HomeMy WebLinkAboutAAC 2018-10-25 agenda.pdfCity of Maple Ridge
AGRICULTURAL ADVISORY COMMITTEE
AGENDA
Thursday, October 25, 2018 7:00 pm
Blaney Room, Maple Ridge City Hall
1. CALL TO ORDER
2. APPROVAL OF THE AGENDA
3. ADOPTION OF MINUTES – September 27, 2018
4. DELEGATIONS
4.1. An Overview of Municipal Intersections for Agriculture and Environment
Rod Stott, Environmental Planner, City of Maple Ridge
5. QUESTION PERIOD
6. NEW AND UNFINISHED BUSINESS
6.1. Food Hub Final Report
6.2. True North Fraser Program
6.3. Golden Harvest 2019
6.4. Introduction of Agricultural Plan – Recommended Action Plan items
6.5. 2019 Meeting Schedule
6.6. Workshop and Event Updates
6.6.1. Metro Vancouver AAC
7. SUBCOMMITTEE REPORTS
7.1. Education
7.2. Food Distribution
8. CORRESPONDENCE
8.1. Upcoming Events
November 6, 2018
7:00 pm
Council Inauguration
Maple Ridge City Hall, Council Chambers
Organizer: City of Maple Ridge
9. ROUNDTABLE
10. ADJOURNMENT
Next Meeting: November 29, 2018
Agenda Submission Deadline: November 15, 2018
QUESTION PERIOD
Question Period provides the public with the opportunity to ask questions or make comments on
subjects that are of concern to them. Each person will be given 2 minutes to speak. Up to ten
minutes in total is allotted for Question Period.
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City of Maple Ridge
AGRICULTURAL ADVISORY COMMITTEE
REGULAR MEETING
The Minutes of the Regular Meeting of the Agricultural Advisory Committee, held in the Blaney Room,
at Maple Ridge Municipal Hall on September 27, 2018, 2018 at 7:13 pm.
____________________________________________________________________________________
COMMITTEE MEMBERS PRESENT
Margaret Daskis, Chair Member at Large
Al Kozak Agricultural Sector
Bill Hardy Member at Large
Candace Gordon Haney Farmers Market Society
Ian Brooks Member at Large
Ryan Murphy Agricultural Sector
Stephanie James, Vice-Chair Agricultural Sector
STAFF MEMBERS PRESENT
Amanda Grochowich Staff Liaison / Planning Department
Amanda Allen Committee Clerk
ABSENT
Councillor Craig Speirs City of Maple Ridge
Caitlin Dorward Acting Regional Planner, Agricultural Land Commission
Chris Zabek Regional Agrologist, Ministry of Agriculture & Lands
David Kaplan Member at Large
Josef Hans Lara Economic Development Committee Representative
Lorraine Bates Agricultural Fair Board
1. CALL TO ORDER
2. APPROVAL OF THE AGENDA
R/2018-030
It was moved and seconded
That the September 27, 2018 Agricultural Advisory Committee agenda be approved as
circulated.
CARRIED
3. ADOPTION OF THE MINUTES
R/2018-031
It was moved and seconded
That the minutes of the Maple Ridge Agricultural Advisory Committee meeting dated June 28,
2018 be adopted.
CARRIED
Agricultural Advisory Committee Minutes
September 27, 2018
Page 2 of 4
4. DELEGATIONS
4.1. Reducing Particulate Matter Emissions due to Open Burning on Agricultural Lands
Darrell Wakelin, Environmental Control Officer, Metro Vancouver
Darrell Wakelin gave a presentation on reducing particulate matter emissions from open
burning on agricultural land that included the health effects of fine particulate matter and
how to reduce emissions through the use of best burning practices.
Mr. Wakelin answered questions from the committee about exemptions, traditional burning
windows and the Metro Vancouver permit fee. The Metro Vancouver Air Quality Management
Bylaw which requires commercial farms to apply for an open burning approval is available on
the Metro Vancouver website.
4.2. A Comparison – Farmers Market, CSA, Food Hub
Al Kozak
Al Kozak gave a presentation from the perspective of a farmer on the logistics and
implications of participating in a Farmers Market, CSA program and Food Hub as a way to
bring product to market. Mr. Kozak answered questions from the committee.
5. NEW AND UNFINISHED BUSINESS
5.1. Young Agrarian Land Matching
The Staff liaison reviewed the request submitted by the Young Agrarians. There was
discussion on the implications to the committee budget as well as additional funding models
and methods to incentivize the land matching program.
5.2. 2019 Business Planning
The Staff liaison reviewed the draft business plan and committee budget. There was
discussion on new deliverables for 2019.
R/2018-032
It was moved and seconded
That the Agricultural Advisory Committee approve the Business Plan 2019-2023 as
amended.
CARRIED
5.3. Planning Department Response to Terms of Reference Memo
The letter dated August 31, 2018 from the Director of Planning was received and reviewed.
Agricultural Advisory Committee Minutes
September 27, 2018
Page 3 of 4
5.4. Workshop and Event Updates
5.4.1. Ministry of Agriculture AAC Workshop
The Staff liaison advised that the notes from the February 21, 2018 AAC Workshop are
available online https://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-
industry/agriculture-and-seafood/agricultural-land-and-environment/strengthening-
farming/planning-for-agriculture/aac/2018_aac_workshop_proceedings_final.pdf
6. SUBCOMMITTEE REPORTS
6.1. Education
There was conversation on including more public-facing educational opportunities in the new
year.
6.2. Food Distribution
Awaiting the finalization of the Food Hub report to determine next steps.
6.3. Food Garden Contest
Stephanie James provided a summary of the 2018 Food Garden Contest and advised that
Ryan Murphy will be introducing the contest winners at the October 2, 2018 Council meeting.
Ms. James thanked Renata Trivieri from Grow and Gather Nursery who donated her time to
judge the 2018 entries and sponsored prizes for the contestants.
6.4. Backyard Chicken
Stephanie James reported on the backyard chicken booth and 4H displays at Country Fest in
July as well as the booth at the Haney Farmers Market in August. Ms. James and the Staff
liaison spoke to the high volume of backyard chicken surveys submitted. The survey results
and feedback will be summarized and included in an upcoming report to Council.
6.5. Golden Harvest
The Staff liaison reminded members to attend and promote the event on October 12, 2018.
Agricultural Advisory Committee Minutes
September 27, 2018
Page 4 of 4
7. CORRESPONDENCE
7.1. Upcoming Events
October 2, 2018
7:00 pm
Food Garden Contest Presentation to Council
Maple Ridge City Hall, Council Chambers
Organizer: Maple Ridge Agricultural Advisory Committee
October 12, 2018
6:00 pm – 8:00 pm
Golden Harvest
The ACT Arts Centre
Organizer: Maple Ridge Agricultural Advisory Committee
October 20, 2018
8:00 am – 8:00 pm
Local Government Election
Multiple Voting Locations
Organizer: City of Maple Ridge
8. ROUNDTABLE
Amanda Allen spoke to the 2019 advisory committee recruitment process and term expiries
of existing members.
Amanda Grochowich reported that the Ministry of Agriculture is hosting a province-wide crop
planning session for farmers and chefs on November 13, 2018. Members can register via
email to FoodsBC@gov.bc.ca .
9. QUESTION PERIOD - Nil
10. ADJOURNMENT – 9:32 pm
M. Daskis, Chair
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Maple Ridge Food Hub
Implementation Plan
Operational and Financial Recommendations
for a Five Year Pilot Project
October 2018
;r l!J
ii
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iii
Acknowledgements
This report was developed by Upland Agricultural Consulting in partnership with
Farm|Food|Drink and AEL Agroecological Consulting. Additional research assistance was
provided by K. Bonner.
Invaluable input was provided by City of Maple Ridge staff and the City’s Agricultural Advisory
Committee’s Food Hub Subcommittee.
A number of stakeholders and experts were consulted throughout the course of this project,
and we sincerely thank them for the time and resources that they were able to contribute. A
complete listing of stakeholders is listed in Appendix I.
Cover photo credit: Roaring Fork Lifestyle
iv
Table of Contents
Acknowledgements ........................................................................................ iii
Table of Contents .......................................................................................... iv
Table of Tables ............................................................................................. vi
Acronyms ................................................................................................... vii
Executive Summary ...................................................................................... viii
1. Introduction ............................................................................................ 1
2. Operations ............................................................................................. 1
2.1 MRFH Governance ................................................................................... 1
2.2 MRFH Staffing ........................................................................................ 2
2.3 MRFH Partnerships .................................................................................. 4
2.3.1 CEED Centre .................................................................................... 4
2.3.2 Haney Farmers Market Society ............................................................... 4
2.4 MRFH Customers..................................................................................... 4
2.4.1 Expected Value of Weekly Orders ........................................................... 5
2.5 MRFH Members & Product Mix ..................................................................... 5
2.6 MRFH Ordering Logistics ........................................................................... 7
2.6.1 Email Listserv ................................................................................... 7
2.6.2 Online Software Platform for Individual Customers ....................................... 8
2.6.3 Retail Customer Ordering ................................................................. 8
2.7 MRFH Order Aggregation and Distribution ....................................................... 8
2.7.1 MRFH Site Location Criteria .................................................................. 9
2.7.2 Other Site Location Considerations......................................................... 10
2.8 MRFH Promotion .................................................................................... 10
2.8.1 Name and Logo ................................................................................ 10
2.8.2 MRFH Website ................................................................................. 11
2.8.3 Social Media.................................................................................... 11
2.8.4 Public Relations, News Releases, and Print Media ....................................... 11
v
3. Financial Considerations ............................................................................ 11
3.1 Start-up Funding ................................................................................... 11
3.2 Product Pricing ..................................................................................... 12
3.3 MRFH’s Advantages ................................................................................ 13
4. Financial Projections ................................................................................ 13
4.1 Brokerage Fee Rationale....................................................................... 13
4.1.1 Anticipated Suppliers and Sales ............................................................. 14
4.2 Income and Expense Projections ............................................................. 17
4.2.1 Variable Expenses ............................................................................. 17
4.2.2 Fixed Expenses ................................................................................ 17
4.3 Cash Flow Projection ............................................................................. 20
5. Ratios .................................................................................................. 22
6. Risk and Sensitivity Analysis ........................................................................ 23
6.1 Risk Scenario 1: Lack of Start-up Capital ....................................................... 23
6.2 Risk Scenario 2: Product Sales Level Adjustments ............................................ 24
6.3 Sensitivity Analysis for Variable and Fixed Expenses in Year 1 and Year 3 ................ 25
7. Balance Sheet Summary ............................................................................. 27
8. Breakeven Analysis ................................................................................... 28
9. Conclusions ........................................................................................... 29
Appendix I ................................................................................................... II
Appendix II ................................................................................................. III
vi
Table of Tables
Table i. Summary of key features of the MRFH over a five year pilot project period ix
Table 1. Staffing requirements over the five year pilot project. 3
Table 2. Anticipated suppliers, sales, a nd brokerage fees for the MRFH during Years 1 - 5. 16
Table 3. Staffing wages over Years 1 - 5. 17
Table 4. Anticipated Income and Expenses Years 1 - 5. 19
Table 5. Anticipated cash flow for the MRFH pilot project from Year 1 to Year 5. 20
Table 6. Operating loan and debt repayments for the MRFH pilot project from Year 1 to Year 5. 21
Table 7. Anticipated liabilities and equity for the MRFH pilot project from Year 1 to Year 5. 21
Table 8. Anticipated financial ratios for the MRFH pilot project from Year 1 to Year 5. 22
Table 9. Risk analysis scenario with $50,000 vs. $5,000 of startup capital in Year 1. 23
Table 10. Change in brokerage fees and associated net income during Year 1 and Year 5. 24
Table 11. Sensitivity analysis for Year 1 – Variable Expenses. 25
Table 12. Sensitivity Analysis for Year 1 – Fixed Expenses 25
Table 13. Sensitivity analysis for Year 3. 26
Table 14. Summary balance sheet for the MRFH Year 1 through Year 5. 27
Table 15. Breakeven analysis for Year 1 through Year 5. 28
vii
Acronyms
ALC Agricultural Land Commission
ALR Agricultural Land Reserve
CEED Centre Community Education on Environment and Development Centre
DSCR Debt Service Coverage Ratio
FTE Full Time Equivalent
HFMS Haney Farmers Market Society
LFM Local Food Marketplace
MRFH Maple Ridge Food Hub
viii
Executive Summary
The Maple Ridge Food Hub Implementation
Plan (the ‘Plan’) provides
recommendations regarding a five-year
pilot program for hub operations and
presents an associated set of financial
projections. The Plan supports the Maple
Ridge Agricultural Plan by exploring the
feasibility of a shared agricultural
infrastructure strategy. The Plan builds
upon the Maple Ridge Food Hub Situational
Analysis and Market Identification Report
to include a robust and scalable strategy
for the food hub framework. The primary
goal of the Plan is to assist local farmers in
saving time and money by selling their
products collectively. Resources, including
staff and equipment, would be shared to
minimize overhead and operational costs.
