed that 50% of cases are packed at the food hub and 50% are farm packed. Sales
mirror this ratio: 50% commission and 50% direct purchase.
37
Commission, Fees and Margin: Packing and cooling fees are estimated at
approximately $5.20 per case including 20% margin. Commission is fixed at 10%,
although this may range from 5% to 15% depending on the volume and complexity
of sales handled for each grower. Margin on direct purchases is fixed at 20% but this
will also fluctuate from 0% to more than 50% depending on market conditions. The
average observed in the industry ranges from 18%-25%.
Price: An average case price of $18.00 was used in the financial model. This is based
on the $20.00 twelve-month trailing average (July 2010 to June 2011) of Chicago
terminal market prices for the top 10 crops mentioned in the survey, less $2.00 to
account for the difference in transportation cost vs. product shipped from border
states and abroad. This transportation differential can be as much as $6.00 per case.
The cost to transport produce from the Dane County food hub to local customers
will be far less, and how the surplus will be shared is subject to negotiation. That
Wisconsin-grown produce can be purchased below terminal market prices may be
one of the primary advantages for buyers; however, the food hub should negotiate to
capture the majority or all of the transportation differential, if not more, on the basis
of longer shelf life, better overall quality, consumer demand for local and a values-
based transaction that provides a greater share of the proceeds to the grower.
Revenue: For purposes of the pro forma each case marketed through the food hub
is recorded as revenue at the full case price. According to accounting principles
this is applicable only to direct purchases; revenue from consignment sales would
be recorded as commission and fees. Returns are estimated at 2% of gross sales to
account for product that is rejected by customers or invoices that are not paid.
38
Cost of Goods Sold (COGS): The cost components of the packing operation are
materials, direct labor and indirect overhead (plant utilities, maintenance, taxes and
insurance). These total approximately $4.15 per case when the facility is operating
at a steady state (including 20% margin yields a total fee of $5.20). The largest cost
component is the price paid to the grower. On consignment sales this is the remainder
after packing fees and commission are deducted: $11.00 in the base case ($18.00 less
10% commission less $5.20 packing fee). On direct purchases it is the agreed upon
case price: $14.40 in the base case ($18.00 less 20% margin).
Selling, General and Administrative Costs (SG&A): These costs include salaries
and benefits, office expenses, professional services fees, liability insurance, licenses
and marketing. The model assumes the operation employs three people at startup
– CEO, warehouse/quality manager and salesperson/buyer – and at specific sales
thresholds increases staff such as additional salespeople, buyers, bookkeepers and
managers. SG&A represents 7% of sales, slightly lower than industry standards.
Financing, PP&E and Startup Costs: Although the facility may be rented at the
outset, in steady state it may be advantageous to own the property. Comparing $3.50
per square foot lease rate to the cost of financing (which is offset by the tax benefits
of depreciation and interest), there is financial advantage to ownership if USDA-
backed financing can be secured below the market rate of interest. The financial model
assumes the purchase of $2.8 million in PP&E (property, plant and equipment), 80%
financed at 5% interest. Property cost is assumed $500,000 for five acres. Plant cost is
assumed $110 per square foot built to suit. Equipment cost is estimated at $185,000
for vehicles, plant equipment and furnishings. Startup costs include a 20% down-
payment of $700,000. The amount of working capital required through breakeven is
additional and will be determined during business planning because it is dependent
on sales forecasts made by the operating team.
Profit and Loss Statement: The pro forma P&L for the food hub in steady state
shows net income of $637,000 and cash from operations of $708,000. Based on an
equity investment including the $700,000 down-payment plus working capital to be
determined, this suggests sufficient cash flow for a return of capital to investors. Ten-
year projections with breakeven and IRR analysis will be completed in the business
planning phase.
TABLE 19: P&L PRO FORMA
Annual % Sales
Revenue
Volume (Cases) 469,000
Average Price/Case $18.00
Sales $8,442,000
Returns $(168,840) 2%
Net Revenue $8,273,160
Cost of Goods Sold (COGS) $(6,490,146)
Gross Margin $1,783,014 21%
Sales, General and Administrative $(548,756) 7%
Depreciation & Amortization $ (112,280)
Operating Income $1,121,978 13%
Interest Expense $ (142,000)
Taxable Income $979,978
Tax @ 35% $ (342,992)
Net Income $636,986 8%
Cash from Operations $708,317
39
Volume Sensitivity Analysis: The food hub will incur losses as it scales its operation.
The chart below shows the effect on cash and net income as volume increases from
one million to the target 12 million pounds. It also shows that the facility will have
the capacity to exceed 12 million pounds; it is operating at 35% of annual capacity
at that level of volume. Storage volume can be added with temporary cooling (e.g.
reefer trailers). Produce volume can be increased through seasonal extension growing
techniques and importing from out of state during the off-season if desired. At full
capacity, the facility can achieve more than $20 million in sales.
TABLE 20: VOLUME SENSITIVITY ANALYSIS
Acres Facility Annual Customer Seasonal Annual Net Cash from Net|
Size Pounds SOR Utilization Utilization Revenue Operations Income
71 25,500 1,184,816 4% 10% 4% $836,006 $0 (63,141)
123 25,500 2,058,586 7% 17% 6% $1,452,538 $63,141 $0
500 25,500 8,375,000 28% 70% 25% $5,909,400 $499,034 $431,036
700 25,500 11,725,000 39% 99% 35% $8,273,160 $708,317 $636,986
1,500 25,500 25,125,000 84% 211% 76% $17,728,200 $1,599,483 $1,507,038
1,791 25,500 30,000,000 100% 252% 90% $21,168,000 $1,930,667 $1,827,999
Pricing Sensitivity Analysis: The following chart demonstrates the effect of price on
grower proceeds, cash and net income. For cases packed at the food hub and sold on
commission, the breakeven price per case is $1.77 for the food hub. In this instance
the grower theoretically could owe the food hub because the price paid did not cover
the packing fee; however, in practice the product would not be packed in such a
down market, nor would a food hub collect from a grower and risk damaging the
relationship. Growers and food hub staff should understand the floor price that makes
the transaction worthwhile for both parties.
TABLE 21: PRICING SENSITIVITY ANALYSIS
Whsle To Grower To Grower Gross Operating Profit Net Cash from Net
Price w/Pack/ Direct Buy Margin Margin Margin Revenue Operations Income
Comm
$1.77 $(2.46) $1.42 64% 17% 0% $815,247 $63,141 $0
$4.60 $0 $3.68 34% 15% 6% $2,115,306 $186,521 $121,246
$10.00 $4.70 $8.00 24% 15% 8% $4,596,200 $418,887 $353,612
$15.00 $8.78 $12.00 22% 14% 8% $6,894,300 $611,968 $543,971
$18.00 $11.00 $14.40 22% 14% 8% $8,273,160 $708,317 $636,986
$20.00 $12.74 $16.00 21% 14% 8% $9,192,400 $794,415 $723,084
$23.00 $15.25 $18.40 20% 14% 8% $10,571,260 $917,511 $842,456
40
ECONOMIC, SOCIAL, AND ENVIRONMENTAL IMPACTS

As predicted at the outset, there could be significant positive economic, social and
environmental impacts if a food hub is developed in Dane County. Based on the scale
of the facility in the base case, the following benefits could be realized:
Jobs: In steady state the food hub employs six full-time and 16 part-time employees
and require up to 10 third party employees to handle distribution. Employment would
increase up to 250% (2.5x) as the facility develops seasonal extension capabilities and
reaches capacity. Indirect employment will also result from the enterprise. According
to a recent UW-Madison study, 2.2 jobs are created for every $100,000 in local food
sales.32 At the projected $20 million capacity, the facility could create over 400 jobs in
the local economy. Staffing would include positions in management, operations, sales,
facilities, production, warehousing, and distribution.
New Markets: According to the average acreage among survey respondents, the
facility would provide a new market and new revenue stream for as many as 50 family
farm businesses in communities across Dane County and the Southern Wisconsin
region, adding value to farmland.
Farm Income: It is not known what crops are currently grown on the acreage
that would be committed to the food hub nor what new acreage will be put into
production; however, if just 10% of the facility’s volume at capacity comes from
acreage converted from commodity crops to fresh market vegetables, farm revenue
could increase by $900,000 to $1.8 million. 33
Economic Multiplier: At a 2.6x multiplier, at capacity and on a retail sales basis, the
food hub would inject an additional $60 million into the local economy ($20 million
wholesale ~ $26 million retail x 85% not currently local x 2.6 multiplier).34 See page
66 of Appendix for explanation of local procurement percentage.
Environmental Impact: In steady state, the food hub will distribute annually
approximately 12 million pounds of produce in 400 tractor-trailer loads over an
average distance of 150 miles. This could reduce carbon emissions by 2.4 million
pounds per year.35
41
BUSINESS OPERATIONS
AND STRUCTURE
OWNERSHIP STRUCTURE
A for-profit business model will ensure the long term financial sustainability of a
southern Wisconsin food hub. Because the success of a food hub depends on a solid
core of producers, grower-stakeholders are encouraged to have a strong voice in
the ownership structure ultimately chosen for the food hub. The Project Team has
explored a number of ownership forms and business model options, and will continue
this effort through meetings with grower-stakeholders during the business planning
phase of the project. Below is an overview of the business structures currently under
consideration and critical considerations associated with each of the models.
Grower Cooperative
A traditional agricultural cooperative (co-op) is exclusively owned and operated by the
group of producers who use the co-op and are its members. Profits are distributed to
members based on amount of usage. In Wisconsin there is also a hybrid cooperative
model in which membership may include non-users. Co-ops elect a board of directors
and make major decisions through democratic voting. There are different methods of
financing the cooperative:
• Direct contribution through membership fees or stock purchases
• Agreement to withhold a portion of net earnings
42
• Assessments based on units of product sold or purchased

