Local buy contributes little to local economy: Study

By Douglas Yu

- Last updated on GMT

Researchers developed an empirical model of dairy supply to assess the impact of localization. Picture: istock / Dirk70
Researchers developed an empirical model of dairy supply to assess the impact of localization. Picture: istock / Dirk70

Related tags: Economics

Localizing fluid milk supply may not be a positive move for the dairy supply chain, according to a study in the journal Environmental Science and Technology.

The study evaluated the environmental and economic impacts of reconfiguring the fluid milk supply chains used in five northeast states: New York, Pennsylvania, Vermont, New Hampshire and Maine.

Key findings

Chuck Nicholson of Smeal College of Business, one of the authors of the report, said, "Changing supply chains would actually increase the distances travelled by beverage milk from farms to consumers, greenhouse gas emissions associated with transportation would increase, supply chain costs would increase and that a total of four new jobs would be created in the New England region.

"Distances travelled for other dairy products in the Northeast also generally increased.”

However, the impact varies by state and by product, according to the research. For example, from March to September 2011, the total miles travelled by fluid milk products decreased for New Hampshire, but increased in New York and Pennsylvania. Meanwhile, the average distance traveled by yogurt in New York and in the Northeast overall increased by 6% and 2% respectively, due to the relocation of the farm milk supply to fluid milk production.

Localization’s effect on local economy: positive but small

Localization is often promoted on the basis of creating local employment and economic activity, Nicholson said.

Even though the research found jobs in New England were created and economic activities increased, positive impacts were small, Nicholson said.

“A total of four net jobs in the entire New England, and about $1m per month in additional economic activity. To put that into some kind of perspective, the value of milk alone produced on farms in New York during 2014 was about $3bn, and that doesn’t count the value of processing, distribution or retailing,” ​he said.

A better food system

Nicholson noted the research results don’t suggest local food is a bad business model, but that there is the potential to have more broadly-based positive impacts of food industry localization, he said.

The key message from the research is to let food systems deliver outcomes that food industry businesses and consumers desire, such as nutrition, health, environmental impacts and safety, Nicholson explained.

“We need more sophisticated assessments of what those supply chains should look like, and the investments in facilities and production technologies needed to achieve [more broadly-based positive impacts of food industry localization],” ​Nicholson added. “This would require more coordinated action among food industry firms and their consumers.”


Source: Environmental Science & Technology

Published: September 24, 2015 DOI:​ 10.1021/acs.est.5b02892

“Environmental and economic impacts of localizing food systems: the case of dairy supply chains in the northeastern United States”

Authors: Charles F. Nicholson, Xi He, Miguel I. Gomez, H. O. Gao, and Elaine Hill

Related topics: R&D

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