How buying local packs a powerful can of economic whoop-ass.
In his new book, The Local Economy Solution, progressive economist Michael Shuman continues his tireless, 20-year effort to wring the necks of worn economic development strategies and get communities to embrace what is known as “import substitution.”
Import substitution is a simple concept. You know those goods we currently import for consumption? Substitute locally made goods for them. Not all imported goods, just the ones we can readily produce—like food and beverages.
It doesn’t require outside investment or new taxation. We consumers already provide an injection of money to local businesses through our purchasing behavior. Given that consumer purchasing comprises 70 percent of the economy, we pack a powerful can of economic whoop-ass.
The advantage is that we don’t ship our money out of the county to pay for those imported goods. We keep it here where it’s invested into local enterprises.
That string of purchasing actions locally generates economic multipliers. If residents spend their income with locally owned companies, and each time money changes hands it stays local, we have more money circulating more times in the local economy. Think of it like money breeding.
This means that if you buy locally produced food from a locally owned grocery store, your economic impact
is two times greater than if you bought an imported item from a non-local store.
GO LOCAL has been working the import substitution strategy in Sonoma County for seven years. In Shuman’s view, that makes us a pollinator.
A pollinator, by spreading the word, helps local businesses grow and helps new businesses start. There’s nothing like a boost in sales income to drive a new or existing enterprise. Cash flow from sales operations is king. It reduces the need to raise money through loans or equity and thus lowers costs. If financing is needed to expand capacity to fulfill greater sales demand, then those businesses can generally get better rates and terms.
Shuman says, “Perhaps what excites me most about the pollinator approach to economic development is how it scrambles old political divisions and opens space for new kinds of community action. It provides conservatives with an approach that’s market-driven, entrepreneurial, business-oriented, and highly decentralized, and progressives with proven tools that expand participation, shrink poverty, and promote diversity.”
Even more than it is today, our local food system is poised to be a major plank of Sonoma County’s identity and economy. That’s also true for the North Bay region as a whole.
Sonoma County residents spend approximately $2.1 billion on food and beverages each year. That chunk of change wields amazing consumer power to dramatically inject a whole lotta cash into Sonoma County’s economy. The optimum impact comes when you buy locally produced food items from local grocers, farmers’ markets, and restaurants.
Since we import nearly 96 percent of the fruits and vegetables we consume in Sonoma County, we could start with growing more. With the resurgent interest in agricultural jobs after nearly a century of job deferment to industrial and knowledge sectors, there are farmers who are already doing this and many more who want to.
Here’s an interesting historical view. In the Sonoma County 1928 crop report, when our population was just 60,000, agriculture production—excluding grapes—was $27.5 million, or $460 per resident. In today’s dollars that’s $380 million, or $6,333 per resident.
In 2014 our agriculture production—excluding grapes—was roughly $306 million, or 80 percent of what it was in 1928.
The big difference, of course, is that our population has grown eight times to nearly 500,000 since 1928, which means our output per person is a paltry $617 today, or one-tenth of what it was. The difference is what we now import.
If we produced enough food locally to reach even one quarter of the 1928 benchmark, we would see ag production at $785 million per year instead of $306 million. Now, add to that food processing and production, distribution and all ancillary businesses that arise as part of the increased volume: The net result is thousands of jobs and greater food security, not to mention fresher and better food.
Sound good? Consider yourself pollinated.
Terry Garrett is the co-publisher of Made Local Magazine and is the co-manager of Sonoma County GO LOCAL.