Many experts believe that the single biggest driver of aggregation center success is
the level of investment and support of its growers. Cooperative models inherently
lead to stronger grower support, given that they are investors and profit sharers in the
business, and have equal voice in decision making.
Considerations: Depending on the structure chosen, there may be restrictions on
membership. Producer groups may not be able to generate funding to invest in the
necessary infrastructure. Finally, the collaborative nature of cooperatives can slow
down and even limit effective decision making processes – key marketing, operations
or finance decisions are often made by the group rather than by specialized experts.
Private Corporation
A for-profit venture’s primary function is to generate profit for stakeholders. There are
several business entity choices for a for-profit:
• Sole Proprietorship: Business owned and operated by one individual.
• Corporations: Consists of shareholders who finance and own the business, and
who elect a board of directors to govern the business. S Corporations and Close
Corporations are two common examples.
• Partnerships: An association of two or more people who co-own and are personally
liable for the company obligations. Limited Liability Companies are partnerships in
which partners are personally shielded from company obligations.
Private corporations can more easily attract interested investors to fund the high
start-up infrastructure costs. Additionally, with a for-profit structure, owners and
board of directors may pursue business strategies that generate more profits for all
stakeholders – owners, staff and producers.
Considerations: For-profits are ineligible for most grants, which can help fund
necessary start-up costs. Additionally, for-profits are subject to a high corporate tax
rate. It is important to seek legal advice to determine what business entity a for-profit
should adopt.
Public-Private Entity
Because agriculture forms the basis of many rural economies, there is often public
interest in investing in the facilities and infrastructure that will increase rural farmer
access to markets. Public-private partnerships can take many different forms. For
instance, a municipality could provide needed infrastructure (land, building, packing
equipment, etc.) and a private company might manage the facility without seeking full
ownership of the entity.
Considerations: A municipality needs to be invested in local food systems and the
positive impact of an aggregation center. Additionally, by garnering support from
both public and private entities, this business form may be likely to more easily
withstand price fluctuations or difficult, less profitable seasons. However, any venture
that has some stream of public funding may also be subject to shifts in government
budgets and fiscal politics.
43
MANAGEMENT TEAM/OPERATOR
The ideal operator will have existing relationships with growers and a high level of skill
and experience in marketing and sales. The key positions at startup include:
• General manager or chief executive who oversees the marketing, operations and
financial functions of the company. This individual will also actively buy and sell
with growers and customers. As the company adds staff this individual may become
less hands-on, but will continue to be involved in every aspect of the enterprise and
may handle key accounts. Bookkeeping staff will be needed fairly early on to assume
time consuming office and accounting duties – it is a very paperwork-intensive
industry – and in time a controller will be needed to manage growth.
• Salesperson/buyer who will visit farms to build the grower base, meet with buyers
to expand the customer base, and negotiate transactions to meet sales targets. This
function will eventually split into buying, sales and customer service.
• Warehouse/quality manager who oversees receiving, inspections, packing, order
processing, shipping and logistics. This individual hires, trains and supervises floor
labor and is responsible for food safety and quality management at the facility.
This position will eventually split into dedicated quality management, warehouse
management, logistics and human resources management functions.
BUSINESS RISKS AND MITIGATION STRATEGIES

National trends and the survey for this study clearly indicate strong demand which
exceeds available supply, so the greatest risk is lack of grower engagement to provide
the volume needed to efficiently operate the food hub. There is also the pricing risk
inherent in the produce industry which could challenge the food hub from achieving
sufficient gross margin to cover its costs.
To mitigate these risks, the operating team should employ the following strategies:
• Emphasize a strong relationship with growers and cultivate these to ensure
ongoing trusted communication, and a consistent quality supply that will meet
demand. This is particularly important in the first few years of the operation.
• Build a base of business with the highest end customers. The company should
seek customers in channels that are less price-sensitive and can purchase in large
quantities. Target customers should include fine dining restaurants, high-end
hotels, premium grocery stores and specialty health food stores. Public schools and
broad line supermarket and foodservice distributors purchase very large quantities,
but will be more price-sensitive. The food hub should seek a mix of customers which
emphasizes the higher end of this range.
• Make it a win for growers even if unprofitable at first. If it doesn’t work for
the growers in Year 1 there will not be a Year 2. This means giving growers the
price they need even if it cuts into or eliminates gross margin, and ensuring the
enterprise is well enough capitalized to cover any initial losses.
• Secure a management team with experience in marketing and sales. An
experienced manager that oversees buying and selling with a deep knowledge of
production, perhaps a former grower, is critical for garnering trust and confidence
among growers and buyers. Growers will need assurance that they will be rewarded
with a better price if they deliver a better quality product, so the sales staff must
be able to effectively gauge and market quality to buyers to ensure an equitable
44
correlation between quality and price. Depending on the breadth of experience

within the management team, transportation and logistics may be outsourced until
the team has perfected marketing and sales.
• Build loyalty for a Wisconsin brand and tell the local story to customers.
There is real value-added in local produce which should command a better price:
local produce has a longer shelf life, better taste, is nutritional and many shoppers
and diners know the difference and will pay for it. Convey the benefits to consumers
at retail through farm identification on signage, cases, PLU codes, and other
strategies.
• Make it easy for distributors’ customers to do business with the food hub.
Deliver consistent quality, packed the way customers demand, and offer an
assortment that make them a valuable supplier to their clients. In time the business
relationship will be based less on price and more on trust and simplicity.
• Establish a wide and cooperative network of growers. There should be a core
group of growers that participate in pre-season crop planning, but cultivating
relationships with a broader range of growers will also increase the likelihood of
filling gaps if weather or other unplanned events disrupt supply. These transactional
relationships can be the foundation for future partnerships as the business expands.
• Collaborate with other intermediaries and partners to strengthen the
market. This is a highly interdependent industry, one in which “coopetition”
– cooperation with competitors – can expand markets and support prices. As
the business and new relationships develop across the local food system, these
stakeholders and other intermediaries serving the same market should be open
to opportunities that could build efficiencies and strengthen markets. These
intermediaries could also become customers, and vice versa, and are a potential
means for finding markets and filling orders.
45
FINANCING OPTIONS
Grants and relatively low interest debt financing would likely be the primary sources
of funding to secure and renovate a facility and purchase the storage and cooling
equipment needed. However, covering working capital in initial years may require
additional funding from equity investments. The following section provides a list of
grants, loan providers and sources of equity funding that may be available.
GRANT OPPORTUNITIES
Agricultural Development and Diversification (ADD) Grant Program
• Takes proposals for projects that are likely to stimulate Wisconsin’s agricultural
economy through the development and exploration of new value-added products,
new markets, or new technologies in agriculture. ADD grants are awarded
competitively each year.
• Subject to availability of funds within the State budget, in 2011 the program has
$356,700 to award to projects with a maximum grant amount of $50,000.
• Information: http://datcp.wi.gov/Business/Grants_and_Financial_Aid/index.aspx
Rural Business Enterprise Grant (RBEG), USDA Rural Development
• Grants to public bodies, private non-profit corporations and federally-recognized
Indian Tribal groups to finance and facilitate development of small and emerging
private business enterprises in rural areas with less than 50 employees and
$1,000,000 in annual revenue, but funds do not go directly to the business.
• Grants are used to establish revolving loan funds, purchase equipment or construct
facilities.
• Business must be located in an eligible rural area which is defined as being outside
of cities with a population of 50,000 or more and the surrounding built-up areas.
• Information: http://www.rurdev.usda.gov/BCP_rbeg.html
Sustainable Agriculture Research & Education Sustainable Community
Innovation Grants
• SARE is a competitive grants program providing grants to researchers, agricultural
educators, farmers, ranchers, and students in the US.
• Sustainable Community Innovation Grants award up to $15,000 for activities that
connect or make links between the farm and non-farm parts of a community for the
purpose of economic development.
• Information: http://www.sare.org
Specialty Crop Block Grant (SCBG)
• Proposals will be accepted from non-profit organizations, producer organizations,
government agencies and other organizations related to Wisconsin specialty crops
industry.
• The project proposed must be focused on research, education, demonstration or in
some way benefit the specialty crop industry. This year’s proposal deadline was April
15, 2011.
• Information: http://datcp.wi.gov/Business/Grants_and_Financial_Aid/Specialty_
Crops_Grants/index.aspx
46
LOAN PROVIDERS
Badgerland Financial
• Part of the Farm Credit System, a nationwide network of borrower-owned
commercial lending institutions established to provide dependable credit and
related services to agriculture and rural America.
• Offer lending, insurance and financial services to residents and businesses of rural
Wisconsin.
• Cooperative ownership structure allows member-owners to participate in
governance and profits – returned $30 million in cash to its members from
2004-2008.
• Information: http://www.badgerlandfinancial.com
Business & Industry Guaranteed Loan Program (B&I), USDA Rural Development
• Program guarantees loans by commercial lenders to rural businesses.
• Maximum $10 million aggregate loan amount to any one borrower.
• Must be located in an eligible rural area which is defined as being outside of cities
with a population of 50,000 or more and the surrounding built-up areas.
• Requires equity investment on the part of owners. 20% tangible balance sheet
equity for new businesses and 10% for existing businesses.
• Information: http://www.rurdev.usda.gov/BCP_gar.html
Whole Foods Market, Local Producer Loan Program
• Applications accepted on a rolling basis through a streamlined process with minimal
fees, interest rates and paperwork.
• Target loan amounts between $1,000 and $100,000 (maximum $25,000 for
startups), loans not to exceed 80% of total project cost and collateral required. Low
fixed interest rates (currently between 5% and 9%).
• One-time nominal processing fee covers administrative expenses, including credit
report.
• Existing vendor relationship with Whole Foods Market preferred.
• Information: http://www.wholefoodsmarket.com/values/local-producer-loan-
program.php
Farm Storage Facility Loan Program, USDA, FSA
• Loans to producers to build or upgrade farm storage and handling facilities for
soybeans, peanuts, hay, renewable biomass, pulses and oilseeds.
• Corn, grain sorghum, oats, wheat, barley, fruits and vegetables are also eligible,
subject to program requirements.
• Information: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&top
ic=flp-fp
7(a) Loan Program, SBA
• Provides new and growing businesses with loans of up to $2 million with an SBA
guaranty of 75% to 85%.
47
• Loans may be used to purchase equipment, inventory, fixtures, leasehold

