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Can local food jump-start the economy?


Ann Arbor, Mich.-based Zingerman's is a model for small food businesses. (Zingerman's)

Gourmands have long embraced local food because it's the right thing to do. But a new report says consumers should view local food enterprises as profitable startups that are key to economic growth and recovery.

Published today by nonprofits the Wallace Center and the Business Alliance for Local Living Economies, the survey looks at 24 community food enterprises, including the Weaver Street Market in North Carolina's Research Triangle and Zingerman's, the well-known deli in Ann Arbor, Mich.

After a long period of ambiguity, the verdict is in on how much locally owned businesses promote economic development. More than a dozen studies have shown that every dollar spent at a locally owned business generates two to four times the income, wealth and jobs than at an equivalent nonlocal business. (Read more about the economics of local foods in an earlier post.)

"This is not only a movement about health or taste. Local food offers a sophisticated business model that is becoming more savvy and more competitive," said Michael Shuman, BALLE's director of research and principal author of the report.

Shuman says all locally owned businesses can help the economy grow. But food businesses are the gateway for many people to rethink their relationship with local stores. People have a closer relationship with food than, say, financial services or energy, he explained. As a result, food is at the forefront of local businesses' driving of economic growth, providing a model for other kinds of entrepreneurs.

Take the Weaver Market. Originally founded in Carrboro, a small artsy community adjacent to Chapel Hill, Weaver Street is now a 12,000-member cooperative that includes three grocery stores, a commissary and an Italian restaurant. The success of the business has allowed the market to open an affordable housing cooperative and a locally owned radio station. It also runs a community fund that donates more than $60,000 each year to local schools and other nonprofits.

Members get discounts based on how often they shop at the market, which stocks a wide array of food, not just "hippie" grains and granola. Intense loyalty has helped build the market's revenues to $20 million annually and helped to generate $12 million of economic activity," according to co-founder Ruffin Slater. "Another way we measure our contribution to our local economy is the amount we purchase from local farmers and food producers, which last year amounted to over $2 million.”

Zingerman's is another good example of how a small food business can grow by serving its community. It began as a 1,200-square-foot deli in 1982 and now includes a catering company, bakery, mail-order business, creamery, a full-service restaurant called Zingerman’s Roadhouse, a coffee roastery and a consultancy called ZingTrain that teaches customer service to other small businesses. Zingerman's employs 525 people in this modest-size university town, with revenues of $27 million.

Shuman says Zingerman's proves that local food businesses need not stay small. By building local loyalty and a solid brand, they can compete in the wider economy and can help develop niches for smaller communities. Who would have thought that Ann Arbor would be home to one of the country's greatest gourmet food communities?

Skeptics argue it would be just as effective, if not more so, to persuade a huge corporation such as Walmart to purchase foods locally. "But that's absolutely untrue," said Shuman. "You get a fraction of the benefits that people are seeing with local food, and we're looking at models that are more competitive than Walmart."

-- Jane Black

By Jane Black  |  December 9, 2009; 10:30 AM ET
Categories:  Sustainable Food  | Tags: Jane Black, local food  
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