{"id":53738,"date":"2020-03-23T11:24:55","date_gmt":"2020-03-23T15:24:55","guid":{"rendered":"https:\/\/sustainableagriculture.net\/?p=53738"},"modified":"2022-06-09T16:46:23","modified_gmt":"2022-06-09T20:46:23","slug":"covid-economic-impact-local-food","status":"publish","type":"post","link":"https:\/\/sustainableagriculture.net\/blog\/covid-economic-impact-local-food\/","title":{"rendered":"COVID-19 Economic Impact on Local Food Markets"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"398\" src=\"https:\/\/sustainableagriculture.net\/wp-content\/uploads\/2018\/09\/Farmers-Market-credit-Lindsey-Scalera-e1537458398168.png\" alt=\"An expanding market for local food promises great opportunities for producers, but it will need support from federal programs. Photo Credit: Lindsey Scalera\" class=\"wp-image-50071\"\/><figcaption><em>An expanding market for local food promises great opportunities for producers, but it will need support from federal programs. Photo Credit: Lindsey Scalera<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p><em>The following economic impact assessment was compiled on March 18, 2020 for the National Sustainable Agriculture Coalition by Dawn Thilmany, Becca Jablonski, Debra Tropp, Blake Angelo, and Sarah Low. More information about the authors can be found at the end of the document. Last updated March 21, 2020.<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Bottom Line<\/strong><\/h3>\n\n\n\n<p>Across key local and regional\nmarkets (i.e., farmers markets, farm to school, food hubs serving other\ninstitutions, and restaurants) we expect to see up to a $688.7 million decline\nin sales leading to a payroll decline of up to $103.3 million, and a total loss\nto the economy of <strong><em>up to $1.32 billion from March to May\u00ad 2020.<\/em><\/strong> Without immediate\nmitigation, we may lose many small, socially disadvantaged, and beginning farms\nand the important markets they serve.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Policy Recommendations<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Explicitly Include Local Food and Farm Businesses in Small Business Support Programs: <\/em>Declare local farm and food assets as key community assets. Require emergency food assistance dollars flowing to communities to support local farm and food businesses. Explicitly integrate local farm and food business into all small business, workforce and emergency payments\/loan programs.<\/li><li><em>Expand Incentives for Small Food and Farm Businesses to Move Online: <\/em>Aggressively encourage farmers to integrate online ordering\/sales platforms, as increasingly states (e.g., CT) are requiring practices that limit customer interaction.<\/li><li><em>Accelerate Waivers and Expand Flexibility for Current USDA Programs: <\/em>Leverage congressional and executive authority to waive limitations on the reach of feeding programs\u2019 ability to purchase food from local and regional suppliers. Relax expenditure limitations so that current USDA award recipients can innovate and rapidly respond to community needs, e.g., Michigan reported that due to lost sales at schools, their Michigan Farm to Freezer program is shifting to freeze items for other markets. Expand and add flexibility to the LAMP and Value-Added Producer Grant Programs so future awards incentivize innovations that enhance rapid responses to future supply disruptions.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Context<\/strong><\/h3>\n\n\n\n<p>Among the businesses facing\nlosses as a result of COVID-19 are the farms and ranches that sell through\nlocal and regional food markets. Social distancing measures such as the closure\nof universities, schools, restaurants, and local food markets (e.g., farmers markets,\nfarm stands) will result in significant shifts in where food is sold or\nacquired, and subsequently, markets for farms and ranches.