improvements, working capital, debt refinancing for compelling reasons, change
of ownership.
• Information: http://www.sba.gov/category/navigation-structure/loans-grants/
small-business-loans/sba-loan-programs/7a-loan-program
Certified Development Company (504) Loan Program, SBA
• Provides growing businesses with long-term, fixed-rate financing for major fixed
assets, such as land and buildings.
• Typically, a 504 project includes a loan secured with a senior lien from a private-
sector lender covering up to 50 percent of the project cost, a loan secured with
a junior lien from the Certified Development Company (CDC) (backed by a 100
percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a
contribution of at least 10 percent equity from the small business being helped.
• Information: http://www.sba.gov/content/cdc504-loan-program
ACCION
• A small business lender, ACCION is dedicated to providing financing and business
education to small businesses across the country. They offer loans of up to $15,000
for start-up businesses and $25,000 for established businesses. They also offer
Credit Builder loans between $200 and $2,500.
• Information: http://www.accionusa.org
Green Choice Bank (and others with sustainability as a core mission)
• GreenChoice Bank’s focus is People, Planet and Profits with a Green Sustainable
mission.
• Provides credit to commercial businesses and nonprofit organizations.
• Products include working capital lines of credit, letters of credit, term loans and
real estate financing.
• Information: www.greenchoicebank.com
Other Commercial Banks
• Some State and National Banks provide agricultural financing. Most of these banks
will offer a full range of loans to cover operating, equipment and real estate needs.
They will also work with programs offered by USDA and IFA.
EQUITY
Slow Money Wisconsin
• The Slow Money Alliance is attempting to identify and attract capital to support
and grow sustainable food and farming enterprises that are committed to the
enhancement of local food systems.
• Focused on building a program to support local food system efforts that will include
business consulting, private and corporate investment, and financial lending to
rural Wisconsin entrepreneurs.
• Information: www.slowmoneywi.org
48
The Lending Club

• Area growers, local residents and others interested in local food systems may want
to provide funding to other individuals willing to give an equity stake in their
venture or pay higher returns.
• The Lending Club is a peer-to-peer service provider that helps match these
individuals seeking higher returns to aspiring business owners willing to pay higher
rates to obtain financing. There are other such providers.
• Information: www.lendingclub.com/home.action
Customer Funding
• In this concept, the basic Community Supported Agriculture (CSA) structure is
applied to other food businesses. Businesses issue “shares” of their product to
future customers and get upfront funding in return. This has been applied to
grocery stores, restaurants, cheese makers, etc.
• Consumer cooperatives are owned by customer members. These businesses raise
initial funding by selling member (equity) shares and can also accept member loans.
The Dill Pickle Food Co-op in Chicago opened with no outside funding using this
method.
Crowdfunding/Internet Funding Platforms
• Donors often get a share of revenue based upon type of contribution.
• Kickstarter and Indie GoGo started to fund arts projects, but several food related
enterprises have gotten their projects funded. Profounder is for any kind of
business. The platforms are contribution based (i.e. not equity or debt) and projects
provide “perks” or a percentage of revenue in return. Both are all-or-nothing
funding. If you don’t reach your goal amount in a certain time period, you do not
get any of the pledged funds.
• Information: https://www.profounder.com
49
RSF Social Finance (provides debt and equity financing, and makes direct
donations)
• Makes investments, provides loans and donates funds to help for-profit and
nonprofit ventures cover mortgage, construction and working capital.
• RSF recently instituted a Program-Related Investing (PRI) program that pools
funding from multiple foundations to make 5-year recoverable investments of
$100,000 at an annual interest rate of 1%.
• The Fund’s PRI recipients are non-profit charitable organizations and mission-
aligned for-profit organizations that will use the borrowed funds on charitable
projects and have:
• a mission that addresses local and sustainable food and agriculture;
• sustainable approaches to sourcing, manufacturing, and distribution;
• workforce relations that incorporate fair trade principles; and
• a capital structure and existing financial partners that reflect commitment to
social good and environmental sustainability; and
• an effective and potentially replicable program to support, evolve and expand
sustainable food systems.
• Information: www.rsfsocialfinance.org/
TAX CREDITS
While tax credits will not help establish the Dane County food hub, they will decrease
the total amount owed to the state or federal government in corporate taxes. By
taking advantage of tax credits, the Dane County food hub can maximize its net
income and available cash flow.
Wisconsin Food Processing Plant and Food Warehouse Investment Credit
• Refundable tax credit for businesses who have invested to modernize or expand
food processing plants or food warehouses in Wisconsin and who have been
certified by the Wisconsin Economic Development Corporation.
• Eligible expenses include building construction and renovations; food or raw
material intake and storage equipment; packaging and handling equipment,
including cleaning, sealing, bagging, boxing, labeling, conveying and product
movement equipment; warehouse equipment, including storage racks and loading
and unloading equipment.
• Information: www.commerce.state.wi.us/bd/BD-FPTC.html
The Economic Development Tax Credit
• Must be applied against a certified business’s Wisconsin income tax liability. In the
case of an S-Corporation, LLC or other pass-through entity, tax credits flow through
to the owners in the same way as the income.
• Eligible activities include: job creation, capital investment, employee training,
moving corporate headquarters to Wisconsin.
50
RECOMMENDATIONS
FOR NEXT STEPS
The Project Team outlined key next steps and should work toward the following
milestones subsequent to the publication of this report:
Q3 2011: Follow-up grower-stakeholder meeting in October to continue to identify

core group of growers which will form the supply basis for the food hub,
and possibly its ownership basis;
• Issue a request for proposal for a business plan consultant;
• Issue a request for proposal for an owner/operator to join with grower-
stakeholders and the Project Team as the new company’s entrepreneurial
management team.
Q4 2011: Identify owner/operator, complete business plan and begin fundraising.
Q1 2012: Identify funding and close on facility.
Q2 2012: Prepare for launch in June 2012.
51
APPENDIX
PROJECT TEAM BIOS
Olivia Parry, Project Director – Dane County Sr. Economic Development Specialist. Since
2006, she has lead the Institutional Food Market Coalition (IFM), www.ifmwi.org,
whose purpose is to conduct strategic research, outreach and education to develop
institutional markets for Dane County and regional growers, and increase WI
local food sales. IFM works with stakeholders throughout the supply chain to
develop organizational and distribution networks and infrastructure. In 2009, in
partnership with Community Action Coalition, farmer Robert Pierce, and Common
Wealth Development, she created the Program for Entrepreneurial and Agricultural
Training (PEAT). This program provides employment and entrepreneurial training
in agricultural production to disadvantaged youth in Madison, Wisconsin. Olivia is
also responsible for facilitating site selection for businesses interested in expanding
in or re-locating to Dane County; providing technical assistance to Dane County
communities on business and economic development; and, is the manager of Dane
County’s Commercial Revitalization and Economic Development loan funds.
Dr. Alvin J Bussan, Project Consultant – Associate Professor for Horticulture at the
University of Wisconsin. As an Extension Specialist, he develops and conducts
educational programming in commercial and fresh market potato and vegetable
production systems, working with many of the leading vegetable growers in
Wisconsin. His research activities include: precision management of potato &
vegetables; influence of management & climate on growth & development of potato
& vegetables; improving sustainability & economic value of vegetable production
systems; refinement of production practices including seeding rate, timing &
methodology, mulching, cover crops & green manures; increasing earliness in
vegetable production; storage of crops; and, improving crop quality.
Carrie Edgar, Project Consultant – Dane County UW Extension Department Head &
Community Food Systems Educator. Carrie’s work is focused on supporting a diverse
and inclusive community food system that is economically viable, environmentally
sound and socially just for the Dane County region. She also serves as staff for the
Dane County Food Council. She came to Dane County in 2010 from Quincy, IL where
she served as County Director for University of Illinois Extension in Adams and Brown
Counties. A great deal of her past work focused on local food systems and organizational
& community capacity building and she was a member of the Illinois Food Farms and
Jobs Task Force. Carrie coordinated the Locally Grown program in western Illinois.
Carrie has a Masters degree in Child, Family and Community Services from University
of Illinois and a Bachelors degree in Communications from Quincy University.
Kathy Nyquist, Project Consultant – Principal at New Venture Advisors LLC, a

