Why Local Food Matters: 

Views from the National Landscape

Debra Tropp, 

Supervisory Agricultural Marketing Specialist 

Farmers Market and Direct Marketing Research
Table of Contents

 What do we mean by local food?

 Relationship of local food to U.S. food system

 Importance of local food demand

 Growth of local food marketing outlets

 Demand drivers and trends 

 What does the future of local food look like? 

 Is there room for further growth?

 How do AMS programs facilitate market access for 

local food?
What is Local?

 A food product that is raised, produced, aggregated, 

stored, processed, and distributed in the locality or region 

in which the final product is marketed.

 No official national designation, though some 

individual USDA programs use a broad (maximum) 

definition: 

 Less than 400 miles from the origin of the product, or

 Within the State in which the product is produced.

 Includes both direct-to-consumer sales AND

intermediated sales by distributors/food hubs 

 To restaurants, grocery stores, schools/universities, 

hospitals, et. al.
How Are Consumer Perspectives Changing?

Phil Lambert, “Supermarket Guru”, 2013: 

 People are choosing their foods more holistically based on 

multiple “food factors”:

 Taste

 Ingredients

 Source

 Nutritional composition 

 Asking who is making their foods

 Understanding impact on environment and animal welfare
Consumers Lean Toward Alternative Store Formats

2.50

2.90

5.40

5.20

9.00

14.70

18.90

37.20

1.80

2.50

3.90

5.30

8.50

14.70

17.20

40.20

0 50 100

E-commerce

Dollar store

Fresh format/limited assortment

Drug store

Wholesale format

Convenience stores

Supercenters

Traditional supermarket

2013 Market Share

2018 Projected Market Share

2014 Retail Shop Topic, Jones Lang LaSalle, September 2014, available from 

http://www.us.jll.com/united-states/en-us/Research/JLL-ShopTopic-Grocery-share.pdf?aa79b615-6518-4080-af03-e6104ea59d91
Rise of Fresh Format Stores

 Strongest growth in “fresh format” stores

 These food stores emphasize perishables and offer 

center-store assortments that differ from those of 

traditional retailers—especially in the areas of ethnic, 

natural, and organic foods

 Examples: Whole Foods, The Fresh Market
How Does Local Food Demand Correspond to 

Changing Consumer Preferences? 

 In alignment with growing demand for freshness, 

product integrity and transparency, local food 

purchasing provides consumers with the opportunity to:

 Obtain food items with superior quality characteristics 

– freshness, flavor, ripeness, enhanced shelf life – and 

possibly enhanced nutritional density (more research still 

needed)?

 Learn about farming practices used (often directly from 

growers if through farmers markets or CSAs)

 Have greater confidence in the integrity and quality of 

the food they purchase

 Reward sustainable production practices
Demand Drivers Among Consumers

 Kearney report: grocery shoppers embrace the increase 

in local food options because they believe it:

 helps local economies (66 percent)

 delivers a broader and better assortment of products 

(60 percent)

 provides healthier alternatives (45 percent)

 improves the carbon footprint (19 percent)

 increases natural or organic production (19 percent)

 Approximately 70% of restaurant operators surveyed in 

2014 said their patrons were more interested in locally 

sourced items than they were two years earlier.

 90% for fine dining restaurants.

A.T. Kearney, “Buying Into the Local Food Movement”, February 2013, National Restaurant 

Association's 2014 Restaurant Industry Forecast
Demand Drivers Among Consumers

 Observations from a 2015 study by Dr. Ion Vasi, an 

associate professor with a joint appointment in the 

Department of Sociology and Tippie College of Business 

at the University of Iowa:

 The local food market is what sociologists call a 

moralized market, where people combine 

economic activities with their social values.

