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.
16 UNION OF CONCERNED SCIENTISTS CHAPTER 3 Local and Regional Food Systems Provide Positive Regional Economic Impacts A critical objective for a community is to promote QUANTIFYING THE ECONOMIC IMPACTS investments that provide sustainable economic pros- OF AN INDUSTRY OR SECTOR perity and employment for its residents. Economic Economic impact analysis provides an estimate of the development is a particularly critical priority in rural local or regional expenditures that arise from the exis- communities (e.g., Vilsack 2010). tence of a market. While its ndings do not indicate If the United States wishes to sustain agricultural whether a market is economically e cient, as discussed production in the future, one priority is to foster in the previous section, economic impact analysis is markets for new farmers, as the country’s farmers are used to measure changes in regional economic growth, collectively aging. Figure 7, a histogram of principal employment, and income. e value of goods and operators by age, shows that 30 percent of farmers are services sold by a business, or the “direct” e ect of a older than 65 years of age. In 2007, the average age of market, is just one component of the market’s econ- the principal farm operator was 57 years—an increase omic impacts. e business must also purchase inputs of two years from 2002 and seven years from 1978. to produce its goods, and these expenditures are the Meanwhile, among new farmers, direct consumer “indirect” e ects of a market. Direct and indirect marketing channels loom large: 40 percent of farmers e ects lead to increases in labor and capital income engaged in direct marketing have fewer than 10 years in households. is results in additional expenditures of experience (Martinez et al. 2010). by households, which are the “induced” e ects of a particular market. e “economic multiplier” of a market is a measureFigure 7. U.S. Principal Operator by Age: of the increase in economic activity that occurs as aFarmers Are Aging consequence of direct market sales.11 Local food sys- 700,000 tems may have other desirable attributes from a com- munity development perspective, such as durability,Number of Principal Operators 600,000 that the comparison of multipliers alone would not 500,000 reveal (Meter 2010). Nonetheless, multipliers do pro- vide a common framework across which comparisons 400,000 in development projects can be evaluated. Research that establishes the economic impacts of 300,000 farmers markets has been based on input-output (I-O) 200,000 models, which establish economic linkages between the outputs of one sector and the inputs of another 100,000 (e.g., Hughes 2003). To undertake such an analysis, 0 farmers market researchers administer surveys of Under 25 35 45 55 65 75 farmers markets within a speci ed region, such as a 25 to 34 to to 54 to 64 to 74 years state, and they then rely on model parameters to de- years years 44 years years years years and over termine the economic impacts of the farmers marketsSource: USDA 2009. 11 e fraction for determining a multiplier is thus the sum of direct, indirect, and induced e ects divided by direct e ects.
18 UNION OF CONCERNED SCIENTISTS Table 2. Economic Impacts of Farmers Markets Henneberry, Whitacre, Hughes et al. (2008) and Agustini (2009) Otto (2010) State West Virginia Oklahoma Iowa # of Farmers Markets in Survey 34 21 152 Survey Respondents Vendors Consumers Consumers Regional Modeling System IMPLAN IMPLAN IMPLAN Increase in Employment Gross 119 jobs; net 82 jobs 113 jobs 576 jobs $59.4 Increase in Gross Output Gross $2.4 million; net $1.1 million $5.9 million million $17.8 Increase in Personal Income Gross $0.7 million; net $0.2 million $2.2 million million Output Multiplier Not reported 1.78 1.55 for determining its net economic impacts, though re- 21 farmers markets in Oklahoma led to a gross search is lacking on the displaced expenditures that increase of 113 jobs, $5.9 million in output (with arise from shopping at a farmers market per se. a multiplier of 1.78), and a $2.2 million increase Survey results can vary depending on whether in income. consumers or producers are surveyed. Henneberry, • Otto found that 152 farmers markets in Iowa Whitacre, and Agustini surveyed farmers market con- led to a gross increase of 576 jobs, a $59.4 million sumers, whereas Hughes et al. and Miles and Hood increase in output (with a multiplier of 1.55), surveyed farmers market vendors. Otto surveyed both and a $17.8 million increase in income. consumers and producers, nding that consumer sur- • Myles and Hood found that 26 farmers markets veys reported $38.4 million in 2009 farmers market in Mississippi led to a gross increase of 16 jobs, a sales while producers reported only $11.2 million. Otto $1.6 million increase in output (with a multiplier regarded the consumer survey data as more accurate of 1.7), and a $0.2 million increase in income. and thus used those data. Such a wide disparity between Unlike the other studies, Myles and Hood reported estimates demonstrates the challenges associated with only the direct and indirect economic impacts and collecting direct marketing data, the importance of did not include any induced e ects. us their well-designed surveys, and the caution that should be ndings are not listed in the summary table. taken in interpreting survey results. Given the researchers’ di ering assumptions and Another metric is to calculate the number of jobs cre- methodologies, the work of Henneberry, Whitacre, ated per farmers market. Henneberry, Whitacre, and and Agustini and of Otto may represent an upper Agustini report 5.4 jobs per farmers market, Otto 2010 bound on the economic impacts that farmers markets reported 3.8 jobs per market, and Hughes et al. report- could provide, whereas Hughes et al. constitutes a ed 3.5 gross jobs (2.4 net jobs) per market. All these lower bound. Despite these di erences, all the studies estimates included both full-time and part-time jobs. found that farmers markets have positive statewide eco- Because many jobs in agriculture are part-time, Hughes nomic impacts. e results are summarized in Table 2. et al. converted their job estimates to full-time equiva- Speci cally: lents, nding a gross increase of 69 full-time-equivalent • Hughes et al. found that 34 farmers markets in jobs and a net increase of 43 full-time-equivalent jobs. West Virginia led to a gross increase of 119 jobs (net increase of 82 jobs), a gross increase of LOCAL AND REGIONAL FOOD SYSTEMS $2.4 million in output (net increase of $1.1 mil- CAN RESULT IN SECTOR SPECIFIC lion), and a gross increase in personal income ECONOMIC GROWTH of $0.7 million (net increase of $0.2 million). Other studies have examined what the sector-speci c • Henneberry, Whitacre, and Agustini found that economic impacts might be if the demand for locally
20 UNION OF CONCERNED SCIENTISTSTable 3. Economic Impacts of Increased Fruit and Vegetable (F&V) Consumption Swenson (2010) Swenson (2010) Connor et al. (2008) Cantrell et al. (2006) Geographic Region Six Midwest states Large metropolitan Michigan Michigan independently areas within 150 miles of farms in six Midwest states Data USDA Census, Iowa USDA Census, Iowa USDA Census, NASS Michigan data Produce Market Produce Market NASS, Michigan State Calculator Calculator extension data Regional IMPLAN IMPLAN IMPLAN REMI Modeling System Land Use Existing crop Existing crop Existing crop No land change; production production production considered increasing fresh F&V sales vs. processed sales Local F&V Increase in seasonal Increase in seasonal 2.15-fold increase in Corresponding Consumption demand for 100 percent demand for 100 fruit; 1.79-fold increase demand increase for local produce percent local produce in vegetables fresh F&V production Seasonal Varied by product (25 Varied by product (25 Varied by product Not applicable Restrictions percent or 50 percent) percent or 50 percent) Marketing No direct marketing No direct Not stated Threefold fresh F&V Channels marketing direct-marketed; 1.5-fold to 2-fold fresh F&V wholesale Increase in Net 6,724 jobs Net 4,802 jobs Net 1,780 jobs Gross 1,889 jobs Employment Increase in Net $985 million Net $710 million Not reported Not reported Gross Output Increase in Net $336 million Net $242 million Net $211 million Gross $187 million Personal Income Output Multiplier 1.71 Not reported Not reported Not reported prices that the use of IMPLAN or some other standard scenario the net impacts were 6,724 jobs, I-O model would not capture. $985 million in output, and $336 million in in- Studies that have examined this issue, which are sum- come. Under the second scenario, there were net marized in Table 3, include: impacts of 4,802 jobs, $710 million in output, !" Swenson (2010) estimated the economic impacts and $242 million in income. Fruit and vegetable of increasing the seasonal production of fresh production resulted in a 6.7-fold increase in fruits and vegetables in Illinois, Indiana, Iowa, labor income and a 3.6-fold increase in jobs for Michigan, Minnesota, and Wisconsin on existing an equivalent acreage of cropland in corn and corn and soybean cropland under two scenarios: soybean production. Swenson also conducted a statewide demands are satis ed by producers sensitivity analysis by assuming that 50 percent within that state, and a metropolitan regional of this increase was sold via direct marketing; market obtains produce from farms within a 150- under such a condition the increase in employ- mile radius.12 Swenson found that under the rst ment could be much greater. 12 e ndings quantify the total value that would arise if consumption were at these levels and do not attempt to net out any portion of local fruit and vegetable consumption that is already occurring.
22 UNION OF CONCERNED SCIENTISTS estimating the net economic effect on any given solidation of our food system. Lusk and Norwood do neighborhood of installing a farmers market there, is acknowledge that local food can be superior with re- warranted. gard to freshness and quality. ese desirable attributes are important reasons why local- and regional-food- LOCAL AND REGIONAL FOOD SYSTEMS system sales have increased in recent years. However, CAN INCREASE BUSINESS INNOVATION even controlling for all other attributes of food-product AND ENTREPRENEURSHIP quality, some consumers value the product’s source; As noted in a previous section, local food systems can di erentiating local food from nonlocal food can in- foster business innovation and entrepreneurship among uence their decision to buy. farmers (Martinez et al. 2010; Feenstra et al. 2003; Second, available evidence suggests that buying food Lyson, Gillespie, and Hilchey 1995). e economic at farmers markets is more a ordable than buying impacts of these enhanced entrepreneurship skills have food at supermarkets for many products during peak not yet been quanti ed. growing season. Claro (2011) found that grocery stores in Vermont had lower prices than farmers markets only RESPONSES TO ARGUMENTS AGAINST for six of the 14 conventional food products in his SUPPORTING LOCAL FOOD SYSTEM sample,13 and also that most organic food was less ex- DEVELOPMENT pensive at farmers markets than at grocery stores. Pirog Some critics claim that the notion that local food sys- and McCann (2009) found as well that many types of tems promote local economic development “violates locally produced food in Iowa could cost less than the core economic principles taught in every introduc- their nonlocal counterparts. Both studies were under- tory economics class” (Lusk and Norwood 2011). ese taken during the summer, when farmers markets tend authors are correct in arguing that national policy to to be open, and it is not clear how the costs of locally expand local and regional food markets should take produced food compare with those of nonlocal food national impacts into account; this would include in other seasons. evaluating costs to regions and sectors that might be Lusk and Norwood’s claim that spending locally disadvantaged under such an expansion. However, does not help the local economy is based on “long-run” contrary to the authors’ assertions, programs that assumptions. e authors presuppose that if the resi- invest in infrastructure and institutions for local food dents of a community are importing food from out- producers are intended to expand, not restrict, con- side the region, those individuals must have su cient sumer selection. income streams, from wages earned in some higher- Lusk and Norwood premise their arguments on an valued industry, to do this. Lusk and Norwood assume unattributed claim that “local food is generally more that the economy is at full employment, so that work- expensive than nonlocal food of the same quality.” ers can move without cost to nd employment between ere are two problems with this statement. First, the industries. Of course, these conditions frequently do authors implicitly assume that local food markets can not hold, and the “long run” can be a grossly inappro- only be supported through mandates or large subsi- priate lens for contemplating the welfare impacts of dies, when actually these markets have arisen with economic development projects, particularly since pro- modest government support. e authors also fail to viding economic development in rural America is such acknowledge, as have other critiques of local food sys- an important policy priority. us the claim that local tems (O’Rourke 2009), the distortionary role that the expenditures do not help the local economy does not U.S. government has played in subsidizing the con- hold up under scrutiny. 13 Nine of the 14 conventional food products had lower prices, although in three of these cases the di erences were not statistically signi cant.
24 UNION OF CONCERNED SCIENTISTS regard. For example, farmers market organizations are way to collect better information on whether and how unlike supermarkets in that they typically do not sell local-food markets alter consumers’ shopping behavior. their own “store brand” products. Consumers at farm- Meanwhile, methodologies for use by farmers market ers markets or CSAs can obtain rsthand information administrators, such as the Food Environment Evalu- about the food being o ered if they discuss with the ation Device (FEED) developed by marketumbrella. producer the practices employed and the associated org,16 can be a useful way to obtain anecdotal informa- environmental and health bene ts; the result can be tion on any linkages between the patronization of healthier food consumption choices. Other local-food farmers markets and the improvement of human health. initiatives, such as farm-to-school programs—which In a survey of farmers market customers in New assist school districts in developing networks to pur- Orleans, 83 percent reported that the market had chase healthful food from local farmers—can help to changed the way they shopped and 74 percent said it increase students’ awareness of food, improve their had introduced them to new foods. eating habits, and reduce childhood obesity. Some researchers have used targeted interventions People with higher incomes and education levels to see how consumers’ shopping habits change after tend to eat healthier. While a uent individuals may exposure to locally produced food. In one experiment, have su cient access to fresh fruits and vegetables, such food was o ered to employees at di erent work- many of those with low incomes do not. “Food deserts” sites periodically over a summer, with the result that a refer to the inability of people living in low-income neigh- signi cant number of them increased their local-food borhoods to obtain healthful and a ordable food—they purchases in the four weeks thereafter (Ross et al. 1999). lack ready access to a supermarket or discount retailer— e nonrandomized nature of such studies, however, even though they live in a well-populated geographic can limit the ability to draw general conclusions from area (Ver Ploeg et al. 2009). them (e.g., Seymour et al. 2004), so further research Local food markets can provide access to healthful on this topic is warranted. food in instances where supermarkets or discount re- Research into dietary habits of low-income people tailers do not. ere are numerous challenges to install- in particular has focused on the implications of target- ing a farmers market in a low-income neighborhood, ed subsidies for fresh and healthful food. For example, including those related to outreach, awareness, and low-income families that had previously participated accessibility, and residents often assume that prices at in a farmers market nutrition program were more like- farmers markets will be high. us practitioners tend ly to subsequently return to farmers markets to buy to believe that local food markets at such locations fruits and vegetables (Racine Vaughn, and Laditka will not generally be viable without nancial support 2010). In a di erent experiment, when subjects main- (e.g., Markowitz 2010; Grace et al. 2008; Fisher 1999). tained an increased consumption of fruits and vege- As a step in that direction, many large cities have tables for another six months after a six-month subsidy begun hiring food policy directors to promote the ac- had been removed, farmers market participants con- cessibility of fresh and healthful foods, particularly in sumed greater quantities of fruits and vegetables than low-income neighborhoods, to support and facilitate did supermarket patrons (Herman et al. 2008). e community-based gardens, and to assist regional farmers Wholesome Wave Foundation reports that redemption who sell their products at farmers markets, public rates for Supplemental Nutrition Assistance Program markets, or similar venues. (SNAP) bene ts, formerly known as “food stamps,” increased 300 percent subsequent to the implementa- Available Evidence Suggests Local Food Systems tion of matching bonus-incentive vouchers for SNAP Can Promote Healthier Eating Habits among redemption, and an increase in patronage was retained Low-Income People15 when the program was withdrawn (Schumacher et al. It stands to reason that because local food systems gen- 2009). More research into the e ectiveness of these erally feature healthful foods such as fruits and vege- bonus-incentive programs is ongoing. tables, shoppers exposed to these products may increase A recent review suggests that, although other studies their consumption of them. Focused e orts are under have reported positive ndings, additional research on 15 It is also possible that product freshness arising from local production could result in greater nutrient content in the food. We do not explore this connection here, as con rming research has not yet been done (Martinez et al. 2010). 16 Online at farmersmarketcoalition.org/feed-and-other-evaluation-tools-can-give-markets-insight-into-operations-and-impacts, accessed June 20, 2011.
26 UNION OF CONCERNED SCIENTISTS from two di erent distances—were customized to the social capital (e.g., Putnam 2000). Speci cally, the particular situation and therefore not generalizable. shopping experiences at direct marketing venues such However, as discussed earlier, shoppers may con- as farmers markets provide more opportunity for in- sume di erent food products as a result of shopping at teraction between vendors and consumers. Some 40 farmers markets than they otherwise would. us there percent to 45 percent of member associations of the can be signi cant energy savings from local food sys- Farmers Market Coalition are registered as 501(c)(3) tems if consumers shift their consumption to food that nonpro t organizations (Briggs et al. 2010), and many is unprocessed or less processed—that is, to the food others provide the services of a 501(c)(3) but may not products o ered through local-food markets. Research have obtained such registration from the Internal Rev- that examines how shopping behavior is altered is there- enue Service. In order to become a 501(c)(3), an insti- fore essential for determining both health and environ- tution must show evidence of o ering public bene ts— mental impacts. Additionally, the positive ndings e.g., educational or charitable—where “charitable” can identi ed in the previous section are applicable for include providing relief for the poor, lessening the identifying environmental bene ts as well. burdens of government, or preventing community Local food systems are also an important market deterioration.18 Examples of the public bene ts that outlet for food that is produced in an environmentally farmers markets in particular can provide include sustainable fashion (e.g., organic). As discussed earlier, bonus-incentive or gleaning programs, the hosting of many farmers market vendors—and direct marketing health sessions and dissemination of informational vendors in general—engage in environmentally sus- materials, and establishment of an organized central tainable production practices, and other producers have location that facilitates community engagement. suggested they would be willing to use more environ- Sommer, Herrick, and Sommer (1981) found that mentally sustainable practices if consumers demanded 75 percent of shoppers at farmers markets arrived in them (Hunt 2007). groups while 84 percent of supermarket customers Local food systems also have land-use implications. came alone. e authors also found that whereas only ey provide market access for farmers, particularly 9 percent of customers in chain supermarkets had a young and beginning farmers, which helps ensure that social interaction with another customer and 14 per- land remains in agricultural production. is preserves cent had a social interaction with an employee, the the bene cial attributes of farmland, particularly if respective percentages for farmers markets were 63 per- the land would otherwise be developed; if operated cent and 42 percent. Hunt (2007) found that the social in accordance with best management practices, farm- interactions associated with farmers markets, such as land provides many important environmental bene- interacting with vendors, going with other family mem- ts, including wildlife habitat, wetlands protection, bers, and enjoying the shopping experience, were crit- water ltration and recharge, and sequestration of heat- ical factors in consumers’ willingness to patronize these trapping gases. venues. Farmers market managers in the mid-Atlantic It could also be the case that less food is wasted or have enumerated important bene ts that their markets discarded in direct marketing systems. First, a greater provide, such as creating a hub of social activity in a proportion of vendors’ products may be consumed by public space, fostering a sense of community, and in- shoppers in local-food markets than by being sold creasing customer awareness of food and its origins through a wholesaler. In addition, unsold produce at (Oberholtzer and Grow 2003). farmers markets is often converted into value-added Research has not yet quanti ed the value of this products or composted, and many farmers markets greater social connectedness resulting from local and have implemented gleaning programs with local food regional food systems, though nonmarket valuation banks.17 ese observations are anecdotal, however; techniques could be used to address the issue. For ex- more research on food waste is needed. ample, investigators could examine whether real-estate property values in municipalities with farmers markets LOCAL FOOD SYSTEMS CAN PROMOTE were greater than those without them, or a contingent- COMMUNITY INTERACTION valuation study could reveal how much people would Revitalizing social connectedness and civic engagement be willing to pay to help install a farmers market in a is a community development priority because it creates public location. 17 Online at farmersmarketcoalition.org/joinus/faq, accessed July 5, 2011. 18 Online at farmersmarketcoalition.org/501c3, accessed July 5, 2011.
MARKET FORCES 31Table 4. Potential Employment Impacts of Reauthorizing the Federal Farmers MarketPromotion Program Case 1: Higher Case 2: Lower Job Case 3: Higher Case 4: Lower Job Job Growth, More Growth, More Job Growth, Growth, Fewer Markets Markets Fewer Markets Markets Jobs per Farmers Market 5.4 2.4 5.4 2.4 # of Farmers Markets 500 500 100 100 Number of Years 5 5 5 5 Total Jobs Created 13,500 6,000 2,700 1,200 per farmers market, while 2.4 was a more conser- 1,200 to 13,500 jobs created through the reauthoriza- vative estimate. We use them here, as they are the tion of the FMPP. Case 1 is the most optimistic of the only two such estimates published in peer-reviewed four scenarios, as it uses the higher estimates of jobs journals. Caution must be taken, however, when per market and number of markets that could be sup- extrapolating regional employment estimates to cal- ported. Case 4, which uses the two lower estimates, is culate national impacts, as there is no evidence that the most conservative estimate. the job implications of farmers markets in, say, Okla- Supporting the development of local-food-market homa or West Virginia are representative of the job institutions is not the only way in which local and growth that could be expected in other regions. regional food-system jobs can be created. We also More research on the economic impacts of local previously showed that increasing local demand for food systems in those other regions would make certain products could result in significant job such calculations more reliable. Two additional rea- growth, and that this increase in sales would not nec- sons for using a range of parameters are that, as essarily need to occur through direct marketing chan- previously mentioned, the underlying studies used nels. For example, research has demonstrated that different survey methodologies and they made increases in local demand for fruits and vegetables di erent assumptions about sales that would have in the Midwest, if supplied locally, could result in a occurred in the absence of a market. net increase of thousands of jobs, both through conventional marketing and direct marketing chan-• The number of new or existing markets that nels, in that region. us supporting local food could be supported and that would not be suc- systems through the various programs outlined in cessful without such support. For an upper- this chapter—including the rural development pro- bound estimate, we assume that 500 markets could grams that could be used to invest in infrastruc- be funded annually, as this corresponds to the ture and institutions that help make the needed number of FMPP applicants in 2010. For a more con- increase in production feasible—could potentially servative estimate we assume 100, as it approximate- lead to the creation nationwide of tens of thousands ly corresponds to the number of FMPP awardees of jobs both through direct and nondirect market- in 2010. ing channels.Over a ve-year period, which is typically a farm bill’slength of authorization, Table 4 shows an increase of
MARKET FORCES 33uncoordinated nature of local-food markets some- potential regional supply (based, for example, on soiltimes presents logistical, awareness, and accessibility characteristics, land availability, and climate conditions)challenges to consumers. ird, existing institutions, with the potential demand (based on population, con-infrastructure, or regulations that are geared to the con- sumer preferences, and income). is line of researchsolidated food system can hamper local-food sales. And could also illuminate the land-use implications of locallastly, existing safety nets developed to protect farmers food systems geared to increased production of fruits,from adverse nancial situations are inadequate for vegetables, or other food products.farmers who sell their products in local-food markets. Our recommendations, o ered below, aim to over- Congress and the USDA should restructurecome these and other barriers and to support and the safety net and ensure credit accessibilitypromote local and regional food systems. for local-food-system farmers. Many attributes of existing agricultural programs areCongress and the USDA, in coordination with not well suited to supporting farms and other pro-other relevant agencies, should maintain or ducers that market their food within localized foodincrease the funding for programs that support systems. For example, insurance focused on singlelocal and regional food systems. crops, as is typical, is not convenient for farmers grow- ese programs are of three types: (1) rural development ing a succession of vegetables throughout the growingprograms that provide funds for investing in infrastruc- season. us the development of whole-farm revenueture to support local and regional food systems; (2) insurance, as an alternative to crop insurance for spec-programs that o er assistance to farmers market man- i ed commodities, would be bene cial. In addition,agers, schools, and other local-food-system administrators; ensuring that farmers selling through local food sys-and (3) nutrition programs that provide nancial assis- tems have access to affordable credit, either fromtance to low-income consumers who wish to purchase Farm Credit System banks or from state nancinghealthful food at local-food markets. authorities, could allow these farmers to develop and Moreover, among the multiple federal agencies that expand their businesses. Lastly, cost-share programsadminister the various programs that support and that provide assistance to organic farmers in obtainingpromote local food systems, continued and improved certi cation could also help them sell food products incoordination is critically important. By organizing pro- local and regional markets.grams within one title in the federal farm bill, Congresscould e ectively bring together these seemingly dis- Local governments and community organizationsparate programs while also raising the pro le of local should foster local capacity to help implementand regional food systems. local and regional food-system plans. e establishment of local and regional food systemsThe USDA, together with academic and other requires a good deal of local e ort and coordination.policy institutes, should raise the level of research When funding is available, there must be evidence thaton the impacts of local and regional food systems, local capacity is su cient to absorb it and that localparticularly regarding their expansion. food initiatives have reasonable prospects for success.Funding more research for local and regional food sys- In addition, assistance should be provided to prospec-tems is essential for e ective future agricultural policy, tive applicants for developing business plans, conduct-and obtaining more precise data on marketing chan- ing outreach, and seeking funding opportunities.nels for local and regional food sales is especially im-portant. Other research priorities include the study Farmers market administrators shouldof how the installation of farmers markets and other support the realization of farmers marketlocal-food outlets in uences consumers’ shopping hab- certi cation standards.its relative to their behavior in the absence of such mar- e development of certi cation standards by farmerskets, and the e ects on low-income people of nutrition market administrators and directors could help ensureprograms that encourage patronage of farmers markets. the integrity of direct-to-consumer marketing systems. In addition, research on the feasibility of establish- Standards provide con dence to consumers that ven-ing local and regional food systems on a greater scale dors are involved in the production of the food theyin speci ed areas would help identify where some of sell and are undertaking environmentally sustainablethe most signi cant economic impacts could be real- production practices.ized. Such research would feature comparisons of the
34 UNION OF CONCERNED SCIENTISTS References Agricultural Marketing Service. 2010. National map of Fisher, A. 1999. Hot peppers and parking lot peaches: Evaluating farmers markets. Washington, DC: U.S. Department of Agri- farmers’ markets in low income communities. Portland, OR: culture. Online at http://apps.ams.usda.gov/FarmersMarkets/ Community Food Security Coalition. farmersmarketsmap.jpg, accessed July 22, 2011. Fitzgerald, K., L. Evans, and J. Daniel. 2010. Guide to federal Becker, G.S. 2006. Farmers markets: e USDA role. funding for local and regional food systems. Washington, DC: RS21652. Washington, DC: Congressional Research Service. National Sustainable Agriculture Coalition. Briggs, S., A. Fisher, M. Lott, S. Miller, and N. Tessman. Garnett, T. 2011. Where are the best opportunities for reduc- 2010. Real food, real choice: Connecting SNAP recipients ing greenhouse gas emission in the food system (including with farmers markets. Portland, OR and Martinsburg, WV: the food chain)? Food Policy 36(Supplement 1): S23–S32. Community Food Security Coalition and Farmers Market Gillespie, G., D.L. Hilchey, C.C. Hinrichs, and G. Feenstra. Coalition. 2007. Farmers markets as keystones in rebuilding local and Brown, A. 2002. Farmers market research 1940–2000: regional food systems. In Remaking the North American food An inventory and review. American Journal of Alternative system: Strategies for sustainability, edited by C.C. Hinrichs Agriculture 17(4):167–176. and T.A. Lyson. Lincoln and London: University of Nebraska Press, 65–83. Brown, A. 2001. Counting farmers markets. American Geographical Society 91(4):655–674. Grace, C., T. Grace, N. Becker, and J. Lyden. 2008. Barriers to using urban farmers markets: An investigation of food Brown, C., and S. Miller. 2008. e impacts of local markets: stamp clients’ perceptions. Journal of Hunger and Environ- A review of research on farmers markets and community mental Nutrition 2(1):55–75. supported agriculture (CSA). American Journal of Agricultural Economics 90(5):1296–1302. Henneberry, S.R., B. Whitacre, and H.N. Agustini. 2009. An evaluation of the economic impacts of Oklahoma farmers Canning, P. 2011. A revised and expanded food dollar series: markets. Journal of Food Distribution Research 40(3):64–78. A better understanding of our food costs. ERR 114. Washington, DC: USDA Economic Research Service. Herman, D.R., G.G. Harrison, A.A. A , and E. Jenks. 2008. E ect of a targeted subsidy on intake of fruits and Canning, P., A. Charles, S. Huang, K.R. Polenske, and A. vegetables among low-income women in the special supple- Waters. 2010. Energy use in the U.S. food system. ERR 94. mental nutrition program for women, infants, and children. Washington, DC: USDA Economic Research Service. American Journal of Public Health 98(1):1–8. Cantrell, P., D. Conner, G. Erickcek, and M.W. Hamm. Hughes, D.W. 2003. Policy uses of economic multiplier 2006. Eat fresh and grow jobs, Michigan. Traverse City, MI: and impact analysis. Choices 18(2):25–30. Michigan Land Use Institute. Hughes, D.W., C. Brown, S. Miller, and T. McConnell. 2008. Clancy, K., and K. Ruhf. 2010. Is local enough? Some Evaluating the economic impact of farmers markets using arguments for regional food systems. Choices 24(1). an opportunity cost framework. Journal of Agricultural and Applied Economics 40(1):253–265. Claro, J. 2011. Vermont farmers markets and grocery stores: A price comparison. Richmond, VT: Northeast Organic Hunt, A.R. 2007. Consumer interactions and in uences Farming Association of Vermont. on farmers market vendors. Renewable Agriculture and Food Systems 22(1):54–66. Connor, D.S., W.A. Knudson, M.W. Hamm, and H.C. Peterson. 2008. e food system as an economic driver: Jetter, K.M., J.A. Chalfant, and D.A. Summer. 2004. An Strategies and applications for Michigan. Journal of Hunger analysis of the costs and bene ts to consumers and growers from & Environmental Nutrition 3(4):371–383. the consumption of recommended amounts and types of fruits and vegetables for cancer prevention. Final report prepared for the Feenstra, G.W., C.C. Lewis, C.C. Hinrichs, G.W. Gillespie, California Department of Health Services, Cancer Prevention Jr., and D. Hilchey. 2003. Entrepreneurial outcomes and and Nutrition Section. Davis, CA: University of California enterprise size in U.S. retail farmers markets. American Agricultural Issues Center. Journal of Alternative Agriculture 18(1):46–55. Just, D.R., L. Mancino, and B. Wansink. 2007. Could behavioral Finkelstein, E.A., J.G. Trogdon, J.W. Cohen, and W. Dietz. economics help improve diet quality for nutrition assistance 2009. Annual medical spending attributable to obesity: program participants? Washington, DC: USDA Economic Payer- and service-speci c estimates. Health A airs Research Service, 43. 22(5):w822–w831.
MARKET FORCES 35King, R.P., M.I. Gomez, and G. DiGiacomo. 2010. National Good Food Network (NGFN). 2011. e economicsCan local food go mainstream? Choices 25(1). of regional meat. Online at ngfn.org/resources/ngfn-cluster-calls/ the-economics-of-regional-meat, accessed July 3, 2011.King, R.P., M.S. Hand, G. DiGiacomo, K. Clancy, M.I.Gomez, S.D. Hardesty, L. Lev, and E.W. McLaughlin. 2010. Oberholtzer, L., and S. Grow. 2003. Producer-only farmersComparing the structure, size, and performance of local and markets in the mid-Atlantic region: A survey of market managers.mainstream food supply chains. ERR 99. Washington, DC: Arlington, VA: Henry A. Wallace Center for Agricultural &USDA Economic Research Service. Environmental Policy at Winrock International.Leopold Center for Sustainable Agriculture. 2011. Iowa local O’Rourke, D. 2009. Lowdown on buying local. Pullman,food & farm plan: Report to the Iowa legislature. Ames, IA. WA: Belrose, Inc.Lev, L., L. Brewer, and G. Stephenson. 2003. Research Otto, D. 2010. Consumers, vendors, and the economicbrief: How do farmers markets a ect neighboring businesses? importance of Iowa farmers markets: An economic impactOregon small farms technical report number 16. Corvallis, survey analysis. Ames, IA: Strategic Economics Group.OR: Oregon State University Extension Service. Pirog, R., and N. McCann. 2009. Is local food more expensive?Lev, L., and L. Gwin. 2010. Filling in the gaps: Eight things A consumer price perspective on local and non-local foods purchasedto recognize about farm-direct marketing. Choices 25(1). in Iowa. Ames, IA: Leopold Center for Sustainable Agriculture.Lusk, J.L., and F.B. Norwood. 2011. e locavore’s dilemma: Pollan, M. 2008. e food issue: Farmer in chief. New YorkWhy pineapples shouldn’t be grown in North Dakota. Featured Times Magazine, October 9. Online at www.nytimes.com/article in the Library of Economics and Liberty. Online at 2008/10/12/magazine/12policy-t.html, accessed July 7, 2009.www.econlib.org/library/Columns/y2011/LuskNorwoodlocavore.html, accessed July 7, 2011. Putnam, R.D. 2000. Bowling alone: e collapse and revival of American community. New York, NY: Simon & Schuster.Lyson, T.A., G.W. Gillespie, Jr., and D. Hilchey. 1995.Farmers markets and the local community: Bridging the formal Racine, E.F., A.S. Vaughn, and S.B. Laditka. 2010. Farmersand informal economy. American Journal of Alternative market use among African-American women participating inAgriculture 10(3):108–113. the special supplemental nutrition program for women, in- fants, and children. Journal of the American Dietetic AssociationMarkowitz, L. 2010. Expanding access and alternatives: 110(3):441–446.Building farmers markets in low-income communities.Food and Foodways 18(1):66–80. Ragland, E., and D. Tropp. 2009. USDA national farmers market manager survey 2006. Washington, DC: USDAMartinez, S.W. 2007. e U.S. food marketing system: Agricultural Marketing Service.Recent developments, 1997–2006. ERR 42. Washington,DC: USDA Economic Research Service. Ross, N.J., M.D. Anderson, J.P. Goldberg, R. Houser, and B. L. Rogers. 1999. Trying and buying locally grown produce atMartinez, S., M. Hand, M. Da Pra, S. Pollack, K. Ralston, the workplace: Results of a marketing intervention. AmericanT. Smith, S. Vogel, S. Clark, L. Lohr, S. Low, and C. Newman. Journal of Alternative Agriculture 14(4):171–179.2010. Local food systems: Concepts, impacts, and issues. ERR 97.Washington, DC: USDA Economic Research Service. Schumacher, A., R. Winch, and A. Park. 2009. Fresh, local, a ordable: Nutrition incentives at farmers markets, 2009 update.Masi, B., L. Schaller, and M.H. Shuman. 2010. e 25 percent New York, NY: Wholesome Wave Charitable Ventures.shift: e bene ts of food localization for northeast Ohio & howto realize them. Cleveland, OH: Cleveland Foundation. Seymour, J.D., A.L. Yaroch, M. Serdula, H.M. Blanck, and L.K. Khan. 2004. Impact of nutrition environmental inter-McCormack, L.A., M.N. Laska, N.I. Larson, and M. Story. ventions on point-of-purchase behavior in adults: A review.2010. Review of the nutritional implications of farmers Preventative Medicine 39(Supplement 2):S108–S136.markets and community gardens: A call for evaluation andresearch e orts. Journal of the American Dietetic Association Sommer, R., J. Herrick, and T.R. Sommer. 1981. e110(3):399–408. behavioral ecology of supermarkets and farmers markets. Journal of Environmental Psychology 1(1):13–19.Monke, J. 2010. Previewing the next farm bill: Unfundedand early-expiring provisions. R41433. Washington, D.C.: Starr, A., A. Card, C. Benepe, G. Auld, D. Lamm, K. Smith,Congressional Research Service. and K. Wilken. 2003. Sustaining local agriculture: Barriers and opportunities to direct marketing between farms andMeter, K. 2010. Learning how to multiply. Journal of Agricul- restaurants in Colorado. Agriculture and Human Valuesture, Food Systems, and Community Development 1(2):9–12. 20(3):301–321.Myles, A., and K. Hood. 2010. Economic impact of farmersmarkets in Mississippi. Publication 2582. Mississippi State,MS: Mississippi State University Extension Service.
36 UNION OF CONCERNED SCIENTISTS Stephenson, G., L. Lev, and L. Brewer. 2008. “I’m getting U.S. Department of Agriculture (USDA). 2011b. Farmers desperate”: What we know about farmers markets that fail. markets and local food marketing. Online at www.ams.usda. Renewable Agriculture and Food Systems 23(3):188–199. gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateS& navID=WholesaleandFarmersMarkets&leftNav=Wholesaleand Stephenson, G., L. Lev, and L. Brewer. 2007. Understanding FarmersMarkets&page=WFMFarmersMarketGrowth& the link between farmers market size and management organiza- description=Farmers%20Market%20Growth&acct=frmrdirmkt. tion. Special report number 1082-E. Corvallis, OR: Oregon And: Farmers markets search. Online at apps.ams.usda.gov/ State University Extension Service. FarmersMarkets, accessed July 8, 2011. Stiglitz, J.E. 2000. Economics of the public sector. ird U.S. Department of Agriculture (USDA). 2011c. Supple- edition. New York, NY: W.W. Norton & Company. mental Nutrition Assistance Program Bene t Redemption Division 2010 annual report. Washington, DC. Swenson, D. 2010. Selected measures of the economic values of increased fruit and vegetable production and consumption in U.S. Department of Agriculture (USDA). 2010. 2008 the upper Midwest. Ames, IA: Leopold Center for Sustainable organic production survey. Volume 3, part 2. Washington, DC. Agriculture. U.S. Department of Agriculture (USDA). 2009. 2007 census Tegtmeier, E.M., and M.D. Du y. 2004. External costs of agriculture: Summary and state data. Volume 1, part 51. of agricultural production in the United States. International Washington, DC. Journal of Agricultural Sustainability 2(1):1–20. Ver Ploeg, M., V. Breneman, T. Farrigan, K. Hamrick, D. Tessman, N., and A. Fisher. 2009. State implementation of the Hopkins, P. Kaufman, B.L. Lin, M. Nord, T. Smith, R. new WIC produce package: Opportunities and barriers for WIC Williams, K. Kinnison, C. Olander, A. Singh, and E. Tucker- clients to use their bene ts at farmers markets. Portland, OR: manty. 2009. Access to a ordable and nutritious food: Measuring Community Food Security Coalition. and understanding food deserts and their consequences. Report to Congress, AP-036. Washington, DC: USDA Economic Timmons, D., and Q. Wang. 2010. Direct food sales in the Research Service. United States: Evidence from state and county-level data. Journal of Sustainable Agriculture 34(2):229–240. Vilsack, T.J. 2010. Testimony before the Senate Committee on Agriculture, Nutrition, and Forestry. June 30. Tropp, D., and J. Barham. 2008. National farmers market summit proceedings report. Washington, DC: USDA Vogt, R.A., and L.L. Kaiser. 2008. Still a time to act: Agricultural Marketing Service. A review of institutional marketing of regionally grown food. Agriculture and Human Values 25(2):241–255. Tuck, B., M. Haynes, R. King, and R. Pesch. 2010. e economic impact of farm-to-school lunch programs: A central Weber, C.L., and H.S. Matthews. 2008. Food-miles and the Minnesota example. St. Paul, MN: University of Minnesota relative climate impacts of food choices in the United States. Extension. Environmental Science & Technology 42(10):3508–3513. Union of Concerned Scientists (UCS). 2009. Community Wells, H.F., and J.C. Buzby. 2008. Dietary assessment of supported agriculture for meat and eggs: Smart choices for major trends in U.S. food consumption, 1970–2005. Economic U.S. food production. Cambridge, MA. information bulletin number 33. Washington, DC: USDA Economic Research Service. U.S. Department of Agriculture (USDA). 2011a. USDA identi es infrastructure and economic opportunities for Winch, R. 2008. Nutrition incentives at farmers markets: regional producers; food hubs emerging as viable business Bringing fresh, healthy, local foods within reach. Washington, model supporting regional food systems. Online at www. DC: Freshfarm Markets. ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template= TemplateU&navID=LatestReleases&page=Newsroom&topNav= Help&leftNav=null&rightNav1=LatestReleases&rightNav2= &resultType=Details&dDocName=STELPRDC5090467&dID =147873&wf=false&description=USDA+Identi es+Infrastructure +and+Economic+Opportunities+for+Regional++Producers%3B +Food+Hubs+Emerging+as+Viable+Business+Model+Supporting +Regional+Food+Systems, accessed July 14, 2011.