MARKET FORCES iiiTable of ContentsFigures and Tables ivAcknowledgments vE X E C U T I V E S U M M A RY 1CHAPTER 1Description of Local Food Systems 6Types of Direct Marketing 6Demand for Local Food 7Supply of Local Food 7Farmers Markets 9Community-Supported Agriculture 10Local and Regional Food Systems Have Scalability Challenges 10CHAPTER 2Supporting Local and Regional Food Systems Is Sound Policy 14Objectives of Government 14Local and Regional Food Systems Can Support Public Objectives 14Local and Regional Food Systems and Food Security 15CHAPTER 3Local and Regional Food Systems Provide Positive Regional Economic Impacts 16Quantifying the Economic Impacts of an Industry or Sector 16Direct Marketing Can Foster Regional Economic Development 17Local and Regional Food Systems Can Result in Sector-Specific Economic Growth 18Economic Impacts of Farm-to-School Programs 21Farmers Markets Can Increase Sales at Neighboring Businesses 21Local and Regional Food Systems Can Increase Business Innovation and Entrepreneurship 22Responses to Arguments against Supporting Local-Food-System Development 22
iv UNION OF CONCERNED SCIENTISTS CHAPTER 4 Local and Regional Food Systems Can Have Positive Social, Health, and Environmental Impacts 23 Local Food Systems Can Promote Healthier Food-Product Choices 23 Local Food Systems Can Reduce the Environmental Footprint of Our Overall Food System 25 Local Food Systems Can Promote Community Interaction 26 CHAPTER 5 Investing in Local and Regional Food Systems and Creating Jobs 27 Initial Funding Can Help New Farmers Markets Succeed 27 Programs that Support Local and Regional Food Systems 28 Determining the Economic Implications of Supporting Farmers Markets 30 CHAPTER 6 Conclusions and Policy Recommendations 32 REFERENCES 34 F I G U R E S A N D TA B L E S Figures ES-1. U.S. Farmers Market Locations, 2010 5 1. Small Farms Account for a Greater Proportion of Agricultural Product Sales from Direct Marketing 8 2. Products Sold by Vendors at Farmers Markets 8 3. Percentage of Farmers Markets with Labeled Products 9 4. The Number of Farmers Markets in the United States Has Increased Rapidly 9 5. Marketing Assistance Needs Identified by Farmers Market Vendors 12 6. Food Products Sold at Food Hubs 13 7. U.S. Principal Operator by Age: Farmers Are Aging 16 8. U.S. Agricultural Acreage by Product: Fruits and Vegetables Account for a Small Fraction of Land 19 Tables 1. States with the Greatest Number of Farmers Markets Per Capita 10 2. Economic Impacts of Farmers Markets 18 3. Economic Impacts of Increased Fruit and Vegetable Consumption 20 4. Potential Employment Impacts of Reauthorizing the Federal Farmers Market Promotion Program 31
MARKET FORCES vAcknowledgments is report was made possible in part through the generous supportof the David B. Gold Foundation, the New York Community Trust, theClif Bar Family Foundation, the Tomchin Family Charitable Foundation,the Deer Creek Foundation, and UCS members.For their reviews of the report, the author would like to thank DavidSwenson of Iowa State University, David Hughes of Clemson University,Larry Lev of Oregon State University, and Stacy Miller of the FarmersMarket Coalition. e time involved in reviewing a paper of this lengthis considerable, and their comments and suggestions greatly improved it.At UCS, the author thanks Margaret Mellon and Karen Perry Stillermanfor the many useful suggestions they provided. eir advice, encouragement,and helpful editing in uenced the report’s nal form.We would also like to thank Steven J. Marcus for copyediting the reportand David Gerratt for his design and layout. e opinions and information contained in this report, being the soleresponsibility of the author, do not necessarily re ect those of thefoundations that supported it or the individuals who reviewed andcommented on it.
2 UNION OF CONCERNED SCIENTISTS The USDA, in its “MyPlate” dietary through direct consumer marketing channels reached $1.2 billion in 2007. guidelines, recommends that Americans e demand for local food has been driven by eat significantly more fruits and consumers who wish to support local farms and other businesses, to purchase healthful food that is fresh and vegetables; in many regions, local tends to be sustainably produced, to interact with farmers could grow a substantial farmers, and to learn more about the food they grow portion of this additional produce. and that consumers eat. e enthusiasm for local and regional foods has also arisen, at least in part, as a back- lash against the de ciencies of our consolidated food production, processing, and distribution system. shopping venues in many cities and towns. Schools, Local and regional food-product sales often occur restaurants, supermarkets, and other mainstream insti- through direct marketing channels. For example, a tutions are also buying food from local farmers. As a farmer could sell food products either directly to a result, innovative farmers are able to develop and expand consumer, such as at a farmers market, at a roadside businesses that generate income in rural communities. stand, or through a CSA; or directly to a retail institu- Most of these markets were independently conceived tion, such as a restaurant, grocery store, or school. as grassroots initiatives, and as such each of them con- Farmers who sell their food through direct marketing tributes uniquely to its community. ese achievements channels tend to operate smaller farms with a variety have been particularly remarkable in that they have of products, such as fruits and vegetables; engage in been mostly self-su cient—realized without the gov- entrepreneurial activities; and follow environmentally ernment subsidies that the increasingly consolidated sustainable production practices. ese farmers can of- mainstream food system receives. ten earn greater pro ts by selling their products through is report shows that local and regional food sys- local food systems than by selling them to a wholesaler tems could expand further, with the potential for cre- in the consolidated food system. In addition, the op- ating tens of thousands of jobs in rural communities— portunity to interact with consumers provides these many of which are struggling economically—and farmers with rsthand information on the demand in urban communities as well. For example, the U.S. for their products. Department of Agriculture (USDA), in its “MyPlate” dietary guidelines, recommends that Americans eat 2. The economic, environmental, and signi cantly more fruits and vegetables; in many re- health impacts of local and regional food gions, local farmers could grow a substantial portion systems depend on how consumers’ of this additional produce in peak growing season. Re- purchasing decisions are altered. gional food systems could also increase market access ere are a multitude of reasons for seeking local and for regional meat and dairy producers, thereby helping regional alternatives to the current consolidated U.S. to foster competition in markets that have experienced food system. For one thing, that system accounts for signi cant consolidation in recent decades. Overall, the 16 percent of the country’s energy use and is a signi - expansion of local and regional food systems could cant contributor to climate change. For another, the complement the nation’s existing mechanisms for food overconsumption of unhealthful processed foods con- production, distribution, and consumption. Greater tributes to Americans’ increased rates of weight gain investment in local and regional food systems would and obesity, which have considerable health conse- thus be an essential step for agriculture policies that quences and large associated societal costs. seek to support such economic activity. Fresh fruits and vegetables are particularly well suited Among the report’s major ndings are: to distribution through direct marketing because they are mostly unprocessed. Communities could see health 1. Local and regional food systems are an bene ts if patrons of local-food markets consequently expanding part of our food system. ate more of these healthful but underconsumed items. Local and regional food-product markets have grown ere could also be environmental bene ts from re- rapidly in recent years and have become entrenched. duced energy usage if diets shifted to eating unprocessed e number of farmers markets in the United States food as a substitute for heavily processed foods. increased from just 340 in 1970 to more than 7,000 While more research is needed to demonstrate how today, and there are now more than 4,000 CSAs. e consumers’ shopping behavior may be altered as a result USDA reports that the sales of agricultural products of buying foods produced nearby, available evidence
MARKET FORCES 5Figure ES-1. U.S. Farmers Market Locations, 2010 Source: Agricultural Marketing Service 2010.This map shows the distribution of thousands of farmers markets across the country, in all 50 states and the District of Columbia.and obtaining more precise data on marketing channels commodities, would be bene cial. In addition, ensur-for local and regional food sales is especially important. ing that farmers selling through local food systems haveOther research priorities include the study of how the access to a ordable credit, either from Farm Creditinstallation of farmers markets and other local-food System banks or from state nancing authorities, couldoutlets in uences consumers’ shopping habits relative allow these farmers to develop and expand theirto their behavior in the absence of such markets, and businesses. Lastly, cost-share programs that provide as-the e ects on low-income people of nutrition programs sistance to organic farmers in obtaining certi cationthat facilitate patronage of farmers markets. could also help them sell food products in local and In addition, research on the feasibility of establish- regional markets.ing local and regional food systems on a greater scalein speci ed areas would help identify where some of Local governments and community organizationsthe most signi cant economic impacts could be real- should foster local capacity to help implementized. Such research would feature comparisons of the local and regional food-system plans.potential regional supply (based, for example, on soil e establishment of local and regional food systemscharacteristics, land availability, and climate conditions) requires a good deal of local e ort and coordination.with the potential demand (based on population, con- When funding is available, there must be evidence thatsumer preferences, and income). is line of research local capacity is su cient to absorb it and that localcould also illuminate the land-use implications of local food initiatives have reasonable prospects for success.food systems geared to increase production of fruits, In addition, assistance should be provided to prospec-vegetables, or other food products. tive applicants for developing business plans, conduct- ing outreach, and seeking funding opportunities.Congress and the USDA should restructure thesafety net and ensure credit accessibility for Farmers market administrators should supportlocal-food-system farmers. the realization of farmers market certi cationMany attributes of existing agricultural programs are standards.not well suited to supporting farms and other produc- e development of certi cation standards by farmersers that market their food within localized systems. market administrators could help ensure the integrityFor example, insurance focused on single crops, as is of direct-to-consumer marketing systems. Standardstypical, is not convenient for farmers growing a suc- provide con dence to consumers that vendors arecession of vegetables throughout the growing season. involved in the production of the food they sell and us the development of whole-farm revenue insur- are undertaking environmentally sustainable produc-ance, as an alternative to crop insurance for speci ed tion practices.
MARKET FORCES 7Food sold via direct marketing does not have to be • Lack of awareness of the existence of local foodlocally produced, and vice versa. markets One type of direct marketing involves a farmer sell- • Inaccessibility, inconvenience, or lack of proximitying food directly to consumers—at a roadside stand, • Higher prices (whether perceived or actual) forU-pick operation, or farmers market, for example, or locally produced foodthrough subscription programs known as community- • Lack of variety of food, or too-small quantitiessupported agriculture (CSA). A New York study foundthat full-time direct marketing farmers used a variety Food retailers have additional challenges associated withof direct marketing channels, while part-time direct purchasing local food, such as in ordering, delivery,marketing farmers reported a greater percentage of sales and reliability. Nonetheless, for retailers and consum-in farmers markets (Lyson, Gillespie, and Hilchey ers alike, the obstacles cited are not associated with the1995). In 2007, 136,817 farms sold agricultural prod- desirability of the food product.ucts directly to individuals for human consumption,with sales totaling $1.2 billion (USDA 2009, Table SUPPLY OF LOCAL FOOD58), although challenges associated with measuring Some farmers can obtain greater revenue by selling fooddirect marketing sales suggest that this number is un- via direct marketing in local markets than by sellingderstated (e.g., Brown 2002). e reported number of food to wholesalers. at is, direct marketing allowsfarms engaged in direct consumer marketing in 2007 local food producers to retain most, if not all, of therepresented a 17 percent increase from 2002. Although revenue from the retail sale of their product; they can6 percent of all farms are involved in direct consumer receive up to seven times greater net revenue on a per-sales, they account for only 0.4 percent of total agri- unit basis from selling locally than in conventionalcultural sales. markets (King et al. 2010). ese advantages can have Instead of selling directly to consumers, farmers important nancial implications for farmers, as mar-could sell food directly to either a retail facility or keting costs accounted for 84 percent of the U.S. retailfood service institution, thus bypassing the wholesale sales value of food products in 2008 (Canning 2011).distribution system. For example, a farmer could sell However, they must also market the product them-products directly to a grocery store, restaurant, hospi- selves, which can incur unpaid labor costs of 13 per-tal, or school. Institutional marketing is generally more cent to 62 percent of the retail price (King et al. 2010).feasible for a group of farmers, which underscores the Some consumers may be willing to pay a higher priceimportance of developing cooperative structures. for locally produced food, although food products will generally need to have other attributes, such as beingDEMAND FOR LOCAL FOOD grown through sustainable production practices, to ere are various reasons why some consumers and re- receive a premium (King et al. 2010). Farmers may alsotailers are purchasing locally produced food. According engage in direct marketing for the opportunity toto a recent literature review (Martinez et al. 2010), socially interact with consumers and retain indepen-these buyers: dence from intermediary purchasers, processors, and• Believe local food is fresher retailers. Finally, a major bene t of direct marketing is• Believe local food is of better quality that farmers can obtain rsthand, real-time feedback• Want to support local businesses and producers about products that customers desire, and then can• Want to know the source of the food adapt their business accordingly.• Want food with greater nutritional value Who are the farmers who supply food to local• Prefer food grown through environmentally food markets? We discuss four characteristics of these sustainable practices (e.g., organic) farmers, using direct consumer marketing as a proxy• Enjoy the shopping experience for local food sales.• Can obtain a greater variety of food• Can pay lower prices Farmers Who Engage in Direct Consumer Marketing Tend to Operate Smaller1 FarmsAs reported by the same researchers, the largest ob- Figure 1 (p. 8) shows that farms of fewer than 50stacles that consumers cite for not buying local food acres account for 29 percent of U.S. direct consumer-include: marketing agricultural sales, but only 2 percent of total1 “Smaller” may apply either to farm revenue or acreage. Starr et al. (2003) and Hunt (2007), in case studies in Colorado and Maine, respectively, found that direct marketing farmers produced their food on small-acreage farms.
