STEVE STEVENSON: Thank you very much.

I’d like to invite our attention now to

the upper end of this discussion about local food systems, but I am going to refer to
more accurately as “regional food systems”, food systems through which mid-scale
farm, farmers, ranchers and fishermen can be competitive and viable. In fact, I’m going
to nudge on even suggesting we talk about a third tier in the U.S. food system, a tier
between directive consumer marketing which makes sense to be very local that’s
national and the international national conventional commodity food system. Is there
wisdom in talking about a third system, and I’ll return to that. I’ll do this out of data that
comes from five case studies of what I am going to call mid-scale value based, food
value chains to mouthful and I’ll go over a little bit about what I mean by that.
Shorthanded probably talk about mid-scale food value chains and I’m talking about mid-
scale. Okay, let’s get started with this and provide some context and where I come from
with this.

This is making use of the 2007 census evaluation and looking for ten years about
changes in the structural farming in this case along the X axis is various scales of farms
and we are talking about ranches and farms in this, okay, graded from less than 2,500
all the way to a million or more. These are the percentage change over the last ten
years. You have probably seen this before or at least heard of this before. Secretary
Bill [2:26] talked about declining middle. This is the declining middle. It has been going
on for at least the last three decades. The consequences of losing the middle in, we are
primarily concerned, I’m not supposed to move too far from here, but the farms that we
are particularly concerned about for statistical purposes we would designate between
gross annual incomes of between $50,000 and $500,000, okay. On the bottom end of
that you would want to say that the Small Farms Commission had small farms defined
as $250,000 or less so when we go from $50,000 to $500,000, the bottom end of that is
the larger small farms series. But whatever they are they are farms that also are
farming occupation farms in the sense that these are farms which farming is, if not the,
an important likelihood strategy for the family, so we are talking mid-scale farming
occupation kinds of farms.

Just very quickly there is a group of us concerned about the decline of the middle and
have set up a task force which we call the Agri-Middle Task Force which has three
primary steers of activity. The middle market development is the private sector stuff. It
is operationalized by a group that calls itself Association of Family Farms and Larry Lev,
who spoke this morning and asked the question, is one of the leaders in this Association
of Family Farms.

YEE: Y-E-E

STEVENSON: I’m sorry, Larry Yee from the University of California. There is a public
policy change component, because the strategy here is that if we are going to make any
serious renewal of the middle it is going to involve changes in the private sector and in
the public sector and a research and education component that surprise support from
that and some of the research I am going to describe to you as part of that research.
There is a CSRES multi-State research project NC1036 which is the formal
organizational part of the research.

Okay, here is a way to visualize what mid-scale farmers are facing or what, this is really
sectors of the food system. If you do scale along the X axis and some kind of level
value added or differentiation on the Y axis, you will come up with four quadrants.
Small high value products exemplified by what I have been hearing this morning is a
number of the directive consumer marketing fits very clearly in that first quadrant. I am
going to hold off the second quadrant. The third quadrant is the commodity marketing
stuff, okay, high volume, low value added. The interesting quadrants are the second
and fourth quadrants. Our analysis indicated that the fourth quadrant which is small to
mid-size people trying to do the commodity game is a difficult, difficult act. I think there
are some farming systems in Wisconsin where I come from grass-based dairy systems
in which have significant lower income costs can compensate for that and there may be
some other ones that would be interesting. By and large that is a difficult what we
would call the trouble zone, so the question becomes then what are the options? Well,
there is the move from quadrant four back to quadrant three which is the get bigger.
That has been one of the key strategies that has been suggested for the last 25 or 30
years. It is also what causes farms to eat their neighbors. Another would be to move
into the direct marketing one. That is a possibility but it is a tough role, but we are
suggesting in the Agri-Middle AFF group is to make the move from four to two. Two is
the opportunity area. It is the heart of what I am saying is the opportunity for a third tier.
It’s significant volumes of higher value food products. The kinds of volumes that the
direct marketers in quadrant one are not designed to produce. The kinds of
differentiation that the commodity marketers in quadrant three are not designed to
produce. Significant volumes of highly differentiated high quality value added products
and the tasks are the ones that I have started to outline there. You get there by
differentiating with value added attributes reach scale not by getting any one farm larger
but by aggregating collectives or cooperatives or LLC’s, there are a lot of different
organizational structures. What I am going to argue with this afternoon is it also comes
with that in addition to different attributes and different aggregations that to make this
work well it is going to require some new business rules the value added value chain
numbers.

Okay, so let me give you our definition of mid-scale or mid-food value chains. You
can…value based strategic business partnerships featuring mid-scale agri-food
enterprises that create and distribute responsibilities and rewards equitably across the
supply chain operate effectively at regional levels with significant volumes of high quality
differentiated food products, okay. The four case studies that the rest of this
presentation are here, and I have given you their URL’s, too. These are four of the
most accomplished values based value chain based enterprises that I know. One of
them is Country Natural Beef in the Pacific Northwest, a cooperative of about 120
ranching families in Oregon, Washington, Northern California and some ranchers in
Hawaii, differentiated by what they removing all exceptors is natural beef with no
hormones in the bags, not organic but all natural beef. Shepherd’s Grain is another
Pacific Northwest. This is an LLC of about 35 wheat farmers who differentiate their
products in two dimensions primarily, one is their production. They operate in the
eastern part of Washington State primarily the Palouse very rich but highly erodible
lands and so they do what they would call “no till” or they talk about direct seed. They
never go in there with plows. They do rotations and direct seed. The other is they grow
particular grains that get milled into particular flours especially bakeries including pizza
chains. Functionally specific value added flour products coming out of this. Organic
Valley Family of Farms you may be familiar with it. It is a western base, or Wisconsin
base coop of about now 1200 dairy farmers with annual sales pushing half a billion
dollars, $500 billion dollars. I hope we get a chance to talk a little bit about the current
recession and how these enterprises are adapting, but Organic Valley is interesting in
another way. It is a national organization that has regional expressions, so when I talk
about regional framework, I really mean regional framework. That means that there
may not be multi-regions in the same business entity, but there is regional expressions.
Sysco Corporation which Craig Watson, I think is around in the back, hi Craig, is a good
example of a national organization. It also has regional expressions in regional
discretion and regional authority to make decisions which I think is important pieces of
these things structurally. Finally, the Red Tomato, which is a northeast non-profit
representing and taking leadership in marketing fruits and vegetables of about 35 or so
fruit and vegetable farmers in the northeast, started in the Boston area but is now
working into Pennsylvania and New York. We are fortunate enough to have the founder
of Red Tomato with us today, Michael Rozyne who will be on a panel. In terms of what
we call “where’s the juice” at the juice in terms of the starting of these enterprises, the
first three the juice is all in the producers. The fourth one the juice is in the broker or the
marketer part of it. I think an interesting question to ask for the research is what’s the
difference depending on where the juice is in these supply chains. We have got some
variety here.

