Recently I attended a lecture at Brown University given by Economist Michael Schuman, author of the book Local Dollars, Local Sense. The topic was “Refocusing Rhode Island economic development on local food.”
Mr. Schuman began with the idea that the fundamental argument for localization is economic. He presented data showing the cost of creating local jobs is a fraction of the cost of attracting global companies who promise new jobs, because of the tax breaks those companies want. He argued that every dollar spent in a local store has twice the impact on the local economy than money spent in a chain store. Local ownership creates self-reliance and that successful local businesses start to sell regionally and globally without subsidies.
|Shartner Farm in Exeter, RI is part of the growing local food industry.|
He acknowledged that local food has its challenges. Keeping local food competitively priced is hard, based on several factors including the high price of land ownership and the cost of distribution. Another factor he didn’t touch on, that I think is important, is most people who start local food businesses do so because they love what they do. They produce high quality products that require specialized skills, or they are working small farms using labor intensive methods. Their product is worth a higher price which might not be understood by the marketplace. Even if it is understood, food is one area of most people's budgets that has some discretionary spending. In a tight economy, choosing pricier food, even if the quality is better, can be a tough sell.
|Pick your Own Farms, like this one in Connecticut, have to stay competitive even with rising overhead costs.|
Mr. Schuman argued that local food’s competitive edge will come as global food prices rise due to increases in transportation costs. In other words, as imported and nationally shipped food prices rise, local food will not seem overpriced anymore.
He suggested local food prices can come down as businesses find ways to be competitive. Collaboration between small farmers to create farmer coops, such as Rhody Fresh, which is local milk from several local dairies, is one way. Food coops and CSAs, can decrease distribution and transportation costs. If farmers get to keep a higher percentage of the retail price, those retail prices will drop. Mr. Schuman suggests that we may have to think regionally rather than locally to find the collaboration needed to reduce prices.
Local government, Mr. Schuman stated, should lead by example and be buying local and demanding that contractors guarantee a certain percent of contract price will stay in Rhode Island. He also addressed the lack of capital investment in local food and in local business development in general. It is very hard for the average person to invest in local businesses, but he suggested several ways to do it, such as Kickstarter and other online small donation websites, investing in food coops such as Urban Greens Food Coop in Providence and slow munis, which are municipal tax exempt bonds.
It was an interesting lecture but I would have liked more examples of successful local food business models and more discussion of a road map for communities looking to create a stronger local food economy.