Community Food Enterprise: Local Success in a Global Marketplace

Michael H. Shuman
Posted: January 25, 2010 05:08 PM
From the Huffington Post

It's time to connect the headlines between persistent unemployment in the United States and growing food insecurity. The next Obama stimulus package should focus on how local food can address both simultaneously.

A study done two years ago found that a 20% shift of retail food spending in Detroit redirected to locally grown foods would create 5,000 jobs and increase local output by half a billion dollars. A similar shift to Detroit-grown food by those living in the five surrounding counties would create 35,000 jobs - far more than ever will come out of the multibillion-dollar bailout of the auto industry. The experience of microenterprise organizations around the country suggests that each of these jobs can be created for $2,000-3,000 of public money--a tiny fraction of the price of the last stimulus.

To some skeptics, locavorism is a cute hobby only embraced by Prius-driving environmentalists in rich countries. Libertarians like those at the Cato Institute argue that the best way to localize is to open Walmarts in every community. Progressives like Peter Singer of Princeton University ask, "If you're living in a prosperous part of the United States, what's really ethical about supporting the economy around you rather than, say, buying fairly traded produce from Bangladesh, where you might be supporting smaller, poorer farmers who need a market for their goods?"

What these critics fail to appreciate is that there are a growing number of profitable and competitive locally owned food businesses, here and abroad, that provide exciting models for communities becoming more food secure. A multi-year study my colleagues at BALLE and at the Wallace Center at Winrock International and I just completed on 24 exemplary "community food enterprises" (CFEs) -- locally owned food related businesses -- came to five surprising conclusions about local food and its economic potential (examined in more detail at a pair of upcoming DC-area and online panel discussions on the CFE study):

* Local food is not just about the proximity of production and short supply chains. Equally important is local ownership of the enterprises involved, which stimulates local income, wealth, jobs, taxes, charitable contributions, tourism, and entrepreneurship. Restaurants like the White Dog Café in Philadelphia draw customers in part by highlighting their business relationships to nearby farmers and other food suppliers. Part of what draws Americans to local food is its stimulus effect. Every dollar spent at a locally owned food grocer, for example, probably contributes two to four times as many economic benefits as does a non-locally owned food business like a Walmart Supercenter.


* Community food enterprises are deploying more than a dozen interesting strategies for competing effectively against multinational enterprise. Many CFEs take characteristics that were once regarded as liabilities, such as limited capital or a dedication to high social standards, and turn them into competitive assets. The Weaver Street Market in Research Triangle, North Carolina, is a consumer cooperative whose members are motivated to buy from the store - because of profit sharing - even when other groceries have nominally cheaper prices. Zingerman's Community of Businesses in Ann Arbor, Michigan, has become an economic powerhouse - now employing 535 people and achieving sales of30 million per year - by creating new local businesses around inputs to the deli (like bread and cheese) and around outputs from the deli (like selling the food in a sit-down restaurant called the Roadhouse).


* One way CFEs have become more competitive is through scale. Local does not necessary mean small. For example, Organic Valley , a producer cooperative that distributes organic foodstuffs via regionally owned and operated networks, involves 1,300 farmers and operates in nearly all 50 U.S. states. Many CFEs also export only once they've met local demand, such as Cargills in Sri Lanka, a family-owned company that connects - through food processing, manufacturing, and distribution -- 10,000 farmers on the island with their grocery chain, is now reaching out globally.


* CFEs are in operation on every continent - including the developing world. For instance, in Zambia, an enterprising woman named Sylvia Banda is promoting the virtues of local eating and cooking in her own television show, a catering business, and small-business training center. In Paraguay, the Financially Self-Sufficient Organic Farm School, based in a rural region of Villa Hayes, teaches CFE entrepreneurship to low-income high school students through local enterprises that defray the costs of running the school.


* Economic developers, both in the U.S. and internationally, would be wise to give CFEs greater priority as vehicles for creating new jobs and enhancing local food security.

Local food, by the way, also increasingly means cheaper food. Few economists appreciate how inefficient traditional global food production has become. Some 73 cents of every U.S. dollar spent on food goes to distribution, including advertising, trucking, packaging, refrigeration, middle people, and so forth. Seven cents goes to the farmer. A local food business, like the Oklahoma Food Cooperative we studied, has reduced distribution costs to 20 cents on the dollar, which means lower prices for consumers and more income for farmers.

This is also why local food is important globally. The worst way to help poor Bangladeshi farmers to get out of poverty is to continue buying their produce, since even under fair trade standards maybe a penny or so of every food-sale dollar reaches them. It's far better for Americans to help Bangladesh residents become more self-reliant on food by sharing our best models of CFEs (and their sharing their best models with us) to encourage local ownership of economic stimulating local food businesses. Plus, the community wealth generated by greater food self-reliance will give us more purchasing power to buy those items, like coffee or bananas, that only can be grown in the global south. Spreading CFE models in the name of creating jobs and food security everywhere is the kind globalization all of us can embrace.

Michael Shuman is the research director for the Business Alliance for Local Living Economies (BALLE), author of The SmallMart Revolution and lead author of Community Food Enterprise: Local Success in a Global Marketplace, published by the Wallace Center at Winrock International. The Wallace Center will be a hosting a pair of panel discussions on CFEs this Thursday in Washington, DC and broadcast live online; for more information, please visit: www.communityfoodenterprise.org/event.