Okay, key characteristics in the two food value chains-engage value and values in
products and business relationships. Very clear we’re not selling commodity stuff here.
They are selling high qualify differentiated food products. The differentiation and the
competition is not on price alone. That’s the value of the product part. The values in
the business relationship, I’ll spell out a little bit more but we are talking both value and
values.

Emphasize organizational interdependence, trust transparency, shared support and

shared reward-I don’t have time to go into it but this model this value chain model at
least I’m aware of it comes out of two sources. It comes out of the quality lean
manufacturing model of the Japanese auto industry primarily Toyota. That’s the…value
chains are these kinds of business relationships are smart and I’ll talk about that a little
bit later on. The other ideological source out of these things is the International Fair
Trade movement. It is actually where Michael comes from. Michael also in addition to
being the founder for Red Tomato, he is the founder of Equal Exchange, the Fair Trade
coffee company, so we have two lines of influence here. One is emphasizing on these
kinds of business relationships and models and are smart. The other is these kinds of
business models that are right. Oh, I have one minute. Oh, I’m in deep trouble.
CAROL KRAMER: [Inaudible]

STEVENSON: Oh, okay, well really can I buy two minutes, all right. This is key and
then we can come out. This is a big part of the values piece in the business
relationship. Producers are treated as strategic partners, not as indistinguishable input
suppliers. That is pivotal in terms of what’s the status of producer organizations.

Negotiate price based on production and transaction plus a reasonable margin - we

have talked about that at Mr. Rozyne’s case this morning and I don’t know if he is
working on that but we can talk about it and defend that in recessionary times.

Experience contracts that are fair and public progress – Control brand identity of the
supply chain. This is really critical when you are talking about high quality food products
that are associated in consumers’ minds that it be…identification be back with the
producers or be in this case co-branding is an option to do that, but the identity doesn’t
get lost in the supply chain and participate fully.

Here are key dimensions that we could talk some more about. Differentiation in
creating effective internal organization forms, selecting value chain partners and I am
willing to talk about examples of that. By and large the best value chain partners that
work are ones that share your values, have different competencies and complimentary
business models and we can talk about what that means. It is important to develop
effective supply logistics as a good friend at Organic Valley says if you are going to
commend the premium you better deliver the goods. So you have got quality in terms
of product, you’ve got quality in terms of business relationships and fair distribution of
rewards and you’ve got very efficient logistical systems. If you mess with any of those
three, you’ve got yourself some trouble. In other words you need to grabble with all
three of those dimensions.

Economic sustainability – we’ve talked about.

Future dynamics – I have asked these three in these four cases what is a head forum,
and they will talk about finding ways to engage consumers as strategic partners. Okay,
I’ve got, yes, we will deal with the questions when…

KRAMER: I guess we need to say that formally for the telecommunications, so any
questions that might come in from this audience and also on-line and it will allow you to
complete a little bit more of what you’d like to include. Are there some questions here
either in this audience or online for Steve? Yes, can you move to the microphone,
please. This is Jeff Steiner from the Agricultural Research Service. I happen to know.

AUDIENCE: Yes, Steve, really good. Quick question?

STEVENSON: Sure.
AUDIENCE: Have you also brought in your model also with economic opportunities
such as conservation payments that may come through program agencies, again those
are other value streams that could come in?

STEVENSON: No I haven’t, but ideally viability comes from some combination of

success in the private sector which is what we’ve focused on here plus getting some
rewards from the public sector, too. But we haven’t just looked at the…now a lot of
these enterprises will have farming systems which would qualify for green payments
that had their work developed with green payment policies for sure.

AUDIENCE: Nevin Cohen from the New School. How do mid-level producers maintain
their private differentiation in a market place in which large commodity producers can
attempt to differentiate their products to consumers? Isn’t there a risk of competition?

STEVENSON: No, I think there is. Well, who talked earlier this morning about
certification systems, I think that is one way is to three of the four cases have third party
certification systems that spell out a set of things. They tend to be the Food Lion
certification which deals with production systems as well as ways in which workers are
treated, so I think the certification piece is one of it. The engaging consumers as
strategic partners is another part of that stuff as I think the larger corporate entities tend
to come out of a broadcast advertising kind of situation, and Michael maybe can talk
when he gets a chance about what Red Tomato is trying to do in terms of creatively
using IT space to both educate and listen to and seriously listen to consumers, so I think
there is some formal certification ways and I think there is some social networking
communication ways that those distinctions can be hopefully maintained.

KRAMER: One more question. Okay, good.

AUDIENCE: Hi, I’m Kelly Horton, I am a foods systems consultant, and I am also the
American Dietetic Association’s hunger and environmental nutrition chair and I was
pleased to see you mentioned those four organizations since I am familiar with all of
them and you mentioned maybe having more information about how he economic
situation is affecting them.

STEVENSON: Yes.

AUDIENCE: Can you talk about that a little bit?

STEVENSON: Yeah, it is a little different. The Organic Valley is getting hammered

the hardest. Dairy is really catching a hard time and it is going to be booked as
conventional daily and organic dairy and the best compounding enough the prices for
conventional daily is going to be pushed way down so that the gap between organic
dairy products and non-organic dairy products is significant. They have cut the pay
price to their farmers twice now, and one of the models sustainable economics models
is to match supply with demand, so when demand peels off you’ve got to find some way
to peel off some of the other supply, too. They have put a quota system on I think 70%
to 75%. The beef people are getting hit but it is a shift. People are buying less middle
meats than steaks and more expensive stuff and more of the roasts and the end meats
and so their sales are staying relatively constant, but the types of products that they are
selling and their income is going down because of it but I’ll be glad to talk further.

AUDIENCE: Thank you very much.

STEVENSON: Sure

KRAMER: While he is getting organized, let me introduce David Oglethorpe,

Professor of Logistics and Supply Chain Management at Newcastle, UK Business
School, at Northumbria University. He has worked in the food industry for over…not
200, excuse me, over 20 years and has 5,000 students and 200 staff. Are you all set?
Okay. Thank you.

DAVID OGLETHORPE: Okay with this. Okay, thanks very much. It is a great
pleasure to be here and thank you for inviting me over. I find it interesting to import a
speaker to talk about local food. First thing I’d just say that obviously what I am going to
try and relate to some of the experiences and some of the results from a study that we
have done in the UK and obviously the UK is quite a different situation. I mean in terms
of distribution of population and concentration of population and proximity to market and
so on. We could be talking about quite different situations, but there has been a lot of
things that have come out this morning that has kind of resonated with some of our
research and I may not be making myself very popular but in some of the things I am
going to say today, but I think some of the realities that we have come across I do need
pointing out. One of the things I was noticing is I flew on British Airways last night which
is I arrived here about 9:30. On the food menu it said all our food is locally sourced
where possible. So I think it is really interesting for global business at 38,000 feet over
the Atlantic, but I think and it was just this one statement and it is kind of a one liner that
gets used a bit too much. It is just sort of a warm glow of this related to this kind of
golden age that was when there was a lot of local food and I was talking to someone
before that that I came across this article that dates back to the 70’s that talked about
wouldn’t it be a great idea if we could get away from lots of different shops and have
some kind of big shop where they sold everything, some kind of supermarket. So I want
to be a little bit of a Devil’s advocate and say okay I’m going to talk about some of the
trade offs, the checks and balances within local food supply chains from some of the
results we found and try and look at this kind of triple bottom line. You may say I’m
going to be a little provocative or perhaps pejorative about it, but I actually want to try
and draw out some of the issues. What is so good about local food and perhaps what
isn’t so good about local food from some of the research that we’ve looked at.

Okay, quick outline of what I want to think about why are we trying to focus on local.
Let’s really step back a bit and try and think what are we trying to achieve here and I’ll
comment a little bit about some literature and is about definition that everyone has
pretty much covered this morning I think anyway, but then talk about what we think we
are trying to achieve. What are the expected outcomes from local food supply which
everyone is explicitly saying this morning but we aren’t really addressing the issue, I
think, and there are a few elephants in the room when we think about that that we are
not really talking about. Let’s discuss some simply realities data that we’ve found from
some case studies, but then try and work out what the actual impact are that we have
pulled out from the cases that we’ve looked at and try and identify some solutions to
this. First of all, while we look at the UK we have an increasingly environmentally
conscience media driven and celebrity chef driven consumer. There is no joke about
that. It really is quite significant in the importance of the celebrity chef within the media,
but there is in the physical world and particularly the physical world for the environment
to have an influence over climate change and localists have seen as a response to that,
but we got to think…we’ve got to make sure that wherever we try and come up with
solutions about anything to do with an environmental impact or social impact that we are
not throwing the baby out with the bath water, and we remember why food systems
evolve the way that they do and why economies evolve the way that they do. The fact
that economy have scale and the scope as we have heard earlier on develop in a major
transport processing and retail systems is really important. We shouldn’t try and
dismantle those important relationships that economic development leads to on
purpose. So we must always think, you know, are we achieving comparative advantage
in what we are doing when we are trying to achieve a better solution for the environment
or for society are we abandoning the things that make it good economically as well.
When we talk about self-sufficiency there is a major think in there about whether we are
dismantling comparative advantage. We trade for a reason because it is resource
sufficient. Within the literature as exactly the same as over here, I guess, there are a lot
of confusion over definitions. We have a definition of agriculture and there is an issue
between local and regional, and regional is much more about marketing image whereas
local is the thing that actually instills local and markets, local outlets and so on. Food
Standard Agency has no enforceable definition. Within the industry we have bodies
which are starting to create some definition and we have the farmer who has a 50 mile
definition but you’ve got somebody else like Watros a major multiple retailer who settle
themselves with a 30-mile definition. That means you can’t have a Watros in my part of
the country, because you can’t satisfy a diverse diet within 30 miles of where I live
unless you are particularly fond of beef and potatoes. But then again in the literature
you have lots of different socio-cultural definitions through local foods which are to do
with boundaries and to do with [30:05] and to do with who it engages with and how we
engage with food. I think that is perhaps more useful when we start to where the real
benefits are.

