WASHINGTON, Feb. 11, 2015 – From 2002 to 2007, the U.S. local food sector saw a 17 percent increase in the average number of farmers selling local foods direct-to-consumers (DTC), through farmers markets, farm stands, and community supported agriculture initiatives. There was also a 32 percent increase in total DTC sales. Since 2007, however, the growth of local food markets has slowed and sales have actually fallen.
A report from USDA’s Economic Research Service (ERS) – “Trends in U.S. Local and Regional Food Systems” -- shows that between 2007 and 2012, for instance, the number of farmers using DTC channels climbed by only 5.5 percent and DTC sales declined by nearly 1 percent, although it’s not clear why.
The downward trend in sales may be due to "plateauing consumer interest, sales shifting to intermediated markets, or even the recession,” Sara Low, an ERS economist and the lead author of the report, said last week in a webinar on the study’s findings.
Still, the market for local foods is substantial, with almost 164,000 farms – about 7.8 of the U.S. total -- selling local food DTC or through intermediated marketing channels – directly to restaurants, grocers or other food aggregators -- in 2012. Total local food sales that year came to an estimated $6.1 billion.
The ERS study found that most consumers were willing to pay price premiums, generally between 7 percent and 15 percent, for local food, particularly if it was grown in metropolitan counties or counties adjacent to urban centers. However, DTC local food prices were found to be lower than retail prices, on average.
From 2006 to 2014, the number of farmers’ markets in the U.S. jumped 180 percent to 8,268, according to the study, which was mandated in the 2014 farm bill. In addition, regional food hubs - aggregators of locally sourced food for wholesale, retail, institutional, and individual consumers - increased by 288 percent, and farm to school programs increased 430 percent to 4,322 school districts.
In their executive summary, the authors noted that subsequent research will need to include more comprehensive geographic and market data and a standard set of economic modeling assumptions in order to get a clearer determination of the economic impact of local food markets.
Additional key findings specific to 2012 include the following:
— Small operations -- with annual gross cash income below $75,000 -- made up the majority (85 percent) of local food farms, but accounted for 13 percent of local food sales. Larger farms, grossing more than $350,000, accounted for 5 percent of local food farms and 67 percent of sales.
— 32 percent of DTC farms were operated by beginning farmers (those with less than 10 years of farming experience).
— Farms that produce both local and organic food are probably less common than you would think. Of the 163,675 farms that were producing local food, only 7,556 of those farms, or less than 5 percent, also produced organic.
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