Dr. Kelly Cain, PhD, is the founding Director of the St. Croix Institute for Sustainable Community Development (SCISCD) at the University of Wisconsin-River Falls, where he has been a Professor in Environmental Science & Management for 25 years, teaching a wide variety of undergraduate and graduate courses in sustainable community development, business ecology, resource management, land use and site planning, multi-cultural perspectives, and ecotourism. He has also served as Director of Campus Sustainability for the past five years. For Dr. Cain’s complete bio, please click here.
Re-Localization of Community Economics
By: Dr. Kelly Cain
Posted: May 2, 2013
It is truly an honor to provide one of the initial blog posts for Go Buy Local. From the first time that I met Bill Veeneman (President and CEO of Go Buy Local) for lunch almost two years ago, it became immediately clear that Go Buy Local had the potential to do what few sustainability-based small business models can do. It had the power to prove the profitability of ‘capitalism with a conscience’, especially for locally owned small businesses who must compete with the likes of Walmart and other large-box retailers, as well as Amazon and other online businesses.
Capitalism with a conscience is not only economically profitable, but environmentally and socially responsible in its outcomes (often referred to as the triple bottom line).
For us here at the St. Croix Institute for Sustainable Community Development (SCISCD / “the Institute”), this is not about conservative versus liberal ideologies. Sustainability-based capitalism is nothing more than core American values of self-sufficiency, self-determination, self-reliance, ingenuity, creativity, innovation, and entrepreneurship applied to our responsibility for self, family, neighborhood, and community, and ultimately the country we all hold so dear.
Applied to our daily lives in the market-place, these core American values lead us to simply make conscious consumer decisions that over time, collectively determine whether our community, region, and nation grow stronger or weaker; economically, environmentally, and socially. This conscious consumer phenomenon is most recently reflected in the resurgence for “American Made.” Ironically, the entire world thirsted for “American Made” products years ago, not because of price, but because of quality!
Go Buy Local is not only a focus on ‘American Made’, but goods and services that to one degree or another are produced, serviced, sold, and celebrated at the local level, whether that be locally grown and processed foods, and locally produced art, or locally sourced professional services and small retail.
At the risk of
over-simplifying, it is generally no secret that we as a nation have outsourced
ourselves into oblivion and about $16 trillion worth of debt. We use to be a
nation that fed, clothed, powered, and financed ourselves, much of it at a
local and regional level. While there are indications we might be coming to our
senses, we cannot continue to mortgage our future to the ‘global economy,’ and
a net-negative exchange of dollars.
Not that all global sourcing is wrong (such as our national affinity for imported coffee). But when we ignore our own ability, not to mention the unmistakable benefits that come from producing more efficient, effective, and strategic products here at home, we are doing just that. For example, the providers of imported energy and food have no allegiance to our local communities other than to encourage and service our continued dependence.
The antidote to this bleeding from the jugular?
Based on the values, principles and practices by which the SCISCD views the current state of economic, environmental, and social trends across the country, Go Buy Local is truly ‘a game changer in the making’ for what we call, “the re-localization of community economics.”
In the end, “a community is sustainable only to the degree to which it is ‘locally’ self-sufficient in energy, food, water, shelter, clothing, transportation, health care, education, safety/security, employment, and commerce scaled to the equitable needs of all its citizens and within the carrying capacity of regional ecosystems over multiple generations (SCISCD, 2007).”
Yes, we are headed in the right direction in many ways with local efforts around energy conservation and efficiency, renewable energy production, farmer’s markets, and Farm to School food programs, etc. These are to be roundly applauded, but must be pushed to scale with a greater sense of urgency.
This is not a fearful plea.
It is the American entrepreneurial spirit applied to the reclaiming of community self-sufficiency. The challenge is for each of us is to understand and consciously spend our dollars in support of these local businesses, civic initiatives, and the building of resilience to large scale threats to fundamental needs, much less quality of life.
To the point, Wisconsin is a state with no fossil fuels or uranium, and only now beginning to realize the lost economy of not powering ourselves, much less not feeding ourselves (despite being a very strong agricultural exporter). By definition, we are not ‘sustainable,’ much less as resilient in the long term as we need to be.
For example, the 2010 census indicates my community (municipality of River Falls) has a population of 15,000 people. From the Bureau of Labor Statistics annual Consumer Expenditures Survey, we know that the average per capita expenditure for food (both eat in and dine out) is roughly $2500. Multiplying the two together, the gross estimate of food system value for the city of River Falls is $37.5 million dollars.
The questions become, “How much of the food consumed in my community is grown and processed here?” and “How much and how fast are my community’s food dollars leaving our local economy due to that lack of self-sufficiency?”
The short answer to the second question is, “A lot and fast.” The answer to the first question is not quite so simple. The differences fundamentally lie in wholesale versus retail economics.
The complexity of generalizing mark-ups, margins, and their impact on a macro and micro-economic level across all food vendors (grocery, restaurant, etc.) and categories (meat, dairy, fruits, vegetables, grain, eggs, and honey) make it extremely difficult if not impossible to apply precise numbers that fit across the country. But, it is safe to make some reasonable assumptions and understand the magnitude of the leakage, and thus the magnitude of the opportunity.
According to the USDA Economic Research Service (December, 2012), farmers and ranchers receive an average 15.8 cents of every food dollar spent, while over $.80 goes to processing, marketing, wholesaling, distribution, and retailing. Few communities in Wisconsin or Minnesota can legitimately claim much more than ten percent (10%) food self-sufficiency in terms of production and processing.
So conservatively, ninety percent of it is being imported and the distribution of each dollar spent (as noted above) exported in return, especially at the wholesale level. The retail mark-up cycles longer in the local community in the form of labor, utilities, taxes, maintenance, and other local overhead costs, but it also cycles out over time.
If we conservatively assume that seventy-five percent (75%) of the average retail food dollar is spinning out of the local economy quite rapidly (in light of the dollars spent at local grocery stores, restaurants, farmer’s markets, etc.), our lack of self-sufficiency allows approximately $28.125 million dollars to bleed out of the community annually at a much faster pace than if the production and processing were local. As we vote with our purchasing power, we begin to incentivize change. It’s basic microeconomics; if more is demanded, more will be produced.
Energy is worse in many ways. Per capita expenditure across WI is roughly $3,300. When multiplied against community population (much less by school district and county), the numbers become staggering and beg for local self-sufficiency from renewable energy systems.
Apply this simple model to food, clothing, water, shelter, transportation, education, healthcare, the arts, and all other products capable of sourcing from local producers or at least from local vendors, and this results in missed employment and economic opportunities of monumental proportion for ourselves, our communities, and the nation.
Go Buy Local is the strongest local business and community model for sustainability that we know of for ‘walking the talk’ on a national level. Our ability to reframe and reverse the trends indicated above are strongly dependent on supporting local goods and service providers who themselves are committed to high quality customer satisfaction and their own responsibility for ‘the re-localization of community economics,’ ecologic integrity, and social well-being.