The Maple Ridge Food Hub (MRFH) will be
based on a broker fee model, whereby
farmer members each set their own prices
for their products and the hub then retains
a 25% fee for the services provided. These
services, overseen by a hub manager,
include product aggregation, order
coordination, delivery, and promotion. The
financial projections have been built with
growth in mind over a five year pilot
program period.
The first two years represent the launch of
the pilot program and therefore only a
handful of suppliers (farmer members) are
expected to join during this initial period.
Approximately 60 weekly orders averaging
$35 per week, over a nine month period,
are targeted during the first year. An
infusion of $50,000 of external funds will
be required to get the hub up and running
and an additional infusion of $15,000 of
capital will be required during Year 2.
These funds can be brought in as loans,
grants, or a combination thereof.
Once the initial proof of concept is
demonstrated more members are likely to
participate in the hub. By Year 3 the hub is
expected to be solvent, with steady growth
in both membership, customers, and
brokerage fees. By the final year of the
pilot project (Year 5) the hub is expected
to be fully self-sustaining with three staff
members, 35 farmer members, and a
dedicated delivery truck. However, the
financial projections indicate that a bricks
& mortar facility will not be affordable
during the initial five year pilot project.
Rather, the financial model allows for
compensation for a farmer member who
will provide space and cold storage for the
other suppliers to use as a centralized
aggregation point.
This report provides a detailed explanation
of the assumptions and recommendations
that are demonstrated in the financial
projections, which has been developed in a
conservative manner. The financial plan
includes a cash flow projection and risk
and sensitivity analysis. Table (i) on the
following page summarizes the main
features of the proposed plan over the
MRFH’s five year pilot program.
ix
Table (i). Summary of key features of the Maple Ridge Food Hub Implementation Plan over a five year pilot project period.
Stage of
Growth
Governance
Type
Target
Farm
Members
Target
Weekly
Customers1
Coordination
of Orders
Staffing Aggregation
Point
Distribution
Methods
Infrastructure Partnership
Roles
Up and
running
Years 1-2
Non-profit
co-
operative
5 to 15 50 to 215
Email
listserv
Online
software
platform
In-person
Hub
manager
Farm with
cold
storage
Customers
will pick up
most orders
Cold storage
Assistance
with
promotion
Order pick-
up
locations
Steady
growth
Years 3-4
Non-profit
co-
operative
20 to 30 350 to 640 Online
software
platform
In-person
Hub
manager
Hub
assistant
Farm with
cold
storage
Customers
will pick up
most orders
Deliveries
for
additional
fee
Cold storage
Freezer
Food
dehydrator
Assistance
with
promotion
Order pick-
up
locations
Independence
Years 5 and
later
For-profit
co-
operative
after Year 5
At least
35
At least
800
Online
software
platform
In-person
Hub
manager
Hub
assistant
Hub
promoter
Farm with
cold
storage
Consider
shared
space with
a partner
after Year
5
Customers
will pick up
most orders
Deliveries
for
additional
fee
Dedicated
pick-up
truck or van
Cold storage
Freezer
Food
dehydrator
FoodSafe
kitchen after
Year 5
Assistance
with
promotion
Order pick-
up
locations
Possible
co-location
of rented
or leased
space after
Year 5
1 Assumes customers will place average weekly orders of $35 over 9 months (40 weeks).
1
1. Introduction
This Maple Ridge Food Hub Implementation
Plan (the ‘Plan’) supports Goal 7 of the
Maple Ridge Agricultural Plan to “Develop
Local Food System Infrastructure Capacity”
by acting on the recommendation to “work
with producers and local entrepreneurs to
explore the feasibility of an agro-industrial
infrastructure strategy that could include:
shared industrial spaces; branding; small
scale processing facilities; community
kitchens; and mobile slaughter facilities.”
With the intent of strengthening the local
farming community, the primary goal of
the Plan is to develop a strategy for a
shared organizational structure that would
help local farmers save time and money by
aggregating, storing, packing, processing,
distributing, and marketing their
respective products together. Overhead
and operational costs would be
minimized. The Plan includes a series of
recommendations for a five-year pilot
program and presents a business case to
get the first steps underway. It builds upon
the Situational Analysis and Market
Identification Report documents that were
developed in support of the Plan.
2. Operations
A successful food hub is versatile and
flexible, able to change course to meet
and align with changes in the marketplace
from season to season and year to year.
This versatility must be anchored within a
solid operations plan and be tied to a
feasible and realistic financial plan.
The operations plan developed for the
Maple Ridge Food Hub (MRFH) considers
the following elements to ensure that the
hub is functional:
Governance: under what business
model will the hub operate?
Staffing: what are the needs for
managing the food hub and how
might those needs shift along with
changes in profitability?
Partnerships: what kinds of partners
would benefit from aligning with
the food hub, and vice versa?
Members: what types of producers
can be expected to join the
organization? What products will
customers be able to choose from?
Customers: what are the primary
and secondary target customers and
how much can they be expected to
spend per order?
Orders and deliveries: how will the
orders be placed and deliveries be
coordinated?
Marketing and Promotion: how will
the hub be advertised and how will
farm members benefit from this
promotion?
The recommendations address these
operational questions so that the
implementation of the food hub can be
undertaken right away, and will likely
require adjustments over the life of the
food hub. The recommendations should be
revisited from time to time, particularly if
targets within the associated business plan
are either not being met or are being
exceeded, and most importantly at the end
of the five year pilot program, before
additional investments are made.
2.1 MRFH Governance
A key first step in the development of the
MRFH will be to establish the organization
itself. It is recommended that the food hub
commence as a not-for-profit co-operative
that will eventually evolve into a for-profit
co-operative. This approach has worked
well for other food hubs2. A local champion
2 For example: the Cowichan Cow-Op, Sechelt Farm
Collective, and Merville Organics have followed this route
(either formally or informally).
2
will need to step forward to get these first
steps underway. This champion will
complete the co-operative’s organizational
paperwork and establish a volunteer Board
of Directors, who will set the direction of
the hub’s policies and manage staff. This
local champion may or may not end up
participating as a farmer, Board member,
or working for the MRFH as a staff (e.g.
manager) but they will be instrumental in
ensuring that these crucial first steps are
completed. In addition to the local
champion, volunteer farmer members will
be required. Since the food hub would
start out as a not-for-profit co-op, farmer
members must be willing to volunteer
some of their time to help the organization
in order for it to become successful. Under
this governance model, all profits are
returned to the MRFH for re-investment
into infrastructure and equipment.
2.2 MRFH Staffing
The most important ingredient in operating
a successful food hub will be to hire the
best possible food hub manager from day
one. Without the right manager, it will be
more challenging to achieve the targets for
farm membership, brokerage fees, and
overall financial success during the pilot
project phase. Simply put, finding the right
manager is the most critical first step.
The food hub manager will need to bring a
combination of skills to the role, including
agricultural production, processing,
business management, marketing, and
communications. Long hours and hard work
will be required during peak summer
months. Farming can be unpredictable, and
therefore the manager will need to be
flexible enough to accommodate
fluctuations in effort requirements. A
manager who knows the local farming
community, and who has previous
relationships with both producers and
buyers may be preferred, in order to jump-
start the level of trust required to ensure
that the hub succeeds. However, business
skills and project management abilities are
of primary importance.
While multiple staff positions are
recommended, only one is expected to be
employed during the first three years.
Once the MRFH is financially solvent (by
end of Year 3) hiring a second employee as
an assistant to the manager will become
feasible. By the end of the pilot project
(Year 5) the financial model predicts that a
third, albeit part-time, employee could be
hired to focus on the ongoing promotion of
the hub.
If, for whatever reason, the target
revenues are not being met over the course
of the five years, the recommendations
should be reviewed and reassessed. For
instance, if the hub is solvent before Year
3, it is possible that an assistant could be
hired by Year 2. If the hub takes longer to
generate revenues then the hiring of an
assistant and/or promoter could be
delayed.
A summary of the recommended positions
are presented in Table 1.
3
Table 1. Staffing requirements over the five year pilot project.
Job Title Role Level of
Employment Effort
Contract Amount3
Food hub
manager
Manage all day to day operations.
General organizational management.
Supplier relations.
Order coordination.
Developing relationships with
potential funders.
Overseeing and managing the budget.
0.75 FTE4 during
years 1, 2, and 3
1.00 FTE year 4 and
year 5 (includes a
raise)
Year 1: $32,500
Year 2: $32,500
Year 3: $37,500
Year 4: $37,500
Year 5: $45,000
Food hub
assistant
Assist with the coordination of
customer orders, deliveries, and
invoicing.
This position would
begin in year 4, once
the food hub
becomes solvent.
0.75 FTE in year 4
1.00 FTE in year 5
and beyond.
Year 1: $0
Year 2: $0
Year 3: $0
Year 4: $25,000
Year 5: $33,000
Food hub
promoter
Coordinate and run all social media
accounts, advertising campaigns, and
general media and communications.
0.50 FTE beginning in
year 5.
Year 1: $0
Year 2: $0
Year 3: $0
Year 4: $0
Year 5: $22,000
3 The positions could be awarded through salaries or consulting fees.
4 FTE = full time equivalent position or 37.5 hour work week. Therefore a 0.50 FTE is equivalent to a 18.75 hour work week and
0.75 FTE is equivalent to a 28.125 hour work week.
4
2.3 MRFH Partnerships
A number of Maple Ridge-based
organizations may provide partnerships
with MRFH. The Community Education on
Environment and Development (CEED)
Centre and the Haney Farmers Market
Society (HFMS) are described here,
however others may exist and naturally
emerge as the food hub gets underway.
A mutually beneficial relationship is
expected between the MRFH and partners,
whereby cross-promotion is anticipated.
Customers of the Haney Farmers Market
may also become customers of the MRFH
and vice versa. One option could include
purchasing food through the MRFH and
potentially picking up up orders at the
CEED Centre or the HFM. Additional
examples are provided below.
2.3.1 CEED Centre
The Community Education on Environment
and Development (CEED) Centre serves the
communities of Maple Ridge and Pitt
Meadows. Over the years, the organization
has explored the feasibility of a local food
hub and continues to be active in
programming for community gardens,
school gardens, and organic farming. The
CEED Centre provides natural partnership
potential for the MRFH. This may include
using the CEED Centre as a possible order
pick-up location, combining efforts around
advertising and workshops, or inviting CEED
Centre staff and/or directors to join the
food hub Board of Directors.
2.3.2 Haney Farmers Market Society
The HFMS aims to provide the public with
direct access to food producers, stimulate
and support the local economy, provide
opportunities to inform and entertain, and
to support and strongly encourage
environmental sustainability. These goals
align well with the MRFH, however the
scope and intent of a partnership will
require further discussion as the food hub
gets underway and grows. The vendors who
sell at the HFM may also be interested in
selling a portion of their produce through
the food hub. The market location may
provide an easy and accessible order pick-
up location during the months that it is in
operation. Furthermore, members of the
HFMS may be interested in becoming Board
Members of the food hub once the hub
formally becomes a co-operative
organization. The food hub manager may
wish to align with the HFMS to help plan
the product mix, consider sharing staff
resource costs, branding, and marketing.
