Food for All: Promoting Equality, Dignity, and Sustainability

Funding equitable food access and capacity building

In 2022, Open Food Network (OFN) received a grant from the Lord Mayor’s Charitable Foundation (LMCF) to implement the Food with Dignity Through Community Food Enterprises project. The primary objective was to enhance the capacity of Community Food Enterprises (CFEs) to offer food with dignity, including advising on design of funding mechanisms and subsidies such as a voucher scheme to support them in the future.

This goal was accomplished by conducting needs assessments in the communities by the partner food enterprises and exploring funding mechanisms to support food access in those communities. The project was a collaborative endeavour involving both the partner CFEs and OFN.

OFN played a pivotal role by developing the need analysis process and document structure for Merri Food Hub and High Rise Community Bakery. We also conducted extensive research to determine the size and characteristics of various community segments. Building upon our findings, OFN offered initial recommendations for potential opportunities. Additionally, we provided a communications brief template and guidance for conducting lean experiments.

The partner CFEs made valuable contributions by leveraging their close relationships with community segment representatives to gain firsthand insights into customer needs. They utilised sales data and existing customer behaviour to understand the equitable access experience. Based on key insights, internal capacity, and capability, the partner CFEs identified priority community segments.

OFN also conducted a scan of food subsidy schemes in other jurisdictions that could be adapted to assist CFEs in the Australian context. This scan is available as a seperate report.

Read the full report

Insights

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On average, 33% of households in Victoria and nationally fall into the second and lowest income quintiles.

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Australian consumers are paying higher prices for food due to increased costs, despite not purchasing more, as rising interest rates and housing expenses affect affordability.

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Income explains 93.4% of the variation in food spending. This equation helps estimate spending on food based on income brackets.

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Small food hubs and organic shops that cover the true costs of providing ecologically sound food are 160-170% more expensive than conventional food from large retailers.

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While some costs could be reduced with scale efficiencies, there is an important role for public subsidies in increasing the affordability of ecologically sound food for Australian households.

Building business models for market demand and public good

Thorough evaluations of pricing strategies are crucial for businesses to ensure their models align with market demand and public good. This involves assessing the appropriate approach for cross-subsidisation to lower income brackets based on market segmentation. Consideration should be given to tiered pricing, sliding scale pricing, or variable product margins to achieve the desired outcomes. By carefully analysing pricing strategies, businesses can find balance between sustainability and accessibility, ultimately maximising their impact in the market.

Merri Food Hub and High Rise Community Bakery serve as real-life examples of how these models can be implemented and achieve success.

Step 1 - Break even analysis

Calculate weekly fixed costs, including wages.
Calculate the average contribution margin.
Determine the weekly revenue target.

Step 2 - Market segmentation

Divide the Total Addressable Market into segments.
Identify segments that can afford hub pricing and those that cannot afford hub pricing, requiring pricing subsidies.
Analyse affordable segments by needs, behaviour, and demographic data (e.g., ABS demographics).
Consider factors such as the number of people working from home and limitations of hub operations.
Assess competitors and alternatives in the market.

Step 3 - Identify target markets

Compare weekly revenue targets in each suburb with the estimated market size of Serviceable Addressable Segments.
Determine the required market share for breakeven.
Analyse historical data by comparing weekly revenue targets with previous revenue to assess scaling requirements.

Dimensions for revenue generation

Target lower-income groups in the same suburbs through food subsidies and/or donations.
Expand into new suburbs with similar income quintiles by establishing new pick-up partners (consider incremental costs like delivery, venue hire, and wages).
Explore funding opportunities for impact outcomes or to subsidise wages and operations.

Pricing strategy evaluation

Assess the appropriate pricing strategy for cross-subsidisation to lower income brackets based on segmentation.
Consider tiered pricing, sliding scale pricing, or variable product margins to achieve the desired outcomes.

Merri Food Hub: Working towards a sustainable and equitable food system

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Merri Food Hub (MFH) stands for food security and works towards a more sustainable food system. Discover how MFH is transforming the food landscape in Fawkner and it’s surrounding suburbs. With a focus on sustainability and inclusivity, MFH strives to establish an efficient, resilient, and equitable agri-food system for all. Explore their current business model and the challenges they face, including affordability and operational capacity.

High Rise Community Bakery: Empowering local community through baking

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High Rise Community Bakery (HRCB) is a social enterprise facilitated by Cultivating Community. Explore the story of HRCB and their mission to empower community through baking. Operating on a sliding-scale pricing model, they offer affordable and delicious bread while giving customers the opportunity to contribute according to their means. Learn how they address affordability and ensure equitable access to food for all income brackets.

Key findings

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New immigrants are contributing to the cultural diversity within the communities and each CFEs community has unique access needs influenced by diverse cultural backgrounds.

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Analysing data from the Australian Bureau of Statistics (ABS) helped identify various community segments based on income, demographics, cultural ancestry, language, work, travel, and more.

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Building and maintaining relationships with community group representatives is crucial for gaining insights into specific community groups.

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Each community food enterprise needs to respond to the unique access needs of their communities and a cookie-cutter approach is not effective in achieving equitable access.

Recommendations

Design/pilot a “food with dignity” voucher fund for the Community Food Enterprise sector, to increase access to food for low income households (more detailed recommendations relating to this fund can be found here link to the global scan.

Fund support to CFEs to build their capacity to provide food with dignity:

Financial analysis/business model development.
Benchmarking to support iterative development of financial model/funding formula for sector wide advocacy.
Needs analysis – identify the groups and their specific complex barriers, needs and preferences re. buying/consuming food.
Lean experiments for marketing mix/community engagement.
Impact monitoring and evaluation for CFEs.
Networking capacity to surface and share needs.

Conduct further research and development of models that inform the true costs/benefits of regenerative food vs conventional food, to inform operational subsidies along the supply chain.

Advocate for funding/subsidies for regenerative producers and supply chain actors consistent with these true costs/benefits.