 It’s not just about the economical exchange; it’s a 

relational and ideological exchange as well

 It’s about valuing the relationship with the farmers and 

people who produce the food and believing that how 

they produce the food aligns with your personal 

values
Demand Drivers Among Consumers

 UI researchers discovered local food markets were more 

likely to develop in areas where residents had a strong 

commitment to civic participation, health, and the 

environment

 For his study, Vasi examined the development of local 

food markets by looking at the number of farmers 

markets, food coops, community-supported agriculture 

providers, and local food restaurants in cities across the 

United States. Researchers also conducted 40 interviews 

with consumers and producers in different local food 

markets in Iowa and New York.
Demand Drivers Among Consumers

Top 10 Menu Trends for 2015

1. Locally sourced meats and seafood

2. Locally grown produce

3. Environmental sustainability

4. Healthful kids’ meals

5. Natural ingredients/minimally processed foods

6. New cuts of meat (e.g. Denver steak, pork flat iron)

7. Hyper-local sourcing (e.g., restaurant gardens)

8. Sustainable seafood

9. Food waste reduction/management

10. Farm/estate branded items

Source: National Restaurant Association “What’s Hot” Chef Survey 
Demand Drivers Among Consumers

 Availability of locally grown produce and other local 

packaged foods have become major influences on 

grocery shopping decisions

 87.2% say it is “very or somewhat important” to their 

choice of a primary food store, up slightly from the 2013 

level of 85.0%

 Leading the “very important” component (44.2%)

 Hispanics (53.3%)

 Single-person households (49.4%)

 Adults between the ages of 50 and 64 (46.2%)

 2/3 of survey respondents endorse efforts of their 

primary supermarket to support nearby local food sources. 

Source: National Grocery Association and Supermarket Guru 

Consumer Panel Survey 2014
Demand Drivers Among Consumers

 Shoppers will switch stores for local food selection

 Almost 30% of grocery shoppers say they 

consider purchasing food elsewhere if their 

preferred store does not carry local foods. 

 Respondents say their main source for local food 

is still the local farmers market and farm stores.

 Only 5% indicate they shop for local foods at 

big-box retailers, and 15% at national 

supermarkets

Source: A.T. Kearney, “Buying Into the Local Food Movement”, January 2013
Demand Drivers Among Consumers

Consumers Willing to Shop Around for Quality Perishables

Channel Primary Food 

Source

Primary Source 

of Fresh 

Produce

Secondary 

Source of Fresh 

Produce

Supermarkets 76% 56% ↓ 29%

Warehouse

clubs/supercenters 19% 10% ↓ 23%

Health food stores 2% 2% 8%

Farmers markets 1% 25% ↑ 12%

Other direct from 

producer 1% 5% ↑ 3%

Specialty store 1% 1% 3%

No preference – – 22%

Colorado State University Survey of U.S. Adults (2006), based on national consumer 

panel data
Demand Drivers Among Consumers
Demand Drivers Among Consumers
 Direct to consumer (DTC) food sales for human 

consumption still represent a very small share of the 

national food supply:

 But if we take into account direct and intermediated 

sales of local food products, the picture begins to 

change:

 Nearly 8 percent of U.S. farms participated in local 

food marketing channels as of 2012 (Low, 2015)

Local Food’s Contribution to National Food System

Year

Total 

Agricultural 

Sales ($000) 

Direct-to-Consumer 

Sales of Ag. Products 

for Human 

Consumption ($000)

Ratio of Direct-toConsumer Sales to 

Total Agricultural 

Sales (%)

2012 394,644,481 1,309,827 0.3
 Estimated 2012 local food sales: $6.11 billion

Of which

 $3.35 billion (54.8 percent) was generated by farms that 

exclusively used intermediated wholesale marketing 

channels

• Only 22,600 farms, 148K per farm

 $1.15 billion (18.8 percent) was generated by farms which 

exclusively used DTC channels

• Approximately 5x as many farms (112,304) as those 

which only used intermediated channels, 10.2K per farm

 Remaining $1.61 billion sold through both channels

. 

Most Local Food Sold Through Intermediaries

Source: Low (USDA Economic Research Service, January 2015)
Why Intermediated Sales?

