Farmzz Blog
What Is a Food Hub? How Farmers Can Sell Through Aggregated Distribution
A vegetable grower near Sherbrooke was pulling in $3,500/week from two farmers markets and a handful of restaurant accounts. She was maxed out—every Saturday morning was a 4 AM wake-up, and she'd lost two restaurant clients because she couldn't deliver consistently while also staffing market days. Then she started sending half her root vegetables and greens through a regional food hub. She gave up some margin, but she gained 15 hours a week and a new revenue stream from institutional buyers she never could have reached on her own.
Food hubs are one of the most misunderstood pieces of the local food system. Some farmers swear by them. Others tried one and felt they just gave away margin to a middleman. The truth, as usual, is that it depends on your farm, your products, and your capacity. This guide explains exactly what food hubs are, how they work, when they make sense, and how to use one alongside direct sales channels for the strongest possible business.
What this guide covers
- What food hubs are and how they work (physical vs. virtual)
- Benefits for small farms: aggregation, logistics, buyer access
- Real examples in Canada and Quebec
- How to find and evaluate food hubs near you
- Honest pros and cons with margin math
- The hybrid model: food hub + direct sales with Farmzz
What is a food hub, exactly?
The USDA defines a food hub as "a business or organization that actively manages the aggregation, distribution, and marketing of source-identified food products primarily from local and regional producers." In plain language: a food hub collects products from multiple small farms, combines them into orders big enough for large buyers, and handles the logistics of getting them there.
Think of it as a co-op for distribution. A school cafeteria that needs 200 lbs of mixed vegetables every week can't manage relationships with 15 different small farms. A food hub can. It takes your 30 lbs of carrots, combines it with another farm's 40 lbs of potatoes and a third farm's lettuce, and delivers one consolidated order to that school.
Food hubs come in two main types:
Physical food hubs operate a warehouse or distribution center. You deliver your product to their facility, and they handle storage, order assembly, and delivery to end buyers. They typically charge a commission of 15–30% of the sale price. Examples include large-scale operations that serve hospitals, schools, grocery chains, and restaurant groups.
Virtual food hubs (also called online food hubs) operate a digital marketplace where producers list products and buyers place orders, but the food hub doesn't physically handle the product. Instead, they coordinate logistics—matching producers with delivery routes, managing order flow, and handling invoicing. Commissions are usually lower (10–20%) because they don't carry the overhead of a warehouse.
Some food hubs are nonprofit organizations focused on community food access. Others are for-profit businesses. Some are farmer-owned cooperatives. The structure matters because it affects pricing, priorities, and how much say you have in operations.
Why food hubs exist: the problems they solve for small farms
Small farms face a structural disadvantage when trying to sell to large buyers. Here are the specific problems food hubs address:
Volume requirements. A hospital or school lunch program might need 500 lbs of produce per week with consistent quality and delivery schedules. No single 5-acre farm can reliably fill that order alone. A food hub aggregates supply from multiple farms to meet the volume, and each farmer contributes what they can.
Logistics burden. Delivering to three restaurants, two markets, and a grocery store every week consumes enormous amounts of time and fuel. Each new buyer means another delivery route, another invoice, another relationship to manage. A food hub consolidates this: you make one drop-off per week, and they handle the last-mile delivery to all end buyers.
Market access. Institutional buyers (schools, hospitals, corporate cafeterias) often require liability insurance, food safety certifications, and invoice processing capabilities that are prohibitively complex for individual small farms. Food hubs handle the administrative burden and open doors that would otherwise be closed.
Marketing support. Many food hubs actively market their farm partners to buyers. They create catalogs, attend trade shows, and build relationships with purchasing managers. As a small farm, getting on the radar of a hospital purchasing department is nearly impossible on your own. Through a hub, it's automatic.
Reduced waste. If you regularly have 20–30% of your harvest unsold after market days, that surplus is either composted, given away, or sold at a steep discount. A food hub can absorb that surplus at wholesale rates—less margin than direct, but infinitely better than zero.
Food hubs in Canada and Quebec
Canada has a growing food hub ecosystem, particularly in Quebec where the local food movement is strong. Here are the types of organizations you'll encounter:
Regional cooperative hubs are farmer-owned organizations that pool resources for distribution. Members pay an annual fee and a per-sale commission, but they also have a vote in how the hub operates. These tend to offer the best terms for farmers because the farmers themselves set the commission rates.
Nonprofit food hubs focus on food access and often receive government funding. They prioritize getting local food into schools, food banks, and underserved communities. Commissions are typically lower, but volume expectations can be specific (they may only need certain products at certain times).
Private aggregators are for-profit businesses that buy from local farms and sell to retail and food service. They tend to have the strongest buyer relationships (grocery chains, restaurant groups) but charge the highest commissions (25–35%).
To find hubs near you, start with the Réseau des fermiers de famille, your regional agricultural office (UPA), or search the MAPAQ directory. Many municipalities in Quebec also have "marché de solidarité" programs that function as virtual food hubs connecting local producers with community buying groups.
