Economics & a Economics & a Sustainable Sustainable

Regional Food Regional Food System System

Jim BowerJim BowerBlue Planet PartnersBlue Planet Partners

Planting Seeds for our Future Planting Seeds for our Future ConferenceConference

March 26, 2007March 26, 2007

Scoping Partners for Scoping Partners for Regional Food Strategy Regional Food Strategy

Project Project Blue Planet PartnersBlue Planet Partners Michael Fields Agricultural InstituteMichael Fields Agricultural Institute Center for Integrated Agricultural SystemsCenter for Integrated Agricultural Systems DATCPDATCP REAPREAP UW – Center for CooperativesUW – Center for Cooperatives Common Wealth Development, Inc.Common Wealth Development, Inc. UW College of AgricultureUW College of Agriculture Other key food systems leadersOther key food systems leaders

Blue Planet Partner

Goal of Regional Food Goal of Regional Food Strategy ProjectStrategy Project

Develop cohesive strategic framework Develop cohesive strategic framework for scaling up this region’s sustainable for scaling up this region’s sustainable food system (Madison – Milwaukee – food system (Madison – Milwaukee – Chicago)Chicago)

Strategies nesting both locally and Strategies nesting both locally and regionally.regionally.

Goal: “Increase consumption of Goal: “Increase consumption of sustainable, regionally produced and sustainable, regionally produced and processed food from 2% to 10% in 7 to processed food from 2% to 10% in 7 to 10 years.”10 years.”

Blue Planet Partner

Anatomy of a Scaling Up Anatomy of a Scaling Up a Sustainable Food a Sustainable Food

SystemSystem1.1. Values (Heart)Values (Heart)

Local, organic, sustainable, Local, organic, sustainable, environmentally sound, life giving for environmentally sound, life giving for communities, healthfulness, freshness, communities, healthfulness, freshness, taste, etc.taste, etc.

2.2. Economics (Blood in the bloodstream)Economics (Blood in the bloodstream) Financial viabilityFinancial viability

Which is more important?Which is more important?

Which is more capable of flexibility? Which is more capable of flexibility?

Blue Planet Partner

Regional Food Regional Food EconomiesEconomies

Not workingNot working Outflow is greater than inflowOutflow is greater than inflow Northwest MN study (Ken Meter)Northwest MN study (Ken Meter)

$851m revenue$851m revenue $1092m cost$1092m cost Losing $200m per year in production Losing $200m per year in production

costs costs

Blue Planet Partner

Supply Chain EconomicsSupply Chain Economics

ProductionProduction ProcessingProcessing DistributionDistribution

Blue Planet Partner

Economics of Economics of DistributionDistribution

Tier 1 – direct from farm to consumerTier 1 – direct from farm to consumer Tier 2 – local / regional distribution – Tier 2 – local / regional distribution –

small scalesmall scale Tier 3 – regional distributionTier 3 – regional distribution

ForkliftsForklifts Semi-trailer scale minimumsSemi-trailer scale minimums Regional warehousesRegional warehouses Just in time deliveryJust in time delivery

Blue Planet Partner

Punch linePunch line

We as a society/region have not We as a society/region have not figured it out yetfigured it out yet

If the economics worked then supply If the economics worked then supply would increase in a proportion to would increase in a proportion to demand at price points that workeddemand at price points that worked

Blue Planet Partner

Changing Economic Changing Economic GroundGround

Fuel pricesFuel prices Changing consumer demandChanging consumer demand Major market makers redefining landscape (Wal-Mart)Major market makers redefining landscape (Wal-Mart) Current market makers rapidly adjusting (Whole Current market makers rapidly adjusting (Whole

Foods)Foods) New institutional buyers beginning to enter the New institutional buyers beginning to enter the

marketmarket Public policy – national, state & localPublic policy – national, state & local Environmental costs internalizedEnvironmental costs internalized Food securityFood security

TIPPING POINTS???TIPPING POINTS???

Blue Planet Partner

What’s NextWhat’s Next Building 100s of viable businesses at all levels of the Building 100s of viable businesses at all levels of the

region’s food systemregion’s food system Driving innovation – new products, new/improved Driving innovation – new products, new/improved

processesprocesses Increasing consumers ready and able to consume a value-Increasing consumers ready and able to consume a value-

laden product at higher price pointsladen product at higher price points Getting more efficient/effective at all levels of the supply Getting more efficient/effective at all levels of the supply

chainchain Encouraging the development of market makersEncouraging the development of market makers Building partnerships that can create new market Building partnerships that can create new market

opportunitiesopportunities

TIPPING POINTS???TIPPING POINTS???

Blue Planet Partner