430

288

180

0 200 400 600

Farm to School Programs

Food Hubs

Farmers Markets

Growth between 2007 and 2014 (Percent)

Prompted by:

 Growing retail and food service buyer interest in meeting 

consumer demand for local foods

 Producer interest in catering to higher- volume wholesale clients

 Comparatively low revenues from labor-intensive direct to 

consumer marketing 

 Growing producer ability to provide deliveries of local products 

in commercial-sized volume over longer portions of the year, 

supported by aggregation services and season extension technology
Farm Level Challenges with Local Food 

 Not always so easy for local farmers to access 

larger-volume marketing channels

 Individual farm operators often lack individual capacity to 

meet buyer requirements for product volume, quality, 

consistency, variety, or extended availability.

 Farmers continue to be challenged by the lack of 

distribution, processing and marketing infrastructure

that would give them wider market access to larger volume 

customers
Meanwhile, Commercial Buyers Are Looking For: 

 Traceback mechanisms and recordkeeping

 Many commercial, institutional and retail buyers want to 

procure local food products that can be traced back to the 

originating farm in the event of a foodborne illness outbreak.

 Smaller and mid-scale farmers often lack capacity to 

establish adequate recordkeeping or product 

monitoring systems by themselves

 Food safety

 Commercial and institutional customers are increasingly 

demanding third-party certifications of production/handling 

processes (e.g., GAP, GHP), which many smaller farmers 

have not had to address in the past 

 Food Safety Modernization Act may result in new 

requirements and expectations
USDA believes regional food hubs can play an 

important role in supporting these small and mid-size 

farmers through aggregation, collective marketing, and 

facilitative services
Defining Characteristics of Regional Food Hubs

 Carry out or coordinate the aggregation, distribution, 

and marketing of primarily locally/regionally 

produced foods

 Move product from multiple producers to multiple 

markets

 Producers considered valued business partners 

instead of interchangeable suppliers 

 Committed to buying from small to mid-sized 

producers whenever possible.

 Use product differentiation strategies (e.g., identity 

preservation, group branding, sustainable production 

practices, etc.) to ensure that producers maximize 

returns from their products.
Regional Food Hubs

 Actively linking producers to 

markets

 On-farm pick up

 Production and post-harvest 

handling training

 Business management 

services and guidance

 Value-added product 

development

 Food safety and GAP training

 Liability insurance

 Aggregation

 Distribution

 Brokering

 Branding and market 

development

 Packaging and repacking

 Light processing (trimming, 

cutting, freezing)

 Product Storage

 “Buy Local” campaigns 

 Distributing to “food deserts”

 Food bank donations

 Health screenings, cooking 

demonstrations

 SNAP redemptions

 Educational programs

 Youth and community 

employment opportunities
Regional Food Hubs

0

40

80

120

160

200

240

280

320

Growth in the Number of Food Hubs (1970s-2014)*

Based on a working list of food hubs identified by the NGFN Food Hub Collaboration
http://www.ers.usda.gov/data-products/food-dollar-series/documentation.aspx

Farm Share of U.S. Consumer Food Dollar (2012)

Different story in local food 

systems...

 In “short” supply chains, local 

producers received up to seven 

times the share of the retail price 

compared to mainstream chains -

USDA ERS report 

http://www.ers.usda.gov/media/122609/err99_1_.pdf

 Food hubs often return between 

75 to 85 percent of their wholesale 

sales revenues to their producers -

USDA AMS report http://dx.doi.org/10.9752/MS046.04-

2012

In mainstream supply chains, 

farmers retain only 17.4 cents

of the consumer food dollar on 

average
Example One: Intervale Food Hub, 

Burlington, VT

Intervale works with producers to determine prices 

based on actual production costs for producers and 

what the market can realistically manage. 

