Beyond Farmers Markets – USDA Efforts to Strengthen the Local and Regional Food Supply Chains
December 01, 2015
By Sarah Lester Fels ’16
Additionally, as more consumers become invested in where their food comes from and how it is grown, organic food sales are also increasing. Organic food sales have increased 11% from 2013 to 2014 alone.[ii] These numbers include sales at farmers markets, via farm to school programs, Community Support Agriculture (CSA), food hubs, and farm stands, and are all what the USDA considers to be retail agriculture.[iii]
As demand for retail agriculture rises, market opportunities increase for producers as well. Congress’ interest has been sparked by the local food movement and has responded with funding and support via the Farm Bill reauthorization for local and regional food programs to help scale local food farmers, as well as a request for more information from USDA to better understand the current trends.[iv] In total, over the past six years, USDA has invested more than $800 million in approximately 29,100 local and regional food businesses and infrastructure projects.[v] Though an impressive amount, demand is still exceeding supply for local and organic markets.
A report to Congress in January 2015, per their request, the Trends of Local and Regional Food Systems confirmed that demand for local and organic food is growing, and that an area of focus for future supply chain growth should be selling local and organic foods to intermediated markets (grocery stores, farm to school distribution channels, restaurants, and food hubs).[vi]
According to the report, in 2012, 7.8 percent of all U.S. farms sold food through local food marketing channels.[vii] Of those 163,675 farms, 70% sold through direct-to-consumer (DTC) marketing channels only (mainly farmers markets and CSAs). Additionally, a majority of local food farms make less than $75,000 Gross Cash Farm Income and generate only 13% of local food sales.[viii] The report determined that there was a correlation between farm size, marketing channels, and local food sales- the larger a local food farm, the more likely they were to incorporate intermediated channels, and farms that use intermediated marketing channels were making disproportionately larger shares of local food sales (see chart).[ix] Thus, there is a need and opportunity for local food farms to diversify their marketing channels beyond DTC in order to scale and meet the increasing demand.
Under the leadership of the Know Your Farmer, Know Your Food Initiative (KYF2) and the New and Beginner Farmer and Rancher program (NBFR), USDA is focusing energy on how to support new and existing farmers along the supply chain and scale their operations to reach these intermediated markets.
KYF2 launched in 2009 as a cross-agency initiative to strengthen local and regional food systems. The USDA-wide task force stimulates agriculturally-based community economic development, promotes locally and regionally produced and process foods, and fosters new opportunities for farmers and ranchers, among other activities.[x] A few of the grants and loans that support the scaling of local and regional farm operations within KYF2’s portfolio include: Farm Storage Facility Loans and Microloans through the Farm Service Agency (FSA), Farmers Market and Local Food Promotion Program through the Agricultural Marketing Service (AMS), and the Business and Industry Guaranteed Loan Program through Rural Development (RD). All services that have contributed to the $800 million dollar USDA investment over the past 6 years into developing the local and regional food system.
NBFR developed in 2014 as a priority of Deputy Secretary Krysta Harden’s to grow the next generation of farmers. The program was partially motivated by the steady increase of the average age of farmers over the past 30 years. The average age of farmer in 2012 was 58.3 years old, up 1.2 years from 2007[xi] The NBFR program consists mostly of an online information portal for new farmers with an emphasis on:
- Increasing farming opportunities for women, veterans, historically underserved populations;
- Connecting new farmers to land;
- Connecting new farmers to capital;
- Supporting farms in transition; and
- Developing a bench of farmers for the future of agriculture.[xii]
Both of these initiatives/programs have earned support in Congress and from top USDA officials, and are having a positive impact, but in recent months it has been the private sector taking bold moves to address supply chain insecurities. Large food companies such as Wegman’s, Walmart, Stonyfield, Nature’s Path and Chipotle are in the process of developing programs to support and scale new farmers.
In 2014, Stonyfield announced a new Organic Dairy Farmer Training Program via a partnership with Wolfe’s Neck Farm in New England. The training program intends to develop the next generation of organic dairy farmers and also incorporates an organic foods research component.[xiii] In the same year Nature’s Path purchased farmland for $2 million in Montana to help secure organic grain supply for their products. And Chipotle promised to source 40 million pounds of local produce in 2014. [xiv] Chipotle is also experimenting with financing farmers directly. [xv]
USDA is interested in learning from these models for potential replication across the country via convenings and potentially larger initiatives in the future. In order for retail agriculture – local food and organic food – to meet the growing demand, it is time to look beyond farmers markets and think about how USDA and the private sector, working together, can support a pipeline of farmers all along the supply chain.
[i] Aubrey, Allison. “Communities Get a Lift as Local Food Sales Surge to $11 Billion a Year.” NPR.org. June 30, 2015. http://www.npr.org/sections/thesalt/2015/06/30/418835394/communities-get-a-lift-as-local-food-sales-surge-to-11-billion-a-year
[iii] Local Food Strategies. “The Emergence of Retail Agriculture.” A Report to the Farm Credit Council. September 2010. http://www.fccouncil.com/files/Emergence%20of%20Retail%20Ag%20-%202012%20Revisions_for%20_web.pdf
[iv] USDA uses local and regional food interchangeably to refer to place-specific clusters of agricultural producers of all kinds—farmers, ranchers, fishers—along with consumers and institutions engaged in producing, processing, distributing, and selling foods.
[v] “Obama Administration Assists Communities in Building Local Food Systems to Foster Economic Growth.” USDA News Release. June 30, 2015.
[vi] Low, Sarah A., Aaron Adalja, Elizabeth Beaulieu, Nigel Key, Steve Martinez, Alex Melton, Agnes Perez, Katherine Ralston, Hayden Stewart, Shellye Suttles, Stephen Vogel, and Becca B.R. Jablonski. Trends in U.S. Local and Regional Food Systems, AP-068, U.S. Department of Agriculture, Economic Research Service, January 2015. http://www.ers.usda.gov/media/1763057/ap068.pdf
[x] “Our Mission.” Know Your Farmer, Know Your Food website. Last Updated August 12, 2015. http://www.usda.gov/wps/portal/usda/usdahome?navid=KYF_MISSION
[xi] 2012 Census of Agriculture. “Preliminary Report Highlights: U.S. Farms and Farmers.” February 2014. http://www.agcensus.usda.gov/Publications/2012/Preliminary_Report/Highlights.pdf
[xii] “Beginning Farmers and Ranchers: ERS Briefing to OBPA performance team and OAO.” USDA Economic Research Service. May 13, 2015.
[xiii] Burger, Melanie. “Ushering in the Next Wave of Organic Dairy Farmers.” September 26, 2014. http://www.stonyfield.com/blog/ushering-in-the-next-wave-of-organic-dairy-farmers/
[xiv] Brat, Ilan. “Hunger for Organic Foods Stretches Supply Chain.” Wall Street Journal. April 3, 2015. http://www.wsj.com/articles/organic-food-firms-tackle-supply-constraints-1428081170
[xv] “Chiptole Plans to Serve More Than 20 Million Pounds of Locally Grown Produce in 2014.” Chipotle blog. June 24, 2014. http://ir.chipotle.com/mobile.view?c=194775&v=203&d=1&id=1942171
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