8 UNION OF CONCERNED SCIENTISTS Figure 1. Small Farms Account for a Greater farmers accounted for 57 percent of the value of direct Proportion of Agricultural Product Sales consumer marketing sales (USDA 2009). from Direct Marketing 100% Farmers Who Engage in Direct Consumer Mar- 90% keting Tend to be Fruit and Vegetable Producers 80% Fruits and vegetables are well suited to direct market- 70% ing because they require little processing. Vegetable/ melon and fruit/tree-nut producers each account for 60% 28 percent of the value of all agricultural products sold 50% via direct consumer marketing (USDA 2009). Forty- 40% four percent of all vegetable and melon producers sell 30% directly to consumers, as do 17 percent of fruit and nut 20% producers, but only 7 percent of livestock producers 10% and 2 percent of those growing non-fruit-or-vegetable 0% crops (grains, for example) seek direct consumer sales Direct Marketing Total Sales (Martinez et al. 2010). Figure 2 shows that 92 percent 1,000 acres or more 50 to 999 acres 1 to 49 acres of farmers markets have vendors who sell fresh fruits Source: USDA 2009. and vegetables, while 45 percent of vendors at farmers markets sell fresh fruits and vegetables. agricultural sales, and these percentages are respec- tively 62 percent and 30 percent for farms of 50 to 999 Farmers Who Engage in Direct Consumer acres. Similarly, according to the USDA’s 2007 Cen- Marketing Tend to Engage in Environmentally sus of Agriculture, farmers with less than $250,000 in Sustainable Production Practices2 annual sales represented 96 percent of the farms that Figure 3 shows that common product labels at farmers engaged in direct consumer marketing, and those markets include “locally grown,” “organic,” “chemical- Figure 2. Products Sold by Vendors at Farmers Markets 100% 90% % of U.S. farmers markets 80% selling selected products 70% % of U.S. vendors selling selected products at farmers markets 60% 50% 40% 30% 20% 10% 0% es s es s g y ds ds y d r bl er rv od kin ltr o o air fo o he et a ow es e go or po u fo fo d ea Ot d d d or s ve g nd pr ke dw to r re se ilk or a d Ba oo ep a es M nd bs an rw ea Pr oc Fis h a r s, M Pr its He ut ts o fru ,n af h ey Cr es n Fr Ho Source: Ragland and Tropp 2009. 2 See also Starr et al. 2003 and Hunt 2007.