Intervale’s producers generally net 60-70% of the 

retail revenue obtained from CSAs and 85% of the 

revenue obtained from distribution to wholesale 

customers through the hub. 
Example Two: Red Tomato, Canton, MA

 Coordinates aggregation, transportation and 

sales for roughly 40 farmers to grocery stores in 

the NE (including Trader Joe’s)

 Employs a variety of product differentiation 

strategies – regional branding, source 

identification and the verified use of sustainable 

production practices like IPM 

 November 2009 case study: retailer agreed to 

sell RT’s tomatoes at $2.79/lb. compared to 

standard retail price for the same commodity of 

$1.99/lb. given the unique attributes of the 

product 

 Combination of cost savings in shared logistics 

and a higher wholesale price led RT’s producers 

to receive 3x higher returns than they received 

for comparable items outside the value chain
Example of Food Hub/Retail Partnership

 In August 2013, Milwaukee-based Roundy's Inc.,a large 

regional supermarket chain and the market leader in 

metropolitan Milwaukee, formed a partnership with the 

Madison-based Wisconsin Food Hub Cooperative. The 

cooperative, based in Madison, supplies a variety of produce 

to Roundy’s stores in Wisconsin operating under the Pick 'n 

Save, Copps and Metro Market banners. 

 Participating stores frequently use point-of-purchase 

displays to promote the program.

 The Wisconsin Food Hub Cooperative generated 

approximately $3 million in produce revenues in 2013, 

after only a year in operation
Example of Food Hub/Retail Partnership

 The partnership with Roundy's is 

designed to get food from farm to 

warehouse and on its way to grocery 

stores as quickly as 24 hours from 

when the produce is picked, said Ron 

Balsimo, sales manager for the 

cooperative. "You can't get any fresher 

unless you walked into a field and picked 

it yourself,“

 The cooperative has grown to more than 

100 members, "and they keep coming," 

Balsimo said.

 Starting to see some farmers expand 

their plantings because of the hub
Benefits of Food Hub/Retail Partnership

 There are demonstrated sales gains that come from 

locally grown food programs in grocery stores, says Bill 

Justin, president of W.L. Justin & Assoc., a supermarket 

consulting company based in Atlanta. "We find that you can 

actually increase total store sales," he said. 

 He has seen examples of such programs increasing sales 

by as much as 15% to 20% in the produce department.

 Having sources of local produce can also help mitigate 

any potential supply concerns brought about by the 

extreme drought in California’s produce-growing regions.
Future Demand Drivers?

Nutrition Assistance Programs

 Acceptance of SNAP benefits at farmers 

markets and farm stands rose from 

approximately 900 sites in 2009 to more 

than 6,400 in 2014. The value of 

redemptions grew from $4 million to 

nearly $19 million, due to:

 Pro-active outreach by USDA Food and 

Nutrition Service (FNS) to certify markets 

and vendors

 AMS and FNS grants for EBT equipment 

installation

 Rise of non-profit voucher programs (i.e., 

Wholesome Wave, Fair Food Network)

 Rise of mobile FMs in low-income areas

$4,173,323 

$7,547,028 

$11,725,316 

$16,598,255 

$17,500,000 

$18,800,000

2009 2010 2011 2012 2013 2014
Future Demand Drivers?

Schools

 Farm to school programs now exist in more than 42,000 schools

 Schools spent more than $600 million on local food in the 2013-14 

school year, up 55% from the previous year.

Hospitals

 Growing number of farmers markets operating at hospitals and 

health care facilities

 More than 90 reported in USDA National Farmers Market Directory 

at hospitals or public health facilities

 Kaiser Permanente lead in early years; recent campaign to 

introduce them at VA hospitals

Military Bases

 New DoD “healthy base initiative” aims to expand farmers 

markets on base, local food in commissaries

 Joint USDA/DoD Report on FMs at military bases released in 

November 2015
AMS Programs and Services

 AMS Connection to Local Food

 Division Structure

 Applied Research Reports

 Facility Design

 Grants

 Farmers Market Promotion Program (FMPP)

 Local Food Promotion Program (LFPP)

 Specialty Crop Block Grant (SCBG)

 Federal-State Marketing Improvement Program 

(FSMIP)

