The Business of Local Foods

This week I was at the Federal Reserve Bank in Chicago to talk about the business of local food. The conversation focused on how USDA and other federal agencies can work together with the private sector to harness the economic potential of local food across the Midwest. Joining me were executives, economic developers, and experts from businesses you may have heard of -- Sysco, Chartwells, SuperValu, General Electric, Feeding America, Whole Foods Market and There were also representatives from local, state and federal government ranging from USDA's agencies to the Illinois Commerce Department -- each recognizing how investments in local food can help stimulate the economy, create jobs and complement our country's current agricultural system.

According the USDA's own research, local food sales made through direct marketing sales like farmers markets, CSAs, and farm stands plus via supermarkets, restaurants and institutional buyers were close to $5 billion. Fruit, vegetable and nut growers selling into local and regional markets employ 13 fulltime workers per $1 million in revenue earned. Why is this? Part of it is consumer demand. In 2011, over 85 percent of the customers polled by National Grocers Association said they chose grocery stores based in part on whether they stock local products. Part of it is flexible business models that can nimbly and quickly respond to the market. Farms selling locally may grow a wider variety of crops, they may pack or process on the farm or use workers to transport and market their products. Regardless, local food has big potential for job creation and economic opportunity.

In the Midwest, local food businesses are blossoming. For instance, with USDA support, the Local Roots Market and Café in Wooster, Ohio is developing a commercial kitchen. When the kitchen comes on-line, Local Roots expects 25 businesses to benefit from increased revenues and 10 new businesses to start-up as a result of kitchen access. Local Roots began in 2009 as a year-round farmers market and has expanded rapidly since then, incorporating as a cooperative in 2010. Today, it has some 800 members and sells food from 150 local producers, who take home 90 percent of their gross sales.

Detroit's Eastern Market attracts more than 250 vendors from Michigan, Ohio, and Ontario to process, and sell their food at the market. Eastern Market also coordinates aggregation, distribution, processing, and commercial sales for many of the region's small and mid-size farmers. In 2010, with USDA support, the market ramped up its research and planning to expand healthy, local food access throughout Detroit. The market also plans to redevelop an economic development district to bring in additional business incubators, restaurants, retailers, wholesale services and a distribution center.

The USDA has been eagerly watching businesses like this grow, develop and succeed. In 2009, the USDA launched the Know Your Farmer, Know Your Food Initiative to coordinate the Department's support and understanding of local food systems. Know Your Farmer, Know Your Food leverages existing USDA resources and improves our ability to execute programs and policies supporting local food businesses and developments across the country. We are proud of the investments the USDA has made in producers, processors, distributors, buyers and other important players in strengthening local food systems to date, and will continue to do so in the future. As part of the Know Your Farmer, Know Your Food Initiative, we are currently preparing a summary of some of the great achievements and inspiring stories coming from these food systems across the country. We know these stories will spark a national conversation about the impact local food systems have on our economy, our farmers and ranchers, and your community. The conversation I had in Chicago is just the beginning.