The Economy of Local Food in Vancouver

March 9, 2012 in NuAgri Educational Resources

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Executive Summary

The food system within Metro Vancouver is responsible for feeding more than two million people on a daily basis. The region’s population is expected to grow substantially over the next thirty years, which means the system will need to keep pace. However, the region’s seasonal production limitations, coupled with demand for its horticultural products from around the globe, have created a system reliant on a predominantly imported food supply. Industrial conglomerates from California and Mexico enjoy significant cost, economies of scale and efficiency advantages over local producers. Further, they demand local buyers to accept supply on a year-round basis, which shifts power into the hands of imported producers. As a result, the food system’s dependency on imported food has made the local region less self-sufficient and places food security at risk.

Constraints within the imported or ‘mainstream’ food system have provided incentives for local producers to grow high value crops, which has helped create a valuable export market. These high value crops, such as blueberries, are partly produced because of high land costs in Metro Vancouver that make certain crops unprofitable to sell in the domestic market. Subsequently, some domestically produced crops are labeled as ‘boutique’, which translate to higher selling prices. However, as the price of fuel directly impacts the cost of transportation, imported suppliers could be forced to increase the cost of their crops, which would bring the price gap between local and imported producers closer.

The Agricultural Land Reserve (ALR), which recognizes agriculture as a priority use in dedicated zones, supports local food production in British Columbia. Compared with imported produce picked before ripeness and shipped long distances to Metro Vancouver, horticultural products from the ALR are shipped short distances when ripe. As a result, efficiently distributed local production reduces greenhouse gas emissions (GHG), and reduces the cost of transportation and the ‘real cost’ of carbon to the environment.

Consumer demand for locally produced food is best evidenced through the strong financial performance of Vancouver Farmers’ Markets. In recent years, vendor receipts have grown to create over $10 million of economic activity for the local economy. Secondary rounds of spending because of the markets are shown to benefit employment (jobs, wages) as well as adjacent business revenues. From a producer perspective, farmers’ markets provide an opportunity to sell direct to consumers and can provide better financial returns. Contract crop production, like Community or Restaurant Supported Agriculture (CSA/RSA) is another form of direct marketing, but is slow to be adopted. The success of farmers’ markets has been achieved despite facing challenges in operational capacity and restrictive regulations.

Farmers’ markets and retailers have also benefited from increasing consumer demand of value-added or ‘artisanal’ type products, which typically have higher margins than minimally processed crops. However, in recent years, food-processing activities within Metro Vancouver have deteriorated in favour of other regions with lower cost structures. This movement has left a gap in the food system, which, because of required capital and capacity, is difficult for local entrepreneurs to fill and further contributes to food waste.

The mainstream food distribution network, similar to the food supply network, is controlled by large distribution and wholesale companies that feature imported food. Supermarket chains operate their own distribution facilities and a concentrated, independent wholesale network serves the fragmented retail marketplace. From a restaurant and hotel perspective, two large food service distribution companies control approximately two-thirds of the market share in Metro Vancouver. Because of the food system’s concentration of power, alternative distribution companies have emerged, which place greater emphasis on supporting local producers, but lack infrastructure and value chain linkages to create significant economic benefits.

Infrastructure investments, such as storage and equipment, can be cost prohibitive for producers because of the cost and limited relative use that comes from seasonal production. The highly fragmented network of small farms also creates barriers to scale up local production at a critical mass level. However, the distribution community is beginning to invest in local producers by educating them of buyer expectations (grading, packaging, labeling) for crops. Technological infrastructure also impacts crops; for example, hydrocooling can greatly extend crop shelf life and is efficiently utilized within the mainstream food system.

The local food system lacks effective linkages with value chain partners, who inherently favour the mainstream system because of its simple, uncomplicated and established structure. Supermarkets, restaurants, and institutional buyers acknowledge that greater support of local producers will add layers of complexity to their operations because of increased administration costs and concerns over food safety. Thus, a general lack of enthusiasm to support local producers is present. Additionally, a parallel ethnic food system that is heavily influenced by an established Asian network contributes to a segregated food system within Metro Vancouver. Barriers in language and cultural practice reinforce a ‘business as usual’ approach, which continues to favour existing supply connections. Overall, connections between local producers and large-scale local sales opportunities need to be improved, though some progress is being made in this respect through the Local Food First network.

Portland, Oregon, a region known for its commitment to local food, is a good benchmark for a successful local food system. Much like the City of Vancouver and the ALR, Portland has an urban growth boundary that outlines specific areas for agriculture production. Coupled with a greater ability to produce year-round and strong consumer demand, food entrepreneurs have formed crucial connections and linkages that influence food policy for the region today. These linkages have created effective infrastructure that enable food system actors to efficiently operate within a locally demanding marketplace. Through dedicated investment, non-governmental organizations and local advocacy groups provide institutional buyers with incentives to procure local, which limits economic leakage to other regions. Many of these value chain actors also seek to reduce their impact on the environment by embracing sustainability as a core principle to their operative structure.

