PACA and local food co-ops have been awarded a $25,000 grant from the USDA to study the feasibility of forming a Purchasing Co-op to serve local food co-ops and local producers!
Members of the Purchasing Co-op will be food co-ops in the Philadelphia area. The Purchasing Co-op would facilitate buying, warehousing, and distribution of local food, and would make it easier for our region’s food co-ops to buy more local food.
The need for a Purchasing Co-op has arisen from both producers and food co-ops. Many producers within 150 miles of Philadelphia are unable to sell their products at food co-ops in the Philadelphia area because of delivery limitations, limits on storage at each store, and lengthy vendor approval processes.
A Purchasing Co-op could be an excellent tool to boost local food production and distribution. Through a Purchasing Co-op, local food producers can sell more of their products in a large urban market and the food co-ops can receive better prices on those products by buying in bulk.
This grant funds a feasibility study for such a Purchasing Co-op. The Keystone Development Center, a cooperative business development center in Ephrata, PA, will assist by conducting the feasibility study and assist with some of the business planning. The local food co-ops will be the main drivers of this project, as they will share ownership of the business entity. Results of the project will be shared, demonstrating the potential for cooperative purchasing between independent food co-ops.
Currently, the combined sales of Weavers Way Co-op, Mariposa Food Co-op, Creekside Co-op, and Swarthmore Co-op total $37 million annually. Each co-op estimates that between 25% and 30% of their total sales are from local products. We’ve estimated that a centralized purchasing, warehousing, and delivery operation would allow food co-ops to increase their local sales by at least 10%. Staff from each co-op have numerous examples of local producers that they aren’t able to work with because of distribution and storage limitations that could be overcome with a centralized Purchasing Co-op operation.
After its initial years of operation, the Purchasing Co-op could expand to serve two other food co-ops that are further away, along with five start-up food co-ops. In total, the Purchasing Co-op could serve eleven independent food co-op grocery stores in the Philadelphia area, with potential annual Purchasing Co-op sales as high as $65 million.
PACA is delighted that the USDA has supported the further development of the Purchasing Co-op, which will be a major financial benefit for local food producers, food co-ops, and families.