consultancy providing business development services for local food system
entrepreneurs and investors. With FamilyFarmed.org, she has led multiple feasibility
studies investigating the commercial viability of local food system infrastructure
projects. As a result, three food hubs were launched in 2011 and three are poised to
open in 2012. Kathy has ten years of food industry experience at Kraft Foods, where
she most recently led integrated marketing planning for a $5 billion product portfolio.
52
She previously managed accounts at the nation’s top two advertising agencies where
she developed national campaigns for Coca-Cola, Keebler, Frito-Lay and Miller
Brewing. Kathy graduated from the University of Chicago Booth School of Business
where she earned an MBA with honors in Strategic Management, Finance and
Entrepreneurship and an academic award in strategy.
Jim Slama, Project Consultant - Founder and President of FamilyFarmed.org which

encourages the production, marketing and distribution of locally grown and
responsibly produced food and goods. FamilyFarmed.org expands the market for local
farmers and food producers, by advancing the Community Supported Agriculture
(CSA) movement, supporting farmers markets, and playing an integral role in public
policy in the state and region. Jim works with many of the leading trade buyers
for local food in the Midwest including Whole Foods Market, Goodness Greeness,
Chartwells Thompson Hospitality, Chipotle, Compass Group, Lettuce Entertain
You, SYSCO, Irv and Shelly’s Fresh Picks, Natural Direct, and more. FamilyFarmed.
org hosts the annual FamilyFarmed EXPO, a food festival, trade show, and financing
conference. Jim is the editor of Wholesale Success: A Farmers Guide to Selling, Post
Harvest Handling, and Packing Produce. The manual gives small to mid-size growers
technical assistance to help them develop the skills to sell produce into wholesale
markets. FamilyFarmed.org also created the On-Farm Food Safety Project which
is working with the FDA, USDA, food buyers, and advocates for small to mid-size
growers to create an online tool giving farmers the ability to create an On-Farm food
safety plan. Jim played a key role in developing and helping to pass the Illinois Local
Food, Farms, and Jobs Act. The law created the Illinois Local, Food, Farms and Jobs
Council which is charged with developing local food systems in the state.
53
LOCAL PROCUREMENT ESTIMATE FOR WI

TABLE 22: CALCULATION FOR EXPENDITURES ON FRUITS AND VEGETABLES IN WI
AND CHICAGO MSA, 2008
Figure Description Source
2008 Average annual expenditures
of all consumer units: (U.S. Bureau of Labor
$657 Fruits and vegetables at home Statistics 2009)
$3,744 Food at home (total) (Ibid)
17.5% Percent fruits & vegetables of all food at home $657 / $3,744 * 100
$2,698 Food away from home (total) (Ibid)
$473 Fruits & vegetables away from home $2,698 * 17.5%
$1,130 Total fruits & vegetables home & away $657 + $473
15,197,234 2008 Population of WI & Chicago MSA (U.S. Census Bureau 2011)
$17.2 billion 2008 Retail expenditures on fruits & vegetables in WI $1,130 * 15 million
TABLE 23: CALCULATION FOR % OF WI & CHICAGO MSA FRUIT & VEGTABLE SALES
PRODUCED IN WI, 2008
Figure Description Source
$17.2 billion 2008 Retail expenditures on fruits & vegetables in WI Table 22 above
27% Farm value compared to retail value (%) Derived from (Swenson
March 2010, 35)
$4.6 billion 2008 Farm share of retail sales ($) $17 billion * 27%
$858,888,000 2008 Cash receipts to WI farmers for vegetables (USDA NASS 2009)
and fruits
($180,000,000) 2008 WI international exports, vegetables (USDA Foreign Agricultural
and preparations Service 2009)
$678,888,000 Net cash receipts to WI farmers for locally $858 million - $180 million
grown produce
14.6% Percentage of WI and Chicago MSA fruit $678 million / $4.6 billion
and vegetable sales produced in WI * 100
(Note: overstated by the unknown portion of cash
receipts from domestic out-of-state customers)
54
Grower Survey – Summary of Reponses

Overall: 241 completed surveys
2. Would you like to diversify your farm in order to grow
1. Do you currently grow fresh market produce? produce?
# responders % responders # responders % responders # responders % responders # responders % responders
Yes 104 43% 104 44% Yes 41 17% 41 34%
No 130 54% 130 56% No 80 33% 80 66%
Blank 7 3% Blank 120 50%
Total 241 100% 234 100% Total 241 100% 121 100%
3. How would you describe your level of interest in selling wholesale produce into a packinghouse facility
in Dane County? (Crosstab with Q9 Acreage)
# responders % responders # responders % responders # responders Ave.
also providing also providing acreage/
acreage acreage responder
Extremely Interested 13 5% 13 11% 8 41
Very Interested 27 11% 27 22% 21 18
Somewhat Interested 51 21% 51 42% 30 10
Not Very Interested 11 5% 11 9% 4 3
Not At All Interested 20 8% 20 16% 0
Blank 119 49%
Total 241 100% 122 100% 63 16
4. How long have you been a produce grower? Crosstab with Q9 Acreage
# responders % responders # responders % responders # Responding Low End - High End - Avg per
0-5 years 34 14% 34 33% Acres Acres Respondent -
6-10 years 24 10% 24 24% Acre
11-20 years 21 9% 21 21% 0-5 years 31 116 149 4
21-30 years 10 4% 10 10% 6-10 years 24 577 579 24
31-50 years 11 5% 11 11% 11-20 years 21 111 121 6
50+ years 2 1% 2 2% 21-30 years 10 49 84 7
Blank 139 58% 31-50 years 11 71 101 8
Total 241 100% 102 100% 50+ years 2 10 15 6
Total 99 939 1054
Crosstab with Q3 Interest

Extremely Very Somewhat Not Very Not At All Any Interest # Any Interest %
Interested Interested Interested Interested Interested
0-5 years 4 8 15 27 33% 4 0
6-10 years 3 5 12 20 25% 1 3
11-20 years 1 8 9 18 22% 2 1
21-30 years 0 2 5 7 9% 2 1
31-50 years 1 3 4 8 10% 1 2
50+ years 0 1 0 1 1% 1 0
Blank 4 0 6 0 13
Total 13 27 51 81 100% 11 20
55
Crosstab with Q3 Interest & Q9 Acreage 5. Do you grow Grade 1, Grade 2, or both?
Count Acres Avg # responders % responders # responders % responders
6+ years experience Extremely Interested 5 326 Grade 1 16 7% 16 18%
6+ years experience Very Interested 19 371 Grade 2 4 2% 4 4%
Total 24 697 Both Gr. 1 69 29% 69 78%
and Gr. 2
Blank 152 63%
Total 241 100% 89 100%
6. What quantities of the following crops could you make available for the packinghouse in 2012? [This was an open
text field in which respondents used a variety of units. The quantities given cannot be auto-summed, so the
number of respondents citing each crop was summed.]
# Responders % of 77 total responders # Responders % of 77 total responders
Fruit Vegetables
Apples 17 22% Zucchini 22 29%
Strawberries 16 21% Cabbage 21 27%
Watermelon 14 18% Carrots 19 25%
Blueberries 8 10% Cherry tomatoes 19 25%
Honeydew 5 6% Onion 19 25%
Vegetables Broccoli 18 23%
Butternut squash 32 42% Corn 18 23%
Acorn Squash 31 40% Potato 16 21%
Other (specify) 29 38% Cantaloupe 14 18%
Tomatoes 29 38% Lettuce 13 17%
Cucumber 27 35% Peas 12 16%
Peppers 26 34% Cauliflower 10 13%
Pumpkins 26 34% Kale 10 13%
Beets 22 29% Spinach 10 13%
Asparagus 9 12%
7. What quantity of the crops you just identified for 2012, could you potentially supply for 2013? [Same crops as
above]
8. What are your current average year harvest dates for these crops? [This was an open text field which can be
analyzed as needed in the business planning phase]
9. How many total acres could you make available to the packinghouse facility?
low end high end
Total Acres 939 1054
# Responders 71 71
Ave. Acreage/Responder 13.2 14.8
Median 3.0 5.0
56
10. Which of the following statements best describes you?