&nbsp; The Congressional Research Service estimated\nlocal food sales at $11.8B in 2017 (Johnson 2019), with nearly 8% of U.S. farms\nand ranches (159,000 operations) participating (USDA NASS 2017). The vast\nmajority (85%) of participating farms and ranches are small. Further, about one\nin four beginning farmers and ranchers use local food markets to differentiate\ntheir product (and get prices above commodity pricing) (USDA NASS 2018). Census\ndata from 2007 and 2012 show that beginning farmers that had local food sales\nhad higher average survival rates across all sales classes (Low et al. 2015),\nand that local food markets can support profitable operations, even at the\nlowest sales categories (Bauman et al. 2018). <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Projected impacts by selected market, based on\nMarch-May period of social distancing: <\/strong><\/h3>\n\n\n\n<p>This short brief provides a\npreliminary attempt to estimate economic losses to the local and regional food\nsector in the U.S. and additional guidance for policymakers as they evaluate\nsolutions that will minimize negative impacts to small businesses and rural\neconomies.<\/p>\n\n\n\n<p><em>1) Farmers Markets<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Using estimates from the 2017 Ag Census\nand recent USDA ARMS data, we estimate $2.4 billion in sales through farmers\nmarkets. Since it is an early part of the season and some markets may continue\nto operate with social distancing\nmeasures, we assume 10%, or at maximum 25% of annual\nsales will be lost.<\/li><li>Assuming a 10% loss in market sales\nresulting from COVID-19, there would be a <strong><em>$240 million decline in sales, leading to a\n$36 million<\/em><\/strong> decline in payroll given estimates of the labor share of\nrevenues paid by farms marketing to local markets.<\/li><li>Assuming a more significant 25% loss in\nmarket sales resulting from COVID-19, there would <strong><em>be a $600 million decline in\nsales, leading to a $90 million decline in payroll<\/em><\/strong> paid by farms\nmarketing to local markets.<\/li><li>The multiplier effect of a loss of\n$240-600 million in sales would lead to an <strong><em>estimated loss to the community economy of:\n$460 million- $1.15 billion<\/em><\/strong> based on the USDA AMS Local Food Impact\ncalculator: <a href=\"https:\/\/calculator.localfoodeconomics.com\/\">https:\/\/calculator.localfoodeconomics.com\/<\/a><\/li><\/ul>\n\n\n\n<p><em>Other Important Issues to Note regarding Farmers\nMarkets:<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\nMarch-May season of the market year is mostly a start-up phase, particularly\noutside of the Southern U.S. and California, so the range of lost sales was\nhard to forecast, and the range of 10-25% of annual revenue was deemed\nreasonable to present as an estimate. In contrast, if the early season for a\nmarket is cancelled, it may be a tipping point leading some marginally\nperforming markets to close for the whole season (or permanently).<ul><li>As\npart of its new shelter in place policy, many cities, including the city of San\nFrancisco has deemed farmers markets part of \u201cessential infrastructure\u201d along\nwith grocery stores and food banks (see <a href=\"https:\/\/sfmayor.org\/article\/san-francisco-issues-new-public-health-order-requiring-residents-stay-home-except-essential\">https:\/\/sfmayor.org\/article\/san-francisco-issues-new-public-health-order-requiring-residents-stay-home-except-essential<\/a>). Such policies should be encouraged, and\nperhaps provided financial and technical support, given food supply chains\ncontinue to be disrupted. <\/li><\/ul><ul><li>8% of local food\nfarms had an online marketplace in 2015. These farms had higher local food\nsales and value-added sales, suggesting online is a viable platform for food\nfarms that could be expanded. Technical assistance for developing online\nplatforms and additional broadband infrastructure could both help with this\nsupply chain disruption but also buoy future food farm sales. <\/li><\/ul><\/li><\/ul>\n\n\n\n<p><em>2)<\/em> <em>Farm to School <\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Based on data collection from state farm\nto school coordinators, and state agencies, we estimate a 10% loss in farm to\nschool sales resulting from COVID-19. Total farm to school purchases were $789 million during the 2013-2014\nschool year. We assume that 1\/3 of these sales were direct from farms ($263\nmillion), whereas the remaindermoved\nthrough an intermediary (e.g., food hub, DOD Fresh, $526M). For the\nintermediated sales, we assume that the farm received 70% of the price the\nschool paid ($350M) after subtracting the distributors\u2019 mark up. <strong><em>10%\nloss of $263<\/em><\/strong><strong><em> million + $350\nmillion = $61.3 million.