Tuesday, February 7, 2012

Guest Reports: Economic Benefits of Farmers Markets and Other Local Food Outlets



The growth in farmers markets is a sign that the local and regional food system is robust and thriving. More farmers markets mean more opportunities for small and midsize farmers — especially beginning farmers — to diversify their farms, sell their products, and grow their businesses. More farmers markets mean more local economic stimulation to more communities which, in turn, mean more job opportunities. More farmers markets mean more access to fresh, healthy, and local food."
Providing support to that argument is a new report from the Union of Concerned Scientists called “Market Forces: Creating Jobs through Public Investment in Local and Regional Food Systems.” It argues that farmers markets and — more significantly — “the local and regional food systems behind them” can be a significant source of job growth with minimal investment.

The report is actually about far more than farmers markets. Report author Jeffrey O’Hara uses farmers markets as a proxy for the whole concept of local and regional distribution of food. And it turns out that, with proper support, growing and distributing fruit and vegetables either directly to consumers or through regional food hubs can represent a real job engine for both rural and urban areas.

The report suggests that government support for new and struggling farmers markets is particularly effective. It states that “modest public funding for 100 to 500 otherwise-unsuccessful farmers markets a year could create as many as 13,500 jobs over a five-year period.” But that’s a floor for job growth rather than a ceiling. Just as significant is support for other local-food institutions such as food hubs and farm-to-school programs — indeed, these kinds of initiatives are what will allow local food systems to scale. More ambitiously, the report also calls for an expansion of farm credit availability to small farmers and changes in the federal crop insurance program to include more “whole farm” coverage rather than the current system which is focused on commodity crops such as corn, wheat, soy, and cotton.  READ MORE




Market Forces
by Jeffrey O’Hara
Union of Concerned Scientists
August 2011
 
As farmers market shoppers have long known, buying food directly from the people who grew it is a great way to add freshness and flavor to your table and more fruits and vegetables to your diet.

But locally grown food is not only good for your taste buds—it creates jobs, keeps money in local economies, promotes community development, and can reduce the environmental and public health costs of the food we eat.

To maximize these benefits, we need new policies aimed at helping local and regional food systems thrive and expand, according to Market Forces, a new UCS report that reviews recent research on these systems and their economic effects. The report recommends the following policy changes:
  • Increase funding for programs that support local and regional food systems.
  • Raise the level of research on the impacts of local and regional food systems. 
  • Restructure the safety net and ensure credit accessibility for local food system farmers.
  • Foster local capacity to help implement local and regional food system plans.
  • Support the realization of farmers market certification standards.  READ MORE

READ THE EXECUTIVE SUMMARY OF THE REPORT

READ THE FULL REPORT



Local Food Systems:  Concepts, Impacts, and Issues

A Report from the Economic Research Service
Economic Research Report Number 97
May 2010

by Steve Martinez, et al. Martinez@ers.usda.gov

READ THE ENTIRE REPORT



Abstract
This comprehensive overview of local food systems explores alternative definitions of local food, estimates market size and reach, describes the characteristics of local consumers and producers, and examines early indications of the economic and health impacts of local food systems. There is no consensus on a definition of “local” or “local food systems” in terms of the geographic distance between production and consumption. But defining “local” based on marketing arrangements, such as farmers selling directly to consumers at regional farmers’ markets or to schools, is well recognized. Statistics suggest that local food markets account for a small, but growing, share of U.S. agricultural production. For smaller farms, direct marketing to consumers accounts for a higher percentage of their sales than for larger farms.

Findings are mixed on the impact of local food systems on local economic development and
better nutrition levels among consumers, and sparse literature is so far inconclusive about
whether localization reduces energy use or greenhouse gas emissions.


What Did the Study Find?

There is no generally accepted definition of “local” food. 
Though “local” has a geographic connotation, there is no consensus on a definition in terms of the distance between production and consumption.  Definitions related to geographic distance between production and sales vary by regions, companies, consumers, and local food markets. According to the definition adopted by the U.S. Congress in the 2008 Food, Conservation, and Energy Act (2008 Farm Act), the total distance that a product can be transported and still be considered a “locally or regionally produced agricultural food product” is less than 400 miles from its origin, or within the State in which it is produced. Definitions based on market arrangements, including direct-to-consumer arrangements such as regional farmers’ markets, or direct-to-retail/food service arrangements such as farm sales to schools, are well-recognized categories and are used in this report to provide statistics on the market development of local foods.

