USDA Economic Research Service (ERS) has published a new comprehensive overview called Local Food Systems: Concepts, Impact and Issues. The 80-page document explores alternative definitions of local food, estimates market size and reach, describes the characteristics of local consumers and producers, and examines early indications of the economic and health impacts of local food systems.
Statistics suggest that local food markets account for a small, but growing, share of U.S. agricultural production. For smaller farms, direct marketing to consumers accounts for a higher percentage of their sales than for larger farms. Findings are mixed on the impact of local food systems on local economic development and better nutrition levels among consumers, and sparse literature is so far inconclusive about whether localization reduces energy use or greenhouse gas emissions.
There is no consensus on a definition of “local” or “local food systems” in terms of the geographic distance between production and consumption. But defining “local” based on marketing arrangements, such as farmers selling directly to consumers at regional farmers’ markets or to schools, is well recognized.
Half of farm expenditures are spent locally
Farmers need to have a strong rural community, but businesses in those communities need to have the support of the farmers too. The June 2010 issue of USDA’s Amber Waves magazine reported the findings that half of farm expenditures are purchased locally.
The Amber Waves articles states: Farm operators are an integral part of some rural economies. The businesses they operate support jobs and purchase goods and services from local implement and input suppliers. Farm household spending on food, furniture and appliances, trucks and automobiles, and a range of consumer goods also supports local jobs and retail businesses. Based on the 2004 Agricultural Resource Management Survey, the linkages between farm household and business expenditures and communities are explored. Farms in urban areas purchase household goods in markets closest to the farmstead, but traveled further to purchase farm business items. The opposite pattern was observed in rural locations.
Total farm business operating expenditures amounted to more than $187 billion in 2008. The ERS researchers examined the purchasing patterns of farmers to determine the likely impact of farm spending on various types of local economies, from highly urban to totally rural. In the 2004 Agricultural Resource Management Survey, a joint effort by ERS and USDA’s National Agricultural Statistics Service, farmers were asked how far they travel to purchase most of their farm inputs and equipment. Farmers were also asked the distance to the nearest town (the average was 8.3 miles) and nearest city of more than 10,000 people (the average was 24.2 miles). If a farmer traveled farther than the nearest city of 10,000, farm-related purchases were considered “nonlocal.”
To determine if the local share of farm purchases varied by location, and to better gauge the potential impact of these expenditures on nearby communities, counties with farms were categorized according to their proximity to urban centers, population density, and commuting patterns. The assumption was that farming is not likely to have a large impact on the economies of more urban, densely settled communities or on nonmetropolitan areas that are highly dependent on metro economies (based on their commuting patterns).
The study found that farm business expenditures were potentially much more important in rural counties (those with low-density, non-urban settlement) than in urban counties in 2004, whether metro or nonmetro. Farm expenditures per nonfarm worker in a county, a measure of the relative importance of farming to a local economy, averaged about $4,500 in rural micropolitan counties (defined as counties containing an urban core with a population between 10,000 and 50,000)—more than 100 times the $41 urban metropolitan county average.
Furthermore, in the least urban counties, the relative importance of the farm sector was reduced where a significant share of residents commute to jobs outside of the county. Despite large differences in the relative importance of farming across county types, roughly half of all farm purchases were made locally.