HmC LLC

Republic Food Enterprise Center

Building infrastructure for the regional food system of southwestern Pennsylvania

Presented By

HmCapital Partners

Greg Boulos & Andrew Ellsworth,

Managing Partners

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A REGIONAL FOOD HUB LOCATED IN THE HEART OF SOUTHWESTERN PENNSYLVANIA

REUSING A FORMER GROCERY DISTRIBUTION CENTER AND SUPPORTING

LOCAL AGRICULTURE AND BUSINESSES

Republic Food Enterprise Center

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What is a Food Hub?

According to the USDA’s food hub study group (2011) a food hub is:

“A centrally located facility with a business management structure facilitating the

aggregation, storage, processing, distribution and/or marketing of locally/regionally

produced food products”

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Republic Food Enterprise Goals

Bridge the divide between the region’s growers and the region’s consumers

Expand market for local food to include stabilized and value-added product that can be sold off-peak

Provide additional value and stability, and an outlet for extra/damaged produce to farmers

Fill demand in marketplace for locally-grown ingredientsLeverage relationships with large end market

organizations (Lutheran Services, Food Bank, Eat n’ Park, Giant Eagle) to inform farmers of products in demand

Provide jobs, economic development, and long-term wealth creation in an economically depressed area by building employee and farmer cooperative ownership

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Reconstructing the infrastructure

Growers

Aggregators

ProcessorsValue Added

Products

Consumers

Absence of infrastructure to sustain regional food systems prevents establishing a complete regional food business eco-system

Infrastructure needs to be based in markets and sustainable with normal market activity

Improvements in infrastructure can lead to better financial performance for farmers creating a healthy cycle

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Year Round Hub Strategy: Value Added

By aggregating, stabilizing and processing to Value Added Products (VAP) hubs take local year round

VAPs bring more value to growers, can use produce that otherwise gets thrown away

VAPs can provide local food businesses with local products when fresh is not

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IN ORDER TO MAKE THE CHANGE WE HAVE TO THINK DIFFERENTLY ABOUT OUR PLACE IN THE LOCAL FOOD SYSTEM – AND

THE PLACE OF ALL AROUND US

Switching from Supply Chain to Value Chain

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Supply Chain Value Chain

Supply chains favor large scale suppliers

Supply chain does not encourage smaller units of production – all push

Supply chains trickle down profits and squeeze the producers into smaller and smaller margins

Value chains integrate small producers, get scale thru collaborating

Value chains are demand driven (pull), involve customers early and often

Value chains respect the entire system and direct profits to the source of supply

Supply Chain vs. Value Chain

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Republic Food Enterprise Center – A CBSE

RFEC is a Community-Based Social Enterprise Solves a problem in an

existing regional supply chain which is market based

Provides value to both suppliers and customers

Will be owned by the employees and the community

Must be Sustainable and profitable

Growers

RFEC

End

Market

s

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Republic’s Community Benefits

Job &

Enterprise

•20 to 35 jobs on site by third year

•50 t0 100 jobs in related businesses

•Dozens of small food enterprises growing to scale

Direct Spending

•$4-5 million in farm purchases over four years processing millions of pounds of local produce for local markets

Shared Ownership

•Employee Owners

•Producer Owners

•Community Stakeholders

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DEMAND CURRENTLY OUTSTRIPS SUPPLY.UNLESS WE CHANGE THE UNDERLYING

ECONOMICS FOR THE GROWERS WE CANNOT CHANGE THAT CONDITION AND

LOCAL FOOD WILL NOT REACH ITS POTENTIAL TO CHANGE OUR LOCAL FOOD

SYSTEM

SourcingToday and in the Future

Regional Source Coverage: Eastern Ohio and Western PA

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Top Ten Vegetables

Rank VegetableTotal Harvested

Acres

#1 Sweet Corn 5154

#2 Pumpkins 1903#3 Potatoes 946#4 Tomatoes 823#5 Peppers, Bell 324#6 Lettuce 281#7 Beans, Snap 238#8 Peppers, Chile 144#9 Squash 136

