Demand for local foods has soared in recent years, exemplified by USDA data showing that the number of farmers markets nationwide tripled from 1994 to 2009.
The USDA conducted a series of 15 coordinated case studies of food supply chains in the United States, examining differences in prices, revenue distribution and transportation fuel use. It aimed to identify potential barriers to expansion of local food supply chains and to better understand how the broader food system could incorporate more local foods in response to growing demand.
Differentiation
And even though locally produced foods are often more costly to produce at present than mainstream, large-scale food production, the USDA found that local food producers and processors can still be successful if they identify the unique characteristics of their product.
“Despite generally higher per unit costs than in mainstream chains, farms and businesses in local supply chains can still be successful if they offer unique product characteristics or services, diversify their operations, and have access to processing and distribution services,” the report said.
It said that local supply chains, particularly direct sales from producer to consumer, were likely to provide consumers with the most information about their foods. However, it added that the fact of a food being local in itself would unlikely be enough to persuade most consumers to pay a higher price. Other differentiating factors, such as grass-fed or organic produce, were also seen to be important.
Mainstream economizing
In addition, the report suggested that local producers could reduce unit cost by building ties with existing national supply chain infrastructure.
“Mainstream supply chains keep distribution costs low and economize on transportation fuel use through scale economies and use of information technology. This structure can accommodate local products if they can be supplied in adequate volumes,” it said.
In terms of fuel use, the USDA said that supply chain structure and size was more important than the number of miles that foods traveled from producer to consumer.
“Products in local supply chains travel fewer miles from farms to consumers, but fuel use per unit of product in local chains can be greater than in the corresponding mainstream chains,” the report said.
Larger loads and logistical efficiencies can outweigh actual distance, it said.
The full report is available online here.