How New Hampshire food co-ops are embracing food supply chain challenges

Workers at Hanover Co-op Food Stores handle deliveries. The cooperative operates grocery stores in New Hampshire and Vermont. (Photos by Allan Reetz, Hanover Co-op Food Stores)

Food co-ops nationwide, including many throughout New Hampshire, outpaced all other food retailers last year in the percentage of sales derived from local, organic and fair-trade foods and products, according to an April 2024 report from National Co+op Grocers (NCG).

The NCG’s “2023 Food Co-op Impact Report” also showed that its member retail food co-ops led the way in supporting local farmers, with the average NCG food co-op purchasing from 169 local farms and producers. Comparably, similarly sized food retailers — those operating between one and 10 stores — worked with an average of only 41 local farms.

The NCG’s report followed just weeks after the Federal Trade Commission released findings concluding that large grocery retailers and wholesalers “accelerated and distorted” the negative effects of supply chain disruptions from the COVID-19 pandemic and that price-gouging practices resulted in competitive disadvantages for smaller grocery retailers.

“Some in the grocery retail industry seem to have used rising costs as an opportunity to further raise prices to increase their profits, which remain elevated today,” the FTC said in a press release.

Nine grocery retailers, wholesalers and food producers were asked to provide information on “disruptions they experienced, how they adapted to those disruptions, and how those approaches may have ultimately affected competition and consumers,” the FTC said.

Privately held C&S Wholesale Grocers, headquartered in Keene, was among those that the FTC examined. The company declined to comment.

McLane Company, a multibillion-dollar wholesale distribution services company with a retail distribution center in Contoocook, was also examined by the FTC.

“We cooperated with the FTC’s efforts to learn about how our industry responded to this challenging period for our country,” said Alicia Downard, McClane’s director of communications and public relations.

“We will continue to operate with the highest ethical standards in collaboration with our partners to maintain the integrity and resilience of our nation’s supply chain,” Downard added.

According to the FTC report, smaller grocery retailers faced competitive disadvantages compared to larger retailers and wholesalers that held greater leverage over suppliers. In some instances, larger retailers and wholesalers threatened their suppliers with significant penalties for incomplete or late deliveries.

The FTC report further highlighted “significant consolidation” in the grocery sector, with the top four largest retailers accounting for over 30% of 2019 sales. “Much of the consolidation is attributable to larger, national firms acquiring smaller regional chains,” the FTC said.

Food co-ops leading the way

Juxtaposed with the FTC report, the success of New Hampshire’s food co-ops is commendable for several reasons, not the least of which is how they are leading the way in tackling today’s food supply chain challenges head-on.

The problem with too much consolidation in the grocery sector is that when a major supply chain disruption occurs, it has a downstream effect on everything else. “The pandemic was the testing ground for that,” said Jacob Vincent, associate director of merchandising with the Hanover Co-Op Food Stores of New Hampshire and Vermont.

During the pandemic, larger wholesalers struggled to keep warehouses operating due to nationwide labor shortages, raw material shortages, and distribution and transportation disruptions. Larger grocery chains struggled to keep shelves stocked as a consequence, the effects of which all consumers have felt at the checkout line.

“With a global disruption like that, it revealed the precarious nature of a global industrial food supply chain,” said Hanna Flanders, founder of the Kearsarge Food Hub, a local food and community nonprofit.

Due to their inherently innovative infrastructure, food co-ops in many ways have been able to weather food supply chain challenges far more efficiently and effectively than larger grocery store competitors. “Over the years we have built relationships with many different suppliers,” Vincent said. “Because of those relationships, we were able to keep the supply of food coming into our stores. We are really proud of that.”

Vincent encourages other smaller and independent grocery stores to “focus on your differentiators. What (products and offerings make) you different from large grocery stores?” “What is unique about us is our commitment to local,” he said. “In our relationships with a lot of different suppliers of varying size, we’re able to provide local and regional products and help grow those markets by helping to support them.”

Farmers as a lifeblood

For food co-ops, local farmers are their lifeblood. “We meet with local growers every year and plan who is going to grow what for the co-op,” Vincent said. Such partnerships ensure that members of the Hanover Coop Food Stores receive a year-round supply of produce, local meats and dairy, he said.

One silver lining from the pandemic is when supermarket shelves were empty, that’s when people started shopping locally, and more people started taking notice of how important it is to have a direct line to local farmers, Flanders said.

“Through our relationships with local farmers, we were able to supply our community,” she said. Considering the Kearsage Food Hub’s humble beginnings as a farmstand in 2015, that is not an unremarkable feat.

For its part, the Kearsage Food Hub has grown from 30 food-producer partners within a 30-mile radius of Bradford to a 50-mile radius today. After transforming an abandoned inn into what is now the Sweet Beet Market + Café, the Kearsage Food Hub now works with more than 150 vendors, and its year-round market serves approximately 4,000 customers annually.

At the national level, food co-ops continue to grow in size. According to the NCG, its 161-member co-ops operate more than 230 storefronts in 39 states, with combined annual sales of $2.5 billion. Currently, more than 1.3 million U.S. residents belong to an NCG food co-op.

Keeping prices low

While high food prices cannot be avoided completely, establishing local partnerships helps. Hanover Co-op Food Stores, for example, is not only a member of NCG, but also partners with the Associated Grocers of New England, a local wholesaler based in Pembroke, NH.

Through these partnerships, the co-op can offer lower-priced, generic brands. “That’s following a national trend we have seen over the last few years of more people buying generic brands to save money,” Vincent said. “Brand loyalty has gone out the window a bit in favor of less expensive products.”

Community outreach efforts

Food co-ops nationwide also lead the industry in community outreach. Collectively, food co-ops donated more than $12 million to a range of nonprofits, schools and community groups last year, according to the NCG.

The mission of the Kearsage Food Hub, which became a nonprofit in 2018, is to “reinvigorate our community with a restorative local food system,” Flanders said. “The nonprofit model helps us explore creative ways to be that bridge between food producers and food consumers.”

Produce that is purchased directly from local farmers and producers helps support approximately seven local food pantries. There is also a free fridge on-site at its Sweet Beet Market & Café, which provides “24/7, no-questions-asked food access for our community,” Flanders said.

Vincent stressed that it’s important to support local suppliers because “the more we can build food access from growers and producers regionally, the stronger that region will be from a food security standpoint.”

Looking ahead

In looking toward the future, Flanders said the “guiding light” for the Kearsage Food Hub is the shared vision of the New England Food System Planners Partnership, whose stated goal is for 30% of food consumed in New England to be produced in New England by 2030. “There is still a lot of work to do,” she said.

It’s going to take not only an entire community to get there but more help at the federal policy level. Analena Bruce, assistant professor of agriculture, nutrition and food systems at the University of New Hampshire, said the FTC should “revisit regulatory policy to address the excessive concentration and consolidation in our food supply chains.”

Added Bruce, “Addressing the obscene market power concentrated in our grocery supply chains would make them less vulnerable in times of disruption and also make it possible for the innovative partnerships already developing in our region to truly flourish.”

Food co-ops have been able to weather food supply chain challenges far more efficiently and effectively than larger grocery store competitors.