Produce Local, Sell Local, Buy Local
The accompanying tables are directly derived from existing research in Northeast Iowa on the potential
for enhancing local productivity, economic fortunes, and health through the consumption of locally
produced fruits and vegetables. In this analysis, I am only including the seasonally produced fruits and
vegetables from a recommended diet that also includes whole grains, meats, dairy, and eggs. The data
that are produced for this region are the foundation estimates for that Northeast region, but they are
adjusted for the much larger population size of this study area and for the difference in local production
that is in evidence for fruits, vegetables, and potato crops.
Table 1 contains the nutritionist’s recommended daily diets of seven recommended vegetables and
fruits. As is immediately evident, much more of the commodity needs to be produced to account for
shrinkage from the producer to the retailer and from the retailer to daily requirements. Estimating the
producer levels allows us to gauge the prices to be received by the producers, and the intermediate
retail level tells us the quantity that will ultimately by purchased by the consumer.
Table 1. Per Capita Diet and Production Requirements
Daily Diet Per Capita in Grams
Commodities
/ Activities
Apple
Tomato
Broccoli
Spinach
Carrot
Squash
Potato
Daily Requirements
125
180
46
15
64
57
58
Amount Sold at
Retail
174
254
111
29
93
109
82
Production
Necessary to Meet
Daily Requirement
206
339
137
39
109
145
97
Next, in Table 2 we need to convert our commodities to prices so that expected receipts to producers
and costs to households can be estimated. These values are U.S. average prices for 2006.
Table 2. Per Capita Producer and Consumer Prices in 2006
Prices Per Pound
Commodities / Activities
Producers
Consumers
Apple
0.30
1.02
Tomato
0.43
1.56
Broccoli
0.34
1.37
Spinach
0.29
0.66
Carrot
0.21
1.36
Squash
0.24
1.44
Potato
0.10
0.51
Table 3 gives us the total annual values in terms of production and as costs to households for this
increment to area diets. At the farm gate, the diet is worth, annually, $71.8 million. At the household
level, it costs $226.7 million
Table 3. Annual Values: Producer Returns and Consumer Prices
Total Prices Received or Paid
Commodities
Apple
Tomato
Broccoli
Spinach
Carrot
Squash
Potato
Producers
Consumers
13,080,998
31,156,581
9,801,339
2,396,133
4,743,502
7,456,010
2,164,150
$70,798,714
37,572,813
83,860,278
32,352,683
4,014,768
26,764,912
33,183,719
8,933,969
$226,683,142
As the commodities above cannot be produced year round, we have to temper our production to our
region. We can assume that 25 percent of our annual need of these commodities can be produced in
the region – three months’ worth of consumption. Table 4 gives an estimate of the total land needed to
produce these fruits and vegetables for local consumers based on average yields in Iowa. Over 4,300
acres would be required to produce the commodities.
Table 4. Seasonal Commodities Land
Requirements
Commodities
Apple
Tomato
Broccoli
Spinach
Carrot
Squash
Potato
Total Crop
25 Percent
1,090
654
727
292
196
1,132
234
4,326
The total value of production is contained in Table 5. This will be the amount of industrial output that is
inserted into the impact model to measure the producer level gross economic values.
Table 5. Seasonal Crop Production Revenues
Commodities / Activities
Apple
Tomato
Broccoli
Spinach
Carrot
Squash
Potato
Total Crop
25 Percent
3,270,250
7,789,145
2,450,335
599,033
1,185,876
1,864,003
541,038
$17,699,679
Next, in Table 6, we get the amount of existing production in the region of all fruits and vegetables.
When we calculate the overall economic values, we need to account for existing production.
Table 6. Estimated Current Production
Acres
896
211
12
Vegetable
Orchard
Potatoes
Percent of Demand Met
by Existing Production
30%
19%
5%
Table 7 is the estimate of the regional economic value of producing 25 percent of the fruits and
vegetables of this diet locally. In producing nearly $17.7 million in output, regional farmers will require
136 jobs (including the farmers) and generate an anticipated $5.5 million in labor income. They will
support an additional 45 jobs in the supplying sector making $1.02 million in labor income. Those
workers and the workers on the farms will convert their earnings into household income and induce an
additional $3.24 million in output, which in turn will require 38 more jobs. In total, the production
would support 219 area jobs and $7.4 million in labor incomes.
Table 7. Seasonal at 25 percent of annual demand
Output
Value Added
Labor Income
Jobs
Direct
Indirect
Induced
Total
Multiplier
17,699,677
2,724,674
3,236,315
23,660,666
1.34
9,277,021
1,393,602
1,922,153
12,592,776
1.36
5,493,409
1,016,646
904,805
7,414,860
1.35
136
45
38
219
1.61
Next we adjust for existing production to get at the net production level economic values. Considering
existing production, we are left with 162 net new jobs regionally.
Table 8. Seasonal at 25 percent of annual demand adjusted for existing production
Output
Value Added
Labor Income
Jobs
Direct
13,121,431
6,877,402
4,072,469
101
Indirect
2,019,903
1,033,129
753,677
33
Induced
2,399,201
1,424,964
670,765
28
Total
17,540,535
9,335,494
5,496,912
162
Multiplier
1.34
1.36
1.35
1.61
Last, as we require land to produce this output, we need to reduce the economic values of traditional
soybean and corn farmers as we are assuming that all land in production in the region is spoken for and
that new fruits and vegetables acres have to come from existing commodities. The total losses to corn
and soybean famers multiplies through regionally to a total reduction of 65 jobs earning $1.85 million.
Table 9. Losses to corn and soybean producers from reduced acreage
Output
Value Added
Labor Income
Jobs
Direct
-5,597,068
-2,815,571
-1,403,927
-46
Indirect
-593,679
-316,012
-208,169
-9
Induced
-828,903
-492,434
-231,658
-10
Total Multiplier
-7,019,650
1.25
-3,624,014
1.29
-1,843,757
1.31
-65
1.40
When we difference tables 8 and 9 we get the net increase in agricultural productivity to the region that
is linked to the nutritional goal. In all, at the producer level, the region would gain 55 jobs and $2.7
million in labor income. Once multiplied through, that productivity on the farm will support a total of 97
jobs and $3.65 million in labor income. Readers will notice that both the job and labor income multiplier
in Table 10 is greater than those in Table 9. This kind of production has stronger linkages, therefore
multipliers, with the regional economy than conventional corn and soybean farming.
Table 10. Net regional gains considering corn and soybean offsets and existing
production
Output
Value Added
Labor Income
Jobs
Direct
7,524,363
4,061,831
2,668,543
55
Indirect
1,426,224
717,117
545,508
24
Induced
1,570,298
932,530
439,108
18
Total
10,520,885
5,711,481
3,653,155
97
Multiplier
1.40
1.41
1.37
1.78
Next we allow our farmers to become direct sellers of half of their produce. In so doing we fabricate
sets of distribution centers across the region where our farmers sell their produce directly to consumers
while the remaining half of their produce is distributed via wholesalers to existing grocers. The full value
of that production is contained in Table 11. As we are only looking at the increment to productivity of
the direct sales, we do not double-count the transfer of the produce to the retailer – instead we look at
it as two portions of a continuing transaction where the farmer is already paid for the produce, and the
retailers’ margins are calculated net of that transaction.
In Table 11, we calculate the expected industrial output that would be associated with the direct sale of
the vegetables and fruits to area residents. We estimate that it will take 573 jobs to market this amount
of produce for the 4 months of operation allowed for the industry. We recognize that these are
temporary, seasonal jobs. In all we estimate that it will link to 664 regional jobs and $10.3 million in
labor income.
Table 11. Total Economic Effects of Producer / Seller Markets
Output
Value Added
Labor Income
Jobs
Direct
19,494,673
8,776,202
7,886,443
573
Indirect
3,540,427
1,840,995
1,142,772
40
Induced
4,453,108
2,637,399
1,243,980
51
Total Multiplier
27,488,212
1.41
13,254,599
1.51
10,273,195
1.30
664
1.16
As these jobs and these sales must come at the expense of existing grocers, we have to offset their
losses. The retailers do not lose the total sales, they lose the margined value of the sales as the cost of
goods sold and all transportation costs are external to their firms. The retail margins were estimated for
the quantity of sales lost and are contained in Table 12. It would cost area grocers 175 jobs making
$3.14 million in labor income to reduce sales by the amounts in this example. That loss multiplied
through the regional economy would cost 207 jobs making just under $4 million in labor income.
Table 12. Total Economic Offsets of Existing Grocers' Lost Sales
Output
Value Added
Labor Income
Jobs
Direct
-7,792,232
-4,488,364
-3,139,612
-175
Indirect
-1,093,912
-569,161
-353,317
-12
Induced
-1,669,350
-991,216
-466,918
-20
Total
-10,555,495
-6,048,743
-3,959,847
-207
Multiplier
1.35
1.35
1.26
1.18
When we difference tables 11 and 12, we get the net addition to regional economic activity attributable
to the direct sales scenario. The sales outlets would support 398 jobs making $4.75 million. In all, once
all of the transactions and input requirements multiplied through the regional economy, 457 jobs and
$6.3 million in labor incomes would be supported while the stores were in operation. We have our
farmer retailers earning much more than the marginal losses to the retailers for a couple of reasons:
first, we have the producer / retailer absorb all transport costs as part of existing operations – all of the
produce already had to be hauled, so the implied cost of transportation is zero when compared to the
grocers’ cost of goods sold. Last we have used national average prices for produce. Accordingly, the
difference between the consumers’ costs and all remaining estimated operation payments have to
accumulate to someone: we chose to allocate those values to the proprietors.
Table 17. Net Regional Economic Effects of Producer / Seller Markets After
Considering Lost Sales To Grocery Stores
Output
Value Added
Labor Income
Jobs
Direct
11,702,441
5,458,855
4,746,831
398
Indirect
2,446,515
1,271,834
789,455
28
Induced
2,783,758
1,646,184
777,062
32
Total
16,932,717
8,376,873
6,313,348
457
Multiplier
1.45
1.53
1.33
1.15