Farm Truck -- Driving a Market?

http://dowser.org/fighting-new-york-city-food-deserts-with-mobile-farms/

There have been many stalled attempts to bring fresh produce to ‘food deserts’ – areas where healthy food is often unavailable for purchase. As a result, people end up shopping at convenience stores where options are quite limited.

This article -- about a Farm Truck in NYC -- highlights the fact that even when there’s demand for healthy foods, supply chain costs pose obstacles to financial sustainability: Fresh fruits and vegetables can be expensive to grow and transport at small scales, so a fair price for the farmer is often too high for the low-income consumer.

Holton Farms seems to have found a solution, though, which reminded me of the Aravind Eye Care System example in one of this week’s articles, Creating Successful Business Models. The Farm Truck offsets its losses in lower income neighborhoods with profits from wealthier areas. “It looks for better-off customers who are willing to pay a little more for quality produce (mixed with a social purpose) -- a strategy known as cross-subsidization. And because it is on wheels it can reach different groups of customers easily.”

This ‘cross-subsidization’ sounds like Aravind’s approach: By charging wealthier patients more and poorer patients less, it has developed a sustainable business model. (p.13, Creating Successful Business Models)

Holton Farms has big plans for the future that extend beyond its Farm Truck. They want to partner with like-minded organizations to create “profitable centralized kitchens that prepare farm-fresh foods for low-income families cafeteria style.” This partnership may lead this for-profit farm (model 3) to enter into some hybrid business models (model 2). I imagine that these kitchens could provide a great opportunity for job training and local employment, too -- an idea akin to the Barefoot College business model cited as a model 1 example.

Thulsi Ravill, Dr. Ventkataswamy’s successor as executive director of the Aravind Eye Care System said, “…you have to transcend the stage where you are simply reacting to market demands, shifting instead to ‘market driving.’” It sounds like Holton Farms is headed in this market-driving direction if they can maintain affordable pricing for the new communities they serve. Afterall, “There’s real value in working with local players to drive product, distribution, and sales innovations in that ‘last mile’ before reaching consumers.” (p.5, Capturing the World’s Emerging Middle Class)

I’m interested in the fact that Holton Farms has been around for generations, and recently endeavored to capture this new market and more explicitly share and implement its social mission. I worry, however, that the Farm Truck model may not be sustainable. As organic and local products are more easily found at grocery chains, how will Holton Farms maintain its higher-income customers, who subsidize its lower income customers? Can the Farm rely on the do-good nature of its current customers? If they can prove out a high volume demand from lower-income customers, might they get involved with owning/operating/supporting a brick and mortar establishment (grocery store) in a food desert? Will the brick-and-mortar kitchens serve the same purpose?