In January, the United States Department of Agriculture released a report by the Economic Research Service entitled “Trends in U.S. Local and Regional Food Systems: A Report to Congress.” This congressionally mandated report drew on USDA surveys, censuses and statistical analyses as well as the available academic literature to provide the latest information on the economics of local and regional food systems to assess the scope of trends in the system.
One trend – a demand for locally grown foods by end-use consumers, grocery stores and restaurants – has jumped to the forefront of the public awareness and has seen steady growth. In 2012, 163,675 farms were marketing locally produced foods directly to consumers or in intermediated sales for human consumption. The number of farms with direct-to-consumer sales increased by 17 percent and sales increased by 32 percent between 2002 and 2007. The number of farms with direct-to-consumer sales increased by 5.5 percent between 2007 and 2012. The estimate of total sales of local food was $6.1 billion in 2012, the report stated. It also stated that farms selling local food through direct-to-consumer channels were more likely to remain in business between 2007 and 2012 than farms not using direct-to-consumer sales.
So how is a farmer to take advantage of the trend towards locally raised foods?
Luckily, the 2014 Farm Bill added several new and reorganized programs to promote the production and marketing of locally and regionally grown foods.
Several grant and loan programs are included to help with financing of upgrades, expansions and other needs.
For example, there is the Value-Added Producer Grant program designed to help farmers develop farmer-based, value-added products such as cheese, jam, packaged meats and sausages. The program was reorganized to better serve small and midsized family farms, along with beginning, socially disadvantaged and veteran farmers. It was increased from $15 million to $65 million for 2014-2018 with $40 million authorized annually, the report stated, and it sets aside funds for local and regional food supply networks.
The Rural Business Opportunity Grant and the Rural Business Enterprise Grant programs are now consolidated under the Rural Business Development Grants program, with up to $65 million authorized for annual funding for 2014 -2018.
Although local food producers are not targeted, they have historically taken advantage of these programs.
The USDA has also expanded the Farm Storage Facility Loan program, which provide low-interest financing to food producers to buy storage and processing equipment. The program has added 23 new categories of equipment for fruit and vegetable producers to finance cold storage facilities, sorting bins, wash stations and other food safety-related equipment.
A 2008 Farm Bill program reauthorized by the 2014 Farm Bill is the Local and Regional Food Enterprise Loan account within the Business and Industry Guaranteed Loan Program. It provides federal guarantees for commercial loans to rural businesses to support development of local food system infrastructure, or businesses that process, distribute, aggregate, store and market foods produced either instate or transported less than 400 miles from where it originates. It can also fund projects in urban areas if the projects support farm and ranch income and expand healthy food access in underserved communities.
Finally, the Food Safety Modernization ACT (FSMA), passed in 2011, calls for “sweeping changes to the U.S. food safety system,” the report stated. The focus will move from responding to contamination outbreaks to prevention of outbreaks. That means that the U.S. Food and Drug Administration will have jurisdiction over on-farm activity and FSMA will set relatively uniform standards on suppliers of fresh produce. The rulemaking stage for FSMA is still ongoing, but growers should be aware that new rules will affect them.
The U.S. Department of Agriculture has stepped up efforts to support the new trend of eating locally produced foods. If you need help sorting out how any of these new or reorganized programs can help you, call your local agricultural or commercial lender and talk to them. They know the options available and can find the ones that will best suit your financial and farming needs.