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USDA Report Investigates Impact of Marketing Channels on Local Food Sales

November 16, 2011 |

USDA National Program for Genetic Improvement of Feed Efficiency in Beef CattleA new report from the US Dept. of Agriculture’s (USDA) aims to bolster private and public sector efforts to increase the amount of locally grown food bought and sold in the US by examining data on how farmers utilize direct and intermediated marketing channels to sell their products locally.

Though demand continues to grow for locally grown food, it still accounts for only a small percentage of the food Americans consume. The USDA’s report, entitled “Direct and Intermediated Marketing of Local Foods in the United States,” presents recommendations to change that, drawing on information from its 2008 Agricultural Resource Management Survey (ARMS).

“For local foods production to continue to grow, marketing channels and supply chain infrastructure must deepen. Information on U.S. local food producers and their marketing channels, however, is incomplete,” the USDA noted in its report summary.

Intermediated Marketing Channels

According to the report, there’s a lot of value for farmers in making greater use of intermediated marketing channels (e.g. farmers’ sales to local grocers and restaurants).

Total estimated gross sales for locally grown food in the US nearly quadruple, to $4.8 billion in 2008, when indirect, intermediated marketing channels are taken into account, the USDA report authors found.

At $2.7 billion, the value of local food sales marketed exclusively through intermediated channels was more than three times higher than that for local foods marketed exclusively through direct-to-consumer channels and two times higher than the value of local foods marketed by farms using a combination of the two, said the report authors.

The Data Behind Locally Grown Food

Sales of locally grown food were highest in metropolitan areas and geographically concentrated in the Northeast and on the West Coast.

Small farms – those with less than $50,000 in gross annual sales – dominate the locally grown food market segment, accounting for 81 percent of the total reported in 2008. Average local food sales for small farms amounted to $7,800 per farm, according to the report, and were more likely to rely exclusively on direct-to-consumer marketing channels, such as farmers’ markets and roadside stands.

Medium-sized farms with annual gross sales between $50,000 and $250,000 accounted for 17 percent of reported local food sales, averaging $70,000 in local food sales per farm. Farmers in this group were likely to use direct-to-consumer marketing channels exclusively, or a combination of direct and intermediated marketing channels.

Large farms with gross annual sales of $250,000 or more accounted for 5 percent of reported local food sales in 2008. With an average $770,000 in local food sales per farm, they were equally likely to use direct-to-consumer marketing channels exclusively, intermediated channels exclusively, or a mix of the two.

The USDA researchers found that large farms predominate when it comes to making use of indirect, intermediated local food marketing channels. They accounted for 92 percent of the value of local food sales marketed exclusively through intermediated channels.

For additional details, the entire report (PDF 3.7MB) can be download here:

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