Tag Archives: local multiplier effect

The Potential Impact of Local Food

Yesterday I wrote about the pending opening of the NewBo City Market and it got me thinking about the potential impact of local food.

“Shop local” is a mantra for a lot of people and it is a great way to help ensure that we have vibrant communities of businesses tied to the local economy.  Otherwise, everything will just be abandoned on the drive to WalMart.  Joy.

However, the next step is to not just “shop local” but to actually “buy locally made products.”  Why does this matter?  Even if you purchase goods from a local merchant, it is likely that those goods came from somewhere else not necessarily tied to your local economy.  In economic terms this is called leakage, as in your dollars are leaking from the local economy.  Granted, dollars are probably leaking from a lot of other local economies into your own but there are no guarantees.

Farmers markets and public markets, like the NewBo City Market, represent an opportunity to bypass to possibility of leakage because you are buying goods directly from local producers.  This puts the dollars in the hands of local producers without the loss of what a “middleman” would charge for distribution, etc.  But, really, how much of an impact can spending locally produce?

In Linn County there are ~214K people living in ~85K households with a median household income of ~$54K.  If each household could direct $10 of their food spend to local food merchants it would equal more than $44 MILLION dollars injected into the local economy.  At the median household income that level of spending could directly support over 818 households or just under 1% of the county’s households.

The local multiplier effect compounds the impact of this spending even more.  Depending upon the study a local merchant usually returns $52-58 to the local economy while the larger national merchants usually return $17-33.  At the low end, you are getting a three times return on the money in the local economy if it is spent with local merchants.  So, as the dollars you spent stay in the local economy the impact can be multiplied if those dollars continue to be spent with other local merchants.  Check out this study from the Idie Impact Study Series for a tidy summation of the impacts of local purchasing.

I don’t want to sound like some clown on late night television telling you to feed the children for the price of a cup of coffee, but $10 a week does not sound like too much to have such a great impact.  Plus, you can avoid shopping at WalMart where your soul is likely to get stolen or, at the very least, crushed by the depression that oozes from the bare concrete floor.