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What is demand for local foods in Lexington KY?

By Jairus Rossi and James Allen IV

Demand for local farm products is on the rise in Fayette County, Kentucky, according to an new assessment by researchers from the University of Kentucky’s Community and Economic Development Initiative of Kentucky (CEDIK). The study conducted 49 in-depth interviews with buyers and producers in the local food system to determine the total dollar amount of Kentucky-based farm product purchased in Fayette County during 2014 and map out the pathways food travels from farm to table. Interviewees included restaurateurs, retailers, institution and hotel procurement agents, farmers’ market staff, processors and distributors. Click to read the executive summary or full report.

FayetteLocalFood_image

Overall, buyers in Fayette County acquired an estimated $14.2 million worth of Kentucky farm products in 2014—money that went directly to local farmers (Figure 1). Based on growth estimates provided by interviewees, this demand is expected to grow to $20-24 million by 2020. Restaurants are currently the largest buyers of Kentucky farm products with $5.5 million in purchasing. In 2014, retailers, institutions (e.g., schools, universities, hospitals), and hotels purchased $3 million, $1.5 million, and $1 million respectively. Producers who sell directly to consumers through Community Supported Agriculture (CSA) programs and farm markets totaled around $3.2 million in sales.

Figure1_PurchasingMarketChannel

Purchasers in each channel expect growth of at least 5% per year, though restaurants and institutions could increase purchasing by 10% annually overall. Direct-to-consumer farms speculate that their market channel could achieve even higher growth—up to 15% per year—due to increased consumer familiarity with direct markets. By 2020, expected purchasing in restaurants, retail outlets, institutions, and hotels is estimated to be around $8 million, $4.5 million, $2.5 million, and $1.3 million respectively.

Based on these purchasing data, the researchers estimated the final consumer value of local foods once resold by restaurants, retailers, and other purchasers. In Fayette County, consumers spent an estimated $34.1 million on local foods in 2014 and will spend a projected $51 million in 2020. Estimates of end-user purchasing for restaurants were generated by assuming that 30% of a restaurant item’s menu cost goes toward the purchasing of that item’s ingredients. Estimates of end-user purchasing for retail outlets were generated by assuming that 70% of the total cost covers the original purchase from the farmer.

During interviews with those involved in local food market channels, respondents identified four major issues which must be addressed to satisfy unmet demand.

  1. Wholesale purchasers say that Kentucky farmers generally cannot provide a sufficient and consistent supply of produce and protein that meets a certain price point and standard quality. As Kentucky’s climate and comparatively short growing season are one factor in limiting supply, more research into production planning and season extension strategies is recommended.
  2. Price disparities between local and non-local products are a major barrier for increasing local food procurement. Respondents identified the absence of critical food system infrastructures as the reason for this price disparity, though there was not consensus about what would facilitate local sourcing. As such, research into what processing, manufacturing, and distribution infrastructures may help Kentucky farmers compete with national and global producers.
  3. There is concern that general consumers do not understand these impacts of seasonality on what can be acquired locally or why certain production methods may command price premiums, suggesting the need for diverse consumer education programs.
  4. There is also a need for improved communication practices that can help producers and buyers understand more clearly on each other’s expectations in quality, price, quantity, and product presentation. Local food coordinators and other advocates are crucial to this effort.

Click here to see the University of Kentucky press release.

You can also read the executive summary or the full report to learn more about this assessment of Fayette County’s local food system.

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