European Food Distribution Network for Small-Scale Producers

Dear all, below is an idea from a business friend of mine who intends to apply for #diogochallenge funding in collaboration with Edgeryders. If you are interested in local and sustainable food production, you may give it a read (and leave feedback for us in the comments). We’d also be happy to get ideas for collaboration with other Edgeryders-related projects to enhance this application. Thanks everyone! --@matthias

1. How it Works

We propose a collection of organizational and ICT infrastructure that empowers small-scale food producers to sell on the European Single Market. Specifically, we want to create: (1) a pan-European network of small-scale food producers, all represented on (2) an Internet food shopping portal that includes “automagic” human translation of product descriptions into European languages. The network consisting of (3) regional groups (“cells”) of at least 10 food producers each, which offer (4) collection of goods and and their combined shipment to other cells of the network throughout Europe, which then act as logistics hubs for distribution to end customers. Combined shipment can use large parcels or even pallets, making it economically possible in contrast to international shipment of individual small orders of products with a low price-to-volume ratio such as food.

This system will then be joined with our existing food-shopping platform for small-scale producers at www.epelia.com. Like now, the operators of this platform take on the task of ensuring adequate visibility of the offered products on target markets, and are compensated with a 4% commission fee on sales. The low fee, together with a future cooperative based legal structure, is designed to ensure that this idea can grow into a movement rather than being exploited for private gain.

2. How it Helps

Currently, access to the European Single Market is very limited for small-scale food producers: a majority of them is located in Southern and Eastern Europe, where sales on their domestic market mostly have declined since 2008, where the logistics infrastructure connecting them to “richer” Northern European markets is often detrimental (parcel service costs, trucking service costs etc.). Also, richer Northern European food markets, esp. the German one, are dominated by oligopolistic structures: a few large food store chains which simply do not bother to buy from small-scale producers, while the remaining institutional clients mostly do not order enough of one item at once to make an international shipment economically viable.

Now how does this scheme of empowering small-scale producers to access European markets create new jobs, given that it competes on the food market, which is inherently limited in growth? It creates jobs (and secures existing ones) by diverting the food market’s revenue away from big business, where it would only end up as shareholder value and from there in ever more ROI-maximizing “investments” (which today means more often than not, speculation). Instead, by intentionally cutting out all middlemen, the food market revenue ends up directly at the small-scale manufacturers, and then mostly as salary at its workers. And because small-scale manufacturing is less efficient than the highly automated, industrial variant, more jobs are created than lost on the side of big business with which this scheme competes.

And, a “less efficient” job does not mean lower income, also not lower competitiveness: for example, we found that food from small manufacturers in Calabria, Southern Italy, has an exceptional quality, and at a price level that is very low for German standards. This price level can be kept in our scheme, by avoiding any intermediate merchants in the chain of commerce. Also, while big business might be efficient in terms of automated production, but is quite inefficient in terms of waste: as much as 30% of food is wasted at various points of the supply chain before it is eaten. Small business in a system of direct sale to consumers is better at this, since no food will rot in stock or store this way. And finally, even if the created jobs are still less efficient, they are more enjoyable because being located in smaller, human scale, more familiar work settings. So they should fare better than big industry jobs in an index of wellbeing that includes not only GDP but also indicators of human satisfaction and happiness.

3. How it’s Innovative

The idea of combined shipments is not new: it has recently been launched by San Francisco based startup Good Eggs (goodeggs.com) in city scale. And in a logical sense, trucking service providers also do this by combining pallets into truckloads, while we combine parcels into pallets. However, to our knowledge no continent-wide system for combined shipment of parcels exists currently, and also not the cell-based regional infrastructure we invented for its deployment.

However, combined shipment alone is not a recipe for jobs in small-scale manufacturing: it is essential to forward the savings from this to the manufacturers, and also to take advantage of direct shipping by adding direct marketing, cutting out the middlemen. While Good Eggs seems not to do this, and trucking companies certainly don’t, we ensure doing so by giving the enterprise a cooperative structure, thus protecting it from hostile takeovers.

