Clearer picture of local food
Only small percentage sold direct-to-consumer by growers
BakingBusiness.com, Nov. 29, 2011
by Staff

WASHINGTON — The image of the grower selling produce at a farmers’ market or roadside stand may be the quintessential image of the burgeoning local food movement. According to a study by the Economic Research Service of the U.S. Department of Agriculture, such direct-to-consumer selling accounts for only a small proportion of the U.S. local foods market.

The study, “Local foods marketing channels encompass a wide range of producers,” was published in the November issue of Amber Waves. The article was written by Sarah A. Low and Stephen Vogel, economists with the E.R.S.

“In addition to buying directly from farmers, consumers also purchase locally grown food through retail channels that enable consumers to purchase local foods with one-stop shopping convenience,” the E.R.S. said.

Taking grocers, restaurants and regional distributors into consideration together with direct-to-consumer selling, “a more complete picture of the local food market emerges,” the authors said.

All told, annual local food sales in 2008 totaled $4.8 billion. The estimate, based on data from the U.S.D.A. Agricultural Resource Management Survey, is four times larger than figures based on direct-to-consumer sales alone.

Of the $4.8 billion, more than half ($2.7 billion) was from farms selling local foods exclusively through intermediated marketing channels, such as supermarkets. Farms using both direct-to-consumer and intermediated marketing channels accounted for a quarter of local food sales, at $1.2 billion.

The researchers found small farmers (with gross annual sales beneath $50,000) relied on direct-to-consumer market channels more than larger farms ($250,000-plus).

“Large farmers that market local foods exclusively through intermediated channels accounted for 92% of these intermediated sales, while small- and medium-sized farms that market local foods exclusively through direct-to-consumer channels accounted for 73% of these sales,” the researchers said.

Previous research has indicated direct-to-consumer sales are highest in metropolitan areas, the E.R.S. said.
The researchers also identified a major west-east divide in terms of how local food is marketed.

“In 2008, 85% of the value of West coast local food sales occurred through intermediated channels,” the authors said. “The dominance of intermediated marketing channels among West coast local food farms is likely because these farms are typically larger and located farther from metro areas than farmers in other regions, necessitating the use of intermediated rather than direct-to-consumer marketing channels.

“High levels of local food production on the West coast may also be related to the region’s suitability for fruit and vegetable production. Recognized for its varied climates, long growing season and extensive irrigation networks, the West coast produces 56% of the nation’s vegetables, fruits and nuts and other specialty crops.”

By contrast, the researchers said farmers in the Northeast who sell local food tended to be smaller and are located closer to densely populated urban markets. They are more likely to use direct-to-consumer marketing outlets.

For farmers who do sell to local customers, the business represents a key source of income, the researchers said.

“Almost two thirds of local food producers reported that local food sales accounted for at least 75% of their total farm sales in 2008, suggesting the importance of local food sales to gross sales for these farms,” the researchers said.

They said consumers are motivated to buy local by a desire for freshness, to support the local economy and for personal communication with the producer.