Madison, Wisconsin, was hit particularly hard by the 2015 merger of Kraft and Heinz and its accompanying layoffs. Now, the city is assessing whether a meat processing plant shuttered in the merger could be repurposed into a food terminal for regional food producers. If the terminal is approved, the city will join others who are shoring up medium-scale food distribution in the face of industry-wide consolidation.
After its $62 billion merger, Kraft and Heinz laid off thousands of workers across the country. In Madison, 1,000 jobs were cut in the city’s Northside neighborhood with the closure of an Oscar Mayer processing plant. The former factory’s site is now being considered for a different food purpose: a wholesale terminal for regional and local food that can serve the area’s small businesses.
The proposed food terminal would emphasize wholesale distribution and last-mile delivery, setting itself apart other local food projects. The aim is not to create another food hub, proponents say, which already exist in the Madison area and generally have some consumer-oriented function. Rather, the terminal will connect growers together to better serve a mid-scale market. “There is a need for business-to-business services like wholesale farmers markets, cross-docking capacity, shared cold storage, and processing/packing capacity,” reads a report produced by the 13-person commission tasked by the city of Madison to evaluate the former Oscar Mayer site.
The terminal also aims to advance the region’s food equity by serving a wide range of businesses that might not otherwise have access to regional food, like corner stores and ethnic markets. “We see market access and food access as two sides of the same coin,” says Michelle Miller, associate director of programs at the University of Wisconsin at Madison’s Center for Integrated Agricultural Systems. “The lack of competition in the food sector is depressing the ability for community-oriented businesses to emerge.”
The model is inspired by similar projects in other cities, such as the Ontario Food Terminal in Toronto, Common Market in Baltimore, and the San Francisco Produce Market. These projects host dozens of producers and serve primarily other food businesses.
“There are implications for small food retailers within the city to be able to benefit from such a facility,” says George Reistad, Madison’s food policy coordinator. “A lot of them are driving to Chicago regularly to get wholesale product that they can’t find locally.”
The wholesale market has been hollowed out over the past several decades by ongoing consolidation among distributors. Today, the biggest organic and natural foods distributor, United Natural Foods, Inc., is the only distribution option for many producers attempting to break into the local food market. If growers and suppliers don’t produce enough or aren’t located conveniently enough to make it onto UNFI’s route, they can be left without a means of getting their products to customers.
Sarah Lloyd is a Wisconsin dairy farmer and works with the Wisconsin Food Hub Cooperative, a farmer-led cooperative of mostly produce farms. Lloyd says that the food hub’s greatest obstacle is transportation.
“We [have] needed to look for buyers that we could take a whole semi-load to, like a small grocery chain,” she says. But the coop struggles with other activities, like delivering throughout the week to restaurants. “We can’t do that last mile. We can’t do even a couple pallets to the hospital. We just can’t overcome the transport.” The addition of a food terminal would mean producers could sell to customers at a central location, rather than having to work out delivery logistics.
Madison residents learned in November 2015 that the local Oscar Mayer meat packaging plant would close as a result of the Kraft-Heinz merger. The plant was vacated in 2017 after being operational in Madison for nearly 100 years. At one time, it employed 4,000 workers.
Since the plant’s closure, the city has undergone an evaluation process to determine what the former Oscar Mayer buildings should house. The 13-person Oscar Mayer Strategic Assessment Committee met throughout 2018, surveyed the community, and produced a report identifying various opportunities for the site, including food manufacturing, aggregation, and distribution.
In December, the city contracted with a consultancy to investigate the food terminal concept and generate a business plan and economic assessment. The city has also been awarded $500,000 from the state to develop the site. The food terminal’s advocates say the project could bring hundreds of jobs back to the neighborhood—as many as 630 jobs serving 100 producers in the first five years of operation.
The Kraft-Heinz merger has resulted in over 10,000 layoffs since 2013, including seven plant shutdowns. The cuts have happened across the U.S. and Canada, including at Kraft’s headquarters outside of Chicago. The merger was orchestrated by billionaire investor Warren Buffet’s firm, Berkshire Hathaway, and the Brazilian investment firm 3G Capital, which bought Heinz in 2013. The companies have a reputation for cost-cutting though mass layoffs.