Now what we have been doing is looking at local supply chains and non-local supply
chains and it is really quite difficult to…it is much easier to identify with a product that
you might think this is a local product but as soon as you really start looking back
through the life cycle and back through supply chains, I found it quite interesting this
morning that no one has really kind of said all of these things are from the same sector.
There has been an assumption as a local sector and there is a non-local sector. Well
from my experience of looking at this and again it may be just a UK example, but I
doubted that when you start looking right looking back at the supply chain there isn’t
anyway of kind of disentangling these. As soon as you go back to primary producers in
general primary producers are selling some of their insert local markets and some into
mainstream. We don’t have any real local producers or if we do they are few and far
between. We have very fewer true local supply chains because you either have an
slightly diverse supply base such as feed and fertilizer in for providers to farmers or you
may have an internationally diverse customer base based on local supplies. When you
look at the supply chain because of all these intertwined complex relationships, it is very
difficult to get a true local supply chain and that is what we have found. It is difficult to
disentangle farmers or you may have an internationally diverse customer base based
on local supplies. When you look at the supply chain because of all these intertwined
complex relationships, it is very difficult to get a true local supply chain and that is what
we found. It is difficult to disentangle any supply chain and what we found in general
local supply represents the small need from the mainstream and shares the economy in
scale and scope and operations that are achieved by engaging in that mainstream
supply chain. As a result typically the point of differentiation between local and non-
local supply happens quite late on in the supply chain typically post primary processing,
Once the product starts to take on a form or the commodity starts to take on a form, it is
more like a product.

We have some expectations that local food can reduce food miles. One thing that was
important to the UK was that this local food movement was all to do with reconnection
and when we had a bad case of hoof and mouth disease a few years ago, the ministry
of agriculture tried to reinvent itself as a department for the environment and the whole
local food agenda gathered pace. Now one of the reasons for that was instead of not
moving livestock around so much surely there will be less potential for disease to be
spread. That was another reason for why we want to engage in local food. It is also the
expectation that it might reduce packaging and waste. It also promotes this sort of
warm glow and this association with more home cooking and less processing, more
wholesome produce and that is another expectation. From what we have seen this
morning adds value but where does it add value and who to. In some examples it adds
value a lot to the retailers but not necessarily to the primary producers and that it
provides health and social benefits as well and some of those may come into question,
too.

Quickly, we are going to look through some of these examples of the case studies that
we looked at. The first one is a food miles issue and there has been lots of examples of
real life cycling in now sustained in the UK now where we are comparing different food
supply chains. We have two examples here which are real examples of five things that
we’ve looked at in our case studies which end up producing sausages, pork sausages.
Now effectively the pork, the pig meat that is grown comes from the same farms. It is
killed in the same avatars. It is based on the same primary inputs. It isn’t until the point
of secondary processing are the two supply chains start to differentiate and one outlet is
[34:16] and the other is to a national supply chain going to a multiple retailer from
supermarket outlet. Actually the food mile issue isn’t necessarily about the supply
chain. It is about what happens in the transport of those later stages, so what we end
up thinking is food mile issues is all about environmental impact and what we are
wondering though is the comparison of the miles, the greenhouse gas emissions
between heavy goods vehicle like a truck and the car, and we can apply the mast to this
and we can apply the emissions for these vehicles and using the real data of the case
study that we had we knew how far people traveled to the farm shop and where they
came from and how much they were buying. They were buying about half a pound of
sausages per week, per consumer and they were traveling about 22 miles for it, so we
could work out consumer carbon footprint for that. We also know on average people
travel about a mile to the supermarket and if you take that off then we know that the
consumer footprint for those farm shop bought sausages locally bought sausages is
about 6 kilos as we take off that burden. How far can we drive for a half pound
sausages around in an HGV as long as we are carrying 25 pounds of other stuff which
we generally are. In the car we’re not and it is crackers I mean how far could sausages
would have to travel to generate 6 kilos of CO2 when transporting 25 tons of other stuff
and this is what the food miles issue is about. It is about emissions per kilo of produce
and the mass. It is mad. You can travel 3 times around the world in an HGV and make
the same carbon equivalent emission as a car does going to a farm shop 22 miles. So
the mass just didn’t work out simply because an HGV can carry thousands of time more
and actually only make 6 times more emissions than a car.

One of the things in that supply chain was and I’ll go through this because my time is
running out is that packaging was perhaps in local food supply seems to be less
obviously but packaging has an environmental purpose. It increases shelf life which is
food waste. The food waste is a really big issue for us as well and if you compare this
study by Levy, if you compare the amount of food waste in the waste stream in
packaging in the waste stream, there is pretty much an inverse relationship. Actually
increasing packaging decreases food waste, so which is worse for the environment.
Well, if you put a paper bag or plastic bag underground they just kind of sit there, but if
you put a kilo of food underground it produces [37:04] which is 23 times as bad for
greenhouse gas emissions than actually the packaging is. The landfill in food is worst
than [37:13] packaging. All of these things we are really starting to test some of the
myths of the data that we are coming up with. The bread supply chain was the same
environmental impacts for industrially made bread was lower on every count of
environmental impact and it was because in homemade bread you don’t use electricity
as efficiently. Also you don’t put preservatives in so you’re waste more food. What
these really tell us is if we introduce any system that takes the production of food out of
the control of the profit-making business environment, we are actually taking away the
cost minimization cost efficiency from that product. If you put that into the hands of the
consumer, we are not resource efficient as the resource efficient businesses, so we
don’t do things as efficiently. We tend to make environmental impacts. The hour
approaches and we have simply taken a more subjective evaluation where we have
looked at different points in the supply chain across different parameters of impact,
economic environmental social impact. We tried to look at for 30 supply chains where
the impacts are and we kind of looked at and I need to explain the impact [38:32] scores
both in general as we can see because of products between local, non-local or mid-
local differentiate later on in the supply chain not where most of the impacts occur.
Actually some of the significant impact economic impacts are all to do with this
customer care and customer interfaces. It is really worth something, it is really worth
something to the consumers and to the connection with the real economy. An
interesting thing here is the efficiency of labor. As we said before there was a
presentation early on that made a point about this and actually in terms of economic
benefit labor use in local systems is really inefficient, but it uses more people so it is
actually a good thing in terms of real economy, so there is kind of a trade off there as
well. Are we looking at efficiency or are we looking at social benefit.

