Locally grown food a $7 billion business, USDA report says

ST. LOUIS -- Carolyn Anderson likes to chat up the growers at her local farmers market in Missouri, at times hanging out behind the beds of pickup trucks brimming with ears of corn.

For Anderson, 29, it's all about keeping it "local." And there's fresh evidence of just how big of a deal that word can mean for farmers' finances.

A new U.S. Department of Agriculture report says sales of "local foods," whether sold direct to consumers at farmers markets or through intermediaries such as grocers or restaurants, amounted to $4.8 billion in 2008. That's a number several times greater than earlier estimates, and the department predicts locally grown foods will generate $7 billion in sales this year.

While there's plenty of evidence local food sales have been growing, it has been hard to say by how much because governments, companies, consumers and food markets disagree on what qualifies as local. The USDA report included sales to intermediaries, such as local grocers and restaurants, as well as directly to consumers through farmers markets, roadside stands and the like.

It found that farm sales to people like Anderson have just about doubled in the past two decades, from about $650 million, adjusted for inflation, in the early 1990s to about $1.2 billion these days. The much bigger, $4.8 billion figure came when sales to local restaurants, retailers and regional food distributors were added in.

"Think of it as expanding what the picture looks like," said Stephen Vogel, who helped do the study for the Agriculture Department's Economic Research Service. "What this report does is say, `Look, this market is bigger than you thought."'

But the report also puts the local food movement in context. It's dominated by fruit and vegetable growers. While only 5 percent of U.S. farms sell their products in local and regional markets, 40 percent of vegetable, fruit and nut farms do.

Consumers tend to assume that the produce they are buying at these markets are fresher, made with fewer chemicals and grown by smaller, less corporate farms. That may be true in some cases and not in others.

"Local" doesn't necessarily mean "organic," a label that carries strict requirements for growers and is overseen by the Agriculture Department. But the word still carries plenty of cache with consumers like Anderson, a farmer's granddaughter who sees shopping at the farmers market in Kansas City, Mo., as a ripe opportunity to get to know the growers and what went into the stuff they're selling.

"Especially on a beautiful day, you're chatting with them about their livelihood -- I enjoy that experience as well as the food that comes out of it," she said.

The number of farms selling directly to consumers has grown, from an estimated 86,000 in the early 1990s to about 136,000 now, according to the USDA. And the number of farmers markets has about doubled, from 2,756 in 1998 to 5,274 in 2009.

Paul Gnaedinger has raised everything from organic corn and soybeans to wheat and rye on his organic farm near Pocahontas, Ill. Lately, he's turned to grass-fed beef.

He sells regionally and wasn't surprised in the growth in local food sales, chalking it up to consumers becoming more savvy in their purchases -- and perhaps a bit greener, knowing that shorter shipping distances may lower the carbon footprint and the chances of contamination in transport.

"I don't want to say they're not trusting of other food sources," said Gnaedinger, 53, who also works as a nurse. "They do tell me they don't want to buy something in Colorado one day, then see it shipped to California before it's shipped here.

"There's real demand in the market for people wanting to know where their food is coming from, that it's going through local channels."

On his 1,800 acres near Friesland, Wis., Larry Alsum, 58, grows several varieties of potatoes that he sells mostly to grocers in Wisconsin, Illinois and Indiana. He also handles wholesale distribution for farmers who grow everything from cabbage to sweet corn, squash, cucumbers and peppers.

He says his operation has blossomed into a $50 million business -- roughly double what it was a decade or so ago -- with a focus on locally grown food. Perhaps only one in five consumers actually cares what that means, he said, but it's more than did just a few years ago.

"As the cost of oil and gasoline continue to rise, there are going to me more opportunities for locally grown," he predicted. "And that just gives us a built-in advantage in marketing."