New Markets and Distribution Opportunities

in Florida’s Food System

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Alan W. Hodges University of Florida-IFAS, Food & Resource Economics

Opportunities in Local Food Systems in Florida

Small Farms and Alternative Enterprises Conference August 2013

Direct-to-Consumer Food Marketing Channels

• Farmer’s markets

• Roadside stands

• Consumer harvesting (U-pick operations)

• Community Supported Agriculture (CSA) buying clubs

• Direct purchase from producers by special arrangement

• On-farm events/agritourism

• Local food festivals

• Mail order or internet sales (not necessarily local)

Intermediated Food Marketing Channels

• Local retail stores

• Consumer-owned food cooperatives

• Restaurants and institutional food services (e.g. schools)

• Regional distributors

What is Local Food? • No standard definition.

• Often considered as within 100 miles of producer location.

• USDA defines as 275 miles.

• US Congress defines as 400 miles.

• Generally produced by small/medium and organic farms

• New vocabulary: “Foodsheds”, “Locavore”, “Slow food”, “Food miles”

Rapid growth of farmer’s markets in the United States

Source: USDA, http://www.ams.usda.gov/AMSv1.0/

Currently over 200 public farmer’s markets in Florida

Value of direct-to-consumer food sales varies widely across the United States

Consumers are willing to pay significant price premiums for local foods

Source: USDA, Economic Research Service, compiled from various studies, reproduced from Martinez, et al (2010).

Local and Regional Food Market Promotion

Efforts • Buy local campaigns • Local food guides • Regional branding • “Know your farmer, know

your food” (USDA) • Market Maker • Food festivals

Survey of local food systems in Florida

• Mail survey of 7,500 randomly selected Florida households (June-July, 2012)

• 1600 responses received, 21.2% response rate

• Measured annual purchases of 12 food types: fruits, vegetables, nuts, beef, poultry, pork/other, fish, dairy, eggs, honey, prepared foods, beverages, miscellaneous.

• Local food market channels examined: retail stores, farmer’s markets, roadside stands, U-pick, CSA, special arrangement with growers, restaurant/food services.

• Estimated regional economic impact analysis using IMPLAN.

• Documented attitudes toward local foods and barriers for development.

Local Food Systems in Florida

Demographic characteristics of survey sample compared to the Florida population

Share of respondents purchasing local foods through different market channels in Florida (2011-12)

Area in which foods are considered to be “local” by survey respondents in Florida

Total annual value of all foods purchased through local market channels in Florida

Total all local foods: $8.31 billion. Total direct-to-consumer purchases: $1.92 billion.

Average local food purchases per household: $1,114. Local foods represent 20% of total food purchases for at-home consumption.

Total annual value of types of foods purchased through local market channels in Florida

Local food purchases in Florida regions in 2011-12

Economic impacts of local food purchases in Florida for 2011-12

Values in millions 2013 dollars; employment represents fulltime and part-time jobs. Estimates reflect total multiplier effects for producer margin, and direct effects only for retailer and restaurant margins

Impact Type Employment (Jobs)

Labor Income

(M$)

Value Added (M$)

Output (M$)

Indirect Business

Taxes (M$)

Producers-Direct Effect 55,656 $1,182 $2,270 $5,511 $14

-Indirect Effect 23,423 $775 $1,213 $2,662 $75

-Induced Effect 66,854 $3,213 $5,178 $8,286 $407

-Total Effect 145,933 $5,170 $8,661 $16,459 $496

Retailers-Direct Effect 34,045 $1,189 $1,672 $2,496 $338

Restaurants-Direct Effect 3,648 $96 $138 $245 $18

Total All Industries 183,625 $6,455 $10,470 $19,200 $851

Attributes of local foods in Florida

Factors limiting purchases of local foods in Florida

Factors affecting

annual local food

purchases in Florida

Conclusions

• Consumers believe that local food is inherently better and are generally willing to pay a premium.

• Most common reasons for purchasing local foods are “freshness”, “food safety” and “nutrition”.

• People have a broad concept of what “local” means, in some cases encompassing the entire state.

• A majority of Floridians currently purchase locally grown or prepared foods through retail grocery stores or directly from producers.

• Local foods have penetrated retail grocery stores, representing 16% of total purchases at retail.

• Vegetables and fruits are most commonly purchased local foods, but animal products are common too.

• Local foods comprised 20% of all food purchases for at-home consumption in Florida.

Conclusions (continued)

• Local foods purchased by Florida consumers averaged $1,114 per household, totaling $8.314 billion in 2011-12

• Total economic impacts of local food sales in Florida: 183,000 jobs, over $10 billion in contribution to Gross Domestic Product.

• Demographic predictors of local food purchasing behavior: age, gender, household income, educational attainment, and number of persons in the household, although effects are mixed.

• Need better food labeling for location of origin, wider variety of seasonal foods, improved local shared infrastructure, better access to farmer’s markets.

• Opportunity for small- to medium-sized agricultural producers to market local foods through retail stores and restaurants as well as direct to consumer.

Florida Economic Study Reports • Local Food Systems in Florida: Consumer

Characteristics and Economic Impacts • Local Food Systems in North-Central Florida:

Consumer Characteristics and Economic Impacts

http://www.fred.ifas.ufl.edu/economic-impact-

analysis/workingpapers.shtml

Selected References

Low, S. and S. Vogel. Direct and Intermediated Marketing of Local Foods in the United States. USDA-Economic Research Service, Economic Research Report 128, Nov. 2011, 38 p. http://www.ers.usda.gov/publications/err128/err128_reportsummary.pdf Martinez, S. et al. Local Food Systems: Concepts, Impacts and Issues. USDA-Economic Research Service, Economic Research Report 97, May 2010, 87 p. http://www.ers.usda.gov/Publications/ERR97/ERR97.pdf O’Hara, Jeffrey. Market Forces: Creating Jobs Through Public Investment in Local and Regional Food Systems. Union of Concerned Scientists, Aug. 2011, 46 p. http://www.ucsusa.org/food_and_agriculture/solutions/big_picture_solutions/market-forces.html Moving Food Along the Value Chain: Innovations in Regional Food Distribution. USDA, Agricultural Marketing Service, March 2012, 53 p. http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=stelprdc5097504