PREFACE

See Can We Really Compete? for background information that form the basis of the proposed solutions below.

The following solutions address the barriers of the marketplace - to create a sustainable local food system.  We are not talking about subsidized commodity farming - they have a secure low risk market - and that is what makes them BIG - they are not part of a sustainable local food system. 

There are many issues that the farmer (common to big commodity or small food producers) has to face “on the farm”, such as, crop insurance, financing of land and equipment, sourcing inputs, etc.  Most, if not all, existing federal and state policies (economic assistance) related to small farm production focus on the “on the farm” issues - mostly through the vehicles of “grants” and “low interest loans”.  While these vehicles are useful “on the farm” in limited circumstances, these vehicles are NOT helpful in establishing an integrated food system because:

The Problem With Grants

1. •Sustainability of a venture has to occur after the grant funds are expended - not through post-grant annual fundraising, but solely by sales of products.
   

2. •Grant funds have to be appropriated periodically by congress or state legislatures - these grant policies are not “integrated” into the “system” (i.e., the tax code).
   

3. •Grant programs typically cost far less than integrated incentive programs (i.e., tax credits).  These programs are a way of placating interests - without spending too much money.
   

4. •Grant programs do not make systemic changes nationwide of cultural habits, etc.  A grant given a Virginia greenhouse will not have an impact in Iowa.
   

5. •Grant programs are periodic in nature: farmers have to apply (i.e., extraneous paperwork) periodically - then they wait for the results.
   

As recommended by Ken Meter, Crossroads Resource Center - Minneapolis, grants should be limited to building costly infrastructure that local municipalities cannot afford.  The infrastructure makes it possible for sustainability of many participants in the local food system.

General Principle For Solutions

The number one criteria in creating a sustainable food policy is this: the policy must integrate local food production into the system of the marketplace.  As an obvious example of a systematic policy would be the $0.45 blenders tax credit for ethanol.  The blender does not need to apply to congress to get that credit - they just report it on their tax returns.  No grant application needed.  While integrated incentives occur for those within “the family” (i.e., large industrial lobbyists), the local sustainable food culture is but a small niche (i.e., the bastard child who screams for attention).

SOLUTIONS

Here are some suggested policies that would more fully integrate local foods into the food system as a whole:

1. 1.Check out: New Report: Union of Concerned Scientists: Market Forces - Creating Jobs Through Public Investment in Local and Regional Food Systems.  Similar recommendations, plus additional ideas to promote local food systems
   
   

2. 2.State Coupon Program. (Thank you Mark Schuett, American Natural Soy, Cherokee, IA for this solution)
   Rather than offer tax credits to the grocer/food distributors as recommended in the next proposal, Mr. Schuett suggests that we pass the savings on to the consumer directly through a “coupon” program.  This proposed solution would give a direct incentive to the consumer to buy local and make local products competitive on price.  The grocer/food distributor would then turn in the coupons to the state.  The grocer would, therefore, receive their standard margins on the local food product after payment of the coupon.  There are additional benefits to this proposal: coupons will better track the actual sales of locally produced food, would take the burden of the logistics of selling local food off of the individual grocer/food distributor, and would provide a direct appeal to the consumer to buy local healthier foods.
   
   

3. 3.Tax incentives for procuring local food at the wholesale & institutional level. 
   Provide a secure, low-risk, market will encourage lenders & investors to support local food producers.  I submitted a draft to the Iowa Legislature that calls for a 20% tax credit for sums expended to source local food at grocery stores & food distributorships (See: Main Page).  The only requirement is that the buyer enter into a contract with the producer in advance of delivery.  This credit could be extended to restaurants and institutional buyers.  It would be preferable that this be a national tax credit, rather than an individual state tax credit because: the term “local” could be defined by distances rather than by jurisdictional confines and, the credit on national income tax liability would be uniform.  However, if the federal government will not pass it, then the states should take the initiative.  Create a secure market, and the farmers will come (and a new generation of farmers will emerge).  This type program would have a beneficial effect on the price of a food item to consumer.
   
   

4. 4.Automatic non-profit status for qualifying food cooperatives.
   Section 501(c) of the Internal Revenue Code should be amended to add a “food cooperatives” as a non-profit enterprise.  In addition, rather than having to apply for tax exempt status, qualification is automatic if the cooperative meets certain criteria.  The cooperative would merely file a notice of non-exempt activity - and it would be up to the IRS to prove disqualification.  The criteria should be specific - with a limitation on the type of members or investors, the locality of production of food sold or distributed by the cooperative, etc.
   
   

5. 5.A national (or state) securities exemption for local food cooperatives.
   Unless you are a producer in the middle of a state, a substantial number of cooperatives involve members (growers) from multiple jurisdictions.  This situation forces a cooperative to get the blessing of multiple jurisdictions under state securities laws.  This is a classic example of bureaucratic red-tape.  As long as there are limits on contributions, and low level of investment risk, this barrier must be eliminated.  Not ever small group of farmers want to hire a team of lawyers to walk through that regulatory maze.
   
   

6. 6.Establishing and maintaining an infrastructure for local production.  (Thank you Ken Meter, of Crossroads Resource Center, Minneapolis, for this suggestion).
   Grant programs should focus on creating an infrastructure that would enable a wide-range of producers, processors, warehousing, and distribution of local food products.  Grants should not be provided to support the temporary income and expense bottom-line of a producer.  Examples of infrastructure could include: a local school wants to build a greenhouse to serve as its biology classroom while they grow food for the school cafeteria; the initial expense of warehousing and distribution facilities and equipment, processing facilities (such as local bottlers); etc.
   
   

7. 7.National (or state) consumer-focused media campaign related to local food production and farming.
   Where this may be in the purview of private foundation activity, there is a national crises related to food production.  Like the Smoky the Bear campaign of bygone times, or the Do Not Litter campaign, the time is right for national attention on the near extinction of the small food producer.  The campaign would highlight the health benefits of locally produced vegetables, meats, and fruits.
   
   

8. 8.Remove regulatory barriers to small food producers.
   Federal food safety legislation actually reinforces the unsafe supply of our food by favoring regulation that the big guys can afford, while creating more barriers for small producers whose products pose far lower risks to national health.  The food safety legislation actually promotes more large economies of scale corporate production of processed foods.  Senator Jon Tester, and others, fought to have the small farm exemption in the legislation - an afterthought for legislators.  We need to encourage clean, open-air, on-farm processing as well as sales.  We need to eliminate barriers at the local level by permitting on-farm sales as not contrary to agricultural zoning designations.  Of course, raw milk advocates face significant barriers - existing statutes treat raw milk as a controlled substance.  Either eliminate the ban on interstate sales of meat altogether, or permit state inspected meat into interstate commerce (I know it was already done - but is it held up in the regulatory phase?).
   
   

The main factors in determining sustainability are:

1. •Consumer education (Demand): price vs. value, health of fresh food vs. processed food/long shelf-life foods, jobs & local food economies
   

2. •Availability (Supply): the process by which food outlets are encouraged to procure local foods
   

3. •Price: While should not be the sole criteria, it is probably the most important.  What policies can make local food competitive?
   

4. •Farmer cooperatives: a key ingredient to provide consistency of product to consumers.
   

Please note that the above-stated suggestions are very brief (except for No. 1), they are provided as a vehicle for further discussion, criticism, and suggestions.  This work will be revised on a regular basis through my own initiative, or through the suggestions entered on the companion Blog at this site.  Your input is more than welcome.