As the Dollar Turns: The Economics of Local Food and Why Your Food Choices Matter

If you’ve read a newspaper, magazine, or surfed the Net within the last year or two, you’ve more likely than not come across articles, blog sites, and a host of other communications about the local food movement. It appears that more and more individuals want to buy food that has been raised or produced closer to their homes. Some say that the local food movement is the number one culinary trend in the United States and shows no signs of slowing down in the near future. When the local food movement began to take hold, conversations supporting it generally centered on the fact that local food was good for us (providing healthier, fresher, and better tasting foods) and good for the environment (decreasing fossil fuel use reduction, increasing sustainable farming practices). But now studies are beginning to show that it’s also good for the economy of our rural communities.

Before I go any further, I am compelled to fully disclose that I am not an economist. But I am a curious learner and it’s with that curiosity and desire to learn more about the many benefits of the local food movement that I share the results of a very interesting piece of research I recently ran across. Vikki Sonntag, PhD, authored an incredibly thoughtful and thought provoking study released by Sustainable Seattle in April 2008. The study “Why Local Linkages Matter: Findings from the Local Food Economy Study” is the best piece of research regarding the financial impact of consumer spending on local food that I have ever read. The study, which has to be fully read to appreciate the tremendous insight the author has into why we should all care about our choices when it comes to spending our food dollar, notes that “…locally directed spending supports a web of relationships, rooted in place, which serves to restore the land and generate community.”

To illustrate the impact of a local food dollar spent in a community, Dr. Sonntag notes that the dollar will for some point stay and be circulated in that rural community. And it is those dollars that stay within the community and are re-spent that create even more value than the initial dollar spent. So, as she points out, $100 spent on local food may actually have an economic impact on the community of several hundreds more dollars as the producer spends his/her dollar locally and others who then receive those dollars do the same. And it is the economic power of that “turning” of the dollar that makes a tremendous impact on the local community. So, the more we can shift our food dollars to local communities and have those dollars re-spent within those communities, the more we increase the economic benefit.

She goes on further to say that as local food becomes a sought after product, more people will enter that business and those individuals will hire from the community and use local suppliers thus creating even more of an economic wave in the community as “resources flow through local economic linkages in relationships of mutual caring and responsibility as evidenced by the local food economy’s greater vitality”. Simply put—the whole is a lot greater than the sum of its parts.

I would suggest that you to read her work. It is inspiring, informative, and I believe that many of the assumptions can be generalized to our state. But when it’s all said and done, it comes down to our individual behavior as consumers, where ultimately we choose to spend our food dollars, and whether or not, by the choices we make, chose to strengthen or weaken our local food economy. Every single time we lift our forks; we’re making a choice and contributing to the creation of our future food system. We literally hold the future of the local food economy in our hands. So, I am making an impassioned plea to all of you to support my Indiana Local Food Stimulus Package noting that if half the families in Indiana shifted $6.25 of their current weekly food budget to the purchase of Indiana grown or produced local food that this effort would provide an annual contribution of 300 million dollars into the local Indiana economy. Impressive? Yes, but that's not the final number. Studies consistently show that a dollar spent locally will multiply itself by 3 to 5 times making the actual economic impact of that one dollar in the local community where it was spent far greater than a buck.

Initially it may be impossible to believe but, with a subtle shift in our food spending habits, we can make a $900 million to $1.5 billion economic impact on Indiana in one year. No government handouts, no Senate sub-committee hearings, no bailouts, no loans. Just real people buying real food getting real results. In these trying times, many of us feel powerless to do anything to improve the economic situation in which we find ourselves. This is something we all can do. When do we start? How about now?