Local Food Market Orientation and Labor Intensity

Abstract

This research uses descriptive analysis to provide a preliminary examination of the role of human capital in farms and ranches that sell through local food markets. We first provide an in‐depth review of previous research investigating the role of human capital in local food markets. Then, we use U.S. Department of Agriculture Agricultural Resource Management Survey data to provide national descriptive statistics to investigate if the repositioning of food and agricultural supply chains towards more localized markets affects the role of human capital in the business model (in terms of the share of business activities spent on human capital), and secondly the returns to human capital (in terms of wages). Given the place‐based nature of these strategies, we also investigate how these human capital investments vary across the rural urban continuum. We find that local food producers devote a larger share of total variable expenses to labor, and have significantly higher average estimated wages; this is especially true for operations with intermediated‐only or intermediated and direct sales, as opposed to direct‐only sales. We also find that wages are higher for local food producers in more urban locations.

Local Foods Go Downstream: Exploring the Spatial Factors Driving U.S. Food Manufacturing

“…Also, the model tracks a narrow time frame (although results are robust when compared to an earlier period). Future research that matches establishment identifiers, as did Jablonski et al (2020), could track the survival and/or growth of start‐ups across time to extend this work. If we can help to define the “locational secret sauce” for food manufacturing start‐ups, then the resources should focus start‐ups in those locations, conserving resources put toward start‐ups in less‐optimal locations.…”

“…Given our findings show mixed, and often weak results for rural areas, care in framing such initiatives is key. Since farm‐level local foods may not be the rural economic development panacea many have promulgated (Low et al 2015; O'Hara and Low 2016; Jablonski et al 2020), the dynamics that are spatially correlated to the consumer demand in high‐income metro and metro‐adjacent areas may be leveraged by rural areas in the region (even if not nearby), if rural economic development is the aim. And, while food manufacturing is also not necessarily a panacea for rural economic development (Goetz 1997; Henderson and McNamara 2000), it does align with other consumer‐driven innovations (organic, direct sales) and can be leveraged or better integrated into the grant and business development programs that are in place to support farmgate food systems.…”

“…Historically, for food manufacturers, a range of place‐based factors impact location decisions (Lambert, McNamara, and Garrett 2006; Lambert and McNamara 2009), but the relative draw varies across subindustries (Goetz 1997). Jablonski et al (2020) find local food producers pay higher hourly wages, but there is less economic development potential for rural areas than previously understood. Since worker experience is important to the growth and survival of the “pioneer” firms who are the first entrant in a region (Jara‐Figueroa et al 2018), metro and nonmetro areas with existing food manufacturing or entrepreneurial ecosystems bolster potential for start‐ups.…”

“…The early stage of the food movement focused on direct sales of unprocessed foods, including those farms and ranches explored in the Jablonski et al (2020) piece in this series. Yet, as the buying power of values‐based consumers grows, both established and new manufacturers will capitalize on or co‐opt food claims (Guthman 2003; DeLind 2011) but will only be effective if such brands are perceived as authentic and linked to quality: for example, placing high value on locally baked bread from short supply chains that assure freshness (O'Hara, Castillo, and Thilmany 2020).…”

“…We investigate for the first time the relationship between food manufacturing start‐ups and a set of variables to represent “the culture of food entrepreneurship” (e.g. local foods and organic sales), and do so across the rural–urban continuum as Jablonski et al (2020) show metro influence matters for those targeting local markets. Also, we examine the relevance of the local entrepreneurial ecosystem more broadly on food manufacturing start‐ups.…”