The environmental impacts were because of these reasons resorts in efficiency that we
tend to get more negative impact in the most local systems probably small vehicle size,
increase in food waste and so on. Social impacts – this lumpiness of jobs is much more
prevalent in rural areas and the things to do with supporting artisan and traditional skills
in the fabric of rural society are really quite valuable. These aren’t consumer benefits
but these are benefits as seen by the producers which is all a very much supplied size
study. An interesting thing here is actually fresh produce versus process produce
performed less well in terms of the overall impact as did meat versus non-meat. Okay,
I’ll finish there but basically there was this point that Steve just made and I think it
makes a lot of sense about this kind of mid-ground that we have found models of local
production where you got incredibly gifted entrepreneurs picking a model of local
system and engaging with local producers to create this mid-scale distribution channel
which can take advantage of the economy of scale of multiple retailers, but also hang
onto the value-added characteristics of local produce. Thank you very much.

KRAMER: We have about 5 minutes for questions now. We have one, thank you.

RICH PIROG: Rich Pirog, Leopold Center, and the next speaker. The question
about energy efficiency I know from what we have done here in the States you look at
energy in the food system, household, refrigeration and preparation and it is the highest
total energy user compared even agri-production and what are you suggesting to UK
citizens about trying to be more accountable for their share of that burden in helping to
sort of you know what with these systems.

OGLETHORPE: One of the policy failures, I think, that has come out of this is that
we do have a framework now for calculating the carbon footprint of any product, but
what it does do is capture the consumer’s contribution which is a real failing of it. Now if
we were to include that and it is a difficult thing to do but you know we have got to start
trying to do difficult things. If we are really going to succeed, then we need to capture
that consumer footprint. Once that’s within the kind of regulation that is used to
measure carbon footprints, then it starts to drive better consumer decisions.

PIROG: I just bring this up to follow your point because in ’07 I forget what
consulting firm in the UK but they asked the question who is responsible for you carbon
footprint and 35% of UK residents said they were. We asked the same question here in
the States last summer. Only 11% of Americans said they were.

OGLETHORPE: Even more reason for counseling from us I supposed, right.

AUDIENCE: Nevin Cohen from New School. Isn’t your analysis based on the existing
land use patterns and transportation patterns so the question of the contribution of the
consumer is really based on an inefficient system, and isn’t the more important question
how do we redesign our communities so that these kinds of food systems are more
efficiently distributed?

OGLETHORPE: Yeah, I think, the answer is obviously that there is a model out
there that would improve all the situations but the triple bottom line is attainable. At the
moment the thinking is going the wrong way, and that is all the points that I’m really
making is the local isn’t necessarily the solution that we think it is in the UK and as a
result lots of initiatives that are happening like various people have mentioned
gardening. Gardening as a means of self-efficiency is really taking off in the UK and it is
incredibly resourceful and efficient. It is a model that sounds nice but actually what
we’ve got to make sure to do is achieve, that I think, we’ve got to achieve resource
efficiencies that economic development has given us and capitalize on those while also
trying to achieve or deliver the social benefits that we get from the networks so it is not
necessarily about transport systems or the actual location of places, it has to do with
interfaces and people and so on. It is a real big issue. The trouble is at the moment the
market failure is happening as a result of us going in the wrong direction.

AUDIENCE: We are playing musical positions here. I just came back from a
conference in Chicago that was about sustainable agricultural supply chains and it had
a number of global companies that might have even started as small businesses like
Ben and Jerry’s for example was there, and Auroric Organic Dairy or IPC Subway, the
sandwich folks, and the models that they talked about were local sourcing sustainable
sourcing working with local producers like Ben and Jerry prides itself on and this was all
corporate responsibility and trying to combine elements of local producers, support for
local communities and in fact Ben and Jerry’s value let sourcing mentioned some
possible criteria which would be small holder farms and producers, cooperatives,
contracting with cooperatives, contacting with minority or employee owned firms, etc.
and they talked about outcomes perhaps being livable wages and benefits, etc. I am
wondering if you have thought at all about sort of this model and often these were
guaranteed or certified by an environmental firm like Conservation International or
World Wildlife Fund or some of these kinds of credibility enhancing organizations. What
is your sort of take on that kind of a system as a lend?

OGLETHORPE: My take would be that quite often you see quite grim or bland
statements that say we support sustainable production or without actually providing
some evidence to see what it was. We set out on this study simply with an open mind
to find some evidence on what we thought was sustainability indicators of what local
foods should be providing and what perhaps isn’t. We came up with some surprises
really, but at least we have measured it and come up with some evidence and I think
there is a real worry especially since the corporate responsibility claims that actually
they are very qualitative and not based on metrics, not based on evidence that you
could necessarily go out and measure and say what is the actual value of this. You
know, I do worry about that agenda and that…the local food needs to avoid that and
there is some proper accounting.

KRAMER: For those of you on the webinar, we are now going to move on to our third
speaker and this is Rich Pirog. He has been at the Leopold Center for Sustainable
Agriculture at Iowa State for 20 years, not 200, but 20,

PIROG: 19.

KRAMER: 19, almost 20 years and he is going to speak about rural economic
impacts of local food systems which gets into the question I was partially asking.

