4 comments print

Base Camp Baker Sellers and buyers come together in Baker City, Oregon, at a thriving rural farmers market. But the vast majority of such direct-to-consumer food sales take place in urban areas.

Rural communities and advocates have tried any number of methods and policies to develop their economies.  These efforts have included chasing smokestacks, promoting housing developments, attracting industry clusters, or appealing to retirees.  A recent movement that has gathered a significant amount of attention is the push for local foods.  Often, this strategy is promoted as a way to increase jobs and incomes in rural areas, but do local food production and marketing really help attain those economic goals? 

Policymakers and the media have increased their support of the “Buy Local” movement, often alongside claims of rural economic development.  Various fiscal policies have been written to promote a return to local food systems.  However, this strategy could prove to be catastrophic for already stressed rural communities if it increases food costs and impairs rural areas' potential to trade.  "Buy Local" policies may, in fact, be redistributing money to higher income locales. 

Data from the USDA on topics like the prevalence of community supported agriculture, direct-for-human-consumption farming, and agritourism provide an interesting look into where "Buy Local" policies may be focused. 

From the Secretary of Agriculture Tom Vilsack to popular author Michael Pollan, notable farm policy advocates have argued that production and consumption of local foods protect rural and urban economies alike from the negative impacts of globalization.  In a 2008 Washington Post interview, Pollan recommended, “Given the choice, buy local over organic.” 

Some proponents view the "Buy Local" movement as a way to market their own products. The community’s passion to promote “localness” helped grow Ben & Jerry’s Ice Cream far beyond the market in Burlington, Vermont.  Others believe local foods could be a way to boycott  large-scale corporate farming.  As such sentiments grow ever stronger, more governmental policies are being written to promote local production, sometimes at the expense of non-local producers.

Examples of policies targeted at supporting local food systems include Food Policy Councils, Farm to School Programs, Infrastructure Development Projects, and Agriculture Conservation Easements (Dillon, 2010). The USDA has also tried to support “Buy Local” producers through the issuance of value-added grants over the last decade.

While certain benefits to local food systems have been amply listed, few sound economic analyses of these projects have been undertaken. The desire to promote local foods has spurred a heated debate with respect to corporate farming, environmental impacts, and disenfranchised communities. Many of these conversations seem to contradict the generally accepted theory of comparative advantage. The “Buy Local” premise also challenges the economics of trade, yet fails to discuss possible trade obstacles. 

The question is simple: Will promoting locally grown foods actually foster economic growth in rural communities?  Or, on the other hand, does promoting local foods actually create more adverse unintended consequences than the programs are worth? 

Relatedly, should state and local governments pursue this strategy to increase tax revenue and develop their infant industries, or should policymakers and grant writers focus on the values of promoting free trade with minimal intervention from governing bodies? The desire to promote local foods could be a poor investment for struggling towns where long term effects are not considered.

What have studies said in the past?

Many economists have studied various aspects of the local foods movement.  The research tends to address three distinct issues:

•    Consumer Preferences for Local Foods

Do consumers actually prefer local foods?  Understanding how customers value various sustainability claims such as “organic” and “locally produced” is vital to determining any potential economic outcomes. Onozaka, Nurse, and Thilmany McFadden (2011) discuss organic methods, fair trade, and carbon-footprint claims as well as location claims – local, domestic, and imported. Using survey data, they conclude that credible labels and certification claims increase consumer confidence, thereby selling more products. 
   
•    Economic Impacts of Local Foods

Some studies have looked at the job-creating potential of policies that support local/regional food systems. Other studies have examined the “opportunity cost” of spending money at a farmers market as opposed to spending it at a traditional grocery store or supermarket. 

One such study finds that the net impact of farmers markets to the West Virginia state economy is still positive once these opportunity costs are considered, but income and employment effects are relatively small. An analysis of the Farm-to-School (FTS) program that focuses on direct-to-consumer marketing found that school size tended to be a significant factor in the success of FTS programs. These results imply that rural schools and farmers might not benefit from such programs. Finally, results from a local food market in Oklahoma quantify the premium paid for locally grown produce, and also note problems in actually getting this produce to consumers; accounting for the defective and surplus products that could not be adequately stored, 52% of the study market's 11,925 pounds of field tomatoes perished.   

•    Local Food Systems and Government Policy

Other research has examined policies targeted at promoting economic growth through local venues. Some studies are critical of given policies (Desrochers and Hiroko, 2008), while others are more supportive (Dillon, 2007).  Gunter (2011) states that benefits to local food policy do exist, “but that impact is quite small and …may not cover the cost of investment necessary.” 

A Congressional Policy Report tries to give decision makers an objective outline of the current situation by providing background and summarizing federal policies that support local foods (Johnson, Cowan, and Aussenberg, 2012). The authors have collected background information on local and regional food systems, including various available data sets on such topics as direct-to-consumer sales, farmers markets, farm-to-school programs, community-supported-agriculture, and community gardens. This report points to federally available data, policies, and proposed polices for analytical consideration.

