Economy Matters

May 1, 2018

Photo by Sadat Karim

Where a public housing project once stood on the western fringe of downtown Atlanta, a garden grows.

Each year, the three-acre patch produces 35,000 pounds of kale, broccoli, collards, tomatoes, and other produce for four farmers markets and other local outlets.

The Truly Living Well Center for Natural Urban Agriculture is a staple in Atlanta's burgeoning local food system. It aims to bring good food, good health, and general well-being to Atlanta's urban center, according to the nonprofit group. It's also the type of organization that was the focus of "Growing Regional Food System Opportunity: Capital and Beyond," a recent conference on local food systems held at the Atlanta Fed. The event explored the economic impact, challenges, and opportunities that local food systems present. The conference was organized by the Atlanta Fed's Community and Economic Development group, along with the Self-Help Credit Union of Durham, North Carolina; Jackson, Mississippi-based Hope Credit Union Enterprise Corporation; and the Food Well Alliance of Atlanta.

The conference stressed the role that activities involved in locally sourced food can play in helping underserved communities and growers who have traditionally confronted racial discrimination in financing. In fact, the Truly Living Well farm lies in a ZIP code whose median household income is roughly half that of Atlanta residents overall, according to U.S. Census Bureau data.

Broad economic impact not yet well understood

The widespread economic effects of homegrown foods are not yet well understood. But regional food systems may help generate economic growth, according to Harvesting Opportunity: The Power of Regional Food System Investments to Transform Communities, a compendium of research papers and reports published in 2017 by the Federal Reserve Bank of St. Louis and the Board of Governors of the Federal Reserve System.

The book suggests that with well-crafted policies and support, regional and local food systems can boost regional economies. For example, a growing focus on local food could open new markets for beleaguered small and midsize farms, particularly if they sell to institutional food purveyors such as schools and government cafeterias. Local food could also bolster the economic security of low- and moderate-income households and communities.

"The approaches that support the development of regional food systems not only contribute direct economic benefits to the community, but can also open the door for improved access to healthy food and other positive outcomes that could result in improved community health and a more productive workforce," Fed governor Lael Brainard and St. Louis Fed president James Bullard write in Harvesting Opportunity's foreword.

Preference strengthening for local food

Consumers are increasingly interested in the origins of food and how their grocery dollars can support local food-related businesses and farmers, according to Harvesting Opportunity.

A few statistics illustrate the point:

• The number of farmers markets nationally has nearly quadrupled in the past 20 years, to almost 9,000 according to the U.S. Department of Agriculture (USDA) (see the chart).
• The USDA's Economic Research Service estimates that local food generated $6.1 billion in revenue in 2012, the most recent comprehensive measurement. That amount still represents only about 1 percent of all consumer spending on food eaten at home, though.
• Recent surveys indicate that nearly 75 percent of shoppers report consuming local food at least once a month.
• As of the 2012 academic year, the number of farm-to-school food programs increased more than 400 percent since 2007, and more than 40 percent of school districts have them, according to the figures the USDA cites from the National Farm to School Network.

Photo by Sadat Karim

Research drills down

Data on local food systems are scarce and expensive to obtain, according to the USDA and those involved in the industry. Plus, the focus of existing research on narrow geographic areas and market segments complicates efforts to compare studies, according to a 2015 USDA report to Congress.

Economic development initiatives built on the traditional principles of rural and urban linkages and substituting locally produced goods for imports—in effect, buying local means keeping the money local—have historically been aimed at rural areas and have yielded only modest results, according to a paper in the Fed book.

More research might add clarity, but "there are reasons to believe that local and regional food system activities may be different," write Harvesting Opportunity coauthors Becca Jablonski of Colorado State University, Mary Hendrickson of the University of Missouri, Stephen Vogel of the USDA, and Todd Schmitt of Cornell University. A key reason that economic potential exists, the researchers write, is "strong evidence" that local and regional food system strategies are responding to growing consumer demand, so consumer skepticism is less of an obstacle.

The USDA has also begun to pay attention to local food. Though small-scale growers and related ventures garner a fraction of the public subsidies that flow to large agricultural operations, the promotion of local systems has been among the USDA's strategies for economic development for the past several years. Between 2009 and 2015, the USDA invested over $1 billion combined in more than 40,000 local and regional food system projects, according to the four researchers. (That investment compares to about $20 billion each year in total farm subsidies.)

"Understanding the impacts of these types of investments on rural communities and economies, however, is still nascent and relatively limited in focus," according to Harvesting Opportunity.

In fact, Jablonski and her coauthors find that metro areas, not rural places, dominate local food system activity. As a result, the economic development strategy surrounding local food systems focuses on using market interactions to fortify links between rural and urban areas. So far, case studies of local food system practices generally find "relatively small, albeit positive, short-term gains accruing to regional economies," according to these economists.

One community sees specific benefits

Local food advocates say some of the greatest gains of their work have yet to be thoroughly studied. In particular, Kim Karris, executive director of the Atlanta-based nonprofit Food Well Alliance, pointed out that little work has been done to quantify the potential savings in areas such as acute health care spending and social programs that could result from healthier diets, better jobs, and richer community engagement resulting from local food activities.

One speaker at the Atlanta Fed conference did cite a few specifics. The Reverend Richard Joyner, founder of the Conetoe Family Life Center in Edgecombe County, North Carolina, said a local food program launched there a decade ago has helped reduce by 60 percent the number of local residents' readmissions to the hospital within 30 days of a stay. The camp's educational component gives students on-the-job training and teaches math, science, and other subjects, contributing to better educational outcomes. And an agreement to sell $90,000 of Conetoe-grown food a year to the county school system is "direct income back into the community."

Such benefits could perhaps be spread more broadly. Locally produced and consumed food can serve as one tool to address stark health disparities between affluent populations and lower-income and minority groups, said Kelly Brownell, director of Duke University's World Food Policy Center.

Take infant mortality, for example. Among non-Hispanic blacks in the United States, the rate of infant mortality is more than double that of non-Hispanic whites. Building the infrastructure to make healthy food more accessible to lower-income and minority populations can help, Brownell said.

Even though locally sourced food has risen in popularity, especially in metro areas, urban farming is far from a means to affluence. Karris's group works with 52 urban farms and 300 community gardens across metro Atlanta. Most of the growers earn less than $25,000 a year from farming, Karris said, meaning that most of the growers continually struggle to make their businesses viable.

Charles Davidson

Staff writer for Economy Matters