4. Deployment Strategy

Right now, we operate the German food shopping portal epelia.com (existing since 2009), with about 150 small-scale food producers selling there. We want to reuse it as the German marketing and sales channel for the international sellers which are added by deploying the concept propose.

For deployment of a combined shipment system, there is obviously the problem of critical mass: you need enough products exported from the same spot to be combined into pallet shipments at least every week. We will work around this issue with the idea of regional cells: this way, we will only need two regions for a start, which can trade food back and forth, and establish a critical mass of 10 or more food producers in both. The system can then grow by adding one region at a time.

At first we want to focus on Southern Italy (Calabria, Puglia and Basilicata) as regions to find small-scale producers for our system. We have already visited a trade fair in Catanzaro and met with vivid interest in the idea. Later we will gradually extended to other regions, first including Romania and Bulgaria as regions of food producers, and later also adding other sales markets beyond Germany.

5. Business Model

The business model is centered around a sales commission of 4% of net turnover on sales via the epelia.com platform. This is also what we currently charge, making some (while not too much) of revenue already. So the long-term sustainability of the approach hinges on attracting enough business turnover via this food shopping platform. For which we seek knock-on funding for founding the first few regional cells and for public relations to find customers for their products, on the German market for now.

We also leverage the efficiency of our e-commerce portal for sustainability: it is based on a software specifically developed for us that automates everything from sales to invoicing (and later also translations). This allows us to focus on public relations work: up to a size of 10 foreign regions (adding 200-300 manufacturers to the platform), we can manage the platform’s workload with a team of just two or three full-time persons. That team will be supported with freelance “broker agents” who travel their home regions in different European regions to talk about this food manufacturer network and found new regional cells, compensated with a part of the trade commission paid by “their” manufacturers.

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Wow

Looks like a very solid proposal both the content and the form in which it’s written

The only thing: there’s no mention of how you’ll going to market the portal (once you have the providers and the logistic in place)

Maybe it’s too early or not relevant to talk about that in the proposal… anyway I’m a big fan/user of these subscription services where every week you get a bag of veggies/fruit/food from not necessary local but always small-scale farmers.

I believe this kind of project could work well with their worldview… and they could be your marketing partners somehow… if not even distributors at the city-scale.

That’s my only thought!

Giacomo

ps. the automagic human translation… what is that? :slight_smile:

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Thanks!

Thanks a lot for the feedback, Giacomo! We like your idea of combining it with food consumption groups, esp. since combined shipment enables one to have complete baskets of mixed food (one producer providing milk products, one fruits and vegetables, another one bread etc.).

The “automagic translation” (I have adapted it in the final submission) is an idea to overcome inner-European language barriers more efficiently: integrate translator software tools (like a translation memory, a diff-like editor showing what was updated in an orginal text etc.) right into the website that needs translations regularly, and to also integrate task management for translators into this. Then, whenever a seller enters or adapts a product description, a human translator will be tasked to translate the changes to target market languages, and payment will also be integrated and managed together with these tasks. Have not seen this anywhere yet, meaning that translation is never as efficient as it could be, needing all the copy and paste and juggling of different platforms right now.

Thanks again :slight_smile:

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Great idea, seems very ambitious

Hey,

Altough i’m somewhat familiar with this idea ever since [Matthias] asked me to inquire into the Romanian market, it’s very refreshing to see it’s moving forward. My feedback:

  • Very articulate writing : especially asking the questions your evaluators might wanna ask in the beginning of paragraphs :)
  • Maybe be more specific about who the platform will cater to or who you'll target? when you say small scale producers i instantly think of individual buyers: like Giacomo says the vegetable or cheese basket, which my family also orders weekly. Is that so? Then when i read "combined shipment", although its cost saving function is clear, I wonder if the platform will cater also for food chains or shops? maybe it's a small detail, it adds to the market strategy Giacomo is asking about.
  • the most difficult aspect i see is getting small producers, farmers especially, online and the assistance they'd need. You mention Bulgaria and Romania, I can imagine two distinct problems here: in general, rural communities not being  1) connected to the Internet and 2) they're almost entirely digital illiterate. 

