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Analyzing Local Food Trends

Discover the benefits and impacts of local foods on economies and consumer preferences, focusing on Tennessee trends and farmers markets. Gain insights on survival rates, sales data, and market dynamics.

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Analyzing Local Food Trends

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  1. Analyzing Local Food Trends David W. Hughes Professor-Greever Endowed Chair in Agribusiness Development, University of Tennessee Extension, Department of Agricultural & Resource Economics Farmers Market Manager Training Center for Profitable Agriculture Franklin, Knoxville, TN November 28-29, 2017

  2. Outline • Benefits of Local Foods • US Local Food Trends • Tennessee Local Food Trends • Focus on Tennessee Farmers Markets • Summary

  3. Benefits of Local Foods • Have well established positive impact on local economies • But is reduced if we account for opportunity cost of local spending (around 1/3) • Some competitive effects between types of local foods (11% reduction for food hub impacts for example) • Sticky dollar impacts as a retail draw likely but depends • Strong consumer preference • Increased attractiveness of a place (Florida model) not well researched • Impacts on disadvantaged groups not well researched (some for organic) • Impacts of social linkages (social capital) not well researched • Food mile (skeptical) • Health (at least in some situations) Source: Hughes & Boys; Boys & Hughes; Thilmany et al.

  4. Competition for Vendors at Farmers Markets Source: Lohr& Diamond

  5. Competition for Customers at Farmers Markets

  6. eXtension Community of Practice:Local and Regional Food Systems AMS Toolkit 1 of 6 initiatives https://localfoodeconomics.com/ Help you & your community understand ag & food enterprise viability, market dynamics and other key socio-economic metrics of local & regional food systems https://localfoodeconomics.com/wp-content/uploads/2017/03/Toolkit-Designed-FINAL-UPDATED-03-7-2017.pdf

  7. US Local Food Trends

  8. 2007 to 2012, Farms with Direct Sales Correlated with Higher Survival Rates Source: Economic Research Service Note: 2007 to 2012 Survival Rates based on sales in 2007

  9. Growth in US Local Marketing Channels Since 2007 Sources: Low et al.

  10. Growth in Food Hubs Slowing 0.28% 2.3% Annual Compound Growth: 2008-12: 18.86%, 2012-15: 2.30%, 2015-17: 0.28% Source: Author calculations based on Feldstein & Barham

  11. Growth in US Farmers Markets Remains Strong (11.27% Annual Compound Growth)

  12. 2015 LOCAL FOOD MARKETING PRACTICES SURVEY • USDA-NASS • Undercounts? (Did everyone respond?) • Accurate? (Yes, given undercount) • For 2015 food for humans to eat or drink (i.e., cut flowers, nursery products, hay, Christmas trees excluded)

  13. US Local Food Sales • 167,009 farms • $8.747 billion in sales • $52,376 per farm • Operators: • Total 303,899 • 1.8 per farm • Female 115,824 (38.1%) (31% all farms in 2012)

  14. Local Food Sales by Type of Buyer • Consumer $3.0 billion 35% • Retailer $2.4 billion 27% • Institution-Intermediary1 $3.4 billion 39% • Total $8.7 billion 100% 1Institutions such as schools, college, universities, and hospitals and intermediary businesses such as food hubs, other wholesalers or distributors, processors, all of which market locally or regionally branded products. Source: USDA NASS-ACH12-35/December 2016

  15. Top Ten States All Local Foods(VT Per Capita $400.26, 14.8 x US $27.07) M $

  16. Institutional-Intermediary, Retail • Institutional-Intermediary: • $3.4 billion • 59,911 farms • $56,751 per farm • To Retailers: • $2.4 billion • 23,624 farms • $101,592 per farm Source: USDA NASS-ACH12-35/December 2016 and authors calculation

  17. Sold Directly to Consumers • Farmers Markets • Community Supported Agriculture • On or Off Site Farm Store or Stand • Online Marketplaces • Other (pick-your-own, mobile market) • Excluded: • Sold directly to retail • Sold directly to institution • Sold directly to or at intermediate market (food hub or other wholesalers primarily)

  18. Direct to Consumer By Marketing Practice • Direct to Consumer: • $3.027 billion (34.6% of all local food sales) • 118,014 farms (70.7% of all responding farms) • $25,650 per farm • On-farm store: $1.322 billion (43.7%) 51,422 farms • Farmers Market: $0.711 billion (23.5%) 41,156 farms • Off-site stand: $0.236 billion (7.8%) 14,959 farms • CSA: $0.226 billion (7.5%) 7,398 farms • Online: $0.172 billion (5.7%) 9,460 farms • Other: $0.360 billion (11.9%) 39,765 farms

  19. Top 10 States in Terms of Direct Sales: Million $ ($13.64 per capita 1.46 x $9.37 US) M $ State

  20. US Farmers Markets • $710.7 million in sales • 41,156 farms • $17,268 per farm • 55.7% one market • 18.6% two markets • 12.3% three markets • 5.6% four markets • 7.8% five or more markets

  21. Majority Short Haul: Distance to Farmers Markets US Producers

  22. TN Local Food Trends

  23. Tennessee Local Food Sales • 4,148 farms • $58.720 million in sales • $14,156 per farm (53.7% of US) • $8.83 per capita (32.6% of US $27.07) • Operators: • Total 7,037 • 1.7 per farm • Female 2,687 (38.2%)

  24. Tennessee Local Food Sales: Direct to Consumers • 3,748 farms (90.4%) • $41.414 million sales (70.5%)-rest is “intermediated” • $11,050 per farm (43.1% of US)

