“Local” is one of the hottest trends in foods. A growing segment of consumers want, and will pay for, foods produced in their local areas, for a variety of reasons. Some just want fresh foods or to support their local farmers. Some worry about the environmental impact of shipping foods long distances or have negative perceptions of “big food” or “factory farming.”
Whatever the reasons, the trend is growing. USDA ‘s Economic Research Service released a report this week titled “Direct and intermediated marketing of local foods in the United States,” outlining trends and challenges in direct and local marketing. According to the report, the number of farmers selling local foods directly to consumers and revenue generated through direct sales of local foods bottomed out around 1992, when about 86,000 farms sold food valued at about $650 million, adjusted for inflation, directly to local consumers.
Since then, sales have turned upward, with about 136,000 farms selling over $1.2 billion in local foods. And that’s just foods sold directly to consumers such as at farmers’ markets. Marketing of all local foods, via direct-to-consumer and intermediated channels such as farmers selling directly to local retailers, grossed $4.8 billion in 2008—about four times higher than estimates based solely on direct-to-consumer sales.
So for some farmers, local marketing provides some clear opportunities to cut out some “middlemen” and sell their products at premium prices. But, the report also reveals some marketing dilemmas, particularly for beef producers wishing to participate. First among these is that demand for local foods is highest in places far from most ranches. The report’s authors note that the value of locally sold food is highest in metropolitan areas, and is geographically concentrated in the Northeast and on the West Coast.
Other key findings include:
- Small farms (those with less than $50,000 in gross annual sales) accounted for 81 percent of all farms reporting local food sales in 2008. They averaged $7,800 in local food sales per farm and were more likely to rely exclusively on direct-to-consumer marketing channels, such as famers’ markets and roadside stands.
- Medium-sized farms, with gross annual sales between $50,000 and $250,000, accounted for 17 percent of all farms reporting local food sales in 2008. They averaged $70,000 in local food sales per farm and were likely to use direct-to-consumer marketing channels alone or a mix of direct-to-consumer and intermediated marketing channels.
- Large farms, with gross annual sales of $250,000 or more, accounted for 5 percent of all farms reporting local food sales in 2008. They averaged $770,000 in local food sales per farm and were equally likely to use direct-to-consumer channels exclusively, intermediated channels exclusively, or a mixture of the two.
- Large farms accounted for 92 percent of the value of local food sales marketed exclusively through intermediated channels.
- For small and medium-sized farms with local food sales, more operators identified their primary occupation as farming and devoted more time to their farm operation than operators of similarly sized farms without local sales. Vegetable, fruit, and nut farms dominated local food sales.
- Among all local food farms, local food sales account for 65 percent of gross farm sales for fruit, vegetable, and nut farms, on average, but only 37 percent for livestock and field crop farms. Excluding local food sales farms marketing solely through intermediated channels, vegetable, fruit, and nut farms grossed $32,000 per farm in local food sales in 2008 compared with $13,800 per farm for field crops and livestock farms.
- Typical local-foods farms operate fewer acres while generating higher gross sales per acre than
field crop or livestock farms. The average local food sales farmer grows high-valued food commodities on 149 acres that yield, on average, $590 per acre in sales. In contrast, the operator of the average farm generates $304 in sales per acre on 392 acres.
Read the full report from USDA/ERS.