Quantifying the Multiplier Effect: What Sustainable Local Food Systems can Mean to Local Communities

Quantifying the Multiplier Effect: What Sustainable Local Food Systems can Mean to Local Communities

Summary

Local Agriculture, where the final sale of an agricultural commodity or its derivative occurs within a predefined boundary relative to where that item was produced, has become increasingly popular as a tool for achieving both rural and urban economic development. Despite this interest, there exists limited data in the Southern Region that quantifies the potential economic impact of such forms of agriculture in different climactic/socio-economic conditions across the region. The current research is collecting the economic information necessary to evaluate the holistic economic impact of Local Agriculture today in North Carolina and more broadly across the Southern Region.

Objectives/Performance Targets

• • Objective 1: Develop indicators using input from Advisory Group
  • Objective 2: Development of a Supply Chain Database
  • Objective 3: Assessment of Supply Chain’s Community Impacts
  • Objective 4: Creation of a Predictive Social Accounting Matrix
  • Objective 5: Implement Outreach and Dissemination

Accomplishments/Milestones

In order to assess the economic impact of the portions of the agricultural economy that are defined by a delineated boundary relative from where that item or its derivative is sold on the retail market to where it was originally produced, in North Carolina, it is necessary to have data that is representative of the state today. Because of relatively low spatial resolution in the sampling frame used to derive available databases of such information, such as the IMPLAN database which is commonly used for such economic analyses, there is reason to suspect that the economic benefits that accrue due to close spatial proximity between buyer and seller (i.e. economic multiplier effects) are being systematically undervalued; this is because their effects would have essentially been smoothed over through the sparseness of the sample relative to the population. In order to remedy this shortcoming of available databases with regards to the agricultural economy, this project details a research program to collect the necessary information to amend currently available data so that economic analyses interested in studying the differential impacts had by different subsectors of the agricultural economy stratified both along geographic regions and relative socioeconomic conditions may be carried out.
Having solicited the input and opinions of both the project’s advisory committee, composed of local farmers/processors throughout North Carolina, and the project’s collaborators, David Swenson of Iowa State University and David Hughes of Clemson University, we have decided to conduct sampling throughout the state at the county level stratified along geographic region in the state (North Carolina can be divided into three predominant geographic regions along an East-West axis: Mountains/West, Piedmont/Central, and Coastal Plain/East) and economic tier status (a measure of the long term forecast for economic growth in the county as defined by the North Carolina Department of Commerce). At random a county corresponding to each pair of traits was chosen in the county. These counties are: Yancey (I – Mountain), Transylvania (II – Mountains), Henderson (III – Mountains), Anson (I – Piedmont), Rowan (II – Piedmont), Chatham (III – Piedmont), Robeson (I – Coastal Plain), Wayne (II – Coastal Plain), Carteret (III – Coastal Plain). While these counties were in no way selected based upon their relative agronomic output, they represent a diverse sampling of counties from across the state.
Working with the North Carolina Cooperative Extension Service, we have attempted to compile an exhaustive list of agricultural producers within each of these nine counties through the contact lists maintained by the Cooperative Extension Service, the contact lists of cooperating non-profit organizations, and public disclosure requests for participation in North Carolina’s Present Use Value Program (North Carolina landowners may have a portion of their property taxes deferred for 3 years at which time the value is forgiven if the land is used in some type of agricultural/horticultural/forestland production program and other minimum requirements are met). Using this list of producers/owners of agricultural land we have defined a sampling frame that includes at least 10% of the nine counties’ farming population while ensuring adequate representation of the diversity of production as it is done in each county uniquely. Representativeness will be evaluated using county level statistics published by the North Carolina Department of Agriculture. It should be noted that this and all other relevant methodologies used in this research, as described in the indicator of success for Objective 1, will be included in outreach activities organized through the Center for Environmental Farming Systems (CEFS), a tripartite collaboration between the North Carolina Department of Agriculture, North Carolina State University, and North Carolina Agricultural and Technical State University, including published material and presentations at stakeholder meetings in the coming years.
Pertaining to Objectives 2 & 3 above, we sought the expertise of the project collaborators, economists with extensive experience in the area of quantifying the economic impacts of local agriculture, to develop a survey that is sufficiently exhaustive and reliable. This instrument will allow us to develop a comprehensive understanding of the structure of the agricultural economy originated or moving through the study’s nine counties through the collection of quantified information and trading partners; both pieces of information are necessary to conduct a representative survey of agricultural value/supply chains in the state. Ideas for improvement were solicited from the project’s advisory staff and submitted suggestions were incorporated into the final document. All materials with the project have secured approval from North Carolina State University’s Institutional Review Board. Further research is being conducted on other sources of information that may be used to identify the farming population in each county so that we may measure the coverage in our sampling frame, which we are currently unable to do. Data collection using the approved instrument is currently in progress.
Pertaining to Objectives 4 & 5 above, the information garnered through the ongoing data collection efforts will be incorporated into the currently available information for performing economic analyses. These databases, which are refined Input-Output models, can be reshaped using publically available information in Social Accounting Matrices, which will allow us to look at different impacts of different subsectors of the agricultural economy in North Carolina based upon geographic region and relative socio-economic class. The findings from the data collection and this synthesis have been and will continue to be incorporated into outreach activities being conducted by CEFS as well as its parent institutions. The outreach activities that this information has been included within have included talks given by the directors of CEFS both within the state and nationally, annual presentations by the project coordinator at events/seminars including those organized by the NC Sustainable Foods Advisory Council and the North Carolina State University Department of Horticultural Science, as well as community meetings with stakeholders across the state. Further the resultant SAM database will be made publically available, having removed all identifying and proprietary information previously.

Impacts and Contributions/Outcomes

In North Carolina today there is a great deal of debate at the local, county and state levels as to the most cost effective ways to encourage economic development in every corner of the state. These debates are focused upon the issue of the expected marginal return to each public dollar that is used to subsidize some industry regardless of the exact form that subsidization takes. Because of the suspected undervaluation of the economic benefits of local agriculture that are thought to accrue based on the closer spatial proximity of buyer and seller any evaluation that is presently done to determine which industries are expected to be the greatest drivers of economic growth in the long run are biased against agriculture broadly and certain subsectors of agriculture more specifically.
The focus of this research is to first collect data of an adequate resolution to be able to conduct such analysis as those described above and then to use this information in a series of econometric analysis to determine the current economic impact of different subsectors of the agricultural economy across North Carolina and forecast plausible scenarios for growth down the road. The findings from this study will be used to inform decision makers in the state as to what industries and subsectors within should be candidates for public investment because they have been demonstrated to be drivers of economic growth using information from today’s economy. North Carolina has a strong tradition of agriculture and the inherent spatial proximity necessary for many of its workings makes agriculture a logical candidate for consideration as a tool by which to achieve economic development in portions of the state that are not currently being targeted for investment by other industries.

Collaborators: