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Abstract
Although the growth in direct markets suggests a significant jump in local food purchasing by
households, direct marketing still only accounts for a small percentage of total food sales because
conventional food supply chains account for the great majority of food dollars. Since these
traditional outlets are often unable to integrate local products from small and mid-size producers,
new opportunities have arisen for farmers to reach wholesale markets. But the economic question
is whether these innovations can compete in terms of efficiency, since the transaction costs associated
with product distribution are likely to rise if new systems do not achieve scale economies.
The goal of this study is to determine what scale would be needed for a local food distributor located
in Northern Colorado to be financially feasible. Since the mission of the distributor is to
increase local food access for wholesale buyers and provide a market outlet for small and midsize
producers; financial feasibility is a necessity but profit is not the primary goal.