PIROG: Thank you. I have learned from the previous two speakers that I had
better go quickly here. We have just a little bit of time. What I want to do is talk from a
funder’s perspective the Iowa’s experience of how we use research and networks to
better make the case for investing using economic…making the case that local food is
good economic development in our rural communities, so that is what I’m going to share
here. A lot of you have heard about the Leopold Center. Very quickly we are a very
unique center. We are funded by a tax on nitrogen fertilizers and the re-registration of
pesticides so actually if we do our job well and there is less fertilize use and pesticides,
we have less money. That is a real interesting piece of legislation when you really think
about it. We have three initiatives ecology, marketing and food systems. Besides being
an Associate Director, I lead the marketing and food systems and we have a small
policy initiative. Since 2002 we have funded more than a hundred projects in food
systems primarily many of those being food systems research and we have also had a
number of projects both competitive and other projects looking at economic impacts of
local foods and I’ll share a number of these with you quickly. Before we go on though, I
put this slide in and as the more we learn about local foods and more we learn about
the web of things, this is just another wrinkle as we move forward I think we’ll have to be
examining. This could be a great project not only for USDA but USDA and DOE and
DOT. We are doing sort of a first cut project looking at the actual cost of food systems
on roadway infrastructure with the assumption at least right now we know from DOT
that semi-trailers are probably only paying 60%-80% of their total responsibility on our
roads and we are not looking at a local food system yet. We are just looking at what
food systems impact. I think in the UK, David, you can tell me if I’m wrong I think food
system is responsible for about 40% of your roadway impacts. That is what I remember
reading in one journal article. That is all food and all that.

OGLETHORPE: [inaudible]

PIROG: Okay. So anyway that is not what I’m going to talk about but that is just a
little another wrinkle in all of this work that I am sure we will keep researchers busy for
years to come.

Okay, rural development. Iowa is certainly nothing like the Northeast I grew up here, it
is rural, mostly rural and mostly agricultural. The counties that are shaded in blue are in
that period from 2000-2007 are basically seeing population increases. Those are our
urban counties. Remember the biggest metro area in Iowa is 400,000. After that you
pretty much drop down to about 100,000 or less, but you can see look at all those
counties that are lightly shaded in red or pink or that are red. We keep losing people
and also what has happened if you go and you go to rural economic development
meeting, folks don’t talk about agriculture as a rural development economic strategy.
They look at other things as bring in the big company computers, service, things like
that and they don’t look at agriculture. Like other States we have seen the same
increases in local food consumption and also in production. We started tracking this.
We have been funding this work since ’95 in Iowa so we’ve got about 13 or 14 years
worth of research experience and also learned a lot of things in what not to do when you
are looking at research and local food. Here in Blackhawk County which is where
Waterloo and Cedar Falls is you are going from about three institutions and about
$100,000 in 1998 to well over $2.2 million in about 24 or 25 dozen institutions in 2007
and we are up to $2.5 million in sales this past year. So obviously we are seeing those
same demands, but okay, if you are a funder, how do you look at this when you are
doing projects. How do you make this work more additive. How do you both
understand what it’s real impact is and how do you connect the research with,
remember this is local food, so it is supposed to be community based, not from here
down, it is supposed to be from there up. How do we make this work? Well, I’m just
going to run through a few scenarios that we have done and then link it…I’m going to
link the research with what we have done from the standpoint of networking. A number
of the partners I work with are in this room and we wouldn’t be anywhere without those
people. It is all about networks and all about relationships. Okay, we are inspired by
some work in California that I think it was USDA that did this work and we said –
scenario what would happen if I ate five servings a day of fresh fruits and vegetables.
Of course, only less than 20% of Iowans do and Iowans don’t talk. Remember, Iowa is
a Jell-o consumption capital of the U.S. here, so we have a long way to go and we said
that for three months out of the year, these Iowa farmers would actually provide a lot of
fresh produce basis, okay. I designed the study and actually worked Angie in the room.
She helped with this study. Dave Swinson, who is the real economist. I am not a real
economist. I play one on TV I guess you could say, but I helped design a lot of this
stuff, so the tools used we have a number of tools courtesy of USGA and other
agencies that helped us along the way. We have an Iowa produce market calculator
that looks at production consumption of produce. We used Implan for input/output
modeling. We made modifications, because of the lack of time I’ll be glad to tell people
how we did that either in questions or later. Ag census, we looked at land requirements
and we created basically a new direct sales sector into the model and somehow I lost a
slide here, so I’m going to…we also took into account that we had to take corn and soy
beans acres out of production. We account for loss of retail margins and set the sale
level because half was direct marketed, half was sold wholesale to food retailers, so for
those for that direct market sales we accounted for loss of retail margins. This scenario
was a net creation of 4100 jobs and I was economy added infrastructure cost of less
than $100 million dollars. We have 99 counties and that is less than $1 million dollars
per county. We did not delved into the economic impact of improved health from loss of
sick days. One would assume if we ate more fruits and vegetables one might be
healthier and the impact was of the same magnitude. The same fellow who did this
work did the work on our ethanol plants and the impact was of the same magnitude as
Iowa was. There were 26 plants that had been built at that time. Other Iowa studies up
in northeast Iowa we looked at a diet based local production scenario involving a whole
market basket of foods and this is in five counties in northeast Iowa. We also found
total increases of about 400 jobs in northeast Iowa. In Blackhawk County which is the
county I showed you the sales data over the last ten years we also have done some
work looking at restaurants as well. Looking at restaurants that doesn’t source basically
your typical restaurant and a restaurant that would source over 70% of local. The
multipliers when we use those in the input/output model a higher multiplier is for
industrial output for labor income and also for jobs. Farmers markets we also have
seen…we tried to document what those increases were based on 2004 data on sales.
We were able to estimate of both what we would call direct. That is from the actual
sales and indirect buying supplies in the economy in the induced that is where all those
people who make the supply sales and actually sell the products go and spend money
in the economy. We added up all three of those and we had about 475 jobs. To the
economy Iowa is one of the leading States I believe per capita for farmers markets, but
remember some of those markets are only three farmers. They are nothing like the
markets you would have in D.C. as far as the size although I am sure the Des Moines
farmers market as far as in energy and enthusiasm would rival any market in the
country. Okay, so there is just a quick snapshot of some data, right, about what the
economic impacts are and again we are a funder. We provide about $1 to $1.2 million
dollars in Iowa a year on research. It really struck us after the first five or six years of
funding in this area that it really…the projects that we had were dynamic and there was
a lot of great activities going on in the State far more than what Leopold Center was
funding, but at least in some of those cases projects would get funded and there would
be this great slurry of activity and then nothing would happen after the money was
finished. It’s, it’s, from our sort of philosophy of how we wanted to move forward we
realized that the research had to be in a much slower partnership with what was
happening at the local community level and so about seven years ago when partnership
with the Leopold Center and the Kellogg Foundation and more recently the Wallace
Center we have been working to be able to build this network of working groups that
really try to address a lot of the technical assistance. Really what we are doing is with
all the other budget cuts we are creating sort of a new multi-organizational extension
service for local and regional foods. That is the way I would best explain this. If this
was my elevator speech and you only had 30 seconds, that is the way I would explain
this. So we have all these groups like [58:42] pork, livestock, fruits and vegetables,
small meat processing and regional foods. I’ll talk about regional foods the most. That
group is really a group of many other smaller groups and again there is all this other
great activity. This isn’t the only things going on in Iowa. There are many other
organizations and all the organizations are involved in these groups, but those
organizations are doing other tremendous work around the State, Practical Farmers of
Iowa, Iowa Network for Community Ag and many others. So that group is connected to
all these other local groups and I’m going to talk about that one in a minute because I
want to talk about the outcomes. We are going to do all this research and it has to have
a purpose, right? It has to have a purpose to better inform whether we want to make
steps towards these types of food systems becoming more prevalent rather than just
being niches and we do have to look at all of those. As David said we have to look at
the environmental, economic, nutritional, food safety, all of those issues have to be
examined. So Leopold Center and other funding organizations and also we tried every
project that is funded from other sources and we tried to get them involved in this
network. We are also connected with the network at the Wallace Centers who have
developed all three internationally.

The regional food group is started in ’03. Basically, our mission is what I said at the
beginning of my comments here. We are trying to use more of a networking approach
to better use research and collaboration to better understand what is happening with
local food systems and better make that case for county and local development. There
is more than 20 organizations that participate in this group and actually that is pretty
common for all of the groups that we have in this State. I just want to also mention that
all of those groups that I used on one of the other slides, all of those groups the leaders
meet monthly. We have nested networks and the goal is everybody kind of at least has
a better chance of knowing what everybody else is doing across organizations and
across farmer networks.

So here is what it looks like in Iowa. We have six of these groups that are about 40 out
of the 99 counties currently meet four times a year. One of the groups is focused on
Latino farming and they are very different in perhaps their focus but they all have an
overall interest in trying to be able to build the community capacity to increase local and
regional food commerce, and my definition might be different than David’s but in some
of these cases some farmers just want to sell at farmer’s markets and other of them
would love to sell to Minneapolis and Chicago and St. Louis and Omaha and you know
we are trying to accommodate both types of markets.

How do we function, quarterly meetings, we provide these small seed grants, basically
just capacity building. The real benefit is them coming together you know frankly after
awhile I just need to get out of the way and let them do what they need to do. These
aren’t just extension folks. There are mayors and county supervisors, bankers and
other non-profit folks that come. We use the funds for assessment, coordination,
leadership development and economic impacts. Some of the stuff I just shared with you
probably we would not have done if we didn’t have an audience to share it to in each of
these groups. The experience groups they learn from each other and we also provide
mentoring as new groups develop and the real important point why we are doing this is
as a funder I’m just after doing this so long am really I feel more convinced that I have
ten years ago that unless we help build community capacity for these local and regional
food systems, if we just try to match up buyers and sellers and that is all we do as we
try to make this work, if the community isn’t supporting those growers and
entrepreneurs to the fullest extent and they aren’t behind this, I think it is less likely they
are going to be successful. They probably…many of them will be successful but
remember one of the definitions of this is community based food systems, so it seems
logical we should connect it back to the community. That is why we are taking this
attack, so what we are trying to do here many of these groups are local or each group is
collecting local food sales data and we require it. Each group is tracking the leveraging
of their local and State funds so we better understand how that money is used. Some
of it is just a small amount of money for this farmer to buy new lighting or buy hives or
whatever the situation is and they try to leverage that money locally, because if
communities don’t buy into this it is not local. If this is just going to be grant funded, I
mean a lot of funders actually have moved on or looking at local food to champion
social causes, so how are we going to continue the movement unless local communities
invest in it. So we are seeing those benefits and again I’m not saying that these studies
were the primary reason. It was the networks and it was all the other good work that all
the other organizations were doing but we are seeing this change. We are seeing
counties like Pottawattamie County which is outside of Omaha investing $30,000 a year
for the next five years because they think this needs to be part of their economic
development portfolio. We’ve got Blackhawk County putting in money. Lynn County
which is Cedar Rapids just hired a person in Planning and Zoning on local foods. Cass
County has put in money. All this in the last nine months. This is going to attract other
State dollars again and if it is real, if it is real then we are going to be able to have more
of that local investment. There is also more involvement at the county and community
foundations and we are starting to see other really interesting little impacts like in
northeast Iowa one business is an implement dealer who is now ordering small scale
actually I think Italian equipment for its customers and shifting its operation because the
farmers are now wanting this kind of equipment. So hey the community needs to get
behind it. The community needs to support this, right. So, okay, last slide, I’m going to
make it. Okay, in closure here research for our perspective with the research is used to
make the case for investment at the local and State level and frankly if you are going to
make that case, you got to talk about jobs. You’ve got to talk about tax-base right. The
other stuff and $4.50 will buy you a mocha lathe probably right I mean you’ve got to be
able to talk dollars and cents when you talk about economic development. You have
got to integrate the research with the network and coalition building. If we are doing
research, we don’t force them but we strongly encourage our researchers to be a part of
these local groups, so they get better ideas of how they are going to do this work and it
becomes more meaningful. The research will in turn inform the local and State policy
where we are trying to reestablish our Iowa food policy council. Several folks in the
room here have been taking leadership in that and that research is an important part of
this in making this happen. Last, and I think this is real important at least my take home
message after the last 19 years is I’m going to turn to those local networks to drive the
research we are going to fund in the future because if it is local food systems they are
the ones that need to be telling and informing us of what we should be doing. With that,
I thank you.