<\/em><\/strong><\/li><li>Given estimates of labor share of local\nfarm market revenues, this would equate to <strong><em>$9.2 million in lost payroll.<\/em><\/strong><\/li><li>The multiplier effect of a loss of $61.3M\nin farm to school sales would lead to an <strong><em>estimated loss to the community economy of:\n$120.3 million<\/em><\/strong> based on the USDA AMS Local Food Impact calculator:\nhttps:\/\/calculator.localfoodeconomics.com\/<\/li><\/ul>\n\n\n\n<p><em>Other Important Issues to Note regarding Farm to\nSchool:<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\nMarch-May period of the school year represents the smallest overall portion of\nfarm to school purchases, particularly outside of the Southern U.S. and\nCalifornia, thus lost sales for farms would have been worse if the outbreak had\noccurred during a different part of the school year. <ul><li>States\nare mixed in how school vendors\/supply chains are impacted by the shift from\nschool meals to emergency feeding programs. However, even most states that\nreport using the same suppliers in the emergency feeding programs as in the\nschools, there appears to be a change in preference to shelf-stable,\nnon-perishable items which farm enterprises and food hubs are less likely to\nsupply.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p><em>3)<\/em> <em>Food Hubs Serving Other Institutions (Beyond Farm to School) and Restaurants<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>With the majority of states completely\nclosing restaurants and universities (and dining halls) for 30 days (or more),\nwe assume significant losses in sales (20% of annual sales)<\/li><li>Direct sales by farms to restaurants and\ninstitutions other than K-12 schools (Universities) are an estimated at $40\nmillion.<\/li><li>We assume most sales moved through a food\nhub as an intermediary. Extrapolating from numbers reported in the 2017 Food\nHub survey, approximately $108 million was sold to restaurants and caterers and\n$30 million was sold to Universities.&nbsp;\nAgain, for sales through hubs, we assume that the farm received 70% of\nthe price paid ($97 million) after subtracting the distributors\u2019 markup. <strong><em>20% loss of $40<\/em><\/strong><strong><em>\nmillion + $97 million\n= $27.4 million.<\/em><\/strong><\/li><li>Given estimates of labor share of local\nfarm market revenues, this would equate to <strong><em>$4.1 million in lost payroll.<\/em><\/strong><\/li><li>The multiplier effect of a loss of $27.4 million in restaurant and\ninstitutional sales would lead to an <strong><em>estimated loss to the community economy of:\n$52.5 million<\/em><\/strong> based on the USDA AMS Local Food Impact calculator: <a href=\"https:\/\/calculator.localfoodeconomics.com\/\">https:\/\/calculator.localfoodeconomics.com\/<\/a><\/li><\/ul>\n\n\n\n<p><em>Other Important Issues to Note Regarding Food Hubs\nServing Other Institutions (Beyond Farm to School) and Restaurants:<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>At least 14\nstates have already closed or limited restaurant operations, according to the\nJames Beard Foundation. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Data Sources<\/strong><\/h3>\n\n\n\n<p>Given the rapidly evolving\nnature of the virus, as well as government responses, we utilized the best\navailable information to formulate our scenarios and estimate potential\nimpacts. <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>U.S. Department of Ag, National Ag Statistics Service, 2017 Census of Agriculture<\/li><li>U.S. Department of Agriculture, National Agriculture Statistics Service, 2018. Highlights: Beginning Farmers \u2013 Characteristics of Farmers by Years on Current Farm <a href=\"https:\/\/www.nass.usda.gov\/Publications\/Highlights\/2014\/Beginning_Farmers\/index.php\">https:\/\/www.nass.usda.gov\/Publications\/Highlights\/2014\/Beginning_Farmers\/index.php<\/a> <\/li><li>U.S. Department of Ag, National Ag Statistics Service, 2015 Local Food Marketing Survey<\/li><li>U.S. Department of Agriculture, National Agriculture Statistics Service\/Economic Research Service, Agricultural Resource Management Survey<\/li><li>Bauman, A. G., D. Thilmany McFadden, and B.B.R. Jablonski. 