2.4 MRFH Customers
In order to ensure that the pilot program is
a success, both in terms of revenues and
marketing, the consumer sectors will need
to be properly identified so that the
amount of targeted sales, and associated
broker fees, are met. The overall approach
towards growing a customer base at the
start of the hub’s establishment must also
be based upon a modest level of effort
expended, as all of the MRFH’s operations
will be managed by a single staff member
during the first two years. The Market
Identification Report provides a detailed
summary of the potential demand for local
produce. The recommendations provided
here are based on that report and on
discussions with the AAC Food Hub
Subcommittee and City staff.
Typical MRFH customers are expected to
be single females and those buying food for
households with young children. This
demographic is based on anecdotal
evidence5 and by spending trends noted by
the Canadian Organic Trade Association6. In
order to bolster the value of sales, the
MRFH is also expected to solicit larger
orders from medium-scale retailers in the
5 Sechelt Farm Collective and Cowichan Co-op, personal
communication (2018).
6 The BC Organic Market: Growth, Trends & Opportunities,
2013. S. MacKinnon. Canadian Organic Trade Association.
5
region (e.g. Bruce’s, Hopcott’s). The
recommended focus is therefore directed
to the following target sector sales:
Pilot project target sectors:
Individuals and families (similar to a
CSA).
Existing small and medium sized
retailers.
Longer term target sectors:
Institutions, restaurants.
2.4.1 Expected Value of Weekly Orders
A 2016 report7 by the B.C. Provincial
Health Services Agency found that the
average monthly cost of a nutritious food
basket for a family of four in BC was $974
(or approximately $244 per week).
According to Statistics Canada, the actual
food expenditures by the average BC
household is $9,139 per year (or an
estimated $175 per week)8. A 2012 report
by the BC Farmers Market Association
indicated that visitors to the Haney
Farmers Market spend on average $25-$30
per visit, and numbers collected by the
HFMS suggest this value may be higher9. In
addition, a farm retail collective on the
Sunshine Coast reports average customer
sales in excess of $40 per order, and the
Cowichan Co-op reports an average of $50-
$60 per weekly order per customer10.
The MRFH financial models are built on the
assumption that annual target sales of
$75,00011 will be met in Year 1, rising to
over $1 million per year by Year 5. In order
to reach these targets, there will need to
7 Provincial Health Services Agency, 2016. Food Costing in
BC 2015.
8 Statistics Canada, 2016. Average household food
expenditure, by province (British Columbia).
9 Economic and Social Benefits Assessment: Final Report.
2012. Haney Farmers Market. BC Association of Farmers
Markets.
10 Sechelt Farm Collective and Cowichan Co-op, personal
communication (2018).
11 As a point of reference, the Haney Farmers Market
Society reports annual sales of over $400,000/year or
approximately $15,000/week.
be at least 60 customers spending an
average of $35 a week Year 1 (see call-out
box, below), rising to over 800 customers
by Year 5. An example of a typical weekly
order, totaling $38, is provided in the call-
out box on the following page.
2.5 MRFH Members & Product Mix
While the Market Identification Report
pointed to the ability of both local and
organic products to receive higher price
points in the marketplace, it is recognized
that only a small base of farms within the
Maple Ridge community (approximately 10)
are using practices that are certified
organic. In order to ensure that the food
hub has a wide enough membership to
succeed, it is recommended that
membership not be strictly limited to
organic farms, although organic products
will be welcomed. It is expected that price
points between the organic and non-
organic products will differ accordingly. At
the end of the five year pilot program (or
sooner if the demand and supply warrant)
the possibility of an organic product stream
could be considered.
Since a goal of the food hub is to
strengthen the local farm community and
to encourage new farms to enter into
production and increase production, it is
recommended that membership target
small and medium-scale farms, as these
operations are most likely to struggle with
market entrance and expansion. If these
Question:
How many customers does the food
hub need to reach $75,000 of total
sales in its first year?
Answer:
60 customers spending $35 a week
over 36 weeks (about 9 months)
would amount to $75,600 in sales.
6
small and medium-scale operators can be
showcased as achieving success through
the hub it may encourage others to start
farming activities on land that is currently
unproductive or underproductive.
If the hub is challenged with membership
early on the scope of possible members
could be widened to producers in
communities such as Pitt Meadows,
Mission, and across the Fraser River into
Langley and neighboring communities. By
the end of the five year pilot project the
MRFH membership should be reviewed to
ensure that the membership criteria
(location of farm members, farm size, and
product offerings) are meeting the hub’s
needs.
In discussions conducted with
representatives from local retailers, local
food distributors, and local restaurants for
the Market Identification Report, the
general consensus was that most local
fruits and vegetables sell well, although
there may be challenges in selling any
products that are new, or unfamiliar, with
the general public.
Products such as berries, salad greens, root
crops, and greenhouse vegetables easily
sell. Organic produce, in particular, is in
growing demand, but is not necessarily a
requirement for sale. This reinforces the
opportunity for the MRFH to provide a
complement of organic product sales,
while leaving the membership open to non-
organic producers. Hub membership and
corresponding product demand will
therefore naturally affect the mix of
products that are made available.
While meeting demand is an important
factor, during the initial stages it will also
be important to offer products that
producers can ensure are consistently
available12. Crops that farmers are already
producing will directly influence the
product mix during the first year or two,
after which the product mix will naturally
become more market driven and guide
production. This speaks to the importance
of crop planning based, in part, on sales
generated during the previous season.
An example of a typical weekly food hub
order that could satisfy the needs of a
couple or a small family is presented in the
call-out box, below.
It is therefore recommended that the MRFH
begin with a focus on a few key products
that are both in demand and that can be
supplied consistently and at a high level of
quality from local producers. It may be
prudent to focus on vegetables, in
particular hardy crops, cucumbers, leafy
greens, and possibly blueberries during the
first year or two, with tomatoes,
strawberries, raspberries, sweet peppers
and other more perishable items added
12 Interviews with the Tofino Ucluelet Culinary Guild and
other co-operative suppliers indicated that the initial
farmer members and what they are already producing will
drive the product mix during the start of the food hub.
Example of a weekly food hub order for a
couple or a small family:
Bunch of kale: $4.00
Salad green mix: $4.00
Potatoes (1 kg): $4.50
Organic carrots: $4.00
Three garlic bulbs: $3.50
Four small onions: $3.00
Organic cabbage: $4.50
Broccoli head: $3.50
3 small cucumbers: $3.00
Pint of blueberries: $4.00
Total: $38.00
Note: prices are provided as examples only
and may not illustrate exact final price points.
7
only when adequate storage and delivery
systems are in place.
While the primary goal at the start of the
MRFH is to create capacity by attracting
existing farmers to the hub, the secondary
goal will be to encourage new and
emerging farmers to participate. While
cranberries, nursery plants, dairy, poultry,
eggs, and meat products are also produced
locally, these products tend to be
produced through larger-scale operations
and/or must adhere to specific food safety
and food quality regulations (i.e. egg
grading) and were therefore not further
considered for the purposes of launching
the food hub. However, they may be
options that can be made available after
the pilot project is completed (i.e. after
Year 5). It should be noted that the food
hub manager will need to pay close
attention to regulations affecting the
aggregation, sales, and processing of food
products within BC, and if these
regulations shift then the product mix of
the MRFH may need to change accordingly.
Product mix recommendations are
therefore as follows:
Years 1 and 2: a mix of vegetables,
including leafy greens, cucumbers,
and root crops. The seasonal
addition of blueberries is possible,
particularly if cold storage is
available. Vegetable examples
include yams, potatoes, parsnips,
garlic, onions, beets, carrots,
rutabagas, turnips, radishes,
broccoli, brussels sprouts, cabbage,
cauliflower, and squash.
Years 3 and beyond: add a wider
selection of vegetables and berries.
Examples include celery, tomatoes,
sweet peppers, and raspberries,
strawberries.
2.6 MRFH Ordering Logistics
It is expected that the MRFH will need to
use a variety of ordering methods so that a
wide range of customers will be attracted
to the hub. There are several tried-and-
tested methods, including email listserves,
online ordering platforms (in conjunction
with a website), and phone call or face-to-
face order placements. All of these
methods are associated with varying
degrees of effort. They are each
recommended for the MRFH and are
described below.
2.6.1 Email Listserv
During Year 1, the MRFH is expected to
consist of a relatively small number of farm
suppliers (up to 15) and less than 100
customers. At that scale, it will be
efficient to start the ordering process with
an email-based listserv, such as
MailChimp13. MRFH staff will be able to
customize the email using a fresh sheet
approach, highlighting the availability of
products on a weekly basis. The listserv
can also direct customers to the MRFH
website, which will be the main platform
for the eventual online ordering software
(see Appendix II for more details). The
software will be purchased in Year 1 but
may take time to be established, therefore
the email listserv can provide a good
additional layer for ordering starting
immediately.
How it Works: Email listserv14
1. Farmers send in a list of type,
quantity, and price of products
to MRFH staff.
2. MRFH staff sends out weekly
fresh sheet lists and associated
pricing through the listserv to
customers (e.g. individuals
and/or retail buyers).
13 The Sechelt Farm Collective operates at a similar scale
and uses MailChimp for all of it’s listserv-based orders.
14 Saanich Organics, a small-scale (3-7 farmers) business,
uses this method and has a customized excel spreadsheet
to manage orders and inventory.
8
3. Orders are returned to MRFH
staff by a weekly deadline.
4. Follow-up/confirmation of order
is made to ensure accuracy and
confirm payment.
For example, if producers send in their
product availability and pricing lists to
MRFH staff on Mondays, an email can then
be sent out by MRFH staff on Tuesday by
noon to all potential customers. Orders are
returned via email to MRFH staff by
Wednesday at 5pm, and are ready for pick-
up or delivery on Thursday afternoons. The
cycle repeats weekly (days can be adjusted
as needed to suit the needs of the
suppliers).
2.6.2 Online Software Platform for
Individual Customers
Individual and commercial customers order
through an online interface where all the
suppliers’ products are listed in one place.
MRFH staff would manage the software
interface. As per the listserv approach,
online software provides pricing flexibility
for farmers. This will allow for price
differentiation between organic and non-
organic products.
It is recommended that the MRFH
investigate software platform options and
choose the model that best fits the needs
and budget of the hub. The following two
software platforms are used by other hubs
and farm collectives:
Local Food Marketplace (LFM)15
LFM offers flexibility and scalability,
including individualized design to meet
website branding and layout needs. It also
allows for mobile app usage, e-commerce
options, and distribution routes based on
orders placed.
The price is approximately $1,500 to have
the software setup, and a $230/month fee
thereafter.
15 Local Food Marketplace:
Local Orbit16
Local Orbit offers a similar interface to
LFM, with the ability to provide farmer
profiles and stories alongside products,
advanced pricing options, inventory
management, and more.
The pricing is similar, although there is no
setup fee, the monthly rates for a package
that would be useful for the Maple Ridge
food hub would be approximately $450 per
month.
2.6.3 Retail Customer Ordering
FarmFolk/CityFolk17 research indicates that
in order to gain commercial customers
(e.g. retailers, restaurants) suppliers must
be able to develop a relationship with
produce managers by being able to contact
the businesses directly. This typically
involves either direct calls or visits. MRFH
staff would be expected to meet the
produce manager at their work place with
samples and product information such as
pricing, farm source, and availability. It is
expected that retail customers would be
small or medium-sized commercial
operations. There is an opportunity for
MRFH to sell excess products, or develop a
standing order for specific products, with
retailers in the area such as Bruce’s
Country Market and Hopcott Meats. It may
be expected that the MRFH offer
discounted pricing compared to the pricing
being offered to individual customers, as
the retailer will also need to include their
margin within their final sales. Retailers
may also expect the order to be delivered
at a pre-arranged schedule.
