5. MARKET FORCES iii
Table of Contents
Figures and Tables iv
Acknowledgments v
E X E C U T I V E S U M M A RY 1
CHAPTER 1
Description of Local Food Systems 6
Types of Direct Marketing 6
Demand for Local Food 7
Supply of Local Food 7
Farmers Markets 9
Community-Supported Agriculture 10
Local and Regional Food Systems Have Scalability Challenges 10
CHAPTER 2
Supporting Local and Regional Food Systems Is Sound Policy 14
Objectives of Government 14
Local and Regional Food Systems Can Support Public Objectives 14
Local and Regional Food Systems and Food Security 15
CHAPTER 3
Local and Regional Food Systems Provide Positive Regional Economic Impacts 16
Quantifying the Economic Impacts of an Industry or Sector 16
Direct Marketing Can Foster Regional Economic Development 17
Local and Regional Food Systems Can Result in Sector-Specific Economic Growth 18
Economic Impacts of Farm-to-School Programs 21
Farmers Markets Can Increase Sales at Neighboring Businesses 21
Local and Regional Food Systems Can Increase Business Innovation and Entrepreneurship 22
Responses to Arguments against Supporting Local-Food-System Development 22
6. 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
7. MARKET FORCES v
Acknowledgments
is report was made possible in part through the generous support
of the David B. Gold Foundation, the New York Community Trust, the
Clif 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 David
Swenson of Iowa State University, David Hughes of Clemson University,
Larry Lev of Oregon State University, and Stacy Miller of the Farmers
Market Coalition. e time involved in reviewing a paper of this length
is considerable, and their comments and suggestions greatly improved it.
At UCS, the author thanks Margaret Mellon and Karen Perry Stillerman
for 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 report
and David Gerratt for his design and layout.
e opinions and information contained in this report, being the sole
responsibility of the author, do not necessarily re ect those of the
foundations that supported it or the individuals who reviewed and
commented on it.
10. 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
13. MARKET FORCES 5
Figure 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 have
Other research priorities include the study of how the access to a ordable credit, either from Farm Credit
installation of farmers markets and other local-food System banks or from state nancing authorities, could
outlets in uences consumers’ shopping habits relative allow these farmers to develop and expand their
to 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 cation
that 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 scale
in speci ed areas would help identify where some of Local governments and community organizations
the most signi cant economic impacts could be real- should foster local capacity to help implement
ized. 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 systems
characteristics, 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 that
sumer preferences, and income). is line of research local capacity is su cient to absorb it and that local
could 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 the
safety net and ensure credit accessibility for Farmers market administrators should support
local-food-system farmers. the realization of farmers market certi cation
Many attributes of existing agricultural programs are standards.
not well suited to supporting farms and other produc- e development of certi cation standards by farmers
ers that market their food within localized systems. market administrators could help ensure the integrity
For example, insurance focused on single crops, as is of direct-to-consumer marketing systems. Standards
typical, is not convenient for farmers growing a suc- provide con dence to consumers that vendors are
cession 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.
15. MARKET FORCES 7
Food sold via direct marketing does not have to be • Lack of awareness of the existence of local food
locally produced, and vice versa. markets
One type of direct marketing involves a farmer sell- • Inaccessibility, inconvenience, or lack of proximity
ing food directly to consumers—at a roadside stand, • Higher prices (whether perceived or actual) for
U-pick operation, or farmers market, for example, or locally produced food
through subscription programs known as community- • Lack of variety of food, or too-small quantities
supported agriculture (CSA). A New York study found
that full-time direct marketing farmers used a variety Food retailers have additional challenges associated with
of 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 the
1995). 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 FOOD
58), although challenges associated with measuring Some farmers can obtain greater revenue by selling food
direct marketing sales suggest that this number is un- via direct marketing in local markets than by selling
derstated (e.g., Brown 2002). e reported number of food to wholesalers. at is, direct marketing allows
farms engaged in direct consumer marketing in 2007 local food producers to retain most, if not all, of the
represented a 17 percent increase from 2002. Although revenue from the retail sale of their product; they can
6 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 conventional
cultural 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. retail
food 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 price
importance of developing cooperative structures. for locally produced food, although food products will
generally need to have other attributes, such as being
DEMAND 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 also
tailers are purchasing locally produced food. According engage in direct marketing for the opportunity to
to 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 Farms
As reported by the same researchers, the largest ob- Figure 1 (p. 8) shows that farms of fewer than 50
stacles 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 total
1 “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.
16. 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.
17. MARKET FORCES 9
free” or “pesticide-free,” “natural,” “pasture-raised/free- Figure 3. Percentage of Farmers Markets
range,” and “hormone-free” or “antibiotic-free.” ese with Labeled Products
labels are intended for education and marketing pur- 70%
poses, as consumers use this information to decide
whether 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 iot
production: 78 percent of organic farmers stated in Ch es Pa ree- Ho ntib
p f a
2008 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 in
Farmers Who Engage in Direct Consumer the United States Has Increased Rapidly
Marketing Tend to Operate Diverse Farms and 8,000
Undertake Entrepreneurial Activities
Small farms with direct sales often grow multiple prod- 7,000
Number of U.S. Farmers’ Markets
ucts (Starr et al. 2003). Farms that engage in direct
6,000
marketing with no additional on-farm entrepreneurial
activities earn $6,844 in average direct sales per farm, 5,000
but farms that engage in three additional on-farm en-
4,000
trepreneurial activities earn $28,651 (Martinez et al.
2010). Small farms involved in direct marketing con- 3,000
stitute 28 percent of farmers that produce on-farm
value-added goods such as processed products; such 2,000
farms also constitute 33 percent of participants in CSAs 1,000
and 49 percent of organic producers (Martinez et al.
2010). Farmers market vendors have expanded exist- 0
ing 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
20
oped mailing lists, made new business contacts, and Source: USDA 2011b.
sharpened their customer relations, merchandising, and
pricing skills (Feenstra et al. 2003). designed to allow farmers to directly sell their products
to consumers.
FARMERS MARKETS Farmers markets once constituted a conventional
We 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 middle
emerging local food systems (Gillespie et al. 2007), parts of the twentieth century, the number of farmers
their 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 away
farmers markets in comparison to other local food mar- from consumers. By 1970, only 340 farmers markets
kets. While no consistent legal de nition of farmers were left in the country (Brown 2001). is trend has
markets yet exists (Briggs et al. 2010), they are gen- reversed itself in recent decades, however. Figure 4
erally conceptualized as structured market settings indicates that the number of farmers markets in the
3 Online at www.agcensus.usda.gov/Publications/2007/Online_Highlights/Fact_Sheets/organics.pdf, accessed July 2, 2011.
18. 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.
20. 12 UNION OF CONCERNED SCIENTISTS
Figure 5. Marketing Assistance Needs Identi ed larly critical institutional channel to fostering greater
by Farmers Market Vendors product sales is through mainstream supermarkets
90%
(King, Gomez, and DiGiacomo 2010). e lack of
nancial support, time, and infrastructure are the most
80%
common barriers that farmers face in direct marketing
70%
to institutions, implying that farmer co-ops or other
60% 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 farmers
30% can lead to obstacles in identifying the source of the
20%
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 p
Ad 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.
22. 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.
24. 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 measure
Figure 7. U.S. Principal Operator by Age:
of the increase in economic activity that occurs as a
Farmers 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 markets
Source: 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.