Organic: Improving lives by improving the economy

by  Maggie McNeil  in  Advocacy, Business, Farm, Industry
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Research shows organic “hotspots” create real opportunities in rural areas

Six farmers’ markets in six rural communities where there were none. Twenty-two year-round employees where there were just five or so seasonal workers. Saturday get-togethers drawing local families with plate lunches featuring garden-fresh treats, live music and fun hands-in-the-dirt experiences for the kids on a farm dedicated to the health of its soil and of its neighbors. A successful and community-engaged organic farm growing produce, grains and pecans and raising grassfed livestock where a conventional commodity farm with tenant farmers had existed for decades.

Big changes most often start in small ways, and in Rapides Parish in Central Louisiana, one single organic farm is transforming the lives of thousands in the local population. Inglewood Farm, in just five years, has become the largest certified organic farm in Louisiana. It has helped create a new awareness and interest in healthy diets, it has spurred the attention of consumers and local farmers alike to organic, and it has helped foster new jobs and entrepreneur opportunities for many.

“The effects of Inglewood are like yeast fermenting; they are growing and spreading—from the farmers’ markets to community gardens to new restaurants opening in town that want to source locally,” said Elisabeth Keller, president of Inglewood Farm. “Plus when the farm makes money, other farmers see this. We hope Inglewood is setting the stage for more farmers getting into organic.”

Inglewood dates back to the 1800s, and the Keller family has owned it since 1926. After decades of farming mostly cotton, corn and soybeans conventionally on the land, the family began to convert it to organic five years ago. The farm now boasts almost 400 acres of certified organic vegetables, pecans, corn, soybeans and wheat, with another 40 acres of vegetables in transition to organic and almost 700 acres of cover crops and pasture being converted to organic.

In 2015, Inglewood grossed around $600,000 in revenue from its organic operations. It is now the anchor vendor in six farmers’ markets in Central Louisiana that didn’t exist a few years ago, providing a new market for young entrepreneurs raising and butchering their own livestock, soap makers, woodworkers, and other local artisans. It’s become the go-to place on Saturday for local families to buy organic produce, see cooking demonstrations, and sit down to a home-cooked and healthy lunch. It’s the spot for aspiring organic farmers to get the latest and best information on organic.

Inglewood demonstrates what conclusive research released this spring by the Organic Trade Association (OTA) proves—that organic agriculture can transform and lift rural areas and communities not just through more knowledge about healthy eating and access to organically raised food, but through real and long-lasting economic benefits.

The research White Paper, entitled “U.S. Organic Hotspots and their Benefit to Local Economies,” was prepared for OTA by Penn State Agricultural Economist Dr. Edward Jaenicke. It finds that counties within organic hotspots—counties with high levels of organic agricultural activity whose neighboring counties also have high organic activity—have lower poverty rates and higher median annual household incomes.

Rapides Parish in Central Louisiana is considered an outlier organic economic hotspot—a county of high organic  activity but surrounded by counties of low organic activity. And as Inglewood demonstrates, the benefits that organic activity brings even in outlier hotspots are significant.

Organic Hotspots

The hotspots research for the first time links economic health at the county level to organic agriculture, and shows that organic food and crop production—and the business activities accompanying organic agriculture—create meaningful regional economic opportunities. It finds that on average, county poverty rates drop by 1.3 percentage points, and median household incomes rise by over $2,000 in organic hotspots. Organic hotspots also were found to lower the unemployment rate at the county level by 0.22 percent, and raise per capita income by $899.

The same beneficial results are not found for general agricultural hotspots. General agricultural hotspots were found to lower the county poverty rate by 0.173 percentage points, raise the median household income by just $75, and actually raise the unemployment rate by 0.06 percentage points and lower per capita income by $1,076.

Also, organic hotspots were found to have a positive impact at the county level comparable to such major anti-poverty programs as the food stamp program, officially known as the Supplemental Nutrition Assistance Program, and even greater than the Special Supplemental Nutrition Program for Women, Infants, and Children.

“We know that organic agriculture benefits our health and our environment,” said Laura Batcha, CEO and Executive Director of OTA. “This significant research shows organic can also benefit our livelihoods and help secure our financial future.”

“Organic agriculture can be used as an effective economic development tool, especially in our rural areas,” said Batcha. “We’ve always had an intuitive sense that organic is good for communities, and studies show that organic’s price premiums and the employment that organic provides have a positive impact. But this is the first study that puts it altogether in a rigorous set of research. The findings of this research provide policymakers with an economic and sound reason to support organic agriculture and to create more economy-stimulating organic hotspots throughout the country.”
- OTA CEO Laura Batcha

Organic is one of the fastest-growing sectors of the U.S. food industry. Organic food sales in 2015 jumped by 11 percent to almost $40 billion, far outstripping the 3 percent growth rate for the overall food market. Organic crops command a significant price premium over conventionally grown crops. As a result, interest in organic at the production level has grown as the demand for organic has risen. More farmers are transitioning to organic production, and more organic businesses are sprouting.

But what does all this interest in organic and organic activity mean for local economies?

“This research systematically investigates the economic impacts of organic agriculture,” noted the White Paper’s author Dr. Jaenicke. “Its important findings show that organic contributes to the economic health of local economies. The growing market interest in organic agriculture can be leveraged into effective policy for economic development.”

Helping alleviate rural poverty

The White Paper summarizes and discusses three research papers that investigate organic agriculture hotspots in the U.S. and assesses the impact of organic agriculture on local economies. It identifies 225 counties across the United States as organic hotspots, then looks at how these organic hotspots impact key county-level economic indicators.

