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The Economics of Local Food Systems: a Toolkit to Guide Community Discussions, Assessments, and Choices

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The Economics of Local Food Systems: a Toolkit to Guide Community Discussions, Assessments, and Choices Agricultural Marketing Service March 2016 The Economics of Local Food Systems A Toolkit to Guide Community Discussions, Assessments and Choices PB 1 Authors and Acknowledgements Authors Dawn Thilmany McFadden (coordinator, Colorado State University), David Conner (University of Vermont), Steven Deller (University of Wisconsin-Madison), David Hughes (University of Tennessee), Ken Meter (Crossroads Resource Center), Alfonso Morales (University of Wisconsin-Madison), Todd Schmit (Cornell University), David Swenson (Iowa State University), Allie Bauman (Colorado State University), Megan Phillips Goldenberg (Crossroads Resource Center), Rebecca Hill (Colorado State University), Becca B.R. Jablonski (Colorado State University) and Debra Tropp (U.S. Department of Agriculture, Agricultural Marketing Service) The authors would like to thank three reviewers, Jeff O’Hara (Union of Concerned Scientists), Rich Pirog (Michigan State University Center for Regional Food Systems), and Katherine Ralstron (U.S. Department of Agriculture, Economic Research Service) for their review and comments. Additionally, special thanks to Samantha Schaffstall and Arthur Neal of the U.S. Department of Agriculture’s Agricultural Marketing Service for support throughout the entire project. Preferred citation: Dawn Thilmany McFadden, David Conner, Steven Deller, David Hughes, Ken Meter, Alfonso Morales, Todd Schmit, David Swenson, Allie Bauman, Megan Phillips Goldenberg, Rebecca Hill, Becca B.R. Jablonski, and Debra Tropp. The Economics of Local Food Systems: A Toolkit to Guide Community Discussions, Assessments, and Choices. U.S. Department of Agriculture, Agricultural Marketing Service, March 2016. Web. In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident. Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA’s TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339. Additionally, program information may be made available in languages other than English. To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at How to File a Program Discrimination Complaint and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632- 9992. Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, SW, Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: [email protected]. USDA is an equal opportunity provider, employer, and lender. ii iii Contents Authors and Acknowledgements ii Introduction: The Economics of Local Food Systems, a Toolkit to Guide Community Discussions, Assessments, and Choices 1 Roadmap to the Toolkit 1 Purpose of the Toolkit 3 Evolution of Food System Policy Drivers and Issues 5 Structuring the Assessment Process to Enhance Success 7 Module 1- Framing Your Community Economic Assessment Process: Defining the Parameters of Your Local Food System 7 Case Study: Northern Colorado Food System Assessment 9 Figure 1.1: Boulder County, CO, Project Advisory Team Figure 1.2: CO Food System Assessment Steering Committee Representatives 9 Identifying the Study Parameters and Priority Issues 10 Study Scope 11 Timeframe 11 Resources 11 Goals of Your Community Food Systems Assessment 11 Using Visual Schematics to Engage Community Members 13 Case Study: The Vermont Farm to Plate Network5 14 Figure 1.3: Organizational Structure of the VTF Farm to Plate Network6 14 Figure 1.4: Community Food System Framework by Activity, Environment and Macro-Forces8 16 Figure 1.5. Assessment Analytical Framework9 17 Figure 1.6: Values Structure in Minnesota’s Food Industry 18 Figure 1.7: Michael Porter’s Value Chain Concept with a Food Systems Focus 19 Takeaways 20 Module 2 — Using Secondary Data Sources 21 Existing Datasets Offer a Wealth of Information 21 Case Study: Understanding the Difference Between Primary and Secondary Data 22 Starting Your Work with Secondary Data Sources 22 Data Sources 23 Data Sources on Food Handling, Processing, Marketing, and Distribution 26 Food Consumption 31 ii iii Waste Recycling 33 Demographic and Economic Contexts 34 Case Study: Maryland Food System Map 35 Figure 2.1: Maryland Food System Map 35 Cautions on Using Secondary Data 36 Takeaways 37 Appendix 1 — Specialized Secondary Datasets 38 Appendix 2 — Examples of Using Secondary Datasets 41 Module 3: Generating and Using Primary Data 43 Before You Start 43 Identifying Key Indicators for Your Community 44 Variables and Attributes/Characteristics 44 Data Collection 47 Case Study: Four Main Types of Survey Variables 48 Table 3.1: Example Likert Scale 48 Figure 3.1: Questions from the Pueblo County Food Assessment Youth Focus Groups 49 Considering Options for Administering Surveys 51 Figure 3.2: Dot Poster Surveys 51 Figure 3.3: Dot Poster Survey Example 51 Data Analysis 53 Figure 3.4: Example Mindmap 53 Case Study: Making Small Farms into Big Business 54 Takeaways 55 Module 4 - Engaging Your Community Process with Data 57 Developing a Shared Project Team Mission Centered on Key Data Findings 57 Data Analysis and Interpretation: Letting the Data Speak 59 Case Study: Strengthening Buffalo’s Food System 60 Figure 4.1: Healthy Food Access in Buffalo 60 Some Words of Caution at This Stage of Your Process: 61 Cluster Mapping and Location Quotients 62 U.S. Cluster Mapping Website 62 Figure 4.2 Establishments Growth Rate in Food Cluster by Economic Area, 1998-2012 63 Figure 4.3: Establishments Growth Rate in Local Food and Beverage Cluster by Economic Area, 1998-2012 63 iv v Engaging Public Support Through Unique Community Trends and Indicators 64 Case Study: Northern Colorado Regional Food Systems Assessment 65 Figure 4.4: Percent of Individuals Who Ate 5 or More Servings of Fruits and Vegetables 65 Table 4.1: Comparing Health Metrics from the Northern CO Food System Assessment 65 Presenting your Findings to Community Stakeholders 66 Takeaways 68 Module 5: Analyzing the Linkages and Contribution of Local Foods to Local Economies through Input-Output Analysis 69 Local Foods and Economic Impact Assessment 71 Linkages, Leakages, and Multipliers 72 Figure 5.1: Simple Multiplier Illustration 72 Producing Reliable Local Foods Impact Estimates 73 The Structure of Input-Output Models 73 Case Study: I-O Models 74 Table 5.1: Numerical SAM for a three-sector economy 74 Table 5.2: Expanded SAM 75 Table 5.3: Multiplier matrix for a three-sector economy 75 Basic I-O Modeling Structure 75 Properly Specifying the Study Area 76 Other Considerations: Reasonable Size of Multipliers 77 Figure 5.2: Illustration of Factors that Drive the Size of an Economic Multiplier 77 Case Study: Colorado Farm to School 78 Figure 5.3: Map of Direct Farm Sales in Colorado, 2007 78 Figure 5.4: Scenario Map for Economic Impact Assessment of Farm-to-School Programming in Colorado 79 Other Considerations: Reasonable Scenario Development 80 Understanding Input-Output Analysis Limits 80 Feasibility and Return on Investment 80 Employment Impacts 81 Impacts on Existing Commercial Activity 81 Takeaways 82 iv v Module 6: Addressing Opportunity Costs in the Analysis of Economic Impacts across Local Food Systems 83 Case Study: Supply and Demand Size Constraints – Incorporating Opportunity Cost and Countervailing Effects 84 Figure 6.1: Selected West VA Sectors Experience Job Gains and Losses due to Expanded Farmers Market Sales 85 Figure 6.2: New Job Impacts due to Expanded Farmers Market Sales in West Virginia 85 Figure 6.3: Expected Acres Needed to Satisfy Demand for Local Fruits and Vegetables Within the 6 State Region. 86 Figure 6.4: Expected Sales from Demand for Local Fruits and Vegetables Within the 6 State Region 86 Resource Constraints and Local Food Systems: Supply Side Countervailing Effects 87 Case Study: Local Food Land Requirements 88 Table 6.1: Kane County Fruit and Vegetable Market Potential and Production Factors 89 Table 6.2: Opportunity Costs Per 1,000 acres of Conventional Kane County Crop Land Converted to Fruit and Vegetable Production 89 Figure 6.5: Fruit and Vegetable Production Acres by State, 2012 90 Local Opportunity Cost of Direct Farm Marketing Channels 91 Case Study: What is Margining? 92 Figure 6.6: Breakdown of $1 Spending on Produce, Farmers Market vs Grocery Store 92 Figure 6.7: Farm Share of the Retail Dollar in Conventional Food Marketing Channels Compared to Select Local Food Channels 93 Figure 6.8: Division of $1 Spending on Produce, Farmers Markets vs. Grocery Store 93 Figure 6.9: Difference in the direct impacts
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