Local & Regional Food Systems Can Offer Economic Benefits for Farmers and Communities
by Veronica Coons
Energy and interest in local and regional food systems runs high across the country for both producers and consumers, but what do we really know about the economic impact for farmers and ranchers and communities? What works and what does not? And what about opportunities or need for urban-rural linkages?
As beginning farmers look to develop economically viable operations and existing traditional commodity producers look for ways to diversify their operations or expand into new markets, and as consumers demand more local products, answers to these questions are important.
Dr. Becca Jablonski, Assistant Professor and Extension Food Systems Specialist at the Department of Agricultural and Resource Economics at Colorado State University, addressed some of these questions at the Kansas Rural Center’s November 2019 Food and Farm Conference in Wichita, Ks. In a keynote address and a follow up workshop, she shared findings and conclusions drawn from her work at USDA, Cornell University and Colorado State over the past two decades.
Jablonski, who was a contributor to the Federal Reserve Bank of St. Louis’ October 2017 report, “Harvesting Opportunities: The Power of Regional Food System Investments to Transform Communities,” pointed to two indicators of the interest in local food. First, there has been a proliferation of federal and state programs to incentivize local food production and for healthier food. The last two federal farm bills have introduced and provided support for a number of programs to put in place local food production and marketing efforts. This is an important shift from the commodity program focus of the past and is due to the rise of farmer interest and consumer demand.
Second, there has been a proliferation of local food policy councils nationwide. Since 2010, 300 such councils have emerged across the country and 52 of them have published food plans for their state or community. Jablonski stated that only two of those food plans actually addressed the need for urban-rural linkages or partnerships. These linkages, it turns out, are focused on something very simple but essential to ensuring success for the community their councils serve: procurement. Procurement represents opportunities to support surrounding rural areas and farmers and ranchers. But to get from Point A to Point B, all parties must be represented on local food councils including rural stakeholders and farmers.
It is important to clarify that urban farms of scale are virtually non-existent in major metropolitan areas. Denver County, Colorado, serving the Denver Metropolitan area, for example has 12 farms and all are fairly small scale. While there are many benefits to encouraging urban agriculture, these farms will not be able to handle the demand for all the food an urban area needs. Jablonski pointed to a survey she did a few years ago of the Union Square Farmer’s Market in New York City, probably the largest in the country, where 400,000 attendees is not unusual. Most of the farms that supplied the market came not from within the city itself, but from a nine-state region surrounding the market.
Jablonski emphasized that the end goal of local food councils is not to simply establish a local and/or regional food system. Rather, it is to create opportunities, not only to support food needs, but to support farmers and the next generation of farmers. To do that, we need to understand the economic impacts to farms and ranches and to community economic development—and the opportunities.
Farmers and ranchers need to be able to make a living, she stated. “Even those that are making a living off the farm are not earning what I think most people would call the sort of income that people aspire to,” she said. Scaling up to meet the procurement demands of the market is critical but can’t be done in a vacuum.
There is good evidence that consumers are willing to pay a premium for products that are marked “local,” Jablonski said. Not only that, consumers are willing to pay for organic, free-range, grass-fed, and other differentiation strategies. Farmers and ranchers selling in these markets also do more of their own marketing, processing, and distribution of their products.
By analyzing the annual USDA Agricultural Resource Management Survey results, Jablonski strives to understand the variable expenses of farmers and ranchers who participate in local and regional food markets, broken down by market channel. These assessments start with harvest and track through marketing.
For small and medium sized farms represented in this survey, labor is unsurprisingly the highest expense. As they grow, the cost of labor continues to go up. Digging deeper, about half of the sample loses money at any scale, but half either breaks even or makes money. This is encouraging, Jablonski says.
“We’ve seen that some of our direct market producers, because they’re trying to think about labor efficiency, have now started to have their CSA customers (community supported agriculture) pick up at the farmers’ market, so they’re not expending time waiting for people to come to the farm to pick up,” Jablonski said. This begins to get at the labor efficiency question because it is not simply the need to add more laborers, but that the relationship marketing that is part of direct marketing and intermediate marketing takes time. Figuring out how to be more efficient with labor is critical.
Communities need a way to evaluate what the economic impact of an initiative to strengthen a local food system
will be. It is important to keep in mind that resources are finite. “It’s not like there’s extra land sitting around waiting for someone to farm it,” she said. Organizers also need to take into consideration impacts on both the supply side and the demand side. Some of the demands from consumers or urban councils in terms of certifications or criteria can have other ramifications for producers or the resource base.
One study by Iowa State University found that if the Midwest grew enough fruits and vegetables to feed all the people in its cities, land would need to be pulled out of the commodity crop production, such as corn and soybeans. There was a positive effect, but not as big as many imagined, because the study accounted for the fact that growing corn and soy also had a positive economic impact on the community, and that had to be subtracted from the change to vegetable production.
However, all in all, impacts of local initiatives tend to be positive, she assured, because farmers markets and food hubs act essentially as small business incubators providing opportunity to build skills and gain business experience. Also, the regular interactions with buyers and consumers may help circulate knowledge and ideas about new products and creative marketing.
Local and regional food policy councils are finding success, and Jablonski shared examples, starting with the aforementioned Denver Sustainable Food Policy Council. Through reciprocal arrangements with area schools, distributors who have gone through the city’s bid process are then qualified to bid for schools.
Through the 2014 Farm Bill, Colorado State University received a grant from the USDA Foundation for Food and Ag Research, which was matched by several commodity groups including the Colorado Wheat and Colorado Potato administrative committees. They are currently building a model that helps them understand the trade-offs along the supply chain for the benefit of the Denver Sustainable Food Policy Council.
Through the model, Jablonski was surprised to learn that many of the decisions made were not based on maximizing profit. Sometimes, shifts are based on how they impact dietary quality or the environment, and are driven primarily by urban council members.
“We’re really trying to look at how we can get some of our urban partners to understand that some of these certifications aren’t so black and white,” she said. Councils serving these areas should consider including rural members that are farmers and ranchers, Jablonski said. They could inform the council what impacts these policies might have for farmers and along the supply chain.
“It’s important to understand that urban people aren’t doing what they do because they don’t like farmers and they don’t like rural places,” Jablonski said. “They have good intentions, but they don’t understand what they don’t understand.”
Similarly, rural producers are not as engaged in with urban communities and their challenges, challenges. For these reasons, Jablonski urges local food policy councils to make room at the table for both urban and rural interests, and perhaps from organizations they’ve never considered.
Veronica Coons is a Great Bend based journalist who covered the Kansas Rural Center Farm & Food Conference for KRC.