Every now and then, newspapers print an article that makes it seem like locavores are running the U.S. food system, throwing our weight around, causing Big Ag to cower in corners. If only we had even a small fraction of that power... In reality, the local food movement is a tiny piece of the nation's food economy — about 1 percent, according a new report from the USDA's Economic Research Service (ERS). The report, "Local Food Systems: Concepts, Impacts, and Issues," was written to provide an overview of local food systems — their size, how they work, their economic impact — while also reviewing recent research on consumer preferences, economics and other topics. In this post, I'll take a look at three parts of the report: defining "local," the size of the local food economy, and how grocery chains are handling demand for local food.
Trying to Define "Local"
"What is Local Food?" is the first question the report addresses. While there are a multitude of definitions of "local," only one legal definition exists, a clause in the 2008 Food and Farm Act that says that a product can be called “locally or regionally produced” if it travels either less than 400 miles from its point of origin or is produced within the same state. A 100-mile limit is popular, more because of the roundness of 100 than for anything related to agriculture or economics. Beyond an odometer reading, other considerations apply: who grew the food, how it was produced, the story behind the food, and what the report calls "social embeddedness" — a "sense of social connections, mutual exchange, and trust." And so, bread baked in an independently-owned neighborhood bakery could get a local definition, even if it uses wheat from hundreds of miles away. This flexibility in definitions no doubt causes disapproving smirks from some quarters, but I see it as a reinforcement of one of the key objectives of the local foods movement: it's not just attaching virtual odometers to food, it's about building stronger communities, preserving farmland, making the food system more transparent, and much more.
Local Purchasing Power
Direct-to-consumer sales – farmers markets, farm stands, U-pick – were about $1.2 billion in 2007, about 0.4% of the total food economy. It's a small number, to be sure, but a significant increase over $551 million in 1997: an annual growth rate of about 10%, which far exceeds the rest of the food economy (about 5% per year). One of the reasons for the growth rate is an increasing number of farmers markets, as the chart below illustrates.
What USDA calls "direct-to-retail" — sales by farms to institutions such as hospitals and schools — is much larger than direct-to-consumer, accounting for about $5 billion in sales in 2007. Unfortunately, the report does not categorize the spending (and the citation for the $5 billion figure is a $3,000 market research report, something a bit beyond the Ethicurean's budget).
Note that these figures do not include a significant part of the local economy: businesses that are considered local for community reasons (like a bakery) or value-added producers (like a jam maker who uses ingredients from the farmers market), so the actual value of the local food economy is somewhat larger than the $6.2 billion cited in the report.
What the Grocery Chains Call Local
Big grocery chains have hopped on the local bandwagon, publicizing their purchases and setting up new initiatives. The report authors visited the websites of the top ten U.S. food retailers to see what they say about local foods and how they define it. Seven of the ten sites mentioned local foods, but only two — Walmart and Delhaize America (Food Lion, Bloom, Bottom Dollar and others) — give specific definitions (within a store's state for Walmart and in any of the 16 states for Delhaize America). Walmart claims to be buying $400 million a year from what they define as local, a development that could act in ways contrary to the idea of "social embeddedness," buying from only the largest farms and squeezing their suppliers in the name of efficiency (these issues and more are raised in a piece that I wrote for Ethicurean and one that Tom Laskawy wrote for Grist).
Some stores are interactive mapping tools on their websites to explain the geography and story behind their local suppliers. Whole Foods uses different icons for each type of supplier and has a brief story about each one. Hannaford, a grocery chain in the Northeast owned by Delhaize America, showcases their Close to Home program with profiles of several local suppliers and interactive maps (New York, for example). It's a good start, but could use some significant improvement. For example, one of the vendors is "Sysco of No. New England", hardly a locally-rooted Mom and Pop operation (in fiscal year 2009, Sysco had global revenues of $36.9 billion across hundreds of outlets). A few more details, like identifying what each supplier does — farming, distribution, manufacturer and so on — would be a big help.
A Cavalcade of Information
The USDA report contains much more data about direct markets, including breakdowns by farm size, type of goods sold, and more. For those who want to dig into the primary research about the local food economy, the report has an extensive literature review that covers about 200 works from academia, think tanks and government. It also has an appendix that catalogs the local food programs in the 2008 Food and Farm Act.