Study: Impact of Buying Locally Depends on Where You Live

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Consumers in the U.S. have been throwing their purchasing power behind local organizations in a myriad of ways in the past several years. Small business Saturdays are a trend, more farmers markets have opened, and “Buy Local” campaigns have kicked off across the country. One reason backers of such programs cite for spending money locally is that it is a way for the regional economy to expand. But how far this statement can be extrapolated may depend on where you live.

A recent study published in Economic Development Quarterly set out to determine the extent that community-oriented agriculture impacts the local economy. Generalizations could not be made nationally, but regional takeaways were evident. ”There has been a lot of hope, but little evidence, that local food systems can be an engine of economic growth in communities,” Stephan Goetz, a professor of agricultural and regional economics in Penn State’s College of Agricultural Sciences and the director of the Northeast Regional Center for Rural Development, said in a press release. “Our findings show that, at least in certain regions of the country, community-focused agriculture has had a measurable effect on economic growth.”

Community-focused agriculture, what the study called CFA, has the potential to add to the local economy. The researchers began by explaining that when a farm is selling food directly to the consumer, the money circulating stays local. “Agritourism” can boost the economy for the same reason. An event, like strawberry picking, is an impetus for consumers to travel to the farm and region to spend money locally. The study set out to evaluate how initiatives of this ilk can aid growth and how important farming is to the local economic region.

The period studied was from 2002 to 2007. During this time, the Plains region led the way with the strongest growth of sales and personal income for farmers. The Rocky Mountains and Southwest followed the Plains, taking second and third for the same indicator.

Less than 2 percent of all U.S. jobs are in farming, and those involved in local farming are still a small sector of the farming community. Taking county-level data from the Census of Agriculture, the researchers found that only 6.2 percent of all farmers engaged in direct sales of food products to consumers. The data came from 2007 and represent 136,817 farms; this is an increase from 2002, when 116,733 farms made direct sales. An uptick in farmers markets was noted as well. In 2012, there were 7,864 farmers markets in the U.S. versus the 4,685 that existed in 2008.

That is the case nationally, but when specific regions are examined, community-oriented farming has a greater influence because it is more widespread. In the New England states, 21.6 percent said they sold directly to consumers in 2007. In the New England and Midwest areas, a $1 increase of direct sales saw $5 and $9 increases in farm sales. Based on this, the researchers then assumed “the local food dollar was spread around more in the food supply chain” in these regions.

A very different picture emerged in the Southeast. A $1 direct sales increase saw an $11 overall farm sales decrease. Researchers speculated this is because local food sales infrastructure is not at the same level of development for this region of the country as compared to the Midwest or New England. Agritourism negatively impacted the New England area’s farm sales but was positive for the Great Lakes and Southeast.

“Injection of new money — money from outside of the community — is what many economic development practitioners think of as the fuel for economic growth,” Goetz said. “But to me, these findings provide quite robust evidence that even direct sales do have an effect on growth, in the Northeast U.S.”

During the period of evaluation, personal income grew by 22 cents for every $1 increase in farm sales. On a yearly basis, this represents 4 more cents for per extra dollar. Again, this was regional. When compared to New England, measurable personal income increases were reported in the Mideast, Southeast, and Southwest. In the Great Lakes counties, it was significantly less.

“Considering the relatively small size of just the farming sector within the national economy, with less than 2 percent of the workforce engaged in farming, it’s impressive that these sales actually move income growth in this way,” Goetz said in the study’s press release.

Of the regional variations in the results, the researchers thought that different production practices and farm structures likely led to discrepancies between sales and personal income. Distance between the population center and farm played a role, too. In the Midwest and New England, where direct sales occurred close to the population center, there was a link between those and total farm sales.

The study’s findings can be beneficial for policymakers and future researchers. The team singled out trends in farm structure in the U.S. as another missing puzzle piece to understanding the local economic impact of farming and direct sales. Digging into the regional results further for more concrete evidence as to why success is found in one region over another could help communities who want to revitalize their area through local strategies.

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