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March 18, 2013

Belfast food hub creates new market for local vendors

PHOTo / Tim greenway
PHOTo / Tim greenway
Julie Romano, owner of Julie Ann’s Outrageous Foods, holds her salsa and tabouli in the Belfast Co-op in Belfast, where her products are sold.
PHOTo / Tim greenway
Jan Anderson, founder of Coastal Farms and Foods processing center, next to a kettle in the shared kitchen in Belfast

Coastal Farms and Foods

248 Northport Ave., Belfast

Founded: 2011

President and CEO: Jan Anderson

Services: Commercial kitchen; cold and dry storage; food processing

Contact: 930-3575 www.coastalfarmsandfoods.com

The world almost didn't get to taste Julie Romano's salsa.

For years, Romano's family urged her to market her homemade dips, but Romano, a mother of three young children, often had her hands too full to start a food business. She eventually approached a local farmers' market about selling her salsa, but state health code regulations derailed that idea.

"Because it was a fresh product, I couldn't make it in a home kitchen," she says.

Romano didn't have the money to upgrade her kitchen to meet commercial standards; she was offered space in a local restaurant, but she couldn't store the ingredients without taking over the kitchen. Her plan to start a business was shelved.

Then she heard about plans to retrofit the old Moss manufacturing building on Route 1 on the outskirts of Belfast and convert the space into a food storage and processing center. The new food venture, owned and operated by Coastal Farms and Foods, would include commercial kitchen space that entrepreneurs could rent by the hour. It seemed perfect for Romano.

"I jumped at the opportunity," she says. "When it opened in September, I made my first batch of salsa."

Julie Ann's Outrageous Foods has been so successful since then that Romano has been having trouble keeping her product on the shelves at the Belfast Co-op, where she sells about 80 units a week. She recently signed a contract to get her products into Whole Foods in Portland and inked a deal with a wholesale distributor that will bring her products to restaurants and institutions around the state. She attributes the immediate success of her company to Coastal Farms and Foods.

"I can't say enough good things about it," she says. "It's been an immense help to me."

That's exactly what Jan Anderson hoped would happen when she opened the food processing center in August with her husband, Dean, and business partners Tony Kelley and Wayne Snyder. A former Belfast city councilor, Anderson once oversaw a feasibility study that showed the city was well-positioned to be a regional food hub with one-third of Maine's farms within a 50 mile radius of the city. Belfast had strong economic activity that drew consumers from surrounding communities and was well-placed geographically; it also benefited from a population of consumers who adopted the local food ethos early. When Anderson couldn't convince the city council to back using public money to create a food storage facility, she eventually organized more than $2 million of private funding to build it herself.

The goal of the new facility, Anderson says, is to boost Maine's food economy by providing Maine farmers space to store their crops and Maine food entrepreneurs the space to create value-added products. So far, every product launched at the Coastal Farms facility has been offered shelf space at Whole Foods in Portland. Anderson wants those products in every supermarket in Maine. She believes Coastal Farms has the ability to boost the local economy, and she values its potential to incubate new food ventures.

"If the food processors using it are successful, then we are successful," Anderson says.

Recipe for success?

Since opening up last fall, Coastal Farms and Food has tapped into a local need for food storage and commercial processing. Along with freezing blueberries for Wyman's and a handful of smaller growers, the facility has stored produce in its cooler and freezer for seven local farms, and provided commercial food processing space for 15 clients, ranging from established food businesses to beginning entrepreneurs.

It's not surprising that a food hub has taken root in Belfast, says James McConnon, a University of Maine professor of agricultural economics. In Maine, Belfast has the most economic pull of any municipality its size, McConnon says, and its population has a strong entrepreneurial ethos.

"It's a town kind of on the go," says McConnon.

Coastal Farms might have opened its doors at the right time. Interest in locally grown food and Maine-grown food is the highest it's ever been, mirroring the national trend to seek out locally grown food, McConnon says. Startup costs for creating a value-added food product are often prohibitive, so access to shared kitchen resources can provide a boost for new food companies to get a toehold in the marketplace, he says. If the food ventures being incubated by Coastal Farms succeed in the marketplace, there could be a multiplier effect on the Maine economy, he predicts.

"There are opportunities to not only create jobs, but to create entrepreneurial capacity around those hubs," McConnon says.