# responders % responders # responders % responders
I have some produce grown. 33 14% 33 41%
in season extension structures
I do not use seasonal extension 47 20% 47 59%
to lengthen the growing season
on my farm.
Blank 161 67%
Total 241 100% 80 100%
11. What quantities of these crops do you grow in seasonal extension structures? [Open text field]
12. What are the estimated harvest dates for the crops that you grow in seasonal extension structures? [Open text
field]
13. If demand were identified, would you invest (or further invest) in farm equipment or structures to extend the
growing season?
Yes 52 22% 52 69%
No 23 10% 23 31%
Blank 166 69%
Total 241 100% 75 100%
14. What other crops (not identified in the previous question) would you grow in seasonal extension structures?
# Responders % of 28 total responders # Responders % of 28 total responders
Fruit Cucumber 7 25%
Strawberries 6 21% Onion 7 25%
Blueberries 2 7% Carrots 6 21%
Apples 1 4% Kale 6 21%
Cantaloupe 0 0% Beets 5 18%
Honeydew 0 0% Zucchini 5 18%
Watermelon 0 0% Cauliflower 4 14%
Vegetables Peas 3 11%
Tomatoes 15 54% Asparagus 2 7%
Lettuce 14 50% Cabbage 2 7
Spinach 12 43% Acorn squash 1 4%
Peppers 10 36% Butternut squash 1 4%
Cherry tomatoes 8 29% Corn 0 0%
Broccoli 7 25% Pumpkins 0 0%
Potato 0 0%
15. What quantities of these crops would you grow in seasonal extension structures? [Open text field]
16. What would be the estimated harvest dates for these crops? [Open text field]
57
17. Would you deliver your produce to the packinghouse?

Crosstab with Q9 Acreage
# responders % responders # responders % responders # responders Ave. acreage/
also providing responder
acreage
Yes 52 22% 52 68% 9 15
No, I would require pick-up 25 10% 25 32% 4 9
for delivery to the packinghouse.
Blank 164 68%
Total 241 100% 77 100% 11 13
18. Would you use a refrigerated delivery truck?

acreage
Yes 16 7% 16 27% 6 25
No 44 18% 44 73% 5 4
Blank 181 75%
Total 241 100% 60 100% 11 15
19. Are you familiar with USDA grading standards?

acreage
Yes 41 17% 41 51% 7 13
No 40 17% 40 49% 15 7
Blank 160 66%
Total 241 100% 81 100% 22 9
Crosstab with Q9 Acreage Crosstab with Q3 Interest in Packing House

Low End High End Avg per respondent Yes No
Yes 92 92 13 Extremely Interested 3 14% 2 8%
No 79 141 7 Very Interested 1 5% 6 25%
Blank 768 821 19 Somewhat Interested 9 43% 8 33%
Total 939 1054 Not Very Interested 2 10% 6 25%
Not At All Interested 6 29% 2 8%
Blank 20 16
Total 21 100% 24 100%
58
20. Do you have washing facilities for all of your produce?

Yes 44 18% 44 55% 8 9
No 36 15% 36 45% 13 10
Blank 161 67%
Total 241 100% 80 100% 21 9
Crosstab with Q9 Acreage Crosstab with Q3 Interest in Packing House

Low End High End Avg per respondent Yes No
Yes 64 82 9 Extremely Interested 4 15% 1 5%
No 102 146 10 Very Interested 1 4% 6 32%
Blank 773 826 19 Somewhat Interested 8 30% 10 53%
Total 939 1054 Not Very Interested 7 26% 1 5%
Blank 17 17
Total 27 100% 19 100%
21. Do you have storage capacity for all of your produce?

Yes 44 18% 44 54% 11 14
No 38 16% 38 46% 11 4
Blank 159 66%
Total 241 100% 82 100% 22 9
Crosstab with Q3 Interest in Packing House

Yes No
Low End High End Avg per respondent Extremely Interested 4 16% 1 5%
Yes 128 190 14 Very Interested 2 8% 5 24%
No 43 43 4 Somewhat Interested 10 40% 7 33%
Blank 768 821 19 Not Very Interested 5 20% 4 19%
Total 939 1054 Not At All Interested 4 16% 4 19%
Blank 19 17
Total 25 100% 21 100%
22. Do you currently have GAP certification on any of your crops?

Yes 6 2% 6 7% 1 2
No 76 32% 76 93% 21 10
Blank 159 66%
Total 241 100% 82 100% 22 9
59

Yes No
Extremely Interested 1 33% 4 10%
Very Interested - 0% 7 17%
Somewhat Interested - 0% 18 43%
Not Very Interested - 0% 9 21%
Blank 3 34
Total 3 100% 42 100%
23. Which of your crops are GAP certified?

# responders of 6 total # responders of 6 total
Potato 4 Corn 1
Cucumber 3 Honeydew 1
Peppers 3 Kale 1
Tomatoes 3 Lettuce 1
Butternut squash 2 Onion 1
Cantaloupe 2 Peas 1
Zucchini 2 Spinach 1
Acorn squash 1 Watermelon 1
Beets 1 Other 1
Broccoli 1 Apples 0
Cabbage 1 Asparagus 0
Cauliflower 1 Blueberries 0
Carrots 1 Pumpkins 0
Cherry tomatoes 1 Strawberries 0
24. If there was demand, would you consider getting GAP certified so that you could sell into the packinghouse?
Yes 52 22% 52 73% 10 15
No 19 8% 19 27% 8 5
Blank 170 71%
Total 241 100% 71 100% 18 11

Yes No
Extremely Interested 3 12% - 0%
Very Interested 4 15% 3 25%
Somewhat Interested 9 35% 8 67%
Not Very Interested 7 27% 1 8%
Not At All Interested 3 12% - 0%
Blank 27
Total 26 100% 12 100%
60
25. Are you familiar with standard safe handling, washing and packing protocols?
Yes 50 21% 50 63% 12 11
No 29 12% 29 37% 9 8
Blank 162 67%
Total 241 100% 79 100% 21 10

Yes No
Extremely Interested 5 19% - 0%
Blank 24 11
Total 26 100% 18 100%
26. Do you currently grow on contract?

Yes 9 4% 9 11% 6 22
No 75 31% 75 89% 55 16
Blank 157 65%
Total 241 100% 84 100% 61 16

Yes No
Not At All Interested - 0% 10 14%
Blank 9 75
Total 68 100% 41 100%
61
27. What percentage of your total output is grown on contract?

10% 25% 40% 45% 50% 90% Total
# answering 1 1 1 1 2 3 9
28. Which of the following statements best describes you?

I would prefer to grow only on contract 4 2% 4 6% 4 28
for the packinghouse.
I would prefer to grow on contract, with the 19 8% 19 28% 16 31
ability to sell additional produce to the
packinghouse without a contract.
I would prefer having a contract, but I would 13 5% 13 19% 11 9
grow for the packinghouse without one.
I would like to grow for the packinghouse, 32 13% 32 47% 26 10
but not on contract.
Total 241 100% 68 100% 57 17
29. What would make you more likely to participate in the packinghouse?
# responders % of # responders Avg acreage
total responders also providing per responder
acreage
The packinghouse is grower-owned 19 25% 15 9
The packinghouse is owned by WI residents 15 19% 14 10
or WI business
The packinghouse is a grower-owned cooperative 26 34% 24 16
You are offered the opportunity to become an 16 21% 12 27
investor in, or part owner of, the packinghouse
None of the above matters as long as you get 45 58% 33 18
a fair market price for your produce

Grower-owned WI business Grower-owned cooperative Investor/part owner None of the
above matters
Extremely Interested 0 0 0 0 0
Very Interested 0 0 0 0 26
Somewhat Interested 15 14 24 13 17
Not Very Interested 0 0 0 0 0
Not At All Interested 0 0 0 0 0
Blank 4 1 2 3 2
Total 19 15 26 16 45
62
30. Would you be willing to participate in preseason crop planning with the packinghouse and other growers to
schedule the type, quantity, and approximate timing of the produce?
Yes 61 25% 61 78% 53 17
No 17 7% 17 22% 4 6
Blank 163 68%
Total 241 100% 78 100% 57 17
31. What concerns do you have that would prevent you from selling wholesale produce to the packinghouse?
Crosstab with Q3 Interest in Packing House and Q9 Acreage
# responders % of 80 total #Citing also # Citing
responders Extremely with 40+ acres
Interested
Doubtful that the price will be high enough to make it profitable 50 63% 5 7
Lack knowledge about GAP certification 30 38% 5 3
Lack of farm storage 28 35% 1 1
Lack of farm labor to harvest 27 34% 5 3
Unsure if I grow enough to sell into a packinghouse 26 33% 4 2
Unsure about liability insurance and my responsibility for insurance 23 29% 0 0
Lack of transportation for delivery to packinghouse 22 28% 2 1
Cannot afford GAP certification 21 26% 1 0
Other 19 24% 2 4
Unsure about signing a contract 15 19% 3 2
Lack of information about labor laws and farm labor management 10 13% 2 1
Unsure about when to harvest for a packinghouse 8 10% 3 3
32. If you are not currently a fresh produce grower, but would like to diversify your farm, please check the box
below so that we can be aware of your interest.
Checked box 42
% of 80 answering “No” to Q2 53%
33. Can we contact you about the packing house? 34. Contact Info
# responders % responders # responders % responders # responders % responders
Yes 37 15% 37 82% Provided contact info 174 72%
No 8 3% 8 18% Did not provide contact info 67 28%
Blank 196 81% Total 241 100%
Total 241 100% 45 100%
63
Buyer Survey – Summary of Reponses