MARKET FORCES 9free” or “pesticide-free,” “natural,” “pasture-raised/free- Figure 3. Percentage of Farmers Marketsrange,” and “hormone-free” or “antibiotic-free.” ese with Labeled Productslabels are intended for education and marketing pur- 70%poses, as consumers use this information to decidewhether to purchase food. 60% Local food markets are particularly important for 50%organic producers. More than 17 percent of USDA- 40%organic products are sold through direct consumer and 30%retail marketing (USDA 2010; USDA 2009). Organ-ic direct-marketing farmers earned 75 percent on aver- 20%age more than their nonorganic counterparts, and they 10%sold a larger quantity of commodities than organic 0%farmers who did not engage in direct marketing y e/ d/ / r all n ic al ee he oc ow an re l-f free ur ise -fr free Ot(Martinez et al. 2010). In any case, organic farming L r rg at ra e O ica e- N e- e on ic-has important implications for supporting more food g emticid st ur rang r m iotproduction: 78 percent of organic farmers stated in Ch es Pa ree- Ho ntib p f a2008 that they intended to maintain or expand their Source: Ragland and Tropp 2009.organic operations over the next ve years.3 Figure 4. The Number of Farmers Markets inFarmers Who Engage in Direct Consumer the United States Has Increased RapidlyMarketing Tend to Operate Diverse Farms and 8,000Undertake Entrepreneurial ActivitiesSmall farms with direct sales often grow multiple prod- 7,000 Number of U.S. Farmers’ Marketsucts (Starr et al. 2003). Farms that engage in direct 6,000marketing with no additional on-farm entrepreneurialactivities earn $6,844 in average direct sales per farm, 5,000but farms that engage in three additional on-farm en- 4,000trepreneurial activities earn $28,651 (Martinez et al.2010). Small farms involved in direct marketing con- 3,000stitute 28 percent of farmers that produce on-farmvalue-added goods such as processed products; such 2,000farms also constitute 33 percent of participants in CSAs 1,000and 49 percent of organic producers (Martinez et al.2010). Farmers market vendors have expanded exist- 0ing product lines, begun additional processing, devel- 94 96 98 00 02 04 06 08 09 10 11 19 19 19 20 20 20 20 20 20 20 20oped mailing lists, made new business contacts, and Source: USDA 2011b.sharpened their customer relations, merchandising, andpricing skills (Feenstra et al. 2003). designed to allow farmers to directly sell their products to consumers.FARMERS MARKETS Farmers markets once constituted a conventionalWe examine farmers markets in more detail in this sec- channel for selling fresh food in the United States,tion because of their role as a potential keystone of particularly in cities. roughout the early and middleemerging local food systems (Gillespie et al. 2007), parts of the twentieth century, the number of farmerstheir unique role in facilitating direct marketing—sales markets decreased as the food system consolidated, in-at farmers markets exceeded $1 billion in 2005 (Rag- terstate highways were developed, and large irriga-land and Tropp 2009)—and the superior data about tion projects allowed produce to be grown far awayfarmers markets in comparison to other local food mar- from consumers. By 1970, only 340 farmers marketskets. While no consistent legal de nition of farmers were left in the country (Brown 2001). is trend hasmarkets yet exists (Briggs et al. 2010), they are gen- reversed itself in recent decades, however. Figure 4erally conceptualized as structured market settings indicates that the number of farmers markets in the3 Online at www.agcensus.usda.gov/Publications/2007/Online_Highlights/Fact_Sheets/organics.pdf, accessed July 2, 2011.
10 UNION OF CONCERNED SCIENTISTS Table 1. States with the Greatest Number rules requiring that vendors sell products that they of Farmers Markets Per Capita produce themselves (Ragland and Tropp 2009). # of Farmers COMMUNITY SUPPORTED AGRICULTURE Rank State Markets A CSA system is traditionally an arrangement whereby 1 Vermont 84 a consumer purchases a “share” of on-farm produce from a farmer early in the year and receives a weekly 2 North Dakota 56 delivery of fresh produce throughout the growing sea- 3 Iowa 232 son (e.g., UCS 2009; Brown and Miller 2008). Fruits and vegetables typically predominate, though other 4 New Hampshire 90 farm products can be included as well. e bene ts to 5 Hawaii 83 farmers are that they receive payment for their prod- ucts earlier in the calendar year before harvest, they can 6 Maine 77 mitigate the e ects of price or production risks that 7 Wyoming 30 could occur during the growing season, and by having completed their marketing before growing season they 8 Montana 48 can focus exclusively on production. Consumers may 9 Washington, DC 28 prefer this approach because it enables them to support local farmers, obtain food that may be fresher than 10 Idaho 65 store-bought, and learn more information from farm- ers about how the food is grown. CSA models have evolved over time, and some now do not require that consumers buy a share in advance or allow customized United States grew to 1,755 by 1994 and reached 6,132 ordering. One directory estimates that there are cur- by 2010, and there are currently 7,146 operating farm- rently over 4,000 CSAs in the United