2.7 MRFH Order Aggregation and
Distribution
Once orders are placed, operators will be
required to bring their products to a
central aggregation point on a weekly
basis. During Years 1 to 4 of the pilot
project this will ideally be located at a
16 Local Orbit
17 FarmFolk CityFolk Food Hub Report 5
9
members’ farm, with access to cold
storage. As the membership and customer
base grows, and if the financial targets are
being met, the hub would be able to plan
to move into a physical location (bricks &
mortar) once the pilot program is
completed.
Based on projected financials, a bricks &
mortar location will not likely be feasible
during the first five years of the hub’s
inception18, unless the space and all
overhead costs (e.g. hydro) are donated.
Instead, it is recommended that the MRFH
compensate a farmer member with existing
storage space to provide a centralized
product aggregation site. This
compensation is established within the
budget at 12% of the broker fees.
Therefore, the focus of the operations plan
is on the majority of orders being
distributed through customer pick-up. Pick-
up sites could include the main order
aggregation site (likely a member’s farm);
other members’ farms, the HFM; the CEED
Centre; or a local or regional retailer. Until
such a time that a dedicated pick-up truck
is purchased (expected in Year 5), the
MRFH will need to borrow a truck on a
weekly basis to ensure that the orders are
dropped off at the pick-up locations. As
one or two local retailers are also likely to
form part of the customer base, delivery
will be required for these larger orders. In
Year 5, a dedicated vehicle would replace
the borrowed truck, and the MRFH would
then be able to make frequent smaller
deliveries to residential areas, thereby
increasing the customer base. Delivery
costs could be offset by a small additional
fee-for-service for smaller orders (e.g. $2
to $5 per delivery), in addition to offering
pick-up available at pre-arranged dates,
locations, and times.
18 After 5 years, it may be possible to possible to begin
discussions with financial institutions, funding agencies,
and/or private investors regarding the establishment of a
bricks & mortar facility.
2.7.1 MRFH Site Location Criteria
For either farm-based order aggregation
and/or a future bricks & mortar location,
the potential site must:
Be in a central location for individual
farmers to make order drop-offs.
Be large enough for MRFH staff to
physically arrange the orders.
Include cold storage on-site (or the
ability to purchase a walk-in fridge to
place on-site).
Be suitable (in terms of access,
parking) for customers to pick-up
orders safely.
Additional bricks & mortar location criteria
must also19:
Be able to accommodate a FoodSafe
kitchen for the production of value-
added products (this will become
increasingly viable after the pilot
project is successfully completed).
Have topography that is relatively flat
for ease of building development.
Be located near a large group of
producers who are members of the
MRFH.
Have access to major transportation
routes to accommodate trucks,
customer access, parking.
Consider provincial Agricultural Land
Reserve (ALR) regulation and align with
municipal zoning as much as possible.
It is important to note that the Agricultural
Land Commission’s regulations and
policies20 will apply to the MRFH if it is
situated within the ALR. The following
additional considerations would then need
to be made, and should be revisited after
the pilot project is completed:
Storage, packing, product preparation
or processing, and retail of farm
products is only permitted within the
ALR if at least 50% of the farm (or co-
19 The bricks & mortar criteria should also be re-considered
once the five year pilot project is completed successfully
20 ALR Regulations & ALR Policies
10
operative’s) products are produced on
the farm. The 50% threshold is based on
the quantity (measured by volume or
weight of processed farm products
used) calculated over the full product
line.
The parameters around the
construction, maintenance and
operation of a building for the food hub
would be partly regulated by the City,
and would stipulate building footprint
and setbacks.
Since the food hub would likely be storing,
aggregating, and distributing goods from
multiple farms it would be unlikely that
any one farmer will be able to provide a
minimum of 50% of the products. However,
if the food hub members formed a formal
co-operative then the 50% rule would apply
to the co-operative itself and not to
individual members.
The City of Maple Ridge’s Zoning Bylaw
(1985) will also determine the potential
location of a future bricks & mortar food
hub. “Food hubs” are not currently an
expressly permitted use within the zoning
bylaw21 and would therefore require a text
amendment or re-zoning application if it
were to be located on an Agriculture-zoned
parcel. It is important to note that there
may be a fee associated with this re-zoning
process. Primary processing, warehouses,
and wholesale use are permitted, but only
in certain zones (e.g. Service Industrial
zone M1) and Business Park zone (M3)).
Locating the food hub outside of the ALR or
the Agricultural zones and directing it
towards Industrial or Business Park
(Commercial) zones is likely to create a
simpler business licencing and permitting
process. If the land is outside of the ALR
then only the municipal zoning regulations
will apply. The issue of zoning will be
easier to address after the end of the five
year pilot program, at which point any
21 City of Maple Ridge Zoning Bylaw. Agriculture zones are
A1, A2, A3, A4, and A5.
specific potential food hub sites that have
been identified can be more thoroughly
assessed.
2.7.2 Other Site Location
Considerations
While the Albion Flats had been noted as a
possible location for a food hub during
earlier discussions (e.g. when the
Agricultural Plan was being developed), the
MRFH implementation plan does not
identify any one particular location as an
ideal possible site for a future bricks &
mortar. Based on the criteria identified
during stakeholder engagement and
presented in section 2.7.1, the Albion Flats
may not be an ideal fit for the food hub.
2.8 MRFH Promotion
Promotion will be required in order to
attract and retain customers and suppliers
to the MRFH. Throughout all of the
branding, marketing, and advertising
efforts, statements representing the
purpose and values of the MRFH will need
to be consistent. This clarity regarding
food hub brand statements will help to
strengthen messaging towards the target
customer base and ensure that it is
maintained in all hub communications.
2.8.1 Name and Logo
While the True North Fraser brand is strong
and well-recognized locally, it may not be
the most appropriate use for the food hub
itself. Rather, True North Fraser can be
viewed as a larger initiative under which
MRFH is one component. It may therefore
provide more clarity for customers if the
food hub is presented as a stand-alone
entity that could be part of a larger True
North Fraser campaign or suite of
initiatives.
A simple approach to developing a brand is
recommended. A name, logo and tagline
will need to be developed for the MRFH,
but this need not be complicated (such as
Maple Ridge Food Hub or the Maple Ridge
11
Farm Collective). The food hub’s name and
logo should be in place by the end of Year
1 and should clearly express what the
benefits will be for the distinct target
audience segments (community, potential
consumers, stakeholders/members). Along
with a name and logo, brand positioning
and value proposition statements must be
developed, and may naturally begin to
emerge over the first two years.
2.8.2 MRFH Website
Creation of a website specifically for the
MRFH will be required during Year 1. The
website will be the main touchpoint with
the public and will need to be directly
linked to any online ordering platform. A
main feature of the website should be
profiles of farm members, staff, and
funders. Links to social media accounts,
news stories of the food hub, and contact
information should also be displayed.
2.8.3 Social Media
The MRFH should have several social media
accounts, including Facebook, Twitter, and
Instagram. MRFH staff will maintain these
sites with regular updates regarding farm
members, product availability, ordering
deadlines, and special events. These
accounts must be updated at least twice a
week in order for followers to maintain
interest. Other features, such as the
website and email listserv can also link to
the MRFH’s social media accounts.
2.8.4 Public Relations, News Releases,
and Print Media
In addition to a social media campaign, in-
person public relationship building will be
key. This may involve attending special
events to represent the food hub (harvest
fairs, farmers markets, community events).
News releases (which can be written in the
form of articles and stories) should be
regularly submitted to local media. Once
the food hub has a truck that it is using for
deliveries the logo should be placed
directly on the truck. This can be done at a
low cost using magnetic signage.
3. Financial Considerations
The following financial projections are
based on a number of considerations,
assumptions, and recommendations.
Achieving a positive cash flow is a critical
goal that will be met, in part, with the
hiring of an adept and capable food hub
manager. The manager will help to drive
sales and assist suppliers in setting pricing
that meets the needs of both the farmers
and the MRFH. The three key issues that
the MRFH manager will need to address at
the start of implementation are start-up
funding, product pricing, and
communicating the hub’s advantages over
other sales avenues. These are discussed
here prior to the presentation of the
financial projections in Section 4.
3.1 Start-up Funding
It is expected that the hub will require an
infusion of funding of about $50,000 during
Year 1 and an additional $15,000 in Year 2
in order to become fully operational and
financially solvent by Year 3.
Public or private funding (or a combination
of both) could be used to initiate the food
hub and help move it forward, particularly
as it graduates from Year 1 to Year 2.
Without this additional funding the food
hub could still operate, however the main
risk is that it would not be able to pay the
MRFH manager’s full wages. This
management role is critical in getting the
initiative off the ground and getting sales
to a level that allows the hub to reach a
breakeven point.
The $50,000 could come from a mix of in-
kind support, loans, and grants, such as:
In-kind support ($5,000): this type of
support could be provided by hosting a
webpage, providing advertising,
meeting room space, and other
12
overhead and administrative needs.
This support could be provided by the
City of Maple Ridge and/or partners
such as the HFMS or the CEED Centre.
Bank or Credit Union loan ($20,000 to
$30,000): this would be achievable for
a portion of the required start-up cost,
with an expected interest rate of
approximately 10%. Major banks and
credit unions such as BMO Financial,
Vancity, CIBC, RBC, New Westminster
Savings, and TD have small business
start-up loans.
Investment Agriculture Foundation
(IAF) grant ($5,000 to $10,000): IAF is
an industry-led, not-for-profit
organization representing the
agriculture, food processing, farm
supply and post farm gate sectors
across BC. IAF invests in projects that
enhance the competitiveness,
profitability and sustainability of BC
agriculture and agri-food. The multi-
million dollar Buy Local Program offers
funding to enhance local marketing
efforts to increase consumer demand
and sales of BC agrifoods. Funding is
50% cost-shared.
Other Grants ($10,000 - $20,000):
grants can be attractive because there
is no need to pay back the funding,
however the reporting and other
overhead can be somewhat onerous.
Several grant opportunities may exist
for the food hub, including BC Gaming
Grant, Real Estate Foundation BC, or a
grant from a credit union (e.g. Vancity,
Westminster Savings).
3.2 Product Pricing
While the marketplace effectively
establishes final pricing, the right
brokerage fee (see definition in the call
out box on the following page) set by the
MRFH will ensure that producers feel
adequately compensated, customers are
willing to pay, and the food hub remains
profitable (or break-even). The financial
plan produced for the MRFH has been
developed using a 25% brokerage fee22.
Farmers will set their own product pricing
to include the 25% that will be allocated to
the hub as a brokerage fee at the time of
sale. The hub will therefore ultimately be
a price “taker”, not a price maker.
Transparency and direction from the MRFH
manager, as well as communication with
suppliers on an ongoing basis, will ensure
that farmer members understand where
and how the brokerage fees are being
used. The manager will also need to track
and evaluate customer response to pricing.
The price that the farmer decides to set
will depend on a number of factors, and
may vary week-to-week. Factors include:
Whether the product is certified
organic;
The amount of choice of similar
products being offered by the hub
(supply);
The quality of the product being
offered (demand reflected through
reputation); and
The availability (products that are
only in-season for a short period of
time may fetch a better price).
The MRFH manager will need to track and
assesses hub sales and monitor competitive
22 This fee was determined based on market research and
discussions with existing food hub operators. A food hub on
Vancouver Island with a brokerage fee of 20% indicated
that it if it could change one thing it would choose a higher
brokerage fee in order to be able to be financially self-
sustaining. It is currently considering raising its fee. On the
other hand, producers indicated that brokerage fees in the
range of 40-50% was too high to be an attractive avenue for
sales.
13
pricing through other retail channels (e.g.
verifying pricing at local retailers, at farm
gates, at the farmers market) to ensure
that the prices being offered by hub
members is competitive.
The 25% brokerage fee will, in turn,
provide several services for the farm
members. These services will include:
Access to a different demographic
of customers (e.g. those that may
not attend farmers markets or visit
the farm gate).
Order coordination, aggregation,
and delivery.
Promotion and public awareness of
the farm and farm’s products.
Time savings that can be redirected
into additional production or other
on-farm or off-farm activities.