1. Do you buy produce for retail sales, foodservice, both
retail sales and foodservice, a group of retailers, or
not at all?
# responders % responders
Retail Sales 7 8%
FoodService 48 56%
Both 22 26%
A Group of Retailers 4 5%
Not at all 4 5%
Total 85 100%

Extremely Interested Very Interested Somewhat Interested Not Very Interested Total
Retail sales 1 3 3 0 7
14% 43% 43% 0% 100%
Foodservice 14 15 19 0 48
29% 31% 40% 0% 100%
Both 6 8 6 2 22
27% 36% 27% 9% 100%
A group of retailers 1 2 0 0 3
33% 67% 0% 0% 100%
Not at all 0 0 0 0 0
0% 0% 0% 0% 0%
Total 22 28 28 2 80
Sum of Retail 8 13 9 2 32
25% 41% 28% 6% 100%
Sum of Foodservice 20 23 25 2 70
29% 33% 36% 3% 100%
2. How interested would you be in buying from the packing house?
Not At All Interested 0 0.0% 0 0%
Blank 5 6%
Total 85 100% 80 100%
64
3. Which types of whole local produce would you buy (either directly or through a distributor) from this packing
house in 2012?
# responders % of 85 # responders % of 85
total responders total responders
Apples 61 72% Asparagus 46 54%
Carrots 61 72% Cabbage 45 53%
Peppers 61 72% Spinach 44 52%
Cucumber 58 68% Blueberries 43 51%
Tomatoes 57 67% Cauliflower 42 49%
Onion 55 65% Squash: Zucchini 41 48%
Broccoli 54 64% Peaches 37 44%
Strawberries 53 62% Squash: Butternut 34 40%
Melon: Cantaloupe 52 61% Squash: Acorn 32 38%
Cherry Tomatoes 51 60% Beets 31 36%
Potato 50 59% Peas 31 36%
Melon: Honeydew 48 56% Kale 25 29%
Melon: Watermelon 48 56% Pumpkins 23 27%
Corn 47 55% Collards 18 21%
Lettuce 47 55% Other 14 16%
4. Which of the following crops would you source if they were available off season / year round?
# responders % of 85 total # responders % of 85 total
responders responders
Apples 65 76% Lettuce 45 53%
Carrots 60 71% Spinach 42 49%
Tomatoes 59 69% Butternut squash 37 44%
Onion 54 64% Beets 32 38%
Peppers 54 64% Acorn squash 31 36%
Potatoes 51 60% Pumpkins 19 22%
Cabbage 48 56%
65
5. Please estimate the average number of POUNDS PER WEEK of the following types of whole local produce you
would buy from this packing house in 2012.
Sum of Averages Sum of Averages
Potato 123,840 Asparagus 10,637
Apples 105,940 Strawberries 10,445
Onion 70,455 Melon: Honeydew 9,125
Cucumber 63,914 Squash: Acorn 7,615
Broccoli 62,468 Blueberries 7,423
Cauliflower 46,650 Squash: Butternut 7,150
Cherry Tomatoes 45,237 Kale 5,995
Cabbage 24,665 Squash: Zucchini 5,915
Carrots 24,101 Spinach 4,679
Tomatoes 22,857 Pumpkins 2,572
Melon: Watermelon 21,345 Collards 2,165
Peppers 20,734 Beets 1,697
Melon: Cantaloupe 12,685 Peas 1,155
Lettuce 12,655 Other 50
Corn 12,595 Total 757,713
Peaches 10,949
6. Which types of processed local produce would you buy from this packing house in 2012?
# responders % of 85 total # responders % of 85 total

responders responders
Carrots 30 35% Blueberries 17 20%
Lettuce 28 33% Corn 16 19%
Peppers 27 32% Potato 16 19%
Onion 26 31% Cherry Tomatoes 16 19%
Broccoli 25 29% Peas 15 18%
Melon: Cantaloupe 25 29% Asparagus 14 16%
Cauliflower 23 27% Peaches 12 14%
Apples 23 27% Squash: Acorn 10 12%
Melon: Honeydew 22 26% Squash: Butternut 9 11%
Tomatoes 22 26% Squash: Zucchini 9 11%
Cucumber 19 22% Beets 8 9%
Melon: Watermelon 19 22% Kale 7 8%
Cabbage 18 21% Collards 4 5%
Spinach 18 21% Pumpkins 3 4%
Strawberries 18 21% Other 2 2%
66
7. Please estimate the average number of POUNDS PER WEEK of processed local produce you would buy from
this packing house in 2012.
Sum of Averages
Lettuce 11,810 Sum of Averages
Cabbage 9,255 Squash: Butternut 605
Broccoli 4,710 Strawberries 530
Onion 3,530 Beets 515
Cauliflower 2,490 Squash: Zucchini 480
Melon: Cantaloupe 2,210 Cherry Tomatoes 370
Carrots 2,200 Blueberries 365
Apples 2,095 Peaches 315
Melon: Honeydew 2,000 Asparagus 310
Potato 1,980 Peas 240
Melon: Watermelon 1,900 Spinach 210
Corn 1,640 Collards 100
Peppers 1,275 Pumpkins 100
Cucumber 1,090 Kale 10
Tomatoes 750 Other (specify) 0
Squash: Acorn 605 Total 53,690
8. Please estimate your total ANNUAL produce purchases by checking a range below:
Range is $46-145 million/year
# responders % responders
Less than $10,000 11 19% # responders % responders
$10,000 - $50,000 15 25% $500,000 - $1,000,000 3 5%
$50,000 - $100,000 8 14% $1,000,000 - $2,000,000 3 5%
$100,000 - $150,000 2 3% $2,000,000 - $3,000,000 3 5%
$150,000 - $200,000 1 2% $3,000,000 - $4,000,000 1 2%
$200,000 - $250,000 1 2% $4,000,000 - $5,000,000 0 0%
$250,000 - $350,000 2 3% $5,000,000 and above 6 10%
$350,000 - $500,000 3 5% Total 59 100%
Crosstab with Q1 Respondent Type, Q2 Interest in Packing House Somewhat Interested

Extremely Interested
A Group of Retailers
Not At All Interested

Not Very Interested
Very Interested
# responders
% responders
FoodService
Retail Sales
Not at all
Both
Less than $10,000 11 19% 2 7 2 0 0 1 3 7 0 0

$10,000 - $50,000 15 25% 2 5 7 1 0 3 6 5 1 0
$50,000 - $100,000 8 14% 0 7 1 0 0 3 3 2 0 0
$100,000 - $150,000 2 3% 0 2 0 0 0 1 0 1 0 0
$150,000 - $200,000 1 2% 0 1 0 0 0 0 1 0 0 0
$200,000 - $250,000 1 2% 0 1 0 0 0 0 0 1 0 0
$250,000 - $350,000 2 3% 0 1 1 0 0 1 1 0 0 0
$350,000 - $500,000 3 5% 1 1 0 1 0 2 1 0 0 0
$500,000 - $1,000,000 3 5% 1 1 1 0 0 1 1 1 0 0
$1,000,000 - $2,000,000 3 5% 0 3 0 0 0 1 1 1 0 0
$2,000,000 - $3,000,000 3 5% 0 3 0 0 0 1 1 1 0 0
$3,000,000 - $4,000,000 1 2% 0 0 1 0 0 1 0 0 0 0
$4,000,000 - $5,000,000 0 0% 0 0 0 0 0 0 0 0 0 0
$5,000,000 and above 6 10% 0 3 3 0 0 3 2 1 0 0
Total 59 100% 6 35 16 2 0 18 20 20 1 0
67
9. Next we would like to ask about how much you would spend on local Wisconsin produce if available from the
packing house in 2012.
Range is $18-26 million/year
Less than $10,000 16 28% $350,000 - $500,000 2 3%
$10,000 - $50,000 17 29% $500,000 - $1,000,000 3 5%
$50,000 - $100,000 7 12% $1,000,000 - $2,000,000 1 2%
$100,000 - $150,000 4 7% $2,000,000 - $3,000,000 1 2%
$150,000 - $200,000 2 3% $3,000,000 - $4,000,000 1 2%
$200,000 - $250,000 1 2% $4,000,000 - $5,000,000 2 3%
$250,000 - $350,000 1 2% $5,000,000 and above 0 0%
$350,000 - $500,000 2 3% Total 58 100%
Crosstab with Q1 Respondent Type, Q2 Interest in Packing House
Somewhat Interested
Extremely Interested
A Group of Retailers
Not At All Interested

Not Very Interested
Very Interested
# responders
% responders
FoodService
Retail Sales
Not at all
Both
Less than $10,000 16 28% 3 8 5 0 0 2 3 10 1 0

$10,000 - $50,000 17 29% 2 10 4 1 0 6 6 5 0 0
$50,000 - $100,000 7 12% 0 5 1 1 0 2 3 2 0 0
$100,000 - $150,000 4 7% 0 4 0 0 0 1 1 2 0 0
$150,000 - $200,000 2 3% 1 1 0 0 0 1 1 0 0 0
$200,000 - $250,000 1 2% 0 1 0 0 0 0 1 0 0 0
$250,000 - $350,000 1 2% 0 0 1 0 0 0 1 0 0 0
$350,000 - $500,000 2 3% 1 1 0 0 0 1 1 0 0 0
$500,000 - $1,000,000 3 5% 0 1 2 0 0 1 2 0 0 0
$1,000,000 - $2,000,000 1 2% 0 1 0 0 0 1 0 0 0 0
$2,000,000 - $3,000,000 1 2% 0 0 1 0 0 1 0 0 0 0
$3,000,000 - $4,000,000 1 2% 0 1 0 0 0 0 1 0 0 0
$4,000,000 - $5,000,000 2 3% 0 0 2 0 0 1 0 1 0 0
$5,000,000 and above 0 0% 0 0 0 0 0 0 0 0 0 0
Total 58 100% 7 33 16 2 0 17 20 20 1 0
10. When are you interested in sourcing Wisconsin local produce?