    Of course some things could help: the 'downshifting" trend (this young guy inherited land and is now selling online); foreigners moving East for pastures, you could find younger or more Internet savvy providers; or go through NGOs running community supported agricultures schemes and in touch with networks of farmers; 

Anyway, well done!

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Love it!

It’s good to read the complete project: up to now I had a partial view since [Matthias] told me about the Southern Italian part of the project, but it seems much stronger now that it’s put into the European Single Market perspective. My 2 cents…

  • I totally relate to what [Noemi] says on getting to the local farmers part, when I think about Southern Italian regions: 1) getting them connected to Internet 2) digital illiterate. This makes me wonder: how about offering a premium service to  famers based on curating their virtual showcase? (services like translation, content, pictures, ecc.)
  • I would love to take be your contact point in Basilicata/Puglia :-) 
  • I've been thinking about the idea of linking one unMonastery residency to the Epelia project and finding a talented and motivated person to map local farmers in Matera Province: I don't know how this can be linked to the challenges proposed by the call for applications, but it would definetely be something that could join forces between the two projects. 

Can’t wait to know more about this :slight_smile:

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Great to have you all :slight_smile:

Hey Noemi and Ilaria and Giacomo, thanks for all the feedback and for poking holes in the proposal. The marketing / communications thing is my weak spot, as always, so I even seem to avoid it subconsciously :smiley:

As Noemi and Ilaria pointed out, digital illiteracy and even Internet connections are a big issue in our target user group. In the project, a lot of time will have to be spent for getting everyone online (at least there’s broadband Internet everywhere now) and helping them to set up their web presence. As I told Ilaria already, there is an upcoming EU funding scheme that seems a perfect fit, called the ICT Innovation Vouchers Scheme. (Take a look, maybe you have other ideas what to do with such vouchers.)

Great Idea and Something we can add to…

Hi all,

we are working on a similar thing in Ireland and would be into partnering for the obvious win-win. We are a coop and do foodbox deliveries via online shopping platform sourcing from local producers that generates revenue for subsequent community cooperative enterprise generation. One bike with 200 customers can generate 30k on an average spend basis annually post-costs for reinvestment to the local community where the profits are generated.

From there we have a host of potential developments chosen by participative process among the customers and local stakeholders/collaborators. So far we are listing tool-banks, community kitchens, farmstart (funding local growers of key produce missing from our infrastructure), digital acces spaces, tech-recycling, packaging and print coops, and energy cooperatives as potential second instance cases of the model.

Its early days but we should perhaps have a chat about this. We are considering strategies to transition to open source once we have established the model. Collaboration is always welcome…sounds like a fit.

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Peasant Box - Cutia Taranului

We too have been running a food-box delivery project http://cutiataranului.ro which connects village producers with consumers in neighboring cities in Romania.

When we launched the project someone living in Romania with a more western mentality asked us how we deal with storage locally and in the city - they wanted to inquire about sharing our storage space in the city. Our storage space is, for the most part, on the plants. During most of the growing season our members (consumers) get food that was picked either the same or the previous day. I can’t think of another way to benefit from such freshness and vitality while living in a city.

Food shouldn’t have to travel - that reduces its value across the board - nutrition, ecology, socially and sustainability-wise. I believe greater emphasis should be made on local food - and that only really unique and valuable (not in terms of money) products which are not available locally may be shipped (I still use some olive oil which can’t be found in Romania, though I have switched to using much more locally harvested sunflower seed oil). In a healthy and sustainable food-culture, this continent-wide project should be marginal. Would it still be viable?

Also, for projects like this to work there needs to be social/cultural/economic compatibility and adaptivity. The information system that drives Cutia Taranului was custom made for Romanian settings. I am confident that Epelia has German culture built into it and that Eimhin’s project is shaped by its cultural settings … and http://www.farmigo.com/ is a very American project and model (that I believe would be irrelevant in Romania).

