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Saturday, March 9, 2013

Unsustainable report

Incomplete report - ignores farming, fishing
By KYLE HENCE/ News contributor

With a booming local food movement, and small-scale agriculture one of Rhode Island’s only bright spots economically, would it not make eminent sense to invest further in the local food system to grow our economy? Isn't it just common sense to be sure policy makers, bankers and investors focus on the thriving local food and farming sectors of our economy?

The answer is no. Not if you are the Pittsburgh-based consulting team paid $45,000 to frame Rhode Island’s economy ahead of a year-long planning process.

How the report views RI
Rhode Islanders and its leaders across industry and government are eager to identify and capitalize on what is sustainable, in an effort to address the nation’s highest unemployment rate and a protracted economic downturn.

Last week, however, in the first formal step in a two-year, $1.9 million statewide planning process called “Sustainable Rhode Island,” Gov. Lincoln Chafee and the state Division of Planning unveiled a 104-page report (pdf) from Fourth Economy Consulting that fails to cite the recent and significant achievements within the Ocean State’s agricultural sector, ignoring the opportunity to build on the successes of a growing plant-based “green” industry.

Food is a trillion-dollar industry in the United States. In New England, agriculture generates $71 billion in economic activity and 379,000 jobs, according to a 2012 report (pdf). Rhode Island’s share of this is growing, and our rate of growth of small-scale agriculture is tops in New England and ranks high nationally.

The number of farms in the state swelled from 858 to 1,219 between 2002 and 2007 — an increase of 42 percent that is the highest in New England and 10 times the national average, according to the U.S. Census of Agriculture.

Talk about "overlooked" - the new Statewide Planning report makes
no mention of the impact of agriculture, including fishing on the
RI economy
A 2012 report by the University of Rhode Island co-authored by Tom Sproul, an environmental economics professor, found the 2007 U.S. Department of Agriculture figures were grossly underestimated.
“It’s definitely a way bigger sector than anybody thought,” Sproul said.

The report conservatively estimates $170.6 million in annual agricultural revenue, more than 2.5 times the USDA’s 2007 estimate of $65.9 million, and suggests that Rhode Island farmers may produce 60 percent of their economic impact via direct interaction with consumers.

“These findings are consistent with our state’s history of leadership in agricultural value,” according to the URI report.

All told, the state’s plant-based “green” industries — inclusive of nurseries, sod farms and agricultural tourism — have a total impact of $1.78 billion, about 3.5 percent of Rhode Island’s gross state product (GSP), with agriculture representing 17 percent, according to Sproul.

Sproul, who invested several years in the aforementioned report, said prospects for growth in this sector are good. “I think it has an incredibly bright future,” he said.

Where’s the local beef?

Rhode Island should do more to retain and support its home-grown businesses, and the state Department of Environmental Management (DEM) agrees. Last week, the agency announced the availability of $150,000 in grant money to farmers, nonprofits and small businesses working to increase the availability of local produce.

“The growth of agriculture in Rhode Island can be seen across the state, from the explosion of farmers markets to the promotion of local foods in our outstanding restaurants,” said DEM director Janet Coit, who sits on the State Planning Council, part of the Division of Planning overseeing Sustainable Rhode Island.

“Rhode Island’s $1.7 billion green industry – and the 12,300 jobs it supports – is a bright spot in the economy of our beautiful state, thanks to growing consumer interest in products grown locally,” she said. “On top of these economic benefits, agriculture also contributes to tourism, open space, quality of life, and access to local foods and horticultural products.”

Despite the fact that Chafee, Coit and state agriculture chief Ken Ayars have repeatedly and publicly lauded the state’s farm-to-table, farm-to-school and broader agricultural successes during the past few years, the Fourth Economy Consulting report, meant to focus on current strengths in the Rhode Island economy and replete with elaborate graphs and full-color panoramas evoking pride of place, fails to recognize agriculture and local food in any substantive manner.

In fact, the executive summary (pdf) fails to mention the state’s agriculture growth even once. In the 15-page document Rhode Island’s thriving agricultural sector is not identified as part of an economic “cluster” or “market opportunity network.”

While the full report calls for definition and validation of market opportunities, with the exception of a singular unexplained graph citation of “Online Agriculture” (R.I.’s top ranking "sustainability measure"), the report fails to make any substantive mention of the local food and farming economy, neither its recent achievements nor its future growth opportunities.

Rich Overmoyer, president and CEO of Fourth Economy Consulting, declined to comment for this story.