Local food markets account for a small but growing share of total U.S. agricultural sales.
• Direct-to-consumer marketing amounted to $1.2 billion in current dollar sales in 2007, according to the 2007 Census of Agriculture, compared with $551 million in 1997.

• Direct-to-consumer sales accounted for 0.4 percent of total agricultural sales in 2007, up from 0.3 percent in 1997. If nonedible products are excluded from total agricultural sales, direct-to-consumer sales accounted
for 0.8 percent of agricultural sales in 2007.

• The number of farmers’ markets rose to 5,274 in 2009, up from 2,756 in 1998 and 1,755 in 1994, according to USDA’s Agricultural Marketing Service.

• In 2005, there were 1,144 community-supported agriculture organizations (CSAs) in operation, up from 400 in 2001 and 2 in 1986, according to a study by the nonprofi t, nongovernmental organization National
Center for Appropriate Technology. In early 2010, estimates exceeded 1,400, but the number could be much larger.

• The number of farm to school programs, which use local farms as food suppliers for school meals programs, increased to 2,095 in 2009, up from 400 in 2004 and 2 in the 1996-97 school year, according to the National Farm to School Network. Data from the 2005 School Nutrition and Dietary Assessment Survey, sponsored by USDA’s Food and Nutrition Service, showed that 14 percent of school districts participated in Farm to School programs, and 16 percent reported having guidelines for purchasing locally grown produce.
Production of locally marketed food is more likely to occur on small farms located in or near metropolitan counties. 
Local food markets typically involve small farmers, heterogeneous products, and short supply chains in which farmers also perform marketing functions, including storage, packaging, transportation, distribution, and advertising. According to the 2007 U.S. Census of Agriculture, most farms that sell directly to consumers are small farms with less than $50,000 in total farm sales, located in urban corridors of the Northeast and the West Coast.
In 2007, direct-to-consumer sales accounted for a larger share of sales for small farms, as defined above, than for medium-sized farms (total farm sales of $50,000 to $499,999) and large farms (total farm sales of $500,000 or more). Produce farms engaged in local marketing made 56 percent of total agricultural direct sales to consumers, while accounting for 26 percent of all farms engaged in direct-to-consumer marketing. Direct-to-consumer sales are higher for the farms engaged in other entrepreneurial activities, such as organic production, tourism, and customwork (planting, plowing, harvesting, etc. for others), than for other farms. In 2007, direct sales by all U.S. farms surpassed customwork to become the leading on-farm entrepreneurial activity in terms of farm household participation. Barriers to local food-market entry and expansion include: capacity constraints for small farms and lack of distribution systems for moving local food into mainstream markets; limited research, education, and training for marketing local food; and uncertainties related to regulations that may affect local food production, such as food safety requirements.
Consumers who value high-quality foods produced with low environmental impact are willing to pay more for locally produced food. 

Several studies have explored consumer preferences for locally produced food. Motives for “buying local” include perceived quality and freshness of local food and support for the local economy. Consumers who are willing to pay higher prices for locally produced foods place importance on product quality, nutritional value, methods of raising a product and those methods’ effects on the environment, and support for local farmers. 

Federal, State, and local government programs increasingly support local food systems.
Many existing government programs and policies support local food initiatives, and the number of such programs is growing. Federal policies have grown over time to include the Community Food Project Grants Program, the WIC Farmers’ Market Nutrition Program, Senior Farmers’ Market Nutrition Program, Federal State Marketing Improvement Program, National Farmers’ Market Promotion Program, Specialty Crop Block Grant Program, and the Community Facilities Program. (WIC is the acronym for the Special Supplemental Nutrition Program for Women, Infants, and Children.) 
State and local policies include those related to farm-to-institution procurement, promotion of local food markets, incentives for low-income consumers to shop at farmers’ markets, and creation of State Food Policy Councils to discuss opportunities and potential impact of government intervention.

As of early 2010, there were few studies on the impact of local food markets on economic development, health, or environmental quality.
• Empirical research has found that expanding local food systems in a community can increase employment and income in that community.

• Empirical evidence is insufficient to determine whether local food availability
improves diet quality or food security.

• Life-cycle assessments—complete analyses of energy use at all stages of
the food system including consumption and disposal—suggest that localization
can but does not necessarily reduce energy use or greenhouse gas
emissions.

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