How to Run a Produce Co-Op from Home

Are you interested in running a fresh produce co-op from home? Learning how to run a produce co-op can be a great way to work from home and get free produce for your family at the same time.

My family has run a produce co-op for the last several years. It is primarily run by my teens because it is a great business for kids, but everyone helps out.

We fell into the produce business. I’d loved our CSA in California and when we moved I had looked for something similar. I found a produce co-op locally and purchased my first box. Not long after that, the person running the group said she was stepping down and asked if anyone wanted to take over.

I didn’t consider it at all. I was mostly bummed that I’d have to keep looking for a produce co-op. Then I realized that I had 3 teenagers and they needed a job to keep them busy. Jumping into the produce co-op seemed like the perfect solution.

At first we stayed small — 20-30 boxes out of our garage. Then Covid hit and we realized there was a huge need for fresh produce in our community, especially since so many of the grocery stores were struggling to stay stocked.

We started offering no-contact deliveries. We ramped up from 20+ boxes to over 250 a week.

We’ve since scaled back but we’ve also picked up a contract with the local college to get fresh produce to students, many of whom don’t have transportation available to help them get to the grocery store so they rely on fast food.

Running a produce business has been a great way for my teens to get some experience working. They’ve learned accounting, supply/demand, customer service, marketing, social media, and quality control.

So, how do you start a produce co-op?

First, you’ll want to look at your local laws and regulations. Many businesses run by kids fall under cottage laws, but if you want to run a produce co-op yourself you will need to look into business licensing and regulation.

Next, you’ll need to find a distributor.

The idea behind a produce co-op is you buy low and sell just a bit higher. The average markup for produce in the grocery store can be up to 50%. We cut that down to 20-30%, depending on the the number of boxes we sell each week. If we sell more produce boxes we are able to offer everyone a steeper discount.

We went with a traditional food distributor that also delivers to the hospital, grocery stores, and schools. This allows us to purchase everything from one place.

I’ve known other produce co-ops who purchase directly from local farmers individually or arrange for a discounted bulk purchase price from local grocery stores.

To work directly with the grocery store, you will need to introduce yourself to the produce manager. We have occasionally worked with our local produce managers, however, the price is much higher and we typically only make a tiny profit or break even doing things that way.

Once you do that, you’ll need to build an audience.

We stay in touch with our customers through a Facebook group. You could also use Instagram, a mailing list, a website, or any other way you’d prefer to stay connected.

To build your customer base, you’ll need to market your produce co-op.

We no longer do any marketing because our Facebook group has grown to the point that we have all the business we can reasonably manage. Any growth now comes through word of mouth.

In the beginning, we used Facebook marketplace and local Facebook groups.

You could use Facebook ads. We never went that route because we didn’t have the capacity to deliver any more boxes than we already were but that can be a very effective tool.

How to Make a Profit with a Produce Co-Op

Our primary goal is to get fresh produce for our family each week and help our community, but we do earn a bit of extra money each week that my boys are putting in their college savings. If your primary goal is to save money on groceries, there are some great tips for creating a basic produce co-op here.

We have very small margins. In order to profit, we make sure to:

• Buy in season. Our distributor lets us know what is fresh and which items are readily available (which means more affordable)
• Minimize waste. Any wasted produce is like throwing away money. We often end up with lots of extra of a few items, more than we can eat in a week. To reduce waste we freeze or preserve what we cannot eat right away. If we can’t do that we donate produce within the community.
• Pay attention to quantity. One of the things that often gets us, is fruits and vegetables are sold in set quantities. If we have sold 30 boxes for the week, we have to be aware of items that come in batches of 11 or 12. If we have to buy more produce than we sold, that cuts down on our profits. My family is able to eat the extra, but some weeks our increase comes in the form of produce and not cash if we aren’t careful with our numbers.
• Offer added value. As I’ve said, our profit margins are low. To counteract that, we offer add-on items, such as full cases of berries or apples, and delivery (which we charge a small fee for). If we just offered produce boxes without delivery, we’d primarily be trading our services for free produce. The profit primarily comes in other forms.

Running a produce business has been a great way for my family to work together, help my teens earn money for college, and get free produce for my family to enjoy.