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
# responders of 85 total 41 41 41 43 47 38 38 39 52 49 44 41
68
11. How important to you is sourcing CERTIFIED ORGANIC produce?

Extremely Important 3 4% 3 5%
Very Important 8 9% 8 14%
Somewhat Important 23 27% 23 40%
Not Very Important 17 20% 17 30%
Not At All Important 6 7% 6 11%
Blank 28 33%
Total 85 100% 57 100%
12. Which of the following other sourcing requirements are relevant to you?
# responding # Yes % Yes # No % No # Blank % Blank
Traceability? 56 52 93% 4 7% 29 34%
Liability Insurance? 55 50 89% 5 11% 30 35%
GAP Certification? 48 27 48% 21 52% 37 44%
HACCP Certification? 53 40 71% 13 29% 32 38%
Farm Food Safety Plan? 55 49 88% 6 12% 30 35%
Compliance with farm 54 47 84% 20 16% 58 68%
labor requirements?
Any other sourcing requirements? (Please specify in box below)

Yes - sized, graded, on time, competitive price
Yes - If delivery by truck what type of truck and is truck refrigerated
Yes - Hydro-cooled, USDA inspected for grade
Yes - Delivery
Yes - Certafied Organic only
No - don’t know of any now
13. As a means of securing local supply, how interested are you in purchase contracts that specify product, price,
timing, and delivery requirements?
Blank 27 32%
Total 85 100% 58 100%
69
14. As a means of securing local supply, how interested are you in participating in pre-season crop planning to
formally arrange products, quantities, packaging, and timing of deliveries?
Blank 29 34%
Total 85 100% 56 100%
15. How interested are you in private labeling any produce items?
Blank 30 35%
Total 85 100% 55 100%
16. If offered, in which other opportunities would you be interested?

Crosstab with Q9 Annual Local Sales
# choosing % of 85 # purchasing # purchasing
total <$2M/yr local $2M+/yr local
responders
Investment 6 7% 2 1
Ownership 4 5% 2 1
Management 10 12% 7 3
Not Interested 44 52% 35 7
Blank 27 32%
17. May we contact you regarding your interest in the packing house?
Yes 46 54% 46 75%
No 15 18% 15 25%
Blank 24 28%
Total 85 100% 61 100%
70
SITE REQUEST FOR INFORMATION

The following RFI was sent out to all Dane County City, Village and Town Clerks and Administrators, and any Dane
County economic development professionals representing those jurisdictions to determine interest and available
sites or buildings for the food hub.
Dane County Planning and Development Dept.

Dane County, WI - Project Fresh
May 9, 2011
Contact: Olivia Parry, Sr. Econ Dev. Specialist
608-266-4270, [email protected]
http://www.dane-econdev.org
Request for Information

Project Fresh is looking for an existing building for the purpose of developing a WI only fresh market
vegetable packing house (Phase 1). In the first phase, the facility will pack, aggregate and market WI produce
and products. Phase II will process WI produce.
Phase I
1. Project timeline: 12-18 months to open
2. Job creation: 20-25 at capacity, plus hourly labor for washing and packing; salaried positions include
distribution and logistics, management, finance, sales, office staff, and operator.
3. Site: 2.5 - 3 acres
4. Zoning: Commercial
5. Facility: Food grade or certified food facility preferable, (not required).
6. Building and site requirements:
• 10,000-25,000 sq feet.
• Refrigeration (not freezer), at least 20% of total size
• Approx. 1000 sq. ft. office space
• 2 loading docks for semis
• Ceiling height 30 feet approx.
• Bay size 20 feet approx.
7. Ownership: Lease preferred, 3-5 years, option for renewal. Will consider purchase.
8. Water: Facility will require high volume of potable water usage in peak season, do you have high volume
capacity? Does your community have opportunity for land application of waste water? Other water
sources than municipal?
9. Utility: 440 electrical 3 phase service to the site. Natural gas should be available.
10. Parking: enough space for a semi-truck to turn around, plus staff parking. Please
describe.
11. Other: The site will route 18 to 25 tractor trailers a week during peak growing season,
and needs access to major transportation routes. What are the weight limits on the
access roads and variances during the year, if any?
12. Would your community support this type of activity?
Phase II would require an additional 1,000-5,000 square feet of refrigerated space for processing produce.
71
BIBLIOGRAPHY
Black, Jane. “Senate passes child nutrition bill.” The Washington Post. August 5, 2010.
http://voices.washingtonpost.com/all-we-can-eat/food-politics/senate-passes-child-
nutrition.html (accessed August 13, 2010).
Day-Farnsworth, Lindsey, Brent McCown, and Michelle Miller. Scaling Up: Meeting
the Demand for Local Food. Joint effort of The Center for Integrated Agricultural
Systems (CIAS), College of Agricultural and Life Sciences and The Agricultural
Innovation Center, Wisconsin Cooperative Extension, University of Wisconsin-
Madison, Madison: Board of Regents of the University of Wisconsin System, CAIS,
December 2009, 30.
Euromonitor International. Fresh Food in the US. Market Research, London:
Euromonitor International, 2011.
Huang, Sophia Huang and Kuo. “Increased U.S. Imports of Fresh Fruit and Vegetables
FTS-328-0.” USDA Economic Research Service Publications. September 2007. http://
www.ers.usda.gov/Publications/fts/2007/08Aug/fts32801/fts32801.pdf (accessed
February 12, 2011).
IBISWorld. Fruit & Vegetable Wholesaling. December 1, 2010. http://www.ibisworld.
com/industry/default.aspx?indid=978 (accessed February 12, 2011).
Institutional Food Market Coalition. 2010 Program Report. Annual Report, Madison:
Dane County Department of Planning and Development, 2010.
Martinez, Steve, et al. Local Food Systems: Concepts, Impacts, and Issues. Economic
Research Report Number 97, Washington DC: USDA Economic Research Service, May
2010, 87.
Meter, Ken. “Local Food as Economic Development.” Crossroads Resource Center.
October 2008. http://www.crcworks.org/lfced.pdf (accessed June 30, 2010).
Mintel Group. Local Procurement - US - February 2009. February 2009. http://
oxygen.mintel.com/sinatra/oxygen/search_results/show&&set_access_filter=all-ZUS/
display/id=393577 (accessed June 30, 2010).
National Agricultural Statistics Service. 2010 State Agricultural Overview: Wisconsin.
Census, Washington, D.C.: USDA, 2010.
National Restaurant Association. “Chef Survey: What’s Hot in 2010.” National
Restaurant Association. October 2009. http://www.restaurant.org/pdfs/research/
whats_hot_2010.pdf (accessed June 30, 2010).
—. “Industry Forecast Predicts Trends in Healthier Options and “Greener”
Restaurants in 2009.” National Restaurant Association Press Release. December 18,
2008. http://restaurant.org/pressroom/pressrelease/?ID=1726 (accessed June 30,
2010).
Neal, Arthur. USDA Blog: Online Resource Helps Producers Get Products to
Market, Bolster Local and Regional Economies. July 12, 2011. http://blogs.usda.
gov/2011/07/12/online-resource-helps-producers-get-products-to-market-bolster-
local-and-regional-economies/#more-34007 (accessed July 29, 2011).
Organic Trade Association. “Industry Statistics and Projected Growth .” Organic Trade
72
Association. June 2010. http://www.ota.com/organic/mt/business.html (accessed

