A Regional Food Distribution Pilot Project
Ontarians are increasingly supporting the health, social, economic, and environmental benefits that come with the choice of buying local food. This shift towards local food is gradually giving new shape to Ontario’s food system.
By moving to meet the demands of their customers, the value chain is finding ways to provide more local food as part of their business model. However, desire alone on the part of customers and suppliers is not enough to effect permanent and systemic change in Ontario’s food system.
The Distribution Challenge
The current distribution system in Ontario focuses on maximizing efficiencies by consolidating large volumes of product in order to serve many different clients. This has created a landscape in which a few food distribution channels have a monopoly on the majority of the food supply. For example, in retail there are just four companies that hold the majority of the volume, while in foodservice, there are eight distributors holding the majority of food supply.
This lack of choice between distributors has made it difficult for farmers with differentiated products–such as varieties grown under sustainable production systems or with ‘heirloom’ genetics–to gain access to the marketplace where the majority of food spending occurs. This system is also not geared toward small- and medium-scale producers, which represent more than 80 per cent of Ontario farms.
The increasing popularity of locally grown food has led to the creation of smaller-scale businesses and aggregators, which act as regional distributors for product from a region’s farmers. These regional aggregators combine products bought direct from the farm and deliver directly to clients, namely restaurants and small retail stores.
For example, since 2008, 100km Foods Inc. has been picking up local food products from farms within the Greater Toronto Area and delivering them to restaurants. While this distribution model means they can provide a diverse set of products within a rapid delivery system that virtually guarantees freshness, they are still faced with the challenge of size – their model was not designed to compete with the large-scale distributors. As a result, they have a less significant impact on large-scale retailers or other purchasers.
Piloting a New Model
To address this distribution barrier, the Greenbelt Fund is bringing both distribution models together – leveraging the efficiencies of large-scale distribution and capitalizing on the product variation and freshness that smaller-scale aggregators provide.
In a pilot, 100km Foods Inc. will source fresh, locally grown products, and Sysco will continue to provide the supply logistics to deliver the product to Aramark in the most efficient manner. The result will be a network of distribution points that are inter-connected, with businesses working collaboratively to get food from farms to customers (see diagram).
This new model will begin with a pilot project based in the Greater Toronto Area. If successful, we intend to expand the pilot to other areas of the province.
Solutions for Everyone
The pilot project will provide benefits for all members across the value chain. It gives farmers an avenue to scale up and diversify their product. They will no longer have to supply large territories in order to be included in the distribution system. Now farmers can elect to provide specialized services and compete on quality, taste, and other points of difference in order to be competitive in the market place.