3.3 MRFH’s Advantages
Product suppliers will be able to choose to
offer as much product to be sold through
the hub as they wish. They may choose to
continue to sell a portion of their products
through farmers markets, CSAs, farm gate
sales, and/or other avenues. Therefore,
the MRFH manager must be able to adeptly
convey the benefits of selling through the
hub. The ability for farm members to save
time by accessing an additional sales
channel for some of their products is
perhaps one of the biggest advantages that
the hub can offer. Ideally, farm operators
will join the hub and experience an
increase in efficiency and a decrease in
personal time/costs allowing them to
increase capacity to a point where their
true success and profitability potential
aligns. Time previously devoted to making
sales pitches, posting on social media,
making deliveries, creating signs, and
attending markets can now be re-directed
to the farm work itself. The farmer can
now re-invest those hours into the planning
and labour needed for the farm to grow.
This, in turn, will provide greater crop
yield returns and result in more product
being made available to sell through the
MRFH in future years.
To be clear, the hub model may not work
for all producers. For very small-scale farm
operations there may be a capacity issue
whereby economies of scale dictate that
the costs of using a hub service outweighs
the income the producer may obtain
through independent marketing and sales,
which is a fair consideration. The food hub
manager’s role will be, in part, to identify
which farms would be a suitable fit as a
supplier to the MRFH and to communicate
to potential farmer members what the
benefits and level of services are, in
exchange for the brokerage fees.
4. Financial Projections
The MRFH’s operational budget will be
based mainly on brokerage fees from
product sales revenue, with an additional
infusion of $50,000 of start-up capital in
Year 1 and an additional $15,000 in Year 2.
The following discussion provides the
rationale for the brokerage fee rate of 25%
and the anticipated sales and associated
brokerage fees over the pilot project’s five
year period.
4.1 Brokerage Fee Rationale
The brokerage fees represent 25% of total
product sales. Throughout the projections
Brokerage Fee:
The brokerage fee is sometimes referred
to as a “margin” or a “markup” that is
paid to the hub at the time of sale. The
fee is used to help pay for the services
offered by the hub. For example, if
spinach is being sold by the hub for
$4.00 a bunch, and the brokerage fee is
25%, then $3.00 is returned to the
farmer and $1.00 is returned to the hub.
The total price (in this example, $4.00)
is set and controlled by the farmer.
14
for income, expense and cash flow, the
following ratio is used:
This ratio between brokerage fees is
maintained, for example 20% of brokerage
fees is equivalent 5% of product sales, and
so on.
As discussed previously in Section 3.2, a
brokerage fee rate level of 25% of total
product sales has been selected based on
market research and discussions with
existing food hubs. The brokerage fee level
of 25% is expected to both reflect the level
of services offered by the hub while
presenting an attractive potential sales
route for the producer.
This brokerage fee level was further tested
using Industry Canada’s benchmarks23 for
small-scale fruit and vegetable growers
(see Figure 1, p16). The data represented
in Figure 1 incorporates a 25% brokerage
fee expense into typical product sales and
returns on sales for small fruit and
vegetable farms at various total product
sales. The benchmarking test indicates the
following:
If fixed on-farm costs are constant (e.g.
no reinvestments into infrastructure
need to be made) as product sales rise
from $10,000 to $30,000, and a 25%
brokerage fee is applied, it can be
projected that the farm’s direct return
on sales will still rise from 5% to 23% for
vegetable growers and from -11% to
25% for fruit growers.
23 Government of Canada. 2015. Industry Canada: Financial
Performance Data by Industry.
Therefore, the MRFH becomes an
“affordable” (i.e. the return on sales is
positive) sales channel for a small-scale
vegetable producer with a brokerage fee of
25% even if they are only generating
$10,000 worth of annual sales (at which
point the rate of return on sales would still
be 5%). The rate of return for a small scale
fruit farm would be negative at $10,000
worth of annual sales, therefore the MRFH
only becomes a viable option for a fruit
farm once that farm is generating
approximately $20,000 worth of annual
sales.
For context, the MRFH Situational Analysis
indicated that the average annual farm
sales (gross farm receipts) per hectare in
Maple Ridge was $27,579 (or $11,000 per
acre) in 201524. The food hub will benefit
these small and medium-scale farmers by
reducing the time they need to spend on
promotion, marketing, and sales. With that
additional time, it is hoped that farmers
will be able to focus on production and see
higher sales per acre in return.
4.1.1 Anticipated Suppliers and Sales
It is expected that in the first year of
operation, the MRFH supplier (farm)
membership will be low, therefore a
conservative estimate of 5 members has
been used in the income and expense
projection modeling for Year 1, and
gradually increases to 35 members by Year
5 (Table 2). Using the benchmarking in
Figure 1, an expected initial product value
per farm of $15,000 is used, growing to an
eventual value of $30,000 by Year 5. In
other words, by the end of the pilot
project it is expected that the average
food hub supplier will be able to sell
$30,000 worth of farm products annually
24 Census of Agriculture, 2016. Land in crops excluding
Christmas trees.
100% of brokerage fees is
equivalent to 25% of product sales
15
through the MRFH. It is also expected that
some farm members would still maintain a
portion of sales avenues through the HFM,
farm gate stands, and small retailers.
Agri-business guidebooks published by the
BC Ministry of Agriculture in 1995 suggested
that 1.25 ha (3 acres) of vegetable
production could generate over $45,000 in
direct market sales, or $36,000/ha (gross
revenue) in 1995 dollars.
This is equivalent to $68,500 direct market
sales or $54,800/ha, in 2018 dollars.
It is therefore expected that a well-
managed small-scale (less than 5 acres)
mixed vegetable farm could feasibly
achieve $30,000 of product sales per year.
Notes:
BC Ministry of Agriculture, Fisheries, and
Food. Direct Farm Market Guide, 1995.
16
Figure 1. Industry Canada benchmarks for small-scale fruit and vegetable farm operations when a 25% brokerage
fee is applied.
Table 2. Anticipated suppliers, sales, and brokerage fees for the Maple Ridge Food Hub during Years 1 - 5.
Line # Parameter Year 1 Year 2 Year 3 Year 4 Year 5
1 Number of farms 5 15 20 30 35
2 Product sales per farm $15,000 $20,000 $25,000 $30,000 $30,000
3 Total value of product
(Line #1 x Line #2)
$75,000 $300,000 $500,000 $900,000 $1,050,000
4 Brokerage fees (%) 25% 25% 25% 25% 25%
5 Brokerage fees ($)
(Line #3 x Line #4)
$18,750 $75,000 $125,000 $225,000 $262,500
-11%
16%
21%
25%
5%
19%
21%
23%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
$10,000 $20,000 $25,000 $30,000Di
r
e
c
t
R
e
t
u
r
n
o
n
S
a
l
e
s
(
%
)
Total Product Sales ($)
Industry Canada Benchmarks for Fruit and Vegetable
Farm Operations when a 25% Brokerage Fee is Applied
Fruit Growers
Vegetable Growers
Legend
■
■
17
4.2 Income and Expense
Projections
The following discussion presents the
income and expense projections and the
cash flow projections along with an
explanation of assumptions used
throughout all calculations.
4.2.1 Variable Expenses
Variable expenses are estimated to be 35%
of brokerage fees (see Table 4, Lines #2-
#5).
Throughout the pilot project’s five years,
this 35% will consist of:
The MRFH’s rent, to provide
compensation to a farmer in exchange
for the use of their farm site (12% of
brokerage fees);
The costs associated with deliveries to
retail customers and order drop-off
locations (8% of brokerage fees). These
two expenses therefore represent a
combined 20% of the MRFH’s brokerage
fees.
Merchant fees associated with
processing credit card and debit card
payments (10% of brokerage fees).
An additional standard contingency rate
of 5% of total brokerage fees is
included as a financial safety net.
As previously discussed, a bricks & mortar
building would not be considered for the
MRFH during the five year pilot period.
Rather, the MRFH would coordinate with a
local farm to act as the drop-
off/aggregation point for all produce in
exchange for compensation. This
compensation would vary based on total
sales, and therefore on total brokerage
fees collected.
4.2.2 Fixed Expenses
Wages are the main component of the
$50,000 annual fixed expenses in the first 3
years (Table 3). Other fixed expenses are
explained in the following page and are
listed in Table 4 (Lines #7 – #18)25.
Table 3. Staffing wages over Years 1 - 5.
Year Staffing Wages &
Benefits
Total
Wages &
Benefits
1 Manager:
0.75 FTE
Manager:
$32,500
$32,500
2 Manager:
0.75 FTE
Manager:
$32,500
$32,500
3 Manager:
0.75 FTE
Manager:
$37,500
$37,500
4 Manager:
1.00 FTE
Assistant:
0.75 FTE
Manager:
$37,500
Assistant:
$25,000
$62,500
5 Manager:
1.00 FTE
Assistant:
1.00 FTE
Promoter:
0.50 FTE
Manager:
$45,000
Assistant:
$33,000
Promoter:
$22,000
$100,000
25 Note that corporate income taxes are not considered as
the assumption is that the hub will initially be a non-profit
organization.
18
As previously described, a MRFH manager
will need to be hired right away to develop
the supplier base, create the email listserv
(and later, the online ordering platforms),
and to start promotion. This wage
represents a relatively high fixed expense
at start-up and will generate a loss in the
first two years of the pilot project (or until
brokerage fees reach $125,000).
While the positions are referred to as
“staff”, the tasks may be able to be
completed by consultants or contractors.
This can be negotiated at the time of
hiring, but should not affect the total
amount budgeted for wages without
making similar adjustments throughout the
projected income and expenses.
Within the total wages, the distribution
amongst staff is somewhat flexible. For
instance, if the manager is performing well
then that position could be offered a raise
and a 0.25 FTE or 0.50 FTE assistant could
be hired with the remaining wages in Years
4 and 5. If the manager or assistant is
capable and efficient at promotion, then
the $22,000 previously set aside for the
promoter in Year 5 could be re-distributed
to other staffing needs.
If the MRFH total product sales are
underperforming (and therefore the
brokerage fees are lower than targeted),
then these staff wages and positions will
need to be reviewed.
Other fixed expenses built into the income
and expense projection assumptions
include the following:
Line #8: Depreciation of assets: Based
at 20% declining balance.
Line #9: Repairs and maintenance:
$500 per year. As there are no owned
facilities, the budget allows for the
repair and maintenance of some minor
equipment only.
Line #10: Utilities and telephone: $50
per month ($600 per year) for
cellphone communication.
Line #11: Rent: $200 per month to
compensate for office space for staff
who will be working from home offices.
Line #12: Bank charges: Assumes $20
per month ($240 per year).
Line #13: Interest on loans: Based on an
interest rate of 10% (see Loan
Schedule, Table 6).
Line #14: Professional and business
fees: Memberships in associations,
accounting fees, bookkeeping fees,
legal fees, and permits for the MRFH
and staff.
Line #15: Advertising and Promotion:
Minimal, as advertising will likely be
done through social media, some print
and listservs like MailChimp
Line #16: Travel (Mileage): Occasional
mileage paid to MRFH staff to attend
events and meetings.
Line #17: E-commerce website: This
line item includes $3,000 to build an
online sales platform and $2,000 for a
website during Year 1 and ongoing
software and website fees thereafter.
Line #18: Insurance: Assumes $4,000
per year to cover delivery truck
insurance and some liability insurance
Table 4 (following page) provides a
breakdown of all anticipated income and
expenses for the MRFH pilot project’s five
year period. The model indicates that the
hub would be able to turn a profit before
the end of Year 3 assuming that the
supplier numbers and gross sales match (or
exceed) the projections.
19
Table 4. Anticipated Income and Expenses Years 1 - 5.
