Ken Meter Crossroads Resource Center (Minneapolis)

Food Deserts & the Economics of Food

Economic Research Service Food Deserts workshop Washington, DC October 9, 2008 Financial partners:

• Blue Cross Blue Shield Minnesota Center for Prevention • W. K. Kellogg Foundation • Northwest Area Foundation • Experiment in Rural Cooperation (SE Minnesota) • Food Systems Working Group (Value Chain Partnerships project) — Aldo Leopold Center for Sustainable Agriculture at Iowa State University • University of Minnesota • Oregon Food Bank • University of Wisconsin Extension • Washington State University • Oregon State University • University of North Carolina — Chapel Hill • Emory University • University of Illinois • Kansas State University Extension • Northern Arizona University • Farm Aid • Metro Denver Health & Wellness Commission “Finding Food in Farm Country” Studies

plus Maui & Hawai’i

39 regions in 19 states, including 7 statewide Local Farm & Food Economies

The perspectives of the communities where commodities are produced and used...

…are often overlooked Vision for local food economies

Build: Health Wealth Connection Capacity Mural: The Food Project Crossroads Resource Center

20 years living & professional work in South Minneapolis (1972 - 1992) Crossroads Resource Center

Aided creation of Latino Mercado Crossroads Resource Center

Wrote for Neighborhood Works on lack of food access 1994 Asset-Based Research & Development

* Start by identifying assets * Then ask about needs * Study local economy before “developing” it * Agree on how to measure “development” North Minneapolis Assets

68,000 people (2000)

$ 1.1 billion consumer spending power (2004)

$ 44 million home mortgage market (2002)

Sources: 2000 Census, Bureau of Labor Statistics, Home Mortgage Disclosure Act data North Minneapolis Assets

400 businesses (1995)

$ 2 billion of residential, commercial, and industrial property (2001)

Sources: CRC Neighborhood Business Survey, City Assessor North Minneapolis Assets

Hosts 170 non-profit organizations

173 external partners

94 faith communities

Ranks high in social capital

Sources: NWCT nonprofit survey, NWAF social capital survey NorthWay income compared to Minneapolis

90%

80%

70%

NorthWay 60% Minneapolis

50%

40%

30%

20%

10%

0% SS PA SSI IDR Other Retire Self-emp Wage/Sal

Source: 2000 Census North Minneapolis

Yet...

25% live below poverty line

Median household income $31,246

3,000 households earn less than $10,000

Source: 2000 Census North Minneapolis

Yet... Livable Wage for a family of 4 is $46,656 Only 34% of households earn a Livable Wage

Source: Jobs Now, 2000 Census The Food Project — Boston State of Minnesota

Farm & Food Economy

Minnesota ranks 6th among farm states in sales Food firms among Minnesota’s Top 20 manufacturing firms

$billions 2005 sales 1 Cargill 71 3 CHS Central Harvest States 12 4 General Mills 11 6 Land O'Lakes 8 7 Hormel Foods 5 10 PepsiAmericas 4 11 Schwan Foods 3

Total 114 86% of farm sales involve livestock, feeding livestock, exports, or ethanol Iowa

3% of farm sales involve fruits and vegetables Farm Production Balance in Minnesota, 1969-2006 12

Cash Receipts 4 Production expenses Balance 2 $ billions (current)

0 2001 1995 2005 1989 1999 1983 1993 2003 1987 1997 1981 1991 1975 1977 1985 1973 1969 1971 -2 1979

-4

Source: Bureau of Economic Analysis Farm Production Balance in Minnesota, 1969-2006 25

20 Cash receipts Production expenses Balance 15

5 $2.5 billion less than 1969 $ billions (2006 dollars)

0 2001 1997 1999 1995 1991 1993 1987 1989 2003 2005 1985 1981 1983 1973 1975 1971 1979 1969 1977

-5 Loss since 1993: $10 billion Source: Bureau of Economic Analysis Minnesota, farm income by type, 1969-2006