How to evaluate a food hub before joining
Not all food hubs are worth your time. Before committing, ask these questions:
What's the commission structure? Get the exact percentage and what it covers. A 20% commission that includes delivery, invoicing, and marketing might be a better deal than a 15% commission where you still handle your own delivery to the hub's warehouse.
Who are the buyers? Ask for a list of current buyer accounts. A hub that sells primarily to schools and hospitals offers different volume and pricing dynamics than one focused on upscale restaurants or grocery stores.
What are the volume commitments? Some hubs require minimum weekly deliveries. If you need to guarantee 100 lbs of mixed greens every week and your production varies, that commitment could become a problem during slow weeks.
How is pricing set? Do you set your own wholesale price, or does the hub dictate it? The best arrangement lets you set the price with guidance from the hub on what the market will bear. Avoid hubs that set prices without farmer input.
What's the payment timeline? Some hubs pay within 7 days, others take 30–60 days. Cash flow matters, especially during high season when you're spending heavily on labor and inputs. A 60-day payment cycle can strain a small farm's finances.
Talk to current members. Ask the hub for references and call at least two existing farm partners. Ask about reliability of orders, payment timing, and whether the hub delivers on its marketing promises.
Honest pros and cons: the margin math
| Pros | Cons |
|---|---|
| Access to large buyers you can't reach alone | Lower per-unit margin (15–30% commission) |
| One drop-off replaces multiple delivery routes | Less control over pricing and buyer relationships |
| Absorbs surplus production that would go to waste | Payment delays (sometimes 30–60 days) |
| Handles invoicing and admin for institutional buyers | Volume commitments may not match production variability |
| Frees time to focus on production and direct sales | You lose the direct customer relationship |
Let's do the math on a real scenario. Say you produce $2,000/week of wholesale-grade mixed vegetables. Selling direct at a farmers market, you might get $3,000 retail for the same product—but it costs you a full day of labor ($200), booth rental ($100), fuel ($40), and packaging ($60). Your net is $2,600.
Through a food hub at 20% commission, you sell $2,000 and net $1,600 after commission. You save $400 in direct costs and a full day of time. If you use that saved day to grow more product or serve your highest-margin direct customers, the hub actually increases your total weekly income despite the lower per-unit margin.
The key insight: a food hub doesn't replace direct sales. It absorbs the volume your direct channels can't handle.
The hybrid model: food hub + direct sales with Farmzz
The strongest approach for most small farms is a hybrid strategy:
Premium products go direct. Heirloom tomatoes, specialty greens, fresh herbs, anything with strong visual appeal or a compelling story—sell these at farmers markets and through your online farm profile at full retail margin. These are the products where the customer relationship and story matter most.
Volume staples go through the hub. Standard carrots, potatoes, onions, salad mix, eggs—products where the buyer cares more about price and reliability than story. Route these through the food hub where they can reach institutional buyers at wholesale prices with minimal effort from you.
Use Farmzz for your direct channel. The food hub handles the wholesale side. For direct sales, you need a way to communicate with individual customers quickly and reliably. That's where notification software comes in. Send weekly availability updates to your subscriber list, announce seasonal specials, and drive traffic to your market stand or pickup location.
Here's why this matters: the food hub gives you a floor—guaranteed volume at wholesale margins. Your direct channel gives you a ceiling—premium prices on your best products with customers who know your name. Together, they create a diversified revenue stream that's more resilient than depending on either channel alone.
A farm running this hybrid model might sell 60% through the hub and 40% direct. The 40% direct portion generates 55–60% of total revenue because of the higher margins. But the 60% through the hub ensures nothing goes to waste and provides stable, predictable income.
Track your revenue and costs by channel so you know exactly what each one contributes. Adjust the mix seasonally: during peak production when you have surplus, send more through the hub. During slower periods when everything sells at market, reduce your hub commitments and focus on direct.
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Frequently asked questions
Does a food hub replace direct sales?
No. The most successful farms use both channels. A food hub absorbs wholesale volume and surplus, while direct sales (markets, subscriptions, online) capture premium margins. Think of the hub as your floor, not your ceiling.
How much commission do food hubs charge?
Typically 15–30% of the sale price, depending on the hub type and what services are included. Cooperative hubs tend to be cheaper (15–20%). Private aggregators charge more (25–35%) but may offer stronger buyer relationships.
Can I sell through multiple food hubs?
Usually yes, unless a hub requires exclusivity. Selling through two hubs serving different buyer types (one institutional, one restaurant-focused) can expand your reach without conflict. Just make sure you can meet both hubs' volume commitments.
How do I find a food hub near me?
Start with your regional UPA office, MAPAQ directory, or Réseau des fermiers de famille in Quebec. Many municipalities also list local food hub resources. Ask other farmers at your market—word of mouth is often the best source.
What if the food hub's prices are too low?
Remember you're comparing wholesale hub pricing against the true net margin of your direct sales (revenue minus time, fuel, booth fees, packaging). If hub pricing is genuinely too low for a particular product, keep that product in your direct-only channel and send other products through the hub.
How does Farmzz work alongside a food hub?
Farmzz handles your direct customer communication: SMS and email notifications to subscribers when produce is available, QR codes for market signups, and a public farm profile. The food hub handles wholesale. Together, you cover every sales channel.