# Statement of income and
expense
Year 1 Year 2 Year 3 Year 4 Year 5
1 Income (brokerage fees) $18,750 $75,000 $125,000 $225,000 $262,500
Variable Expenses
2 MRFH location compensation at
12% of brokerage fees
$2,250 $9,000 $15,000 $27,000 $31,500
3 Delivery at 8% of brokerage fees $1,500 $6,000 $10,000 $18,000 $21,000
4 Merchant fees (credit card and
debit card processing fees) (10%
of brokerage fees)
$1,875 $7,500 $12,500 $22,500 $26,250
5 Contingency (5% of brokerage
fees)
$938 $3,750 $6,250 $11,250 $13,125
6 Total variable costs (35% of
brokerage fees)
$6,563 $26,250 $43,750 $78,750 $91,875
Fixed Expenses
7 Wages and benefits $32,500 $32,500 $37,500 $62,500 $100,000
8 Depreciation $500 $1,900 $1,520 $1,216 $4,973
9 Repairs and maintenance $500 $500 $500 $500 $500
10 Utilities and
telephone/telecommunication
$600 $600 $600 $600 $600
11 Rent $2,400 $2,400 $2,400 $2,400 $2,400
12 Bank charges $120 $120 $120 $120 $120
13 Interest on loans $3,000 $4,009 $852 $0 $0
14 Professional and business fees $500 $750 $1,000 $1,000 $3,500
15 Advertising and Promotion $680 $250 $250 $250 $250
16 Travel $1,200 $600 $600 $600 $600
17 E-commerce website $5,000 $2,280 $2,280 $2,280 $2,280
18 Insurance $4,000 $4,000 $4,000 $4,000 $4,000
19 Total fixed expenses $51,000 $49,909 $51,622 $75,466 $119,223
20 Net operating income $-38,813 $-1,159 $29,628 $70,784 $51,402
21 Other income (income from
fundraising or interest-free grants)
$20,000
Net income $-18,813 $-1,159 $29,628 $70,784 $51,402
20
4.3 Cash Flow Projection
As previously discussed, a deficit of
approximately $40,000 is projected over
the first two years. Based on the model a
$20,000 operating grant together with a
$30,000 loan or line of credit would cover
the deficit and also make debt repayment
feasible.
In Year 2, an additional $15,000 would be
required for equipment (Table 5). Loan
repayments could begin as early as the
third year or when sales exceed the
$75,000 milestone (see Table 6).
The capital budget for cash flow
projections includes funds for the following
equipment:
Line #4: $2,500 in Year 1 and Year 2
for office equipment;
Line# 5: $5,000 in Year 2 for a walk-
in refrigerator;
Line #5: $5,000 in Year 5 for
additional warehouse equipment;
and
Line #7: $15,000 in Year 5 for an
additional delivery truck.
Table 5. Anticipated cash flow for the Maple Ridge Food Hub pilot project from Year 1 to Year 5.
Line
# Cash flow Year 1 Year 2 Year 3 Year 4 Year 5
1 Net income $-18,813 $-1,159 $29,628 $70,784 $51,402
2 Add back depreciation $500 $1,900 $1,520 $1,216 $4,973
3 Loan principal repayments $-4,914 $-6,566 $-26,396 $-7,125 $0
4 Office Equipment $-2,500 $-2,500 $0 $0 $0
5 Warehouse Equipment $0 $-5,000 $0 $0 $-5,000
6 Leasehold improvements $0 $0 $0 $0 $0
7 Vehicles $0 $0 $0 $0 $-15,000
8 Subtotal (Lines 1 to 7) $-25,726 $-13,325 $4,752 $64,875 $36,375
9 Proceeds on loans $30,000 $15,000 $0 $0 $0
10 Net change in cash $4,274 $1,675 $4,752 $64,875 $36,375
11 Opening cash $0 $4,274 $5,949 $10,701 $75,577
12 Closing cash $4,274 $5,949 $10,701 $75,577 $111,952
21
Loans and debt repayments are based on an operating line of credit with an interest rate of
10.0%. The projections indicate that the balance could be paid out by Year 4 (Table 6).
Table 6. Operating loan and debt repayments for the Maple Ridge Food Hub pilot project from Year 1 to Year 5.
Operating Debt Year 1 Year 2 Year 3 Year 4
Opening balance $0 $25,086 $33,520 $7,125
Proceeds/Lump sum payments $30,000 $15,000 $-25,000 $-7,125
Interest at 10.0% $3,000 $4,009 $852 $0
Loan payments $-7,914 $-10,575 $-2,248 $0
Closing balance $25,086 $33,520 $7,125 $0
A summary of total liabilities and equity are provided in Table 7.
Table 7. Anticipated liabilities and equity for the Maple Ridge Food Hub pilot project from Year 1 to Year 5.
Liability and Equity Year 1 Year 2 Year 3 Year 4 Year 5
Working capital $4,274 $5,949 $10,701 $75,577 $111,952
Net equipment and vehicles $2,000 $7,600 $6,080 $4,864 $19,891
Total Assets $6,274 $13,549 $16,781 $80,441 $131,843
Operating Loan $25,086 $33,520 $7,125 $0 $0
Retained Earnings (Loss) $-18,813 $-19,971 $9,657 $80,441 $131,843
Total Liabilities and Equity $6,274 $13,549 $16,781 $80,441 $131,843
22
5. Ratios
The MRFH is projected to be solvent before
the end of Year 3. The projected debt to
equity ratio at the end of Year 3 is 74%
(Table 8).
Assumptions regarding ratios include:
Line #1: Debt to equity ratio: The lower
the positive ratio, the more solvent the
business. At the end of Year 3 the hub
is solvent.
Line #2: Interest coverage ratio: The
ratio of net income before interest to
interest expense. This ratio is an
indication of debt risk. This ratio isn’t
relevant in the first two years because
there is no interest coverage. The
accumulated interest coverage at the
end of Year 3 (Years 1 to 3 summed) is
projected to be 28. That means
earnings are 28 times higher than the
projected interest expense over the
first three years.
Line #3: The debt ratio is calculated as
total debt to total equity. This is also a
solvency ratio indicating ability to
repay long-term debt. This ratio also
indicates the extent to which the
business is financed. The lower the
ratio the more solvent the business.
The projected debt ratio shows a low
debt ratio by the end of Year 3.
Line #4: Revenue to equity is an
indication of productivity and indicates
how much revenue is earned for the
amount invested. Equity is negative in
the first two years so the ratio is not
valid.
Line #5: Net profit to equity is also an
indication of productivity and is
calculated as net income/equity. In the
first two years the ratio is not relevant
because equity is negative.
Table 8. Anticipated financial ratios for the Maple Ridge Food Hub pilot project from Year 1 to Year 5.
Line # Financial ratios Year 1 Year 2 Year 3 Year 4 Year 5
1 Debt to equity ratio 133% 168% 74% 0% 0%
2 Interest coverage ratio -503% 72% 3148% N/A N/A
3 Debt ratio 400% 247% 42% N/A N/A
4 Revenue to equity ratio -100% -376% 1294% 280% 199%
5 Net profit to equity (%) N/A N/A 307% 88% 39%
23
6. Risk and Sensitivity
Analysis
The following three scenarios were tested
against the financial model in order to
determine what impacts to the income &
expense projections and cash flow
projections may occur if:
Scenario 1: Tests what occurs when
the full $50,000 of startup capital is
not raised.
Scenario 2: Tests what occurs when
product sales (and therefore
brokerage fees) do not meet
targets.
Scenario 3: Tests changes in
projected variable and fixed
expense levels in Year 1 and Year 3.
6.1 Risk Scenario 1: Lack of Start-up
Capital
The investment in a competent MRFH
manager at the outset is an important
factor to the success of this financial
model. This scenario assumes that the
efforts to raise $50,000 of startup capital is
unsuccessful, and only $5,000 is obtained,
and therefore the funds for the manager’s
salary are not available. Without funding to
hire a manager, the MRFH would have to
rely on volunteers to promote the hub to
suppliers (farmers) and customers and to
develop the sales and ordering process.
The volunteers would still need to generate
the same amount in targeted brokerage
fees in Year 1 to cover other expenses, and
the hub would still require an injection of
$5,000 in cash (Table 9).
Table 9. Risk analysis scenario with $50,000 vs. $5,000 of startup capital in Year 1.
Projected Income and Expense
Projections
Year 1 –
$20,000 in grants and
$30,000 in loans
Year 1 –
$5,000 in grants
Brokerage fees $18,750 $18,750
Delivery, shipping and warehouse
expenses
$3,750 $3,750
Wages & benefits, rent, phone $36,100 $0
Other expenses $17,713 $17,713
Total expenses $57,563 $21,463
Income from fundraising $20,000 $5,000
Net income $-18,813 $2,288
Projected Cash Flow Projections Year 1 –
$20,000 in grants and
$30,000 in loans
Year 1 –
$5,000 in grants
Net income $-18,813 $2,288
Add back depreciation $500 $500
Loan principal repayments $-4,914 $0
Capital equipment, vehicles and
leasehold improvements
$-2,500 $-2,500
Proceeds from loans $30,000 $0
Net cash inflow $4,274 $288
Opening cash $0 $0
Closing cash $4,274 $288
24
6.2 Risk Scenario 2: Product Sales
Level Adjustments
The second scenario tests the impacts that
adjustments made to the targeted product
sales (and associated brokerage fees) have
on the net income in Year 1 and Year 5. If
product sales (and therefore brokerage
fees) are 50% lower than targeted in Year
1, net income would be 16% lower than
projected. In Year 5, a 50% variance in
brokerage fees would impact the bottom
line by 166% (Table 10). Once sales exceed
projected fixed expenses, sales variances
will magnify the changes reflected in the
net income. This reinforces the notion that
the efforts of the MRFH must be focused on
driving sales (and therefore brokerage
fees) over the pilot project period of five
years.
Table 10. Change in brokerage fees and associated net income during Year 1 and Year 5.
Change in brokerage fees - Year 1 Change in brokerage fees - Year 5
%
Change
in Fees
Brokerage
Fees
Net
Income
$
DSCR26
%
%
Change
Net
Income
%
Change
in Fees
Brokerage
Fees
Net
Income
$
DSCR % %
Change
Net
Income
-50 9,375 -44,906 -6,094 16% -50 131,250 -33,910 -85,313 -166%
-40 11,250 -43,688 -4,875 13% -40 157,500 -16,848 -68,250 -133%
-30 13,125 -42,469 -3,656 9% -30 183,750 215 -51,188 -100%
-20 15,000 -41,250 -2,438 6% -20 210,000 17,277 -34,125 -66%
0 18,750 -38,813 0 0% 0 262,500 51,402 0 0%
20 22,500 -36,375 2,438 -6% 20 315,000 85,527 34,125 66%
30 24,375 -35,156 3,656 -9% 30 341,250 102,590 51,188 100%
40 26,250 -33,938 4,875 -13% 40 367,500 119,652 68,250 133%
50 28,125 -32,719 6,094 -16% 50 393,750 136,715 85,313 166%
26 DSCR is the Debt Service Coverage Ratio, which refers to the amount of cash flow available to pay debt obligations.
25
6.3 Sensitivity Analysis for Variable
and Fixed Expenses in Year 1 and
Year 3
In Year 1, a change in variable expenses
(which are directly related to brokerage
fees) will be less impactful (or risky) than
potential changes in fixed expenses, which
do not correspond directly to the collected
brokerage fees (Table 11 and Table 12).
Table 11. Sensitivity analysis for Year 1 – Variable Expenses.
Change in variable expenses
% Change Variable Expenses
$
Net Income $ DSCR % % Change Net
Income
-20 5,250 -37,500 1,313 -3%
-15 5,578 -37,828 984 -3%
-10 5,906 -38,156 656 -2%
-5 6,234 -38,484 328 -1%
0 6,563 -38,813 0 0%
5 6,891 -39,141 -328 1%
10 7,219 -39,469 -656 2%
15 7,547 -39,797 -984 3%
20 7,875 -40,125 -1,313 3%
Table 12. Sensitivity Analysis for Year 1 – Fixed Expenses
Change in Fixed Expenses
% Change Fixed Expenses $ Net Income $ DSCR % % Change Net
Income
-50 25,500 -13,313 25,500 -66%
-40 30,600 -18,413 20,400 -53%
-30 35,700 -23,513 15,300 -39%
-20 40,800 -28,613 10,200 -26%
0 51,000 -38,813 0 0%
20 61,200 -49,013 -10,200 26%
30 66,300 -54,113 -15,300 39%
40 71,400 -59,213 -20,400 53%
50 76,500 -64,313 -25,500 66%
26
By Year 3, errors in projecting variable expenses are more critical. A 20% variance in fixed
expenses will impact net income by 35% and a variance of 20% in variable expenses will
impact net income by 84% (Table 13).