Local means sustainable

As the Sproul report suggests, there are multiple elements within our local food system — urban and rural agriculture, food production and processing, food security, waste management, the environment, pride of place, public health and nutrition. The local food system’s role in filling the needs of thousands of Rhode Islanders who frequently go without a meal (the “food insecure”) make it a moral imperative in addition to the economic one described by Sproul and Coit.

Rhode Island’s Five-Year Strategic Plan (pdf) released in 2011 by the Agricultural Partnership hints at a significant opportunity for growth. As of 2010, Rhode Island sourced only 1 percent of the food that is consumed from within the state, translating to a theoretical 99 percent upside potential that taps consumer demand, but also provides a motivating factor of food security.

On the one hand, Rhode Island ranks high in national rankings in growth of small farms and direct farm-to-table produce sales, but on the other ranks low in New England in at least one measure of food security. The juxtaposition of these two metrics reveals a clear economic opportunity, one entirely missed in the $45,000 economic snapshot presented to the Division of Planning last week.

The consultants' report, among many recommendations, encourages “buy local” campaigns, which have been proven to benefit participating communities directly through the “local multiplier effect.”

“The food system as a whole drains money from the local economy,” according to Sarah DeWeerdt in a 2009 report for the Worldwatch Institute. “Every time money changes hands within a community, it boosts the community's overall income and level of economic activity, and fuels the creation of jobs. The more times money changes hands within the community before heading elsewhere, the better off the community is.”

This is a point of leverage and high return following from a simple shift in spending patterns to keep local dollars circulating within the local economy rather than leaving it. How much of a multiplier varies significantly. One United Kingdom study found that dollars spent on local suppliers worth 400 percent more than those spent non-locally or a 4x multiplier. An Iowa State University study found a 2.6x multiplier where small farms prevail as they do in Rhode Island.

How does this translate to jobs and revenues? According to a study by Michael Schuman, a local food economy expert and author of “Local Money, Local Sense,” if the city of Detroit were to shift 20 percent of its food spending to local sources, 4,700 jobs would be created and the city would receive nearly $20 million more in business taxes a year.

In the counties he assessed in northeast Ohio, about one-quarter Rhode Island’s population, Schuman calculated that a move to 25 percent food localization by 2020 could result in the creation of close to 28,000 new jobs and generate $868 million in additional wages annually.

Food localization on this scale has significant challenges, including accessibility and affordability of farm land for new farms, training for food-based businesses and marketing. In Ohio, Schuman estimated a large requisite infrastructure-building investment of $1 billion would ultimately generate $100 million annually in taxes.

Local benefits

Noah Fulmer is the co-founder of Farm Fresh Rhode Island, a nonprofit that has capitalized on the market opportunity within the local food sector by serving as a distributor using an online ordering system, sourcing from scores of area farms and delivering to restaurants and institutional kitchens throughout Rhode Island. 

Last year, Market Mobile grossed about $1.5 million, up from $1 million in 2011 and $650,000 in 2010.
“It’s disappointing that there is not more attention paid to local farms and to the seafood industry,” said Fulmer from his office in Pawtucket. “We can certainly produce a lot more food, and if we see an upswing in the economy we could see agriculture benefit in an even more striking way.”

According Fulmer, state leaders in Vermont and Maine look to local agriculture as economic drivers. “It would be nice,” he said, “to see more people at the planning level give more support to this.”

The Farm Fresh story is not mentioned in the consultants’ report. However, in a graph, “Online Agriculture” is shown as Rhode Island’s highest ranking of 22 sustainability measures. While not explained further in the recently released report, data cited by the Agricultural Partnership suggests Farm Fresh’s successful web-based local food marketing and distribution program is responsible for this top sustainability metric, a truly homegrown Rhode Island win-win.

“We are seeing a lot of growth despite what’s going on statewide,” Fulmer said.

The failure of the Fourth Economy Consulting report to draw attention to local agriculture and plant-based green industry is worrying. It begs the question: Is this initial $45,000 investment in economic analysis indicative of what will come from the $1.9 million plan? If so, Rhode Islanders, particularly those invested in local food security and in seeing further expansion of the agricultural sector, might well be concerned.

“This is not intended to be a fully realized snapshot of the economy,” said Kevin Flynn, associate director of the Division of Planning, when asked about the report’s failure to cite Rhode Island’s well-documented and thriving local food economy.

“In retrospect it would have been better if a little more attention had been paid to that aspect,” Flynn said when pressed. “As we begin in earnest to work on the plan over the next year we will be looking at this.”