The concept of a food hub is relatively new, having taken hold only in the last five years, but it's gaining traction as an engine for economic development, says John Fisk, director of the Henry A. Wallace Center for Sustainable Food Systems at Winrock International. He cited a 2011 municipal study of the economic potential of a proposed food hub in southern Wisconsin. The study found the venture could bring in $20 million in economic activity and create 40 full-time jobs. That kind of prognosis is starting to attract a higher level of investment in local food systems, Fisk says. Even food corporations like Sysco are beginning to take notice, although returns on investment remain modest. In an April 2012 USDA study of food hubs, 17 of 20 operators reported being financially viable or close to the break-even point.

"It's a solid investment, but it's not tech money," Fisk says.

Entrepreneurs connected with a food hub have the potential to create a robust wholesale market for farmers who normally would depend solely on direct sales to consumers, says Melissa White Pillsbury, organic marketing coordinator for the Maine Organic Farmers and Gardeners Association. And increased food storage capacity may encourage farms to expand, she says.

"I think that having storage capacity definitely creates a huge opportunity for farmers to start to think about growing more," White Pillsbury says.

Belfast isn't the only place in the state with the potential to establish a food hub. For example, the town of Van Buren recently committed $1 million in grant money and municipal funding to invest in a food processing facility for locally grown produce, according to the Bangor Daily News. And Ellsworth is showing some potential as a food hub because of its regional economic pull, its proximity to growers and a small cluster of businesses that create value-added products from regionally grown produce, McConnon says.

There is also a handful of common kitchen ventures scattered throughout the state, says Beth Calder, a food science specialist with the University of Maine Cooperative Extension. Calder recently provided technical assistance to a coalition of communities that wanted to create common kitchens. The project was successful in starting shared-use kitchens in Saco, Portland and Unity, with another kitchen trying to get off the ground in Eastport. But the coalition ran out of funding and has since disbanded. It's hard to keep the doors of a shared-use kitchen open, Calder says.

"Having multiple shared-use kitchens and keeping them sustainable is the trick," Calder says.

Learning the hard way

The concept of a food hub is still in its infancy, having sprung up only in the last few years, says Fisk. No food hub has been around long enough to prove its longevity, but Fisk points to Organic Valley, a successful Midwestern cooperative dairy venture that closely mimics a food hub, as an example of the potential for the food hub model.

Coastal Farms seems to have some of the requirements Fisk lays out for success, including good access to agriculture and potential markets. Coastal Farms also happened to follow another of Fisk's suggestions: to retrofit an existing building rather than sinking capital into a new one. Still, the ultimate success of a food hub will depend on careful management, he says.

In the 2012 USDA study, even most successful food hub operators reported feeling like they were walking a tightrope between solvency and disaster as they tried to balance supply and demand. They're charged with managing an inconsistent and perishable product while making it available consistently and affordably to their markets, the report stated. That's not an easy task, says Fisk.

"You've got to manage your costs, and logistics are usually one of the biggest things you've got to conquer first," he says.

It's too early to declare Coastal Farms a success, says McConnon. The venture had its share of growing pains in its first few months of business, admits Wayne Snyder of Coastal Farms. Construction delays in infrastructure, caused by snags created by parts manufacturers, cost the venture customers, Snyder says. Large growers sign storage contracts months before the growing season starts, and the delays created uncertainty around Coastal Farms. The storage facility froze and stored only 1.2 million pounds of blueberries, for example, when it hoped for at least twice that.

"You have only one opportunity a year to plan to use a facility like that," says White Pillsbury. "Very few farmers were going to plan for a facility that didn't exist yet."

This year, with the storage units fully up and operational before the summer starts, growers are more comfortable committing to Coastal Farms, says Snyder. In the middle of February, company officials had already signed agreements to freeze and store millions more pounds of blueberries for the coming season.

"We just started to turn the battleship around," Snyder says.

Local food entrepreneurs like Brian McCarthy are counting on Coastal Farms to succeed, even as the work out the kinks in their own business ventures. McCarthy, who is preparing to launch a line of flavored dilly beans, recently did a test packaging run at the Belfast facility, and discovered about a dozen problems with the first run. That's par for the course when you start the machines on a new venture.

McCarthy has already worked through half the snags. He expects to be able to sell his product by April, and hopes to buy locally grown Maine produce for his Magic Dilly Beans in the coming growing season. He says it's been invaluable to have a place like Coastal Farms to help get his business off the ground. By renting processing equipment, he's been able to save money and invest more in his business, but he says the shared experience at the facility is even more valuable.

"Being here at Coastal Farms, it's just like a community where everyone is working together and figuring things out together," McCarthy says.

Craig Idlebrook, a writer based in Massachusetts, can be reached at editorial@mainebiz.biz

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