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This column was originally published in Illinois AgriNews during the month indicated and is reprinted here by permission.

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Illinois AgriNews - December 2010

Local Foods: State and Federal Incentives for Economic Development

Nicholas Johnson and A. Bryan Endres
Department of Agricultural and Consumer Economics
University of Illinois

One would assume that with 76,000 farms, 950 food processing facilities and a strong agricultural constituency, a majority of the $28 billion annually spent by Illinois consumers on food would be for “Illinois Grown” products.  The reality is quite different—only 4% of food consumed in Illinois is grown within the state.  Given its agricultural productivity and proximity to urban markets, however, Illinois is well positioned to capitalize on the social and economic opportunities presented by increased demand for local foods (estimated at $30 billion annually through the multiplier effect).  A recent USDA report, Local Food Systems: Concepts, Impacts, and Issues, explored the other potential benefits of local food systems.

Many federal and state incentives are available to promote local food systems.  But what is “local” food?  The Illinois Food, Farms and Jobs Act promotes products grown or processed within the state.  The proposed Food Safety Modernization Act provides preferences for products grown within a state’s borders or within 275 miles.  But the recently enacted federal Nutrition Bill does not define the term, despite containing provisions to improve access to “local foods” in schools.

Specifically, current law allows the USDA to offer schools grants for local foods initiatives, such as buying locally-sourced food for cafeterias or establishing school gardens.  The 2010 Nutrition Bill enhances current law:  First, it gives the Secretary criteria to use in awarding grants, with priority to schools that make local food available for school lunches.   Second, the bill provides $5 million annually for grants, beginning in 2012.  The bill does not define “local food,” though it directs the Secretary to consider “regional balance” in awarding grants, including the “equitable treatment of urban, rural, and tribal communities”--suggesting a smaller “local foods” radius than the one contemplated by the pending food safety legislation. 

In Illinois, the Food, Farms, and Jobs Act promotes local food systems though an aspirational goal calling for 20% of the food purchased by state agencies and state-owned entities to come from local sources by 2020.  To facilitate that goal, the Act permits state agencies to give preference in bid contracts to suppliers who use locally sourced products or foods.

The hortatory language of the Illinois Act might lead one to ask:  Why a purchasing goal and not a mandate?  From a legal perspective, the answer is that state laws giving preference to local businesses may run afoul of the dormant commerce clause of the U.S. Constitution, which can invalidate state laws that “excessively burden commerce among the states” by favoring in-state businesses at the expense of out-of-state ones.  Therefore, state legislatures may be loath to set procurement mandates for local foods, instead setting targets or establishing grant programs that fund efforts to promote local food economies, healthy eating, and knowledge of agriculture.

Accordingly, states seeking the economic benefits of a vibrant local foods network have created a variety of unique incentives.  For example, the Illinois Act directs the Department of Agriculture to develop a geo-coded database of available local foods.  The Act also authorized the development of a “local foods” logo to stimulate consumer demand.  In the future, look for local governments to develop similar incentive programs, with even narrower definitions of “local foods” to capture the economic benefits of our agricultural productivity rather than sending these dollars to other states or abroad.

 

Department of Agricultural and Consumer Economics    College of Agricultural, Consumer and Environmental Sciences
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