Table 13. Sensitivity analysis for Year 3.
Change in variable expenses
%
Change
Revenue
$
Variable
Expenses $
Fixed $ Net
Income $
DSCR % % Change Net
Income
-20 125,000 18,750 51,622 54,628 25,000 84%
-15 125,000 25,000 51,622 48,378 18,750 63%
-10 125,000 31,250 51,622 42,128 12,500 42%
-5 125,000 37,500 51,622 35,878 6,250 21%
0 125,000 43,750 51,622 29,628 0 0%
5 125,000 50,000 51,622 23,378 -6,250 -21%
10 125,000 56,250 51,622 17,128 -12,500 -42%
15 125,000 62,500 51,622 10,878 -18,750 -63%
20 125,000 68,750 51,622 4,628 -25,000 -84%
Change in fixed expenses
%
Change
Revenue
$
Variable
Expenses $
Fixed $ Net
Income $
DSCR % % Change Net
Income
-20 125,000 43,750 41,298 39,952 10,324 35%
-15 125,000 43,750 43,879 37,371 7,743 26%
-10 125,000 43,750 46,460 34,790 5,162 17%
-5 125,000 43,750 49,041 32,209 2,581 9%
0 125,000 43,750 51,622 29,628 0 0%
5 125,000 43,750 54,203 27,047 -2,581 -9%
10 125,000 43,750 56,784 24,466 -5,162 -17%
15 125,000 43,750 59,365 21,885 -7,743 -26%
20 125,000 43,750 61,946 19,304 -10,324 -35%
27
7. Balance Sheet Summary
The balance sheet presented in Table 14 summarizes many of the key points of the financial
projections.
Table 14. Summary balance sheet for the MRFH Year 1 through Year 5.
Balance sheet Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Working capital $4,274 $5,949 $10,701 $75,577 $111,952
Office Equipment $2,500 $5,000 $5,000 $5,000 $5,000
Warehouse Equipment $0 $5,000 $5,000 $5,000 $10,000
Leasehold Improvements $0 $0 $0 $0 $0
Vehicles $0 $0 $0 $0 $15,000
Accumulated depreciation $-500 $-2,400 $-3,920 $-5,136 $-10,109
Total fixed assets $2,000 $7,600 $6,080 $4,864 $19,891
Total assets $6,274 $13,549 $16,781 $80,441 $131,843
Operating loan $25,086 $33,520 $7,125 $0 $0
Total Equity
Retained earnings
(accumulated deficit) -
opening
$0 $-18,813 $-19,971 $9,657 $80,441
Current year earnings (loss) $-18,813 $-1,159 $29,628 $70,784 $51,402
Cumulative earnings (loss) $-18,813 $-19,971 $9,657 $80,441 $131,843
Total liabilities and equity $6,274 $13,549 $16,781 $80,441 $131,843
28
8. Breakeven Analysis
The breakeven point in the MRFH pilot
project will occur when net income is
positive (Table 15, Line #7). Based on the
income & expense projections, this can
occur by Year 3 (or more specifically
before the end of Year 3), when brokerage
fees reach approximately $80,000.
Since 35% of the brokerage fees will be
dedicated to variable expenses, the
remaining 65% will be available to pay for
fixed expenses (Table 15, Lines #3 and #4).
With fixed expenses projected to be about
$50,000 per annum, calculations indicate
that the MRFH should break even once
brokerage fees reach $80,000 (this is
equivalent to product sales of roughly
$320,000) (Table 15, Line #8).
Table 15. Breakeven analysis for Year 1 through Year 5.
Line
#
Breakeven Analysis Year 1 Year 2 Year 3 Year 4 Year 5
1 Brokerage fees $18,750 $75,000 $125,000 $225,000 $262,500
2 Variable expenses $6,563 $26,250 $43,750 $78,750 $91,875
3 Contribution margin $12,188 $48,750 $81,250 $146,250 $170,625
4 Contribution margin % 65% 65% 65% 65% 65%
5 Fixed expenses $51,000 $49,909 $51,622 $75,466 $119,223
6 Fixed expenses (Line #5)
as a % of brokerage fees
(Line #1)
272% 67% 41% 34% 45%
7 Net operating income $-38,813 $-1,159 $29,628 $70,784 $51,402
8 Breakeven brokerage
fees
$78,462 $76,782 $79,418 $116,101 $183,420
29
9. Conclusions
The MRFH has the potential to be a
centralized service for small and medium-
scale producers to be able to aggregate
and coordinate the sale of their products in
order to better meet local market
demands.
This MRFH Implementation Plan provides a
set of recommendations for operational
and financial management. The financial
projections are based on a robust and
conservative analysis.
Key recommendations include:
Establish the hub as a non-profit co-
operative and move towards a for-
profit co-operative governance
model at the end of the five year
pilot project.
Raise $50,000 of startup capital in
Year 1 and aim for an additional
infusion of $15,000 in Year 2
through a combination of grants and
loans.
Hire a dynamic and competent food
hub manager immediately, and hire
other staff at later dates if
profitability allows.
Target a minimum of 5 suppliers
(farmer members) during Year 1,
and grow to at least 35 suppliers by
Year 5.
Target approximately 60 weekly
customers by the end of Year 1, and
aim to grow to over 800 by Year 5.
Offer a product mix that includes a
variety of vegetables and berries,
and expand the fresh sheet list as
cold storage and supply allows.
Set up an online ordering platform
and allow suppliers to set their own
prices, which will be monitored by
the hub manager.
Ensure that the hub manager
communicates back to the suppliers
regarding appropriate price points
and general customer feedback.
Communicate the value of the hub
services to potential suppliers,
highlighting the savings of time and
money over the long term.
By following these recommendations, the
financial projections indicate that the hub
can become solvent by Year 3 of the pilot
project.
A bricks & mortar location could be
considered after the five year pilot project
has been successfully completed, but is not
financially feasible during this initial
timeframe.
II
Appendix I
Over two dozen stakeholders and experts helped to inform this report. The following is a list
of the farms, businesses, organizations, and agencies that were consulted with in the
preparation of this document. The communications included a combination of group
meetings, phone calls, one-on-one conversations, and emails. The stakeholders are presented
in alphabetical order.
Amazia Farms
BC Vegetable Marketing Commission
Big Feast/Big Smoke
Blue Moon Organics
BMO Financial Group
CEED Centre
Cow-Op: Cowichan Valley Co-operative Marketplace
Discovery Organics
Duende Farm
Fable Kitchen Restaurant
Formosa Blueberries
Fresh Ideas and Solutions
Golden Ears Cheesecrafters
Haney Farmers Market Society
Hopcott Premium Meats
KitchenPick Culinary Herbs
Merville Co-operative Organics
Ministry of Agriculture (Sector Development Branch)
Ministry of Agriculture (Strengthening Farming Branch)
Red Barn Farm
RoosRoots Farm
Saanich Organics
Sechelt Farm Collective
Sustainable Produce Urban Delivery (SPUD)
Tofino Ucluelet Culinary Guild
Triple Creek Farm
Vancity Community Investment
Vancouver Foundation
Wandering Row Farms
III
Appendix II
Email listserv pros Email listserv cons
More direct communication with
farmers and customers, may help
develop trust
Farmers and Coordinator could
negotiation to set price for products
Coordinator can develop their own
technique of ordering and inventory
processes for the Hub
Coordinator may need to spend large
amounts of time organizing emails
and managing orders (especially
when Hub is just beginning)
May not be as organized and may
lead to more mistakes than other
methods
Online Ordering Pros Online Ordering Cons
Easy for hub coordinator or farmers
to manage
Easy for customers to choose desired
products each week
Potential for easy method of
inventory
Some have mobile apps, flexible
payment options, delivery truck
route mapping
After learning curve of software, it
has the potential to save producers
and buyers time
Marketing tools may be included in
software
Cost of monthly subscription
Initially may have to spend lots of
time learning how software works, if
Hub Coordinator employee changes
frequently, the time spent on
learning software increases
Farmers may also need to learn how
it works and need to update quantity
and type of produce available each
week
Commercial buyers may need to
spend time learning how to use
online ordering website
May not provide everything the Food
Hub needs or wants in the way the
website is organized
In-person Ordering Pros In-person Ordering Cons
More direct communication with,
may develop trust
Time consuming for Coordinator and
potentially the commercial retailers
Expenses of driving to meetings
1
Appendix Table 1: Agricultural Plan – Recommended Action Plan
Goal Recommended Actions Who? Resources
Required
a) Develop a strategy to increase landowner awareness of farmland
leasing options, taxation benefits, and community demand for
local production
AAC
District
Farmers Institute
Minimal
Hire a co-op student
to assist or
consultant to
develop strategy
b) Create a database of farmland available for leasing, including a
database maintenance strategy
AAC
District, Farmers Institute,
Ministry of Agriculture And
Lands
Minimal
Hire a co-op student
to assist
c) Develop access to materials on lease/rental terms and sample
agreements, possibly website delivered
AAC
District, Farmers Institute,
Ministry of Agriculture and
Lands
Minimal
Hire a co-op student
to assist
d) Create educational materials for agricultural property owners
regarding stewardship of agricultural land
Farmers Institute, AAC
Support from Ministry of
Agriculture and Lands, Metro
Vancouver
Minimal
Utilize existing
materials and
modify; production
and distribution
costs
e) Through various workshops and electronic media, initiate
discussion on the role of small lot property owners in enhancing
local agriculture in the District (gaining access to land, pooling of
small lots, rent calculator, lessee responsibilities).
Farmers Institute
AAC
Support from Ministry of
Agriculture and Lands, Metro
Vancouver
Minimal
Invite Ministry of
Agriculture and
Lands staff to assist
Goal 1: Increase Access to
Underutilized Agricultural
Land
f) Identify and promote opportunities for development of urban
agriculture
Farmers Institute, AAC,
Community Kitchens,
District
Minimal
2
Goal Recommended Actions Who? Resources
Required
a) Partner with farmers to create apprenticeship opportunities and
mentorships, and to attract workers to agriculture in the area
Farmers Institute
Commodity Associations,
District, Educational institutions
Moderate
b) Pursue options and opportunities to provide a hands-on training
ground for aspiring farmers
Farmers Institute with support
from Agricultural Land
Commission, District
Moderate
c) Engage high schools and post-secondary institutions in local farmer
training initiatives
Farmers Institute Support from
Agricultural Land Commission,
District,
School District
Minimal
Invite presenters
within the industry
d) Investigate innovative ways aspiring new farmers without land may
be encouraged to access agricultural land currently not in
production
Farmers Institute Support from
Agricultural Land Commission,
District
Minimal
e) Through various workshops and electronic media, initiate
information exchange on small lot agriculture (production
techniques, organic, equipment, pest management)
Farmers Institute
Support from Ministry of
Agriculture and Lands, Metro
Vancouver
Minimal
Invite presenters
from within the
agricultural industry.
Add to Lower
Mainland
Horticultural
curriculum
f) Develop information sharing and exchange networks and coalitions
with like-minded groups in other areas
Farmers Institute Minimal
g) Create a cross-commodity Farmers Institute to coordinate and
implement the knowledge base initiatives identified in this
Agricultural Plan
AAC could take lead with
assistance from other
organizations
Moderate
Goal 2: Improve the Knowledge
Base of Farmers
h) Develop awareness of educational initiatives in the local
community
Farmers Institute Minimal
3
Goal Recommended Actions Who? Resources
Required
a) Develop an inventory of local agricultural land use and agricultural
products produced
Farmers Institute Moderate
b) Create newspaper slot highlighting farming, seasonal recipes,
farmer direct markets
Farmers Institute; community
kitchen
Community newspaper
Farmers Market
Minimal
c) Encourage retailers to advertize and identify locally produced
seasonal products.