10.0

Government Payments

8.0 Other Farm-Related Income Farm Production Balance

6.0

4.0

2.0

$ billions (2006 dollars) 0.0 2001 2005 1997 1989 1993 1985 2003 1981 1999 1995 1987 1991 1983 1975 1977 1979 1973 1971 1969 -2.0

-4.0

Source: Bureau of Economic Analysis Crop and livestock sales in Minnesota, 1969-2006 12

Livestock 8 Crops

4 $ billions (2006 dollars)

0 2001 1999 1997 2005 1987 1995 2003 1985 1993 1975 1983 1991 1981 1989 1971 1973 1969 1979 1977 Source: Bureau of Economic Analysis Estimated meat consumption in Minnesota, 1970 - 2005 90

40 million pounds 30

- 2000 2002 2004 1990 1992 1978 1994 1980 1996 1982 1998 1974 1984 1972 1970 1988 1986 1976

Source: USDA / Economic Research Service Sales of Minnesota farm products, 1949 - 2006

0.6

Fruits & Nuts 0.5 Vegetables Farm home consumption

0.4

0.3

$ billions (2006) 0.2

0.1

- 2006 1997 2000 1991 2003 1994 1985 1988 1979 1982 1973 1976 1967 1970 1961 1964 1958 1949 1955 1952 Source: USDA / Economic Research Service Estimated fruit & vegetable consumption in Minnesota, 1970 - 2005 2,500

2,000

1,500

1,000 million pounds Vegetables Fruit

500

- 1996 1994 1992 1990 1984 2004 2002 2000 1998 1972 1970 1988 1986 1982 1980 1978 1976 Source: USDA / Economic1974 Research Service

Minnesota Consumers

$11 billion market for food (2006) 90% (or more) sourced outside the state

$23 million sold directly from farmers to consumers 0.3% of farm sales 0.2% of consumer demand

Source: Census & BLS Minnesota summary

Farmers lose $700 million per year (1993-2006)

Farmers buy $4 billion of inputs from outside state

Consumers spend $10 billion on food sourced outside

Source: Census & BLS Minnesota summary

$15 billion loss per year

Source: Census & BLS U.S. Farm Cash Receipts and Production Expenses, 1969-2001 400.0

350.0

300.0

250.0

200.0

150.0 Cash receipts Production expenses

$ billions (2002 dollars) Balance 100.0

50.0

0.0 1981 1991 1971 1995 1999 1983 1989 1993 1977 1997 1973 1975 2001 1969 1985 1987 1979 -50.0 Change in Farm Production Balance, 1969 - 2002

Map by Ken Meter, 2005 U.S. Consumers

$823 billion household market for food (2006)

$812 million sold directly from farmers to consumers 0.4% of farm sales 0.1% of consumer demand

Source: Census & BLS Low-Income Consumers in U.S.

27% of U.S. population earns less than a livable wage (185% of poverty)

The level at which children qualify for free/reduced lunch

Source: Census & BLS Low-Income Consumers in U.S.

These consumers spend $143 billion on food (2006)

Including $30 billion food stamps

And $5 billion WIC coupons

Source: Census & BLS Low-Income Consumers in U.S.

These consumers spend $143 billion on food (2006)

This is 55% of what farmers earn selling commodities!

Little public planning for how to address this consumer market

Source: Census & BLS Low-Income Consumers in U.S.

Inner-city grocery stores are among the most profitable

Source: Institute for a Competitive Inner City Low-Income Consumers in U.S.

