Thursday, November 09, 2017
Economist projects continued growth in local food sales. Consumers are willing to pay more for local food because they attach values to it.
By Kay Shipman
American consumers’ demand for locally grown food is creating a multibillion-dollar market offering farmers significant returns, according to a USDA agricultural economist and national local food expert.
Last week, James “Jim” Barham, based in Rural Development’s Washington, D.C., office, offered Illinois Farm Bureau Local Regional Food Conference attendees a primer on the nation’s local food economy and a glimpse into its market potential.
IFB President Richard Guebert Jr. kicked off the conference general sessions by emphasizing local food’s importance to U.S. agriculture. Guebert encouraged conference participants to build relationships and collaborate to develop successful market ventures.
In the marketplace, consumers are willing to pay more for local food because they attach values to it, Barham noted. The values range from nutritional benefits to environmental stewardship to economic development and investment in local jobs.
Related: Food chain brought live via tour. Click here for photos, audio.
While local food is loosely defined as coming from within a certain geographic area, “the tricky part is what is that area?” Barham asked. Definitions vary from within a state’s boundaries to regional boundaries to a set mile radius to the number of miles a delivery truck can travel in a day. “That’s (definition) up to consumers and the market,” he added.
A 2015 study by the National Agricultural Statistics Service showed 167,000 farms generated $9 billion in local food sales at the farm gate. This compares to $6 billion sales of organic food during the same period.
In Barham’s view, one of the most positive points of the local food economy is the portion of revenue farmers receive. He pointed out farmers receive only 17 cents out of every dollar spent on food. In comparison, farmers receive 40 cents or more from every dollar of local food sales, he projected. “It’s big; it’s significant, and the benefits to producers are clear,” Barham said.
According to Barham, one of the most surprising findings in the 2015 study showed sales from on-farm stands generated the biggest market sales to consumers compared to farmers’ markets and other types of sales.
While Barham considers the organic food industry as a mature economic sector, he projected “local food is getting there. It’s on the same trajectory.” Barham pegged today’s local food market at roughly $20 billion.
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