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Economic Impacts of Localizing Central Illinois’s Food System

Executive Summary
By Viktor Schrader

What would be the local impact of encouraging residents of Central Illinois to


purchase more local fruits and vegetables by visiting their farmers’ markets?
In a word – major.

Although a global food system has grown into the dominant method of
production and supply, there is a movement among concerned individuals and
communities, domestically and abroad, towards a more localized food system. However,
choices for consumers with these preferences are often limited by the local food supply;
being a virtuous “locavore” in central Illinois may require excluding fruits and vegetables commonly found
in the supermarket from one’s diet.
Local producers must respond to this increased demand for local foods by diversifying their
product and increasing production in certain under-produced sectors, and direct market channels must be
developed so that local producers have more viable options for selling directly to local consumers. Such
action would not only satisfy “locavores;” indeed, the effect of each transaction is multiplied by the
amount of linkages to local suppliers in the economy. Simply, buying locally produced fruits and
vegetables would concentrate economic benefits in the entire region as more dollars would maintain
circulation in the local economy.
This study provides a local example of how such an increase in demand for and production of local
food promotes local economic growth.
Estimated Impacts of Increased Local Production
Analysis done on five central Illinois counties shows that by simply doubling the small percentage of fruits
and vegetables sold in local farmers’ markets, an extra $1.3 million in output and 6 new jobs would be
added to the local economy (Table 1).
Table 1: Net impact of doubling vegetable and fruit production in 5 central Illinois counties
Increased Economic Output $1,325,518
Increased Jobs 6
Increased Earnings… $426,709
…to Owners $115,558
…to Workers $311,151
As important as this impact would be, nearly doubling vegetable sales at local farmers’ markets would still
only capture 4.5 percent of total local consumption of vegetables. Likewise, nearly doubling fruit sales
would only supply a little more than 1 percent of local consumption. Clearly, local producers have a great
opportunity to expand in local markets, to the benefit of all.
Tables 2 shows the economic impacts if sales were to increase so that 11 percent of vegetable and 2
percent of fruit consumed in the five county region were supplied locally. Nearly $4.9 million in output
and more than 19 jobs would result from even these modest increases. The benefit to local governments
would be obvious as well, as they would take in greater revenue from taxes.
Table 2: Net impact of increasing vegetable and fruit production in 5 central Illinois counties to 11% and
2% of consumption respectively
Increased Economic Output $4,870,760
Increased Jobs 19
Increased Earnings… $1,568,956
…to Owners $438,880
…to Workers $1,130,077
Direct Market Channels
Developing direct market channels, such as farmers’ markets, Table 3: Local Farmers’ Markets
CSA programs, and on-farm stores, is a necessary condition Pontiac Farmers Market
for growing the local food economy. New markets generate Dwight Main Street Farmers Market
reliable demand for farmers’ products, encouraging more North Bloomington Street Farmers Market
production and inducing more growers to enter the market. Uptown Normal Trailside Farmers Market
Growing these markets takes advantage of local economic Downtown Bloomington Farmers Market
linkages (which produce the higher multipliers characteristic Down Village Market
Gibson City Farmers Market
of fruit and vegetable farming), creates broader
Paxton City Farmers Market
diversification, and reduces dependence on imports, an
Pekin Downtown Farmers Market
unnecessary outflow of revenue that could be kept circulating
in a healthy and growing local economy.
The contribution that farmers’ markets currently make to the Central Illinois economy is impressive. Table
4 shows the estimated current impact of nine regional markets (listed in Table 3). Sales data from the
Downtown Bloomington farmers’ market was extended to the vendors in table 5 to estimate the total
impact of fruit and vegetable sales in all the markets.
Table 4: Current impact of fruit and vegetable sales at identified farmers’ markets
Direct Indirect Induced Total
Economic Output $1,238,791 $190,478 $236,428 $1,665,696
Owners’ Income $125,378 $12,713 $6,774 $144,865
Workers’ Income $196,899 $62,348 $71,985 $331,231
Employment 3.87 2.83 2.81 9.41
In table 4, “Direct” spending refers to the impact of fruits and vegetable sales themselves. “Indirect”
refers to fruit and vegetable farmers buying their inputs (land, support services, pesticides and other
chemicals, insurance) from local suppliers. The buying and selling of these inputs represents the linkages
in the local economy. “Induced” refers to the extra consumption from individuals with more wealth. The
multiplied effect can be seen as the total impact per dollar of direct spending.
Multiplier of Local Food
Our analysis generated an economic multiplier for the regional fruit and vegetable at 1.34.

Concluding thoughts
While recent Census data shows an increase in the number of small farmers within our region, agriculture
is still very polarized with 95% of farmland inhabited by corn and soybeans. Imagining a major shift in
current land use patterns is difficult, given supports for large grain operations. However, we find that
even marginal expansion of agricultural markets for local consumption will result in significant returns.
Farmers, consumers, restaurant owners, and grocery stores should realize how their market decisions
affect the regional economy and make a concerted effort to buy and sell locally. Meanwhile, local leaders
must not waste this opportunity to encourage this growth. Future generations will thank them for it.

For a copy of the complete study, please contact The Heartland Local Food Network at www.hlfn.com
Methodology
1.) Five county region includes McLean, Livingston, Tazewell, Woodford, and Ford
2.) Consumer spending data originates from the American Community Survey of the 2000 U.S. Census
and Bureau of Labor Statistics’ Consumer Expenditure Survey (2005-2007).
3.) Farmers’ market sales of fruits and vegetables are used as a measure of local spending.
Comparing farmers’ market sales to total expenditure gives the share of regional consumption that
is supplied locally. Market channels such as community-supported agriculture, roadside stands,
and institutional spending are excluded from the analysis. This clearly understates the amount of
local spending currently taking place, as well as the possibilities for growth in local spending.
4.) Impacts are estimated using the IMPLAN Modeling system. Events are specified based on
proposed increases in the share of local consumption met by local production.

Understated Effect
Certain assumptions made during the analysis tend to understate the overall impact of buying local fruits
and vegetables:
1.) Assuming the supply of farmland to be fixed so that an increase in fruit or vegetable production
accompanies a decrease in grain production, a negative impact was estimated based on the
economic loss. The results reported above are thus a net impact. To the extent that farmland is
available, grain production will not be replaced and the economic impact will be more positive.
2.) IMPLAN’s data files do not reflect vegetable production in two counties (McLean and Ford) or
fruit production in three counties (Tazewell, Ford, and Livingston) despite evidence to the
contrary. This results in an additional understatement of the “real” multiplier effect of these types
of production. Data for these missing counties would allow a more accurate and greater impact
than that reported above.

For a copy of the complete study, please contact The Heartland Local Food Network at www.hlfn.com