For example the phrase “regional groups (“cells”) of at least 10 food producers each” assumes a culture of organization and collaboration - this isn’t obvious and may take on different forms in different cultures.

my 2 cents …

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trade-off for larger scale and impact?

"Food shouldn’t have to travel " - just wanted to say I couldn’t agree more with this, that is, in a broad context.

I think Matthias’s friends are onto something else though, which is providing a larger scale support for small producers - enabling the organisation and collaboration you mention, while still cutting the middle men, with some trade-offs, including the loss of some ecological sustainability. If only we could have it all…

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On culturally informed design

Thanks for the valuable feedback! The part about social / cultural / economic compatibility is especially relevant, and true of course. It would be valuable to co-design a culturally informed approach for Romania with you, starting from the updated Epelia concept. (We know that this is too much to ask as a favor, but we’ll come back to you once deploying the idea in Romania is imminent and Epelia is ready to put some cash into this.) The new concept relies on farmers’ markets, and thus should easier adapt to local circumstances, as basically all regions have their own farmers’ markets, in a way that works for them …

Noemi is right that this idea is more about supporting small producers economically rather than perfect sustainability. And where a region has so much agriculture that it supplies for more than the locally needed food, local marketing of that food is not the full solution to supporting small-scale farmers. I think the natural idea is trading with other regions – much more sustainable at least than using the food for biofuels … .

But you’re right about transport being inherently unsustainable. To different degrees though: transporting basic foods means high transport volumes and costs and just makes no sense. Transporting foods with a high price per volume ratio (like spices, liqueurs, mature cheeses etc.) needs much less transport volume, making only as much a waste of resources as the fact that these semi-luxury foods exist at all … . I mean. while the low-volume transport could even be made sustainable (trains powered by renewables anyone?), the fact of producing gourmet cheeses in a world of 1.3 billion hungry people is absurd in itself.

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Epelia

“Gourmet cheese” is a great example … what is considered gourmet in Germany vs. Romania? What is considered gourmet in a Romanian city vs. a Romanian village? What is considered gourmet in Bucharest (largest city in Romania) vs. in a smaller city/town?

Our objective has been from the start to go for the simple and basic things … healthy, fresh day-to-day food. We are constantly trying to encourage the producers to diversify … but anything that is too “gourmet” is ultimately rejected (either to costly to produce or to expensive for people to buy).

If I set aside the “internationality” aspect of it (though I would be quite happy to purchase even my olive oil directly from a Portugese peasant then from a store) … then I am behind you a hundred percent.

I developed the information system that drives our project out of necessity. I am not a very good developer nor I do like doing it. If I were asked to deploy it for another country/culture … I probably could not (or doing so would require more effort than I could provide). So it would be great if there was an open-source platform that enabled forging direct producer-to-consumer relationships to encourage local production. I would be happy to retire my code for a better, more stable, more robust and more standard open-source platform that does this.

If that is the objective then I would recommend, from the start, realizing that we cannot model an “application” for this. Specific application choices are bound to create cultural/contextual friction. I would aim for a framework that can be configured/extended/adapted … kind of like WordPress does for blogging.

I think it could be very valuable to gather experiences from people who already have experience with such projects on the ground in different countries/cultures. To get a perspective of what aspects are shared and what aspects are unique. That may help in identifying core capabilities around which a platform could be built.

If there are developers committed to doing this I’d be happy to partake by both sharing my experience here in Romania, helping shape the overal research dynamic and design of the platform.

I’ve looked at Epelia but everything seems to be in German. I look forward to learning more.