States.5 ers markets. Table 1 shows the states with the greatest number LOCAL AND REGIONAL FOOD SYSTEMS of farmers markets on a per-capita basis and demon- HAVE SCALABILITY CHALLENGES strates that farmers markets can occur in regions of the While local and regional food systems are experiencing country that do not have large urban centers. Many of growing sales volume, barriers exist to increasing their these states are located in the Midwest (Iowa, North scale. In this section we discuss some of the most Dakota), northern New England (Maine, New Hamp- serious barriers: challenges pertaining to geographic shire, and Vermont), and the Rocky Mountain West limitations; impediments to the e ectiveness of direct (Idaho, Montana, and Wyoming). is nonurban- marketing; inadequate institutions, infrastructure, and occurrence phenomenon also holds at the county regulations for facilitating local and regional food level, as rural areas have a greater density of farmers systems; and inadequate agricultural programs for markets on a per-capita basis than do urban areas.4 assisting local-food-system farmers. However, these ndings do not imply that there are higher per-capita purchases of local food in rural areas. Geographic Limitations A farmers market can be administered by some Geographic limitations suggest that food systems could other organization or else become its own organization. be more e ective at regional levels than at exclusively e level and sophistication of a farmers market bureau- local levels (e.g., Clancy and Ruhf 2010). First, region- cracy is generally proportional to its size (Stephenson, al systems can expand product availability throughout Lev, and Brewer 2007). Forty to 45 percent of member the year as a result of varying growing seasons within associations in the Farmers Market Coalition are reg- a region. is local variation can also help mitigate istered as 501(c)(3) nonpro t organizations (Briggs et seasonal bottlenecks at processing facilities by having al. 2010). Most farmers markets are operated on a utilization occur over a longer period. Seasonal uc- seasonal basis (consistent with the growing season), tuations in demand for particular products may exist tend to be in an outdoor public location, and establish as well. 4 See map online at www.ers.usda.gov/AmberWaves/December10/Indicators/On eMap.htm, accessed July 2, 2011. 5 Online at www.localharvest.org/csa, accessed July 3, 2011.
12 UNION OF CONCERNED SCIENTISTSFigure 5. Marketing Assistance Needs Identi ed larly critical institutional channel to fostering greaterby Farmers Market Vendors product sales is through mainstream supermarkets90% (King, Gomez, and DiGiacomo 2010). e lack of nancial support, time, and infrastructure are the most80% common barriers that farmers face in direct marketing70% to institutions, implying that farmer co-ops or other60% such groups may be essential to addressing these chal-50% lenges (Martinez et al. 2010; Vogt and Kaiser 2008).40% However, aggregation of food from di erent farmers30% can lead to obstacles in identifying the source of the20% food, should that be necessary (Martinez et al. 2010).10% Food hubs 0% d n g g g s A food hub is a drop-o point for farmers and a pick- an y io s tin rs sin tin ch es g g licit ot ign ge me di ke ear sin nin up location for distributors and customers. It permits in om pa r n ar Bu lan tis ub Pr am Ta nsu ha M res the purchase of source-identi ed local and regional ver p c co e rc pAd M food, coordinates supply-chain logistics, and is a facil- ity for food to be stored, lightly processed, and pack-Source: Ragland and Tropp 2009. aged so that it can be sold under the hub’s regional label. As such, food hubs contribute to the expansion Farmers market organizers or institutions may of local and regional food markets. charge vendor fees to cover the costs associated with e USDA has identi ed more than 100 food hubs market administration, but breaking even on costs can (USDA 2011a), many of which are legally organized be challenging, particularly in the early years of estab- by nonpro t groups or public-sector entities. Sixty per- lishment. Most farmers markets operate on shoestring cent of these food hubs have been operating less than budgets, with the median annual operating budget ve years and on average they have 13 employees each. being about $2,000. As a consequence, 59 percent of Food hub customers include restaurants, grocery stores, farmers markets rely exclusively on volunteer workers, colleges or universities, food cooperatives, distributors, and 39 percent have a paid manager with no other school food-service providers, and multi-farm CSAs. employees (Ragland and Tropp 2009). In some loca- Figure 6 shows that while fresh produce is the most tions, extension-service personnel ll the management frequent product sold at food hubs, at least 60 percent function at no charge. Nevertheless, having a paid also sell eggs, dairy, poultry, and meat. Innovative mar- manager is an important sign that the farmers market keting arrangements could be encouraged as food hubs is nancially viable, as mean sales at markets with expand. For example, virtual supermarkets could allow paid managers are ve times higher than at those with consumers to order food products online from