Small and midsized farms with local food sales spent more hours farming, were more likely to list farming as the principal operator’s primary occupation, and tended to forgo the opportunity to earn additional labor income more than similarly sized farms without local food sales.

Farmers selling locally grown food through farmers’ markets, roadside stands, and other local food outlets account for a small, but growing, segment of U.S. agriculture. Consumer demand for locally produced food is driven by demand for freshness, support for the local economy, and personal communication with the producer (see “Varied Interests Drive Growing Popularity of Local Foods” in the December 2010 issue of Amber Waves).

In addition to buying directly from farmers, consumers also purchase locally grown food through retail channels that enable consumers to purchase local foods with one-stop shopping convenience (see “Local Food Supply Chains Use Diverse Business Models To Satisfy Demand,” in the December 2010 issue of Amber Waves).

When intermediated, or indirect, local food marketing channels, such as sales through grocers, restaurants, and regional distributors, are combined with direct-to-consumer sales by farm operations, a more complete picture of the local food market emerges than is the case when only direct-to-consumer sales are considered.

Based on data from USDA’s Agricultural Resource Management Survey (ARMS), local food sales amounted to $4.8 billion in 2008 when direct-to-consumer and intermediated sales of locally grown food are measured—four times higher than estimates based on direct-to-consumer sales alone. ERS researchers used these data to explore differences in the marketing channels used by farms selling locally, to examine the relationships between producer location and the marketing channels used, and to assess operators’ commitments to farming among farms with and without local food sales.

Marketing Channels for Locally Grown Food

The 2008 ARMS measured local food sales by asking farm operators whether they sold directly to consumers at farmers’ markets, roadside stands, onfarm stores, and community-supported agriculture or through intermediated sales to local grocers, restaurants, and regional distributors during the year. Over half of local food sales—$2.7 billion—were from farms selling local foods exclusively through intermediated marketing channels. Farms using both direct-to-consumer and intermediated marketing channels accounted for a quarter of local food sales ($1.2 billion).

Use of local food marketing channels varied with farm size. Small farms (gross annual sales under $50,000) relied on direct-to-consumer channels more than large farms, which were more likely to use intermediated channels for their local food sales. Large farms (annual sales over $250,000) that market local foods exclusively through intermediated channels accounted for 92 percent of these intermediated sales, while small and medium-sized farms that market local foods exclusively through direct-to-consumer channels accounted for 73 percent of these sales.

While we do not have information on the value of local foods sold through individual marketing channels (such as farmers’ markets or grocers), we do know the number of individual marketing channel types each producer used. Farmers’ markets and roadside stands each accounted for over one-third of the local food marketing outlet types small farms used (35 and 34 percent, respectively). Farmers’ markets and roadside stands were also used by large farms reporting local food sales (15 and 24 percent, respectively). Large farms, however, relied on regional distributors over four times more often than small farms to market their local food. Interestingly, grocers and restaurants, as a share of marketing channel types, were utilized by small and large farms selling locally at similar rates, suggesting that these marketing channels are available regardless of farm size.