 Cost-Share for Organic Certification
Legislative Authority Supports USDA/AMS Interest 

in Locally-Grown Food

1946 Agricultural Marketing Act:

 Agency mandated to reduce distribution costs and the 

price spread between producers and consumers 

 Directed to market the “full production” of American 

farmers—regardless of scale—in a useful, economical, 

profitable, and orderly manner

 Improvement of overall dietary and nutritional 

standards is a primary policy goal

1976 Farmer to Consumer Direct Marketing Act:

 Encourages promotion of direct farm marketing 

activities for mutual benefit of farmers and consumers
Legislative Authority Supports USDA/AMS Interest 

in Locally-Grown Food

Bottom line: USDA/AMS is mandated to:

 Support the development and creation of shorter food 

supply chains wherever feasible

 Work to ensure that food producers receive a greater 

share of the final retail price that consumers pay

 Support profitable marketing of all American farmers at 

all scale levels

 Promote direct marketing of farm products where it 

provides mutual benefit to farmers and consumers
Farmers Markets and Direct-to-Consumer Marketing

 Through market research, analysis, data products and 

other tools, we help stakeholders better understand 

trends in the rapidly evolving direct to consumer 

marketplace. 

 Maintains four national directories on local food (FMs 

[8,527], CSAs [668], food hubs [153], on-farm markets 

[1,313]) at www.usdalocalfooddirectories.com

 FM directory selected as first Federal API in 2013!

 Administers voluntary FM market manager surveys

 Developing national surveys for CSAs, food hubs, on-farm 

markets (directories launched in 2014)

Structure of AMS Local Food Research & 

Development Division
Food Hubs and Other Aggregation Models

 Conducts research on emerging business enterprises 

that offer aggregation, distribution, and/or marketing 

services to small and mid-sized agricultural producers 

who cater to local food markets.

Facility Design

 Provides targeted site assessment, design services 

and layout analysis for food market and facility 

personnel to improve the efficiency of permanent food 

market, distribution and warehouse facilities. 

Structure of AMS Local Food Research & 

Development Division
Regional Food Hub Resource Guide 

Food hub impacts on regional food systems, and the resources 

available to support their growth and development

Moving Food Along the Value Chain: 

Innovations in Regional Food Distribution

Food Value Chains:

Creating Shared Value to Enhance Marketing Success

Building a Food Hub from the Ground Up:

A Facility Design Case Study of Tuscarora Organic Growers

Research/TA Reports on Local Food Systems
Upcoming Releases in early CY 2016:

 The Evolving CSA Business Model (results of national survey and 

focus group interviews in six states)

 Potential Demand for Local Agricultural Products by Mobile 

Markets 

 Local Food Economic Assessment Toolkit: a guide to creating 

your own community assessment using secondary/primary data and 

IMPLAN input/output software 

Research Reports on Local Food Systems
Why an Economic Impact Toolkit?

The recent sharp increase in market demand for local 

foods, currently estimated by USDA to be over $6 billion 

in value, has sparked a groundswell of interest and 

investment in local food systems. 

 Community planners, public officials, and private 

foundations are increasingly interested in exploring the 

potential of local food in generating economic growth 

and business development.

 Unfortunately, many of these initiatives lack a clear 

roadmap for measuring and evaluating their overall 

impact. 
Why an Economic Impact Toolkit?

To provide community planners and other stakeholders 

with better ways of assessing outcomes of proposed local 

food investments, USDA/AMS asked Colorado State 

University to convene a group of leading U.S. 

researchers and consultants to synthesize current best 

practices 

The project team members chosen to create the Toolkit 

were deliberately selected because of their specific 

research expertise in local food systems and 

economic impact assessment.
Toolkit Learning Objectives

The Toolkit contains seven modules that offer real-world, 

practical guidance to planners, economic development 

specialists, and others interested in assessing the 

economic impact of local food system interventions. Topics 

covered include:

 Framing research approaches

 Collecting primary data

 Compiling data from secondary sources

 Developing a solid grasp of economic multipliers 

and their limitations as measurement tools

 Making effective use of input/output software

 Customizing it as needed to better reflect local food 

system conditions.
Grants: Farmers Market Promotion Program

Mission: To increase domestic consumption of, and 

access to, locally and regionally produced agricultural 

products, and to develop new market opportunities for 

farm and ranch operations serving local markets 

 Diverse applicant eligibility (non-profits, local governments, 

producer networks, etc.) Excludes state governments and 

individual producers

 Only funds direct producer-to-consumer marketing activities 

(e.g., FMs, CSAs, on-farm markets)

 Approximately $13 million in funding available in FY 2016

 $25,000-$100,000 per grant 

 RFA likely to be released in March 2016
 Mission: To increase domestic consumption of, and 

access to, locally and regionally produced 

agricultural products marketing through 

intermediaries (not direct to consumer)

 Launched in FY 2014, result of new Farm Bill

 Approximately $13 million in funding available in FY 2016

 Planning Grants – up to $25,000 each

 Implementation Grants - up to $100,000 each

 Diverse applicant eligibility (State governments and 

individual producers are prohibited)

 RFA for FY 2016 likely to be released in March 2016

Grants: Local Food Promotion Program
 Agency oversees management of grants administered 

by State Departments of Agriculture solely to enhance 

the competitiveness of specialty crops 

 Specialty crops are defined as “fruits, vegetables, tree 

nuts, dried fruits, horticulture, and nursery crops (including 

floriculture)”

 $63 million in funding was available in FY 2015 (pro-rated 

based on state share of specialty crop production)

Grants: Specialty Crop Block Grant Program
NEW: Multi-State Specialty Crop Block 

Grant Program

Designed to: 

 Support food safety and research

 Address plant pests, disease, and crop-specific 

issues

 Increase marketing opportunities for specialty crops

 Announced September 4, 2015

 Applications must be submitted to www.grants.gov 

by January 14, 2016
 Program is open to state departments of agriculture in 

the 50 States, the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, American Samoa, 

the United States Virgin Islands, and the Commonwealth 

of the Northern Mariana Islands. 

 Involves at least two partners located in different 

states. USDA encourages other State agencies, Tribal 

governments, universities, non-profits, and other 

specialty crop organizations to partner with participating 

State departments of agriculture

NEW: Multi-State Specialty Crop Block 

Grant Programs
NEW: Multi-State Specialty Crop Block 

Grant Program

Priority areas: 

• Benefitting underserved communities and veterans

• Improving producers’ and facilities’ capacity to comply 

with the requirements of the Food Safety Modernization 

Act

• Developing adaptation and mitigation strategies for 

farmers in drought-stricken regions of the country

• Increasing opportunities for new and beginning farmers

• Developing strong local and regional food systems

• Protecting pollinator habitats/improving pollinator 

health

• Supporting the growth of organic specialty crops.
 Provides matching funds to State Departments of 

Agriculture, State agricultural experiment stations, 

and other appropriate State agencies

 Assists in exploring new market opportunities for U.S. 

food and agricultural products, and to encourage 

research and innovation aimed at improving the 

efficiency and performance of the marketing system

 About $1 million per year

 Funds approximately 20 projects per year at an average 

of $50,000 per grant

Grants: Federal-State Marketing Improvement Program
 As of FY 2016, being administered by AMS/TM/Grants Division 

(not NOP)

 Organic producers can be reimbursed up to 75 percent of their 

certification costs (not to exceed $750)

 Two organic certification cost share programs were offered in 

2015, valued at $11.9 million

 National Organic Certification Cost Share Program 

(NOCCSP) - $11 million per year

 Agricultural Management Assistance (AMA) Organic 

Certification Cost Share Program - $900K per year

• Available to organic producers (crop and livestock operators only) 

in CT, DE, HI, MA, ME, MD, NH, NJ, NV, PA, RI, VT, WV, WY

Cost-Share for Organic Certification
Debra Tropp

Supervisory Agricultural Marketing Specialist

Local Food Research and Development Division

Phone: (202) 720-8326

Email: Debra.Tropp@ams.usda.gov

Website:

www.ams.usda.gov/services/local-regional

Contact Information