February 12, 2011).
Pirog, Rich. “Checking the food odometer: Comparing food miles for local versus
conventional produce sales to Iowa institutions.” Leopold Center for Sustainable
Agriculture. July 2003. http://www.leopold.iastate.edu/pubs/staff/files/food_
travel072103.pdf (accessed August 24, 2011).
Swenson, David. Selected Measures of the Economic Values of Increased Fruit and
Vegetable Production and Consumption in the Upper Midwest. Research, Department
of Economics, Iowa State University, Ames: Leopold Center for Sustainable
Agriculture, March 2010, 67.
The Diesel Technology Forum. “Fact Sheet on EPA’s Proposed Medium and Heavy
Duty Greenhouse Gas and Fuel Efficiency Standards .” Diesel Technology Forum.
October 25, 2010. http://www.dieselforum.org/index.cfm?objectid=72AC9B9E-95EC-
11E0-B620000C296BA163 (accessed AUgust 24, 2011).
The Food Channel editorial staff. Food Channel Looks Back at the Decade in Food.
Edited by Kay Logsdon. 2009. http://www.foodchannel.com/stories/2292-food-
channel-looks-back-at-the-decade-in-food (accessed June 30, 2010).
Thrive. Thrive here in the Madison Region: Industries and Companies - Agriculture.
2011. http://www.thrivehere.org/industries-companies/agriculture/ (accessed July
22, 2011).
U.S. Bureau of Labor Statistics. “Consumer Expenditures in 2008.” Consumer
Expenditure Survey. October 6, 2009. www.bls.gov/cex/csxann08.pdf (accessed June
30, 2010).
U.S. Census Bureau. 2007 Economic Census. July 23, 2010. http://factfinder.census.
gov (accessed February 12, 2011).
—. State & County Quick Facts: Wisconsin. June 3, 2011. http://quickfacts.census.
gov/qfd/states/55000.html (accessed July 27, 2011).
U.S. Environmental Protection Agency. “Emission Facts: Average Carbon Dioxide
Emissions Resulting from Gasoline and Diesel Fuel.” Office of Transportation and Air
Quality. February 2005. http://www.epa.gov/oms/climate/420f05001.pdf (accessed
August 24, 2011).
UC Davis. “US Fruits and Vegetables.” Rural Migration News. July 2007. http://
migration.ucdavis.edu/rmn/more.php?id=1231_0_5_0 (accessed February 12, 2011).
USDA Agricultural Marketing Service. GAP/GHP Audit Verification Program:
Wisconsin. July 7, 2011. http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STE
LPRDC5091877 (accessed July 27, 2011).
USDA Foreign Agricultural Service. Trade and Agriculture: What’s at Stake for
Wisconsin? WTO State Fact Sheet, Washington D.C.: USDA, 2009.
USDA NASS . Cash Receipts from Farm Marketing, by Commodities, Wisconsin 2004-
2008. Wisconsin 2009 Agricultural Statistics, Washington, D.C.: USDA, 2009.
Weise, Elizabeth. “Is organic always the best pick when it comes to buying food?” USA
Today. December 22, 2010. http://www.usatoday.com/yourlife/food/2010-12-21-
Organics21_CV_N.htm (accessed February 12, 2011).
73
ENDNOTES
1
(Neal 2011)
2
(Institutional Food Market Coalition 2010)
3
(National Agricultural Statistics Service 2010)
4
(Meter 2008)
5
(U.S. Environmental Protection Agency 2005) (The Diesel Technology Forum 2010)
6
(Neal 2011)
7
(Thrive 2011)
8
(Day-Farnsworth, McCown and Miller December 2009)
9
(Meter 2008)
10
11
(Pirog 2003)
12
13
(USDA Agricultural Marketing Service 2011)
14
(IBISWorld 2010)
15
(U.S. Census Bureau 2010)
16
(Euromonitor International 2011)
17
(Organic Trade Association 2010)
18
(Weise 2010)
19
(UC Davis 2007)
20
(Huang 2007)
21
(Mintel Group 2009)
22
(Mintel Group 2009)
23
(National Restaurant Association 2009)
24
(The Food Channel editorial staff 2009)
25
(National Restaurant Association 2008)
26
(Martinez, et al. May 2010, iv-v)
27
(Black 2010)
28
(U.S. Bureau of Labor Statistics 2009)
29
(Huang 2007)
30
(Mintel Group 2009)
31
32
33
34
(Meter 2008)
35
74
The study was funded by the HUD Sustainable Communities Regional Planning
Grant Program that was awarded to the Capital Region Sustainable Communities
Consortium, and with additional support from Dane County, the City of Madison and
Madison Gas and Electric.
On behalf the Project Team, we would like to thank all of the Study Advisors and
Technical Advisors for their expertise and support.
Study Advisors
Grant Abert, Slow Money
Amber Bennett, Badgerland Financial
Bob Bloomer, Chicago Public Schools
Leah Caplan, Metcalf’s Market
Mike Daniels, USDA Rural Development
Mark Daugherty, Collaborative Energy Ventures LLC
Teresa Engel, Wisconsin DATCP
Lois Federman, Wisconsin DATCP
Michael Gay, Office of Business Resources, City of Madison
Robert and Barbara Golden, RE Golden Produce
Diane Hesselbein, Dane County Board of Supervisors
Anna Maenner, Wisconsin Fresh Market Vegetable Growers Association
Anne Reynolds, UW Center for Cooperatives
Bob Scaman, Goodness Greeness
Joie Schoonover, UW Madison Housing
Brandon Schulz, Wisconsin Grocer’s Association
Rick Terrien, Iowa County Development Corp.
Jose Valadez, Whole Foods
Todd Violante, Dane County Planning and Development
Jim Welsh, Natural Heritage Land Trust
Phyllis Wilhelm, Madison Gas & Electric
Technical Advisors
Kelly Liddington, Virginia Cooperative Extension
Duane Maatz, Wisconsin Potato and Vegetable Growers Association
Anne Reynolds, UW Center for Cooperatives
Kerryann DiLoreto, Survey Consultant
Laura Witzling, Dane County Planning and Development
For More Information contact:

Oliva Parry, Sr. Economic Development Specialist
Dane County Planning and Development Department
210 Martin Luther King, Jr. Blvd.
City-County Building, Room 116
Madison, WI 53703-3342
Phone: 608-266-4270
Fax: 608-266-9117
75
© 2011, Dane County Planning and Development Department

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Southern Wisconsin Food Hub

Dane County Planning and Development Department

Table 1: Number of Completed Grower and Buyer Surveys 19

——————————— FINDINGS, ANALYSIS, RECOMMENDATIONS

PROJECT IMPACTS ———————————

RECOMMENDATIONS FOR NEXT STEPS

DANE COUNTY BACKGROUND ———————————

FEASIBILITY STUDY FUNDING

An Advisory Board was convened to provide project oversight and facilitate

FEASIBILITY STUDY WORK PLAN

Invited buyers, County representatives, Ag Extension, ag associations and other stakeholders to

Developed and implemented two surveys among growers and buyers

Timeline of Activities Feasibility Study Completed:

——————————— SURVEY RESULTS

and nearly half Grower Survey Buyer Survey

in their segment Wisconsin Fresh Market Vegetable Growers Association

GROWER AND BUYER RESPONSES

NUMBER OF COMPLETED SURVEYS

TABLE 1: NUMBER OF COMPLETED GROWER AND BUYER SURVEYS

LEVEL OF INTEREST IN PACKING HOUSE

TABLE 4: GROWER AND BUYER LEVEL OF INTEREST

As noted in the complete summaries in the Appendix, 80% of grower respondents

SUPPLY AND DEMAND

TABLE 6: SUPPLY – ACREAGE AVAILABLE TO PACKING HOUSE IN 2012

TABLE 7: DEMAND – BUYER POUND AND DOLLAR VOLUME

GROWER PRACTICES AND BUYER REQUIREMENTS

INTEREST IN OWNERSHIP, MANAGEMENT OR

packing house. This

TABLE 14: GROWER CONCERNS REGARDING WORKING WITH A PACKING HOUSE

FIGURE 1: UNMET DEMAND FOR LOCALLY-GROWN FRUITS AND VEGETABLES –

LOCAL MARKET ANALYSIS

FIGURE 2: PROXIMITY TO MAJOR MARKETS

COMPETITIVE LANDSCAPE AND ADVANTAGE

TABLE 16: SPECIALTY PRODUCE WHOLESALERS IN WISCONSIN

While the current competitive landscape does not appear to be aggressive, it is

TABLE 17: SITE SPECIFICATIONS FROM RFI SUBMISSIONS

FIGURE 3: COUNTY MAP OF POTENTIAL SITES AND FARMS

FIGURE 4: STATEWIDE MAP OF POTENTIAL SITES AND FARMS

TABLE 18: FACILITY SIZE AND THROUGHPUT

ECONOMIC, SOCIAL, AND ENVIRONMENTAL IMPACTS

• Assessments based on units of product sold or purchased

BUSINESS RISKS AND MITIGATION STRATEGIES

correlation between quality and price. Depending on the breadth of experience

• Loans may be used to purchase equipment, inventory, fixtures, leasehold

The Lending Club

Q3 2011: Follow-up grower-stakeholder meeting in October to continue to identify

Kathy Nyquist, Project Consultant – Principal at New Venture Advisors LLC, a

Jim Slama, Project Consultant - Founder and President of FamilyFarmed.org which

LOCAL PROCUREMENT ESTIMATE FOR WI

Grower Survey – Summary of Reponses

Crosstab with Q3 Interest

10. Which of the following statements best describes you?

17. Would you deliver your produce to the packinghouse?

18. Would you use a refrigerated delivery truck?

19. Are you familiar with USDA grading standards?

Crosstab with Q9 Acreage Crosstab with Q3 Interest in Packing House

20. Do you have washing facilities for all of your produce?

Crosstab with Q9 Acreage Crosstab with Q3 Interest in Packing House

21. Do you have storage capacity for all of your produce?