Financial feasibility of selling frozen produce in local and regional markets

Abstract

Abstract Farmers and food entrepreneurs are encouraged to enter direct and intermediated markets for value-added food products, but do not have information that they need to determine whether the markets are financially feasible for their operations. We conduct timed trials in a state-of-the-art regional shared-use food processing facility in the Northeast, and test production costs for two high-quality, safe, value-added frozen products: blueberries and spinach. We combine this with research on capital costs, field research on distribution costs and baseline per-unit revenues, and published research on potential market returns, and assess the conditions under which frozen produce sales can be a good business choice for farmers and food businesses in local and regional food markets. We develop a roadmap and a calculator tool that potential market entrants, extension agents, regional food business centers and other agricultural support providers can modify to reflect local and regional market conditions. The tool can help determine whether entering the frozen produce market is a good fit for a farm or food business. In general, we find that frozen regional blueberries have potential to generate a profitable return for medium-scale farmers with access to a shared-use facility, or farmer aggregators with the ability to invest in their own facilities. Frozen regional spinach is unlikely to generate a profitable return at the regional scale. Our results provide critical information to policy makers regarding the scale of production necessary to justify investments in regional shared-used kitchens. Results also suggest that policy makers should be cautious when encouraging farmers and food businesses to enter value-added markets, as there is significant potential for these markets to under-perform.