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Transforming Communities

Transforming Communities

Do investments in local food systems really have the power to transform communities? That's the underlying question addressed by Harvesting Opportunity, a book recently released through a joint USDA/Federal Reserve effort intended to describe the local food landscape, its many components, and the outlook for constructive solutions.

As a part of their research function, the Federal Reserve wanted to know about the economic effects of growing consumer interest in local foods. In partnership with USDA, the Fed sought out experts in the field of local foods to write down what they have found through research and experience.

My contribution to this effort is the chapter on “The Nature of Local Food System Farm Businesses.” With nearly forty years’ experience in local food production, financing, and policy I had a few things to say about how direct-to-retail farm businesses are different from conventional corn and soybean commodity farm businesses.

Lending to a local food farm depends on understanding the marketing plan. That contrasts with conventional commodity farms where the lender concentrates on production costs and yield. For local food farmers, how, where, and whom their output is sold is much more important than what particular type of produce is sold.

Furthermore, understanding the difference between lending to local food producers versus lending to conventional commodity producers requires acknowledging that consumer demand drives local food system agriculture. Information exchange between consumers and producers is an essential component of the economic value of local foods. It’s often said of local foods that "the source and story of the food stays with the product" as it moves from farm to fork. It’s that story that consumers want to hear, and they are willing to pay for it.

I've seen change and maturation of the local food sector. Things feel different now than forty years ago. Not only are there celebrity chefs, but those chefs deliberately seek out mutually beneficial relationships and even help to create celebrity farmers. From a Farm Credit lender's standpoint, it's a new experience to see farmer-customers on the menu at local foods restaurants—and of course I mean listed on the menu as "featured local farmers."

Now there is change because of the local food sector. More new farmers are beginning businesses, and there are now about 8,700 farmers markets around the country. That’s a whole lot of opportunity in farming.

The effect of local food on the economy as a whole is beyond opportunity and approaching transformative. By 2019, USDA expects local food sales to top $20 billion dollars. That would be a big pile of money if it were in one place. However, the transformative power on communities of that local food money is because it is spread so widely.

Of course billions of dollars in local food sales have got an effect at the farm level, but its real power is that the local food economy is making its way to schools, hospitals, farmers markets, grocery stores, and restaurants. Consumers want fresh, safe, healthy local food.

Demand for local food is transforming our communities by bringing opportunity to farmers, bringing farmers to cities, and bringing access to underserved neighborhoods in urban areas. Who would have guessed the economic power of local food to create new communities even as it enhances our collective quality of life?