Monday, March 03, 2008
Will not think for food.
A recent discussion with friends concerning local food production and distribution-- or, more specifically, the lack thereof-- got me wondering about the economic impact of non-local food sales.
To wit, I was able to reference a 2005 study completed by IU Southeast faculty members Jon Bingham, M.A. and Dagney Faulk, Ph.D. and published in the Indiana Business Review, for information about local food expenditures.
By using the low-cost plan from Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, December 2004 and adjusting it to Midwest pricing, Bingham and Faulk were able to determine that average monthly food costs for variously configured families of two or more in our region range from $353 to $599.
The 2000 census shows 21,057 households in Floyd County with two or more people. Obviously, there are 12 months in a year.
$353 x 21,057 x 12 = $89,197,452
$599 X 21,057 X 12 = $151,357,716
Assuming that all food is prepared in-house, our annual county expenditure on home cooked meals is between $89.2 million and $151.4 million, not including the over 6,000 single person households.
In fairness, some of the money spent undoubtedly goes toward local wages to the extent our mostly chain grocery stores provide employment. The trouble is that those typically low-paying jobs are one of the few mechanisms we have for local food dollar retention.
I admittedly know very little about the food retail business but, if profit from such operations in Floyd County is calculated using the study numbers and the 6% net profit rate reported by large grocery chains a few years ago, it amounts to between $5.4 million and $9.1 million annually, the large majority of which is removed from our local economy and transferred to out-of-state corporate entities along with the jobs and tax revenues those dollars generate.
According to the Louisville Independent Business Alliance, independent local businesses do a much better job of keeping our dollars in the community via a multiplier effect, that is, by hiring other local firms to provide services like accounting, construction, signage, legal representation, and insurance. For every $100 spent at a community-based business, $45 goes back into the local economy. A typical corporate chain only returns $13 per $100.
On the low end of our annual food expenditures, $89.2 million spent with local food merchants would return approximately $40.1 million to our local economy. The same amount spent at a chain would retain only $11.6 million. If we purchase from out-of-state corporations, our grocery buying habits cost the local and state economy $28.5 million per year in Floyd County alone and it's only one of 92 counties in the state.
Not satisfied with that self-flagellation, we sometimes compound our losses by offering tax abatements to non-local grocery chains as an enticement to locate here. Doing so not only makes our economy and tax base less sustainable, but also encourages significant additional shipping with associated cost increases in traffic congestion, infrastructure maintenance, and negative environmental impact. Moreover, it ties food costs more closely to fuel costs. When we demand more fuel to ship all of our food, we ultimately pay more for both.
As our food purchasing model is replicated from county to county and state to state, those costs increase exponentially, leaving us holding the bag- a grocery bag in this case, with much less in it.
There are lots of ways to starve ourselves. It's unfortunate that we've figured out how to make buying food one of them.