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Free software solutions for food coops

A quick note with tips from something I remember from research for the EarthOS document. As I understand, you look for a self-hosted open source software solution to run the box scheme in Romania, enabling you to do your own culture-sensitive adaptations and configurations. For that purpose, Epelia will unfortunately not be the right solution, since it’s an SaaS type marketplace that will work the same all over Europe, and has no explicit support for box schemes. But there are two open source applications I am aware of which might possibly be an adequate basis for running your food coop, and for contributing improvements:

  • Open Food Foundation, a software for the management of food coops, box schemes and other local food startups.
  • FoodSoft, a free and open source Ruby on Rails software to manage orders, stock, accounting and work contributions in a food cooperative. Online demo available.
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Nice project - other food hub software

This is a nice project.

Stroudco offer their software to other food hubs http://www.stroudco.org.uk/how-it-works/

Some of my friends from the farm run a food hub. A coder who also stays at the farm developed the software that they use. I think they will be interested in this project - I’m pointing them here.

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Hello everybody,

I just read everything, very interesting discussion and topic. Can I ask how it all ended? :smiley:

We did indeed send the application outlined above to the European Social Innovation Competition for the 2014 edition. The application included a practical activity to map local farmers, in collaboration with the unMonastery project in Matera, South Italy. Our team made it to the 10 finalists, so we were invited to Brussels for the pitching and award ceremony. But in the end, we were not among the three winners.

After that:

It turned out to be too difficult to turn the farmer mapping in Matera into a useful trade connection, esp. as our collaboration with Maria Pierra in Matera was new, we had challenges working remotely together.

On other fronts, we reached out to various governmental initiatives across Europe to evaluate potential collaborations. One contact to such a government-provided local food platform in Hessia, Gemany, seemed very promising: they had all the farmers on the platform, we had all the tech, and they were interested to collaborate. Then our contact person in that local government office suddenly died. Another contact with Gutes vom Bauernhof in Austria provided a lot of inspirations (they have really good ideas and policies!), but ultimately did not result in an active collaboration.

Around that time, I was in Nepal and came back with the idea to organize direct sales for farmers in Nepal instead – the potential improvement for a farmer’s life is much higher there than in Europe, even with the modest trade volume that would be expected at first. That was the start of Edgeryders powered coffee from Nepal, and by means of recursive problem solving lead to the current open source optical coffee sorter project.

In Europe, building a distribution network for local food means competing in the oligopolist food retail market, which is no match for a small company or network. So unless a major shift in consumer preferences or a major economic crisis happens, I see no opportunity for such a move. Market structures in other parts of the world are not as efficient and not as rigid, and inequalities are even much higher, so personally rather want to invest the little means I have there.

Interestingly, the coffee project is not any more about necessarily international trade relations. If and as long we find direct sales options inside Nepal for the quantities we have access to, we’ll do that. That’s why @anu and I are working on setting up a small roastery and coffee processing plant in Nepal.

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Hell of a story @matthias , thank you for your time writing it!!
It gives lots of perspectives to my own current project, as you can imagine.

I agree with you about the fact that small markets and direct and local sales have to be the first option. It’s some sort of a feeling converted in a statement that never left my reflexion about local food production and distribution.
I agree also on your point about the differences of potential between Europe and places like Nepal. Yet, I would add that it might be a little less contrasted now… I witness everyday where I work (neighborhood / city) something growing related to locally produced things, specifically fresh food. It started with vegetables of course: years ago it was only the AMAP network doing the distributing link between locally based producers and farmers, and consumers. Now, you have these inner city shops that do the same, like Au Bout Du Champ (they have 4 frontshops in Paris…), and also start-ups like La Ruche Qui Dit Oui, wich is also distributing directly the bags of vegetables to their customers, but also launched a partnership with the SNCF (national unique train company in France) to make.every station a local food distribution spot…
And now it’s not even only just about the vegetables, since a former teacher of mine during my cheesemongery course, has now launched what he calls La Laiterie de Paris. It’s a place where he both transforms and sells milks from local producers. It’s absolutely unique and completely exploding right now under the press coverage following the business success.

Anyway, thank you very much for the follow up story. I now regret we didn’t have more time to discuss all this with blankets on our shoulders in Kaouiki ahah :grin:

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