News

USDA demystifies local food chain supply

June 23, 2010

"The objective of this report is to improve understanding of how local food products are being introduced or reintroduced into the broader food system and potential barriers to expansion of markets for local foods," said Michael Illenberg, public affairs specialist with the USDA Economic Research Service. "Understanding the operation and performance of local food supply chains is an initial step toward gauging how the food system might incorporate more local foods in the future to meet growing demand." 

A series of coordinated case studies compares the structure, size, and performance of local food supply chains with those of mainstream supply chains. Interviews and site visits with farms and businesses, supplemented with secondary data, describe how food moves from farms to consumers in 15 food supply chains. Key comparisons between supply chains include the degree of product differentiation, diversification of marketing outlets, and information conveyed to consumers about product origin. 

Among the summary's key findings includes the fact that it is more profitable for producers to participate in local food supply chains – but only up front. Producers often assume more responsibilities – such as marketing and processing – in direct market or local food chains, lowering their cut of the retail sale price, sometimes by up to 70 percent. Foodservice executives who understand this dynamic could work with local producers to make more mutually beneficial deals. 

Thefull reportcan be accessed from the USDA Economic Research Service site.