2018. The financial performance implications of differential marketing strategies: Exploring farms that pursue local markets as a core competitive advantage. Agricultural and Resource Economics Review. 47(3):477-504.<\/li><li>Low et al. 2015. Trends in local and Regional Food Systems. Report to Congress. U.S. Department of Ag, Economic Research Service, Administrative Publication Number 068. <\/li><li>Low, S. and K. Thompson. 2020. Could Online Sales Be a Direct Marketing Opportunity for Rural Farms? University of Missouri E<a href=\"https:\/\/extension2.missouri.edu\/g6224\">xtension Guide G6224<\/a>. <a href=\"https:\/\/extension2.missouri.edu\/g6224\">https:\/\/extension2.missouri.edu\/g6224<\/a><\/li><li>Johnson, R. 2019. 2018 Farm Bill Primer: Support for Local Food Systems. Congressional Research Service IF11252 <a href=\"https:\/\/fas.org\/sgp\/crs\/misc\/IF11252.pdf\">https:\/\/fas.org\/sgp\/crs\/misc\/IF11252.pdf<\/a><\/li><li>Primary data collected from member states of the National Farm to School Network, 3\/17\/2020-3\/18\/2020<\/li><li>MSU and Wallace Center\u2019s 2017 National Food Hub <a rel=\"noreferrer noopener\" aria-label=\"Survey (opens in a new tab)\" href=\"https:\/\/www.canr.msu.edu\/foodsystems\/uploads\/resources\/2017%20national%20food%20hub%20survey%20findings.pdf\" target=\"_blank\">Survey<\/a><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Authors<\/strong><\/h3>\n\n\n\n<p>This economic impact assessment was developed for\nthe National Sustainable Agriculture Coalition by the following:<\/p>\n\n\n\n<p><strong>Dawn Thilmany\u00a0<\/strong><\/p>\n\n\n\n<p>Colorado State University &#8211; College of Agricultural Sciences<\/p>\n\n\n\n<p>Associate Department Head<\/p>\n\n\n\n<p>Professor \u2013 Outreach Coordinator<\/p>\n\n\n\n<p>Extension Economist-Labor and Agribusiness Management<\/p>\n\n\n\n<p>Ph.D.: University of California, Davis<\/p>\n\n\n\n<p><strong>Becca Jablonski<\/strong><\/p>\n\n\n\n<p>Colorado State University &#8211; College of Agricultural Sciences<\/p>\n\n\n\n<p>Assistant Professor and Food Systems Extension Economist<\/p>\n\n\n\n<p>Ph.D.: &nbsp;Cornell University<\/p>\n\n\n\n<p><strong>Sarah Low<\/strong><\/p>\n\n\n\n<p>University of Missouri &#8211; Collage of\nAgriculture, Food, and Natural Resources<\/p>\n\n\n\n<p>Associate Professor of Regional\nEconomics<\/p>\n\n\n\n<p>Agricultural and Applied Economics<\/p>\n\n\n\n<p>Fred V. Heinkel Chair in Agriculture,\nAgricultural and Applied Economics<\/p>\n\n\n\n<p>PhD,\nAgricultural and Consumer Economics, University of Illinois Urbana-Champaign,\n2009<\/p>\n\n\n\n<p><strong>Debra Tropp<\/strong><strong><\/strong><\/p>\n\n\n\n<p>Principle at Debra Tropp Consulting<\/p>\n\n\n\n<p>Retired&nbsp;USDA Agricultural Marketing\nService Deputy Director, Local Food Research and Development Division<\/p>\n\n\n\n<p><strong>Blake Angelo<\/strong><\/p>\n\n\n\n<p>Governor Appointed Colorado Food Systems\nAdvisory Council, Coordinator<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The following economic impact assessment was compiled on March 18, 2020 for the National Sustainable Agriculture Coalition by Dawn Thilmany, Becca Jablonski, Debra Tropp, Blake Angelo, and Sarah Low. More information about the authors can be found at the end of the document. Last updated March 21, 2020. Bottom Line Across key local and regional [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":50071,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[199,563,200,23],"tags":[941,940,96,306],"class_list":{"0":"post-53738","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-local-food-systems","8":"category-marketing-labeling","9":"category-nutrition-food-access","10":"category-rural-development","11":"tag-coronavirus","12":"tag-covid-19","13":"tag-local-and-regional-food-systems","14":"tag-local-food","15":"entry","16":"clb-has-post-thumbnail"},"acf":[],"yoast_head":"<!-- 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