KRAMER: Thank you very much. Would you like to tell us who you are again?

AUDIENCE: I’m Kelly Horton and I’m a food systems consultant. I’m also on the board
of PCC Natural Markets, which is the largest natural and organics co-op in the U.S. We
talk a lot about the triple bottom line, and today we’ve heard quite a bit about the
economics of that one leg, and you sort of talked about how do we find a way for people
to really be invested in local? I think we need to focus on the other things, such as
health and environment. We hear that a lot from our consumers. I would like to see
more research, so it’s not really a question, but maybe we can focus more funds on that
sort of research.

PIROG: I know it wasn’t a question, but the economics has helped get our foot in the
door, but in no way have we forgotten the importance of the other two legs of the stool,
ecological and economics, putting a cost to those environmental benefits, if they’re
there, and putting a cost to those health benefits, are very high on our priority list, and
they should be in this research. I’m totally on the same page with you.

AUDIENCE: Can I just follow that up again? David Oglethorpe again. I think I actually
understand a lot better following that, fully what the differences are, and the drivers for
local food chains between the UK and the US. It is much more driven by a desire to
have a community collective output basically, rather than something that just is
attracting value added. That’s why local food, I think, is different for most. From that
aspect of health, I would just be interested to know what your perception is, perhaps of
how well this local food initiative over here then can drive health benefits because for
us, and it’s something that I didn’t really get a chance to talk about, local food is like any
other value-added premium product. It tends to focus on the luxury and indulgent end
of the market. So actually health is a bad thing from a lot of the products. You get high
fat content, high sugar content, a lot of cream, a lot of butter, a lot of cheese associated
with local foods. If that’s the case in promoting that, it’s not a good thing from health, so
I wondered if it was different for you.

PIROG: Boy, there’s about six questions that you had in there.

AUDIENCE: Well, there were six things I didn’t have time to talk about.

PIROG: Six things, yeah, you impact all of them, I think. One could also make the
argument that a more localized food system would have less processed foods. It very
well may have more cream and butter, and eggs and meat, but it probably has less of
the boxed tarts and all the other things that have gone through many steps. It’s an area
that we need to do more research on. I know there’s anecdotal research, for example,
that because of the perception, through all the studies, that it tastes better and that it’s
fresher, that perhaps kids would eat more fruits and vegetables were they local. We
need to be able to further document those. There are probably folks in the audience
who are working on those studies right now, but I really think from a much larger
perspective, if you start looking at European research, and I’ll try my best to remember
these numbers from a study. This was from the European Journal of Clinical Nutrition,
where they looked at an Italian diet, of what Italians were currently eating, this Baroni, et
al. They looked at a recommended Italian omnivorous sustainable organic-type diet;
they looked at a vegetarian and a vegan diet. They did a life cycle assessment across
all of those diets. What they found was going from what Italians were currently eating,
which in my estimation would probably be closer to a Mediterranean diet than what
Americans are eating right now. Would anybody disagree with that? Italians are
probably closer to a Mediterranean diet? Going across the suite of environmental
impacts using life cycle assessment for what Italians were eating, going to an
omnivorous, but recommended by dietitian and nutritionists organic diet, was more than
a factor of 4. Going from that organic omnivorous recommended diet to an organic
vegan diet was less than a factor of 1. I can point you to the research. Again, diet plays
a critical role. Eating a healthy diet is going to be a big part of this in the future. If more
of those products, in the United States fruits and vegetables are what most people think
about when they think of local. Although other foods are certainly sold, those are the
first thing that pops into mind.

AUDIENCE: I’m Matt Benson with Virginia Cooperative Extension, and I was
wondering if you could just better explain the dynamic in Iowa between work related to
local food systems and your interactions with cooperative extension. You kind of just
gave that 30-second elevator pitch. I was wondering if there were any lessons learned
that other extension services could benefit from about how this local food system
movement fits into what extension is doing, and the strengthening of the missionaries of
extension.

PIROG: Well, the Center has been around for over 21 years, and extension is actually
mentioned in our mission and mandate, but Iowa may be unique in the fact that our
nonprofits, the universities and the colleges, and the Leopold Center, all are part of this
sort of hub. Perhaps in some ways, we act as a bridge. Perhaps in other ways, we’re
just so polite in Iowa that everybody collaborates and gets along with each other.
Building that culture of collaboration takes a lot of work, but in the future, with all of
these organizations losing staff, what other way is there than to move forward,
particularly in local food work? We are going to have to be more interdependent with
each other. There really is no other choice. No one organization can do it.