Similarly, Vancouver’s Granville Island is a model where a supportive local food infrastructure showcases the abundant food offerings to over 12 million annual visitors. Its management supports local producers by providing space to sell unique, high quality crops that increases local demand, builds production capacity and creates additional customer traffic. Granville Island is successful in part, because of its infrastructure and profile, which advances the local food trade and provides strength to the city’s international acclaim.

Despite some of its weaknesses, the food system in Metro Vancouver is beginning to display strengths similar to that of Portland. Consumer demand is driving food buyers to make incremental changes in favour of local food procurement. The distribution network is starting to work with producers to mutually benefit operations, which also provides benefit to the environment as it redirects supply away from distant growing regions. Local advocacy groups are taking greater leadership in advancing the local food trade through effective partnerships with public and private entities. For example, Local Food First is championing the connection of neighbourhoods through a food ‘hub’, which is envisioned to include a permanent farmers’ market, distribution/storage centre and food processing capacity. The hub will also foster an exchange of ideas between local food actors to create a more robust local food economy. The Vancouver Food Policy Council also directly contributes in this space as it works directly with the City of Vancouver on food-related issues and initiatives.


Many different parties will need to cooperate to achieve a more profitable and sustainable local food system that makes better use of existing production by ensuring more of it reaches local shelves. Public institutions can assist producers and farmers’ markets by easing regulatory barriers and starting procurement initiatives. The private sector will determine success, and it remains to be seen whether Vancouver farmers, restaurants, retailers and others can build the linkages and partnerships that have been critical to success in regions such as Portland. The Local Food First network has begun the work of filling gaps and building linkages, but will need widespread support across the value chain to build a strong local food system.


Stronger distribution linkages are the key requirement in getting local food to market. This can be achieved if the private sector (building on the work of Local Food First) can open up existing or create new distribution channels.

  • Provide access for local farmers to intermediaries and distributors
  • Create storage facilities to store crops and extend the selling season
  • Utilize web resources to connect buyers and sellers real time
  • Assist local producers with investments in technology that lengthen product shelf life
  • Create database that maps all value chain members and their respective needs

Farmers’ Markets (FM)

Fewer restrictions and market permanence are central to fostering growth for farmers’ markets in Vancouver. The City of Vancouver, the Parks Board, the Vancouver School Board and Your Local Farmers’ Market Society need to partner and cooperate to make markets an integral part of a livable, sustainable city.

  • Reduce restrictive regulations that constrain farmers’ market (FM) operations (signage, access to electricity) and create permissive bylaws based on specific FM needs
  • Provide longer-term leases to establish markets and avoid high switching costs
  • Expand network to downtown location during the work week
  • Provide tax breaks to businesses that assist farmers’ markets (parking, storage)
  • Develop hub concept, including a resilient business plan, strong partnerships, and long-term capital campaign
  • Capitalize on economic benefits of farmers’ markets and strategically locate markets to meet the needs of underserved areas in Vancouver
  • Build relationships with retailers/restaurants to jointly promote local supply
  • Create a market sponsorship strategy to strengthen operations
  • Link community organizations with farmers’ markets to support health

Restaurants & Food Retailers

Retailers and restaurants can create partnerships local producers by promoting their products within their operations, building on a successful value proposition from other jurisdictions.

  • Partner with farmers to create joint promotions that feature local products
  • Build partnerships with farmers to build local capacity through improved Restaurant-Sponsored Agriculture (RSA) adoption
  • Create an alternative RSA / CSA (Community supported Agriculture) design to share up-front costs and improve cash flow
  • Partner with farmers’ markets to build local capacity and make them central to the selling proposition, as is common practice in Portland
  • Feature local producers within the restaurant / retail communications – build local brand

Institutional Buying

Large public institutions can improve their supply of healthy local food through procurement initiatives that build local capacity and build on existing institutional resources such as warehousing facilities. Vancouver Coastal Health, the Vancouver School Board, the City of Vancouver and the University of British Columbia are candidate institutions.

  • Communicate with distributors and wholesalers to improve local sourcing
  • Specify a certain percentage of supply to come from local producers
  • Connect with other institutional buyers to increase scale and lower individual cost of the two above recommendations
  • Link institutional purchase managers with alternative suppliers such as farmers’ markets
  • Introduce local food requirements for public institutions and encourage private institutions to change procurement policies
  • Increasingly coordinate schools with local farms to educate children and supply farmers with access to direct sales

Food Processing

Linkages between producers and processors are critical to rebuilding the area’s processing infrastructure, building on work underway through the Local Food First network.

  • Better utilize existing processing infrastructure (i.e., kitchens) to reduce waste and retain local investment
  • Connect with producers and encourage contract crop production for processing that can be used with 2nd grade products
  • Provide incentives for primary and value added entrepreneurs through grants


Farmers will need to better educate themselves about local sales and partnership opportunities in order to access the higher-value local market.

  • Provide financial and educational support for local farms to build capacity and enter the mainstream supply chain
  • Ensure knowledge exists across the industry on processing, packaging, grading, traceability, health and safety, and other requirements of large-scale production
  • Connect with local food processors to utilize 2nd grade field crops
  • Create incentives for distributors and wholesalers to serve the local, independent market, and support a dedicated agent to manage local growers
  • Create farm partnerships to share in packaging and transportation costs

For full article click: The Economy of Local Food in Vancouver