#10 Cabbage, Head 95

Eastern Ohio Top 10 Vegetables

Rank VegetableTotal Harvested

Acres#1 Sweet corn 4357

#2 Potatoes 4393#3 Pumpkins 1298

#4 Cabbage, Head 600

#5Tomatoes in the

open 571#6 Peppers, Bell 301#7 Beans, Snap 235#8 Squash 147#9 Peppers, Chile 86

#10 Cucumbers 73

Western PA Top 10 Vegetables

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Top Ten Fruits

Rank FruitsTotal Harvested

Acres#1 Grapes 12419#2 Apples 1725#3 Peaches 288

#4 Blueberries, Tame 202#5 Strawberries 116#6 Pears 94#7 Raspberries 69#8 Plums and Prunes 40#9 Cherries 39

#10Melons,

Watermelon 28

Western PA Top 10 Fruits

Rank FruitTotal Harvested Acres

#1 Apples 1849#2 Grapes 1138#3 Peaches 274#4 Melons, Canteloup 180#5 Strawberries 145#6 Blueberries, Tame 99

#7 Melons, Watermelon 72

#8Blackberries (include Dewberries) 41

#9 Raspberries 31#10 Pears 26

Eastern Ohio Top 10 Fruits

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Western PennsylvaniaCommodity Crops vs Top Ten Fruits and Veggies

1060396

1502012061Acres Harvested 2007

Commodity CropsFruitsVegetables

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RFEC Sourcing Strategy

Growers of fruits and vegetables report inadequate income to support their farms

RFEC has two goals in the sourcing strategy Ensure that growers are able to get the most revenues

for their harvests by decreasing the waste which results from either inability to take seconds to market or to sell firsts in a timely manner

Improve the economic return for growers so that there is an increase in the amount of acreage and yield of fruits and vegetables in the region’s farming community

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Seconds = $8.6 Million Opportunity

Based on the CMU study, the annual value-added products that could be produced off of seconds generated by southwest Pennsylvania farms could easily exceed $8.6 Million

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THE DEMAND FOR LOCAL FOOD AND FOOD PRODUCTS HAS NEVER BEEN HIGHER AND

IT CONTINUES TO GROW ACROSS ALL LEVELS OF THE CONSUMER POPULATION

Demand:Growing and Unmet

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Fresh Produce – In season

Value-added – Year round

Increasing the Value to Producers

HmC LLCSource:Specialty Foods Report

Consumers are more likely to prefer VAPs with local and eco-friendly content

Influences consumers most now

Will grow the most in the next few years

All NaturalManufactu

rer80%

Distributor88%

Manufacturer

51%

Distributor50%

Organic 46% 50% 32% 38%

Local 46% 50% 52% 50%

Eco Friendly 30% 13% 50% 44%

Sustainable 15% 13% 47% 56%

Fair Trade 4% 19% 13% 13%

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Servicing Large Regional Buyers

Lutheran Services Society (Meals on Wheels)Food BanksEat n’ ParkGiant EagleSchool DistrictsRestaurantsCorporate Cafeterias

It’s all about scale…

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RFEC IS A PLATFORM IN OUR LOCAL FOOD SYSTEM THAT WILL DO THREE THINGS

VERY WELL:•AGGREGATE•STABILIZE

•PRODUCE VALUE-ADDED PRODUCTS

What the Republic Hub Will Do

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Aggregator

Pre-planting negotiations with area growers

Simplify collection process around farmer’s markets

Emphasize collection of seconds as well as firsts

Non-farm aggregation as well such as auctions and produce wholesalers

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Stabilization

Process fresh produce soon after collection

Convert into common ingredients

Build sufficient inventories to carry the Hub’s VAP through the non-growing season

Use both shelf stable and frozen technologies

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Value Added Products

Hub develops lines of VAPs in partnership with End Markets (EMOs)

VAPs are derived primarily from the ingredients derived from local growers and producers

In general, the Hub will seek opportunities for VAPs that fit the “G-B-B” approach to retail (Good-Better-Best)

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Opportunity for Collaboration

Republic Food Enterprise Center can: Serve as the next step after shared-use kitchens for

food entrepreneurs Provide access/entry into larger commercial markets Serve help source local produce Offer training and experience on larger food

processing equipment Provide guidance and technical assistance to shared-

used kitchen start-ups

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Thank You!

This Plan is the exclusive property of Hollymead Capital Partners LLC

Any reproduction without the expressed written permission of HmCapital is prohibited

HmCapital Partners

6000 West Grove Circle

Gibsonia, PA 15044

www.hollymeadcapital.com