a local unpaid managers (Ragland and Tropp 2009). farmer and pick them up the following day. Meat and poultry also have unique direct consumer marketing challenges. Consumers may have food safe- Local Capacity to Support Local and ty concerns about meat in an open-air market or may Regional Food Systems lack a cooler for transporting frozen meat products (Lev ree types of capacity must be fostered to ensure that and Gwin 2010). Also, operating a meat processing sales of local and regional food products are increased. and distribution facility requires specialized skills that First, appropriate expertise and technical assistance are di er from those of farming; this fact can make prob- key assets for developing local food markets (Martinez lematic the successful implementation of a farmer- et al. 2010). For example, given the extensive outreach owned slaughterhouse cooperative. e ort that local and regional food systems must under- take, some regions have developed food plans that doc- Facilitating institutional sales ument the constituent networks, relationships, and Farm-to-school initiatives help schools invest in infra- coordination mechanisms required. Innovative pro- structure and capacity building to position themselves posals such as those outlined in the Iowa Local Food to buy healthful food from local farmers. Analogous & Farm Plan, the Local Food Assessment for Northern opportunities for local food systems could be explored Virginia, and a northeast Ohio report, e 25% Shift, in collaboration with other institutions, such as the address the capacities needed to help ensure the military, prisons, food banks, and hospitals. A particu- successful implementation of such plans.
14 UNION OF CONCERNED SCIENTISTS CHAPTER 2 Supporting Local and Regional Food Systems Is Sound Policy OBJECTIVES OF GOVERNMENT industrial agriculture generates. Annual costs of envi- An important role of government is to attempt to en- ronmental and health externalities in the United States sure that markets operate e ciently so that societal from agricultural production are estimated between welfare is maximized. Although unregulated markets $5.7 billion and $16.9 billion (Tegtmeier and Du y 2004). can maximize aggregate welfare in theory, the condi- Whether local and regional food systems reduce the tions under which they are ine cient may warrant social cost of food depends on their comparison with government intervention. Speci c conditions (e.g., Sti- the private production costs, subsidies, and externali- glitz 2000) that can lead to ine cient markets include: ties of food products in the highly consolidated food 1. Failure of competition. ere must be a large system. Measuring these factors is di cult, and they number of buyers and sellers, with low entry and are likely to vary regionally, seasonally, and by food exit barriers, of a product so that rms cannot product. Not all food can be produced locally in all individually in uence market prices. locations, and consumers may buy some food products 2. Public goods. Goods that are nonrivalrous9 and from local farmers but other food products from nonlo- nonexcludable10 will be underprovided by private cal sources. us a critical research objective is to con- markets, given the potential for “free-riding” sider the implications of integrating local and regional (when someone consumes a good or service food products to a greater extent into our current con- without paying for it). solidated food system. 3. Externality. When a transaction a ects an ere are multiple concepts of a “local or regional individual not involved in the transaction, an food system,” and they are often confounding. A nar- externality has occurred. Pollution is an example row approach to quantifying the net incremental of a negative externality. bene ts of local and regional food systems is to assess 4. Incomplete markets. When a private market the implications of proximity of local consumption and does not provide a good or service that consumers production if there was no change in diet for the are willing to purchase, it is said to be incomplete. consumers who purchased locally produced food. 5. Information failures However, there are attributes of local and regional 6. Unemployment, in ation, and disequilibrium food systems that are not associated with geographic proximity. For example, the food-product mix in local LOCAL AND REGIONAL FOOD SYSTEMS and regional food markets di ers from that of con- CAN SUPPORT PUBLIC OBJECTIVES ventional food markets. Local food-product sales are External costs in the U.S. consolidated food system associated with a greater percentage of fruits and arise from the billions of dollars of taxpayer subsidies— vegetables and the use of sustainable agricultural directed to commodity crop producers, for example— production practices. that are allocated annually to support that system. Calculating the bene ts of integrating local and re- Such costs also include the negative externalities that gional food products into the conventional food system 9 “Nonrivalrous” implies that if one person consumes the good, this does not reduce the ability of other people to consume the good. 10 “Nonexcludable” implies that it is di cult or impossible to prevent someone from consuming the good.