Economics of Buying Local, Part 1

Buying local has caught on around the country. Good for people, good for communities, good for health, good for farmers, good for ag land preservation, good for air, land, water, climate .... The beat goes on.

But is it good for the economy?

Separating out the economic return of growing local food for local consumption is gaining momentum as more governments and communities measure the economic return of going local.

New Jersey is one state that has measured such efforts. The state supports a Jersey Fresh program with an annual expenditure from state funds. From the 2004 NJ Agriculture Annual Report comes this fact:

Jersey Fresh Economic Impact – Using federal funds, a study was conducted to determine the economic impact of the Jersey Fresh Promotional Program. The study showed that each dollar spent on the Jersey Fresh program increased farm revenues by $31.54. That increase boosted farm-related businesses by an additional $22.95 of sales in agricultural support industries. In total, each dollar spent on Jersey Fresh promotion resulted in $54.49 of increased economic output in the State.

With a current budget for Jersey Fresh being about $800,000, this means an increase in farm revenues of $25.2 million, and a total increase in economic output for the state of $43.6 million.

Pretty good return.

Source: New Jersey Agriculture 2004 Annual Report, Agricultural Statistics, New Jersey Department of Agriculture / National Agricultural Statistics Service, USDA, http://www.state.nj.us/agriculture/04AnnualReport.pdf