One model that seems to work: locate grocery stores on edges that join prosperous and low-income communities

Source: Institute for a Competitive Inner City Cash receipts and production costs for U.S. farms, 1929 - 2007 Source: ERS — Chart by Ken Meter, 2008 300

250

200

150

Cash Receipts Production Expenses 100 Receipts less Expenses

$billions (2000 dollars) 50

0 2007 1980 1977 1986 1983 1992 1989 1998 1995 2004 1947 2001 1944 1953 1950 1959 1956 1965 1941 1962 1935 1938 1932 1968 1929 1974 1971 -50

Source: USDA / Economic Research Service Cumulative flow of money away from farm communities, 1910 - 2007

- 1985 1991 1949 1940 1997 1913 1988 1946 2003 1979 1919 1976 1994 1964 1955 1982 1952 1973 1970 1967 1910 1961 1958 1925 2000 1916 1931 2006 1922 1937 1928 1943 1934

(100)

(200)

(300)

(400) $ billions (2007 $)

(500) $600 billion more paid by farmer interest

(600) payments — than all subsidies

(700) Corn sweeteners consumed in U.S., Corn sweeteners1966-2002 consumed in U.S., 1966 - 2002

HFCS 30 Glucose Dextrose

Source: USDA/ERS — chart by Ken Meter, 2006 U.S. Youth Who are Overweight Percent by Age Percent 16 14.0% 14

12 10.7% 13% 10 10.7% 8

6 4.6% 4 4.1% 2

0 1963-70 1971-74 1976-80 1988-94 1999 Ages 6-11 Ages 12-17 >95th percentile for BMI by age and sex, based on NHANES I reference data Source: Troiano RP, Flegal KM. Pediatrics 1998;101(3):497-504. NHANES 1999, National Center for Health Statistics. Chart by Melinda Hemmelgarn Value Chain

Food Service

Producer Processor Distributor Retailer Consumer Farmers' share of retail prices paid by consumers, 1950-2004 900

800

700

600

500

400 marketing bill farm value 300

$ billions (2004) 200

100 41% 20%

Source ERS; chart by Ken Meter, 2007 Value Network

Policy Council Non Profits

Consumer: Producer “Coproducer”

Processor Retailer Educator

Distributor Food Service 3 Levers for food systems change

1.Relationships: Invest in reciprocal relationships

2.Resilience: Invest for the long-term

3.Recycling: Build local infrastructure Invest in communities

rather than cash for commodities “Finding Food in Farm Country”

www.crcworks.org/econ.html (612) 869-8664

[email protected] Sources of Farm Credit Balance of federal subsidies and farm interest payments, 1910 - 2007 60

Federal subsidies 40 Farm interest payments Subsidies less interest 30

- $ billions (2007 $) 2000 2006 1967 1997 1958 1988 2003 1910 1994 1955 1985 1976 1991 1982 1949 1946 1943 1973 1931 1934 1928 1925 1940 1922 1937 1964 1919 1979 1970 1916 1961 1952 (10) 1913

(20)

(30)

(40)

(50) Balance of federal subsidies and farm interest payments, 1910 - 2007 60

Federal subsidies 40 Farm interest payments Subsidies less interest 30

- $ billions (2007 $) 2000 2006 1967 1997 1958 1988 2003 1910 1994 1955 1985 1976 1991 1982 1949 1946 1943 1973 1931 1934 1928 1925 1940 1922 1937 1964 1919 1979 1970 1916 1961 1952 (10) 1913

(20)

(30)

(40)

(50) Balance of federal subsidies and farm interest payments, 1910 - 2007 60

Federal subsidies 40 Farm interest payments Subsidies less interest 30

- $ billions (2007 $) 2000 2006 1967 1997 1958 1988 2003 1910 1994 1955 1985 1976 1991 1982 1949 1946 1943 1973 1931 1934 1928 1925 1940 1922 1937 1964 1919 1979 1970 1916 1961 1952 (10) 1913

(20)

(30)

(40)

(50) Cumulative flow of money away from farm communities, 1910 - 2007

- 1985 1991 1949 1940 1997 1913 1988 1946 2003 1979 1919 1976 1994 1964 1955 1982 1952 1973 1970 1967 1910 1961 1958 1925 2000 1916 1931 2006 1922 1937 1928 1943 1934

(100)

(200)

(300)

(400) $ billions (2007 $) $600 billion flows out (500)

(600)

(700)