Farmers Institute
AAC
Minimal
d) Partner with schools and the School District to communicate
information about farming
AAC
District
Minimal
e) Create more hands-on displays at District Fair Farmers Institute
Ministry of Agriculture and
Lands
Minimal
Partner with
commodity
associations
f) Host a “Taste of Maple Ridge” event annually Farmers Institute
AAC
Minimal
User pay and
donations
g) Engage local chefs to partner in local food promotion Farmers Institute Minimal
User pay and
donated
h) Partner with schools to develop agricultural curriculum, including
coordinating with the Agriculture in the Classroom Foundation and
the School Gardens project
Ministry of Agriculture and
Lands
Ag in the Classroom
BC Agriculture Council
Minimal
Already existing
i) Report on Agricultural Plan completion in the media District Minimal
j) Report regularly in the media on progress and issues relating to
implementing the Agricultural Plan
District Minimal
Goal 3: Improve the Knowledge
Base of the Consumer Public
k) Provide continued support for the Haney Farmers Market District
Farmers Institute
Minimal
Location,
advertising,
promotion
4
Goal Recommended Actions Who? Resources
Required
a) Work with producers to: investigate the potential for marketing
cooperatives, brokerages; machinery cooperatives; investigate
community storage and handling options; learn about marketing
models; branding
Farmers Institute
Support from Ministry of
Agriculture and Lands
Commodity groups
Moderate
Seek IAF funding to
explore options
b) Hold workshops on local marketing and distribution systems Farmers Institute
Support from Metro Vancouver
Minimal
Invite existing local
marketers
c) Enlist the participation of local expertise up-to-date on food
marketing issues
Farmers Institute
Support from AAC, Metro
Vancouver, District
Minimal
Invite presenters
from Fraser Health
Authority,
Food security
groups, Organic
associations, Direct
marketing
associations
d) Develop a strategy to assist the development of distribution and
marketing options in the District
Farmers Institute Assistance
from Ministry of Agriculture and
Lands, Metro Vancouver
Moderate
Seek IAF funding to
explore options
e) Pursue the development of key components of a local distribution
system, including cooling, handling and staging area for fresh
produce (e.g., food terminal)
Farmers Institute Moderate
Seek IAF funding to
explore options
Goal 4: Develop the Local
Distribution and Marketing
System
f) Investigate marketing needs of local farming community. Farmers Institute Assistance
from District, Ministry of
Agriculture and Lands, Metro
Vancouver
Moderate
5
Goal Recommended Actions Who? Resources
Required
a) Continue to implement the OCP policies to protect the agricultural
land base by creating Development Permit Area guidelines to
minimize non-agricultural encroachment on agriculturally
designated lands and farming activities
District Minimal
b) Continue to implement the OCP policies to protect the agricultural
land base by creating guidelines for reviewing applications for non-
farm use, exclusions, fill applications, transportation and utility
applications, subdivisions, and government applications
District Minimal
c) Investigate federal, provincial and Metro Vancouver support for
agriculture irrigation water supply expansion
District Minimal to
moderate
d) Explore opportunities to protect agricultural land from
development through a variety of means such as donations of
land, covenants, easements, agricultural use of municipal land,
consolidation of land, and other mechanisms that support
agriculture.
AAC
District
Minimal to
moderate
e) Support opportunities to provide land for community based
agriculture.
AAC
District
Land Trusts
Minimal to
moderate
f) Explore establishing an agricultural levy on agricultural land
conversion developments to ensure that capital is available to
finance the agricultural strategy in this Plan
District Minimal
g) Explore retention of lots 2 ha (5 acres) and larger in the
Agricultural Land Reserve.
District Minimal
Goal 5: Protect the Agricultural
Land Base
h) Support and encourage applications to include lands in the
Agricultural Land Reserve
AAC
District
Farmers Institute
Minimal
6
Goal Recommended Actions Who? Resources
Required
a) Investigate a watershed-based surface and groundwater irrigation
strategy
District
Metro Vancouver
Min. of Ag and Lands
Moderate
b) Where a need is identified, undertake a water supply inventory for
lands in the Agricultural Land Reserve
District
Min. of Ag and Lands
Metro Vancouver
Moderate
c) Explore establishing a drainage and flood control levy District Minimal
d) Require upland landowners and applicants to control storm water
flows into the flood plain
District Minimal
e) Undertake a feasibility study of drainage and flood control to
rehabilitate affected areas.
District
Support from Ministry of
Agriculture and Lands
Moderate
f) Continue to build relationship with neighbouring municipality District Minimal
g) Require compensation from unavoidable agricultural land
conversion developments to be used to increase net agricultural
capability in the District
District Minimal
Goal 6: Rehabilitate and Improve
the Agricultural Infrastructure
h) Encourage the Agricultural Land Commission to enforce
agreements entered into with proponents that allow applications
to proceed on Agricultural Land Reserve land.
District Minimal
Goal 7: Develop Local Food
System Infrastructure
Capacity
a) Work with producers & local entrepreneurs to explore the
feasibility of an agro-industrial infrastructure strategy that could
include: shared industrial space; branding; small scale processing
facilities; community kitchen; mobile slaughter facilities
Farmers Institute Support from
District, Ministry of Agriculture
and Lands, Metro Vancouver
Moderate
Seek IAF funding to
explore options
LJ
LJ
7
Goal Recommended Actions Who? Resources
Required
a) Work with the AAC to promote and gauge the feasibility of
alternative models of community supported agriculture
AAC
Support from Farmers Institute
and other community
organizations
Moderate
b) Continue to acknowledge and incorporate agriculture into District
economic development strategies and plans.
District Minimal
c) Explore the agro-tourism policies of the Agricultural Land
Commission for their potential to provide new and expanded
opportunities for farmers and their possible inclusion into District
bylaws.
District Minimal
d) Promote local agri-businesses and activities on District website
and publications
District Minimal
e) Encourage linkages among the agricultural sector in Maple Ridge
agriculture to identify cross-demand for products and services
Farmers Institute Minimal
f) Identify a community work force for agriculture AAC
District
Coordinate with Farmers
Institute, Social Services,
community organizations
Minimal
g) Identify community demand and develop linkages for participatory
food production
Farmers Institute
Support from District,
community organizations
Moderate
Goal 8: Increase the Diversity of
Agricultural Activity
h) Provide opportunities for community gardening, allotments; and
urban demonstration plots
District
Support from Farmers Institute,
realtors,
Minimal to
moderate
8
Goal Recommended Actions Who? Resources
Required
a) Implement Development Permit Area guidelines to minimize non-
agricultural encroachment on agriculturally designated lands and
farming activities, including specific provisions for buffer zones,
appropriate landscaping, subdivision design, and building location
District
AAC
Minimal
b) Create a cross commodity Farmers Institute to implement
agricultural initiatives identified in this Plan
AAC, Metro, Ministry of
Agriculture and Lands
Minimal
c) Require notices on title on properties adjacent to agricultural lands
(disclosure statements) to avoid neighbhourhood conflicts
District
Realtors
Minimal
d) Enforce noxious weed bylaw on idle land in the ALR, municipal
rights-of-way and utility rights-of-way.
District Minimal to
moderate
e) Create respect for property rights of farmers respecting trespass,
vandalism, and harassment
Farmers Institute
AAC, District, Metro Vancouver
Minimal
f) Develop a neighbourhood community watch for stray dogs,
animals, and trespass
ACC, Farmers Institute
District
Minimal
g) Develop ongoing communication channels with non-farming
landowners to promote “good neighbour” relations
Farmers Institute Minimal
Goal 9: Reduce Potential for
Stress in the Agricultural-
Residential Interface
h) Educate landowners adjacent to agricultural land of potential for
farming activities on neighbouring properties
District, AAC
Farmers Institute
Minimal
9
Goal Recommended Actions Who? Resources
Required
a) Educate farmers about the benefits of completing and
implementing Environmental Farm Plans
Farmers Institute
AAC
Minimal
b) Lobby to have the Environmental Farm Plan program broadened to
include the equine sector, hobby farmers, and new farmers
Farmers institute
AAC
Minimal
c) Identify options for farmers to manage manures in a sustainable
manner
Ministry of Agriculture and
Lands
Farmers Institute
Minimal
d) Investigate and adopt new technologies to deal with farm wastes,
alternative energy sources, and generation of greenhouse gases
Ministry of Agriculture and
Lands
Ministry of the Environment
Metro Vancouver
Farmers
Moderate to major
Seek Investment
Agriculture
Foundation funding
to explore options
e) Develop interface, linkage, and communications with Department
of Fisheries and Oceans and BC Ministry of Environment to create
workable solutions to agriculture-environment issues in the District
District
AAC
Farmers Institute
Minimal
f) Educate and inform the community about the ecological goods and
services agriculture provides in Maple Ridge
District
AAC
Farmers Institute
Moderate
Goal 10: Minimize Impact of
Agriculture on the
Environment
g) Promote the use of natural methods of controlling pests Farmers Institute
District. Ministry of Agriculture
and Lands. Metro Vancouver
Moderate
a) Keep channels of communication open to advise on issues before
they become problems
AAC Minimal
b) Develop strategy to control populations of released domestic
rabbits
District Moderate
c) Work with farmers experiencing depredation from bears and deer
to channel movement away from farms
Ministry of the Environment
District
Moderate
d) Support research to develop repellents and barriers for problem
wildlife
Farmers Institute Minimal
Seek Investment
Agriculture
Foundation funding
to explore options
Goal 11: Reduce Agriculture–
Wildlife Conflicts
e) Identify opportunities and create incentives for land owners to
participate in land management systems that enhance wildlife
habitat and support agriculture
Farmer's Institute
AAC, District , Ministry of
Agriculture and Lands, Metro
Vancouver
Moderate
10
Goal Recommended Actions Who? Resources
Required
a) Continue to retain the AAC to advise Council on issues affecting
agriculture
District Minimal
b) Develop results-based approach to new regulation, so that targets
and effects are assessed before regulatory policy is implemented.
District, AAC, Ministry of
Agriculture and Lands,
Agricultural Land Commission
Minimal
c) Monitor proposed regulations to ensure they are not unnecessarily
onerous on producers and agro-development
District, AAC Minimal
Goal 12: Create a Regulatory
Environment Friendly to
Agriculture
d) Advocate for Region-wide policies for agricultural areas AAC
District , Farmers Institute
Minimal
a) Continue to implement OCP by concentrating growth to within the
urban area boundary
District Minimal
b) Create a Code of good land stewardship in the Agricultural Land
Reserve (abandoned cars, trailers, machinery, trash, obsolete
signage, dumped soil) to prevent contamination and visual
pollution (batteries, crankcase oil, unproductive fill)
District
AAC
Agricultural Land Commission
Minimal
c) Encourage property owners to build in a fashion to conserve the
land base and minimize potential for conflict with agricultural
activity
District
Agricultural Land Commission
Minimal
Goal 13: Protect and Enhance the
Agricultural Context of the
Agricultural Land Reserve.
d) Explore changes to the RS-3 (One Family Rural Residential Zone) as
it applies to the Agricultural Land Reserve with respect to
restrictions such as setbacks, lot coverage, and accessory buildings.
District Minimal
AGRICULTURAL ADVISORY COMMITTEE
2019 MEETING SCHEDULE
Meeting Date
Upcoming Events Submission Deadline Date
January 24, 2019
January 10, 2019
February 28, 2019
February 14, 2019
March 28, 2019
March 14, 2019
April 25, 2019
April 11, 2019
May 23, 2019
May 9, 2019
June 27, 2019
June 13, 2019
September 26, 2019
September 12, 2019
October 24, 2019
October 10, 2019
November 28, 2019
November 14, 2019
Notes:
- AAC meets Thursdays at 7:00pm on the assigned month.
- Meetings are held on an as needed basis.
- Requests for agenda items are due to the Chair two weeks prior to meeting date
- Items to be included on the Upcoming Events section of the agenda are due two weeks prior
to meeting date. Please email Committee Clerk or Staff Liaison with:
o event date;
o event time,
o event location
o event organizer
- Agendas will be published and distributed one week prior to meeting date.
- No meetings in July/August or the last two weeks of December.