NSAC's Blog

June ERS Reports: Opportunities & Constraints to Local and Alternative Production Systems

June 25, 2010

This June the USDA’s Economic Research Service (ERS) published reports identifying the opportunities and constraints facing both local food supply chains and grass-fed livestock production systems.

In response to the exploding demand for local foods the ERS published, “Comparing the Size, Structure and Performance of Local and Mainstream Food Supply Chains.”  The report looks at the determinants of structure and size for local food supply chains and compares the social, environmental and economic performance of local vs. mainstream supply chains.

The report is one of the outcomes of a 2008 Farm Bill effort by Senators Feingold, Menendez, and Harkin, supported by NSAC, to foster greater research into local and regional food systems.

Using case study analysis, the report focuses on 5 products from 5 urban areas; blueberries in Portland, Oregon; leafy greens in Sacramento, California; apples in Syracuse, New York; beef in Minneapolis, Minnesota, and fluid milk in Washington D.C.  Click here to read about the case studies in detail.

The case studies followed each product along 3 supply chains; local, inter-mediated and mainstream.  Local supply chains relied on direct marketing from producer to consumer, defining  “local” as produced within a 400 mile radius or within the state, a definition that NSAC helped develop for use in the Farm Bill.  Inter-mediated supply chains refers to producers who grow/ raise food locally but then employ a marketing intermediary to reach consumers.

Key findings from the report include:

  • Direct marketing comprises a very small portion of the total sales for each product but producers using local food supply chains receive higher revenues per unit and receive a larger share of the retail dollar.  Farmers selling into inter-mediated supply chains also receive a larger share relative to the mainstream supply chains.
  • Economic benefits from local supply chains accrue locally, but mainstream supply chains can also contribute to local economies.
  • Local food systems generate greater social capital and civic engagement.
  • Local food supply chains often rely on a more diversified portfolio of market outlets such as farmers markets, CSAs, buying clubs, restaurants, Internet sales, etc.
  • Costs associated with mainstream processing and distribution often block small to mid- sized producers from opportunities to scale-up.

In their monthly publication, “Livestock, Poultry and Dairy Outlook,” the ERS published another report in response to growing consumer demand for grass-fed meat.

Most cattle spend the first half of their lives grazing on pasture.  However, in conventional production systems, cattle are confined into concentrated into feedlots and finished on grain feed.  In addition to providing a large market for abundant gran supplies, the grain feed also results in more tender meat with a shorter production time.

Alternatively, many ranchers are returning to production systems that finish the livestock on high-quality grasses and forages.  The resulting meat is leaner and also provides a healthier fat profile with more Omega-3 fatty acids.  Producers can also differentiate their products as “grass-fed” or “grass-finished” as a marketing niche.  According to this ERS report, grass-fed or finished cattle comprise about 3% of the industry, growing at about 20% per year.

This ERS report explains that although grass-fed beef is a commercially viable alternative to conventional systems, as demand for grass-fed meat expands, foraged based production systems will face increasing constraints.  Specifically, the ERS cites the higher costs associated with relying on feeds that are in shorter supply (particularly in winter months), potential land shortages, and the greater production time required to fatten cattle on forages.  The report also addressed the need for more processing facilities in local areas to handle the increasing demand.

Click here to read this report.

Categories: Local & Regional Food Systems, Research, Education & Extension

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