Wednesday, September 7, 2011

Local Food Economics

I’ve been working on our local food system for a while now. Mostly from a personal point of view, but lately, more and more from a community point of view. I’ve found that it takes a community to create a viable system. I can do enough myself to survive, but it’s a lot of work, and variety goes missing. So I find myself doing more talking and organizing than ever. As I talk to people and try to nudge things forward one question always comes up. WHY? Why is local food so important. Why would I want to change what I eat, what I do, how I farm, how I shop, etc? I have a list of responses including Health, Freshness, Safety, Food Security, Environmental Impact, etc. But the one that gets the most attention and makes people think (at least in my community) is the Economics of local food. I get some odd looks when I say that. We are a farming community. People know that making a living farming is hard, risky, and for new people starting out pretty much impossible. We have a few large scale farmers here working from a base that grandpa started. They don’t produce for the local market, and they survive by getting bigger every year. Most of them are one bad year from bankrupt. We have a lot of hobby farms of various sizes where the farmer works full time somewhere else to support his/her farming habit. And we have a few poor dirt farmers like me, trying to make a go growing for the local market. People look at me and think “no one in their right mind would try to do what you do… How’s that make economic sense.”

But, here’s what I discovered as I poked at this problem. It does make economic sense. Here’s why.

In our county there are about 31000 people. If they spend as much on food as my family does, about $40 per person per week (I’ve been told that number is way low, but it is the number I know is true for me) that means that people in my county are spending at least $64,480,000.00 a year on food. That’s a lot of money in a fairly poor county. Very little of that money stays here, because almost none of the food is produced here. Even at the locally owned grocery stores (there are only a couple small ones) most of the money leaves the county. Why? Because that’s how retail grocery business works. In retail grocery the gross margin is about 30%. That means 70% of what you pay at the check out is what the store is paying to have stuff on the shelf. The 30% gets divided up in taxes, utilities, wages, etc. to run the business. A small amount of that stays in the community. That’s it. So for our county, we ship out at least $45,136,000.00 every year. Much of that could stay here. If you buy food that was produced here, most of that money stays. If 10% of our food was produced locally then $4513600.00 stays here. That would make a huge economic difference in our county. That’s not a government program, or a tax burden on the future generations. It’s just keeping our wealth here. As high as 80% of our food could be produced here. That would create jobs, keep wealth local, and have a massive impact on our little community. That’s what I mean when I say a local food system is important for economic reasons.

So, why aren’t we doing it? Many reasons. Consumers don’t buy local food because it is inconvenient to get, or not available most of the time (at least 6 months of the year there are no outlets for local food without going to the farmer.) Large scale farmers don’t see enough of a market to scrap their system and retool. They would go bankrupt in a hurry if they tried. Small scale farmers don’t have the capital nor the volume to access the market. So nothing happens.

That’s what we are trying to change here. I’ll be sharing what we are doing soon.
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