If urban farms are to be maintained or even developed further, they will need to be economically viable in the long run. This was the starting point for a research led by a team at the South Westphalia University of Applied Sciences (Fachhochschule Südwestfalen) in Germany, and more specifically by Bernd Pölling, who is a PhD student there. Their research highlights the importance of understanding how farmers do business to adequately support them
Urban settings matter
Urban settings create both opportunities and challenges for urban farming. Here urban farming refers to market- and business-oriented agricultural and horticultural activities within and at the fringe of cities and agglomerations. Their location is, on the one hand, a great opportunity for these farms. Indeed, they are close, and therefore can easily access, a huge consumer market. This opens a wide range of opportunities.
On the other hand, location is also one of their greatest challenges. Indeed, farming is one of many activities competing for land at the city fringe. Farmers face issues such as land fragmentation, loss of land, but also insecure leasing conditions. Additionally, agriculture does not rank high on the priority list of urban planning, and planning officers in cities or metropolitan regions are not always familiar with agricultural specificities. In these conditions, producing food is more complex next to cities, and only selling one’s products to the anonymous mass market through global long value chains is not enough to make ends meet.
Low-cost specialization, differentiation or diversification: the 3 main business models
So, how does agriculture adapt to these urban settings? Not all urban farmers respond to such pressure in the same way. Based on a literature review and on a study of the Ruhr region in Germany, researchers found that urban farmers adopt two main strategies, which translate into three business models.
The first strategy aims at reducing costs and specializing in products (mainly horticulture) that have a high added-value and high perishability. This business model is called low-cost specialization. However, modern food systems cause fragility for urban farmers in long value chains, so that high-value production alone is not sufficient to maintain profitability on the long run.
The aim of the second strategy is to exploit new revenue by adapting to urban dwellers’ demand:
- First, as more and more consumers are interested in developing direct relationships with food growers, some farms chose to go beyond pure production and anonymous marketing strategies. They develop activities that allow them to market directly to consumers. For instance, they take on processing, packaging, distribution and marketing through channels such as farm shops, farmers markets, pick-your-own, food boxes, etc. This vertical integration allows them to occupy a niche that prevents dependency from the global market. This is the differentiation business model.
- Second, farms chose to respond to urban dwellers’ demands for nature-based activities. They develop new services for touristic, recreation, social, educational or gastronomy purposes. This business model is called diversification.
Urban farms are more and more diversified: should we care?
According to Bernd Pölling, Western European countries, the US and Canada are all experiencing a common trend towards diversification. For example, in the Ruhr region, it is estimated that the number of horticultural farms have decreased by nearly 50 % between 1999 and 2010. Land that was formally used to grow food is now used to provide recreational services, especially equestrian services. This process has even been coined as “horsification”, as a reference to the development of horse keeping.
One could regret that once productive land is now taken away from food. However, the food that was produced before did not necessarily go into the city, as urban farms were also connected to the global markets. One could make the hypothesis that, nowadays, less food is produced close to the cities due to ongoing loss of farmland and transformation into non-productive service-oriented farms (diversification). Yet, increasing shares of the food produced close to the city are directly marketed to the nearby city via short food supply chains (differentiation). This coexistence of food-related differentiation and service-oriented diversification results in heterogeneous and multifunctional urban farming patterns.
City regions need to ensure access to land
This research shows that farmers are able to seize the opportunities that urban settings represent and adapt their activities to urban demands. If policies can support such evolution, their first challenge is to secure farmers’ access to land. This is twofold:
- First, maintaining agricultural land, and ensuring that policies are stringent enough.
- Second, ensuring that leases are long enough to enable farmers to plan ahead their evolution. For example, it is difficult for farmers to start a conversion to organic farming if they are bound to a one or two years lease.
This research also points to the crucial role that urban food consumers have, as their demand for either more direct links with producers or more recreational services directly shapes their cities’ fringes and their ability to produce food to support them.
- Pölling, B. (2016), “Comparison of farms structures, success factors, obstacles, clients’ expectations and policy wishes of urban farming’s main business models in North Rhine-Westphalia, Germany”, Sustainability, vol. 8,446
- Pölling, B., Mergenthaler, M., Lorleberg, W. (2016), “Professional urban agriculture and its characteristics business models in Metropolis Ruhr, Germany”, Land Use Policy, vol. 58, pp. 366-379
NB: the author would like to thank Bernd Pölling for his inputs and comments.