  25. Distribution by Number of Years Directly Selling, 3,748 Tennessee Producers Author calculations based on USDA-NASS-2015 Local Food Marketing Practices Survey

  26. Tennessee Local Food Sales: Institutional, Intermediary and Retail • Farmers: 400 (9.6% of all responding farmers) • Sales: $17.306 million (29.5%) • $43,265 per farm (3.9 X direct)

  27. Tennessee Local Food Sales: Value Added and No Value Added • No Value Added: • $29.143 million (49.6%) • 1,648 farms • $17,684 per farm • Value Added: • $29.577 million (50.4%) • 3,748 farms • $10,013 per farm

  28. Tennessee Farmers Markets • 130 (61 counties; 64 in top ten counties) • 1.5% of US markets (130 out of 8,707) • TN markets pop weighted/ US market pop weighted • 72.5 with 100 equal to US or • TN 49 markets short (179 if like US) • Adjusted for difference in per capita income • 83.2 or TN 26 markets short (156) • TN per capita direct sales: $6.23 (33.5% under US $9.37) (NASS Local Foods Survey) • All gaps would be larger (could be slightly but recall VT!) if we adjusted for level of state tourism Source: Author calculations based on Agricultural Marketing Service, USDA, NASS Local Foods Survey

  29. Tennessee Farmers Markets • 63.1% accept credit cards • 30.8% accept SNAP payments • 36 have organic product vendors • 83 have baked goods vendors • 79 have eggs vendors • 68 have meat vendors Source: Author calculations based on Agricultural Marketing Service, USDA

  30. Take-Aways • Local foods provides strong local benefits, some more proven by research than others • Need to keep an eye on competition, especially between-among different types of local foods • Nationally growth in food hubs slowing, farmers markets growth remain strong • Non-direct largest share of $s nationally • Local foods strong in TN, but a lot of room for growth, farmers markets and otherwise

  31. Questions, Comments,Thank You!David W. Hughesdhughe17@utk.edu

  32. Local Food Literature B.B.R. Jablonski, T.M. Schmit & D. Mansury. 2016. “Assessing the Economic Impacts of Food Hubs on Regional Economies: a framework including opportunity cost.” Agricultural and Resource Economics Review. 45(1): 143-72. D. Thilmany McFadden, D. Conner, S. Deller, D.W. Hughes, K. Meter, A. Morales, T. Schmit, D. Swenson, A. Bauman, M. Phillips Goldenberg, R. Hill, B.R. Jablonski, and D. Tropp. 2016.The Economics of Local Food Systems: A Toolkit to Guide Community Discussions, Assessments, and Choices. U.S. Department of Agriculture, Agricultural Marketing Service, March ,Web. Feldstein, S. & J. Barham. 2017. “Running a Food Hub Learning from Food Hub Closures: Vol 4.” USDA, Agricultural Marketing Service. Hughes, D.W. & K. Boys. 2015. “What We Know and Don’t Know About Local Food Systems and Economic Development.” Choices. 1st Quarter Hughes, D.W. & O. Isengildina -Massa. 2015. “Keeping Dollars Home: the Economic Impact of the Farmers’ Marketsand the South Carolina Locally Grown Campaign.” Food Policy. 54(1): 78-84. Boys, K. & D.W. Hughes. 2013. “A Regional Economics Based Research Agenda for Local Food Systems.” J. of Agriculture, Food Systems, and Community Development. 3(4):1-6. Lohr, L., & Diamond, A. (2011, July). Trade zones for farmers’ markets: Spatial relationships. Paper presented at the CENET Track Session, Economic Contributions from a More Localized Food System, annual meetings of the Agricultural and Applied Economics Association, Pittsburgh, PA. Low, S. A., et al. 2015. Trends in U.S. Local and Regional Food Systems, AP-068, U.S. Department of Agriculture, Economic Research Service, January. Swenson, D. 2011. The Regional Economic Development Potential and Constraints to Local Foods Development in the Midwest. Iowa State University. Hughes, D.W., C. Brown, S. Miller & T. McConnell. 2008. Evaluating the Economic Impact of Farmers’ Markets Using an Opportunity Cost Framework. J. of Agricultural & Applied Economics. 40(1):253-65. USDA-NASS. 2016. Direct Farm Sales of Food Results from the 2015 Local Food Marketing Practices Survey. ACH12-35/December 2016.

  33. Other Literature Hughes, D.W. & D.B. Willis. “Constructing a Full Developed IMPLAN-Based Core-Periphery SAM: Issues and Implications.“ Measuring Economic Linkages. CRENET Track Session Annual Meeting, Agricultural and Applied Economics Association, Chicago, IL, July 30- August 1, 2017. Sabatini, F. 2008. “Social Capital and the Quality of Economic Development.” Kyklos 61(3):466-499. Lyson, T.A. 2004. Civic Agriculture: Reconnecting Farm, Food, and Community. Medford, Mass.: Tufts University Press. Florida, R. 2002. The Rise of the Creative Class: And How It's Transforming Work, Leisure and Everyday Life. New York: Basic Books. Porter, M.E. 2000. “Location, Competition, and Economic Development: Local Clusters in a Global Economy.” Economic Development Quarterly 14(1):15-34. Lyson, T.A., G.W. Gillespie Jr., and D. Hilchey. 1995. “Farmers' Markets and the Local Community: Bridging the Formal and Informal Economy.” American Journal of Alternative Agriculture 10:108-113.

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