What does America’s local food environment look like?

The maps shown here, taken from data provided by USDA-ERS, offer an interesting examination of several important factors of local food systems (Figures 1 and 2). 

Counties are classified by rural-urban continuum code and broken into three categories for simplicity:  Each grey region on the map represents a metropolitan cluster of counties (codes 1-3), blue regions represent codes 4-7, and the green counties represent the most rural counties (codes 8-9). 

Malone & Whitacre, from USDA/ERS data Rural-Urban Continuum: This map puts counties on a rural-urban scale, grey for metro, blue for exurban and micropolitan, green for the most rural "non-metro" counties.

The maps display an apparent pattern as to where support for local food systems is high. 

Malone & Whitaker, from USDA/ERS data Figure 1: Most direct food sales are taking place in urban areas rather than in non-metro communities.

Notably, in counties with high levels of direct sales for human consumption (Figure 1) or community supported agriculture (CSA) (Figure 2), we find that these areas:
•    Are predominantly located in the most metropolitan counties (55% of high direct sales counties and 51% of high CSA counties are in codes 1-3).
•    Have an average population density of between 469 and 994 people per square mile (compared with an average of 16 people per square mile in counties with codes 8-9). 
•    Have median household income averages of over $50,000 (compared with an average of $38,600 in counties with codes 8-9).
•    Are usually located in coastal regions – far away from where average government payments are highest. 

Malone & Whitacre, from USDA/ERS data Figure 2: Community-supported agriculture, fostered by current policy, is also strongest in heavily urban areas.

Generally, in counties where high percentages of Community Supported Agriculture or direct-to-human consumption exist, residents have higher incomes and population density is also high. In other words, the farms that enjoy high levels of support from their local populations are not typically located in more rural parts of the country. 

Malone & Whitacre, from USDA/ERS data Figure 3: Even agritourism, which has also been supported as a rural development strategy, is highest in counties with relatively high population density.

Additional maps show some other interesting relationships relevant to local food systems across the country.  Figure 3 (above) shows that high activity in agritourism is more related to rural places. However, the population densities of these “high agritourism” counties are still relatively high (320 people per square mile vs. 60 people per square mile on average for codes 4-7).  Furthermore, 34% of counties with high government payments to agriculture actually exist within urban areas (Figure 4, below). 

Malone & Whitacre, from USDA/ERS data Figure 4: Over a third of the counties with high government support payments for agriculture are actually urban.

Figure 5, summarizing the information in Figures 1-4, shows that while the most rural counties make up 21% of all counties, they are under-represented in the counties high in community-supported agriculture or direct-sales of food. 

Malone & Whitacre, from USDA/ERS data Figure 5: In this chart, blue signifies the most metropolitan counties, green the most rural. Community-supported agriculture and direct sales of food are proportionately lower in the most rural places.Does this signify an "opportunity" for rural producers or does it mean the local foods effort does not work to the benefit of non-metro places?
Implications

Overall, the maps suggest that support for local food systems is a strongly urban phenomenon.  Will heavily promoting (and even publicly funding) the local food movement have a lasting impact in rural areas? The evidence here suggests that local foods might be a niche market with the potential for new entrants in these rural areas.

The fundamental question that has yet to be answered, however, is whether developing local food systems provide merely short term benefits, or if this strategy might provide long-run positive results. In other words, are we creating anything new, or are we simply “re-inventing the wheel” of production agriculture?

Some might interpret the above maps as suggesting that rural areas are ripe for the promotion of community-supported agriculture or direct-to-consumer marketing. Perhaps efforts such as the USDA’s Know Your Farmer, Know Your Food program and Chipotle’s focus on local foods (including this award-winning commercial) could in fact contribute to rural economies. While such efforts typically emphasize the potential gains to rural communities, the existing evidence suggests that such gains haven't yet occured and future benefits may not in fact result. 

The local food strategy as a means toward rural economic development, at least as structured and promoted thus far, also contradicts economies of scale as well as the theory of comparative advantage; farms with direct-to-human consumption tend to be smaller, less efficient entities.  
 
The patterns suggested by the maps above support the conclusion of a 2010 letter to Secretary of Agriculture Tom Vilsack from a group of U.S. senators, including Pat Roberts from Kansas (2010), about government investment in local food initiatives. The senators wrote, “This spending doesn’t appear geared toward conventional farmers who produce the vast majority of our nation’s food supply, but is instead aimed at small, hobbyist and organic producers whose customers generally consist of affluent patrons at urban farmers’ markets.”

Trey Malone is a graduate student and Brian Whitacre is an associate professor in the department of Agricultural Economics at Oklahoma State University.