Organic hotspots are as diversified as the organic industry and the various kinds of organic agricultural activity and accompanying businesses: crop production, livestock production, and organic processors. Along the West Coast, organic hotspots are often areas of high organic fruit and vegetable production. In the Pacific Northwest, organic grain production comes into play. In the Midwest, organic dairy production dominates most organic hotspots, and in the Northeast, organic vegetable and organic dairy production are prevalent.

Organic hotspots are found throughout the country in 22 states—from Tulare and Fresno counties in the Central Valley in California and Benton County in Oregon’s Willamette Valley to Huron County in the “Thumb” area of Michigan and Piscataquis County in Maine’s Highland Region. Organic hotspots are particularly strong on the West Coast, with smaller areas of hotspots in the northern Midwest, in several parts of New England and the northern Mid-Atlantic states, plus a few other isolated areas.

Rapides Parish in Louisiana is one of the few organic hotspot counties in the South—outlier or otherwise. With the exception of Broward County in southern Florida, there are no full-fledged organic economic hotspots (high organic activity in the country surrounded by high organic activity) in the Southern United States. The dearth of economy-boosting hotspots in the American South—where rural poverty is a significant and widespread problem—is a telling statistic.

A recent report published by the U.S. Department of Agriculture’s Economic Research Service shows that one in every four children in rural areas were living in poverty in 2014, compared with one in every five urban-dwelling children. The report also shows that at the county level and looking at 2010-2014 averages, there were 43 counties with child poverty rates of 50 percent or higher, with 31 of these counties in the South. Persistent child poverty counties—those with child poverty rates of 20 percent or more over the last 30 years—numbered 708 with 558, or 80 percent, of those counties in rural areas.

“The issue of poverty is one that I’ve tried to elevate, particularly in the rural areas,” said Agriculture Secretary Tom Vilsack at the Organic Trade Association’s Policy Conference in May. “There a tendency for some folks to think of poverty as an urban issue, but it’s a serious rural issue.”

“We obviously want to expand those (organic) hotspots,” said Vilsack. “We want to make sure that unemployment keeps coming down in those rural areas; that the poverty rate keeps coming down.”

Vilsack stressed the need for America—and the American agricultural system—to provide people with options. “You don’t have to go to the city. That’s an option. But here’s something else—We need to have that local regional system, to have organic, to foster small-scale manufacturing. We’re trying to do that, and if we do, we’ll have better incomes, better jobs, and your (organic hotspots) report reflects that.”

Reverse causality?
The chicken or the egg?

Reverse causality refers to a direction of cause-and-effect. In the case of the hotspots research, this refers to the questions did organic activity lead to increased economic activity in a county, or did a county’s strong economic health lead to it becoming an organic hotspot?

This research sought to measure the causal impact of organic on economic activity. So, to minimize the possibility of reverse causality in the research, Dr. Jaenicke used two techniques:

  • First, the research looked at all the factors that can impact the economy, like income and land values. Then, counties identical in all of these factors—except one is organic and one is non-organic—are compared. This singles out the organic factor. Those data were used in this identification of organic hotspots from 2009.
  • Then, the research moved forward to 2012 to collect the economic data. Since economic activity in 2012 could not impact 2009 hotspots and non-hotspots, the use of time-lagged economic variables helped prevent reverse causality.

Outreach is critical

Why are some counties organic hotspots and others not? The White Paper identified what factors create organic hotspots, and highlighted outreach and knowledge transfer as critical in ttheir formation. The prevalence of outreach services by organic certifiers is found to play one of the strongest roles in organic hotspot formation. Also, whether a certifier is government-sponsored, by a state department of agriculture for example, is another key factor in enabling organic hotspots. 

The organic sector has always been unique in its response to and need for outreach and networking. The infrastructure that conventional agriculture has enjoyed for more than 50 years of county agricultural extension agents, university agronomists, commodity marketing experts, a host of supportive government programs, and even knowledgeable farmer neighbors at the local elevator or coffee shop hasn’t existed for organic producers. The farmer who’s converting to organic is often on his or her own.

In converting Inglewood Farm to organic, the Keller family found that they, too, were often without established resources to turn to for organic advice. According to Elisabeth Keller, the local ag extension agents “were interested in organic, but didn’t know much about it…The advice we got came from other farmers.” Connecting with the Southern Sustainable Agricultural Working Group and its farmer members, making farm visits, and picking the brains of other farmer experts in organic helped them navigate the organic learning curve.

Successful and forward-thinking organic operations like Inglewood view educating others about organic as a critical part of being a good organic steward.

Take the example of Homegrown Organic Farms, based in organic hotspot Tulare County in Porterville, California. Homegrown works with close to 100 organic growers farming some 4,000 acres heavily concentrated in the California’s Central Valley, and spreading from San Diego up to Oregon. Homegrown functions as the support and information system for its growers.

“We’re trying to build a foundation with the baseline always of serving the growers and helping the grower to be successful,” said Scott Mabs, CEO of Homegrown Organic Farms. “Farmers need resources to transition into organic, the right management advice to maintain a successful farm system, and markets for their products. We can help them with all of that.”

Homegrown not only looks out for its farmers, but reaches out to local young people to educate them about organic farming and the career opportunities in organic. Through a program at Homegrown’s hometown school district in Porterville called the Pathways Program, Homegrown growers have been contributing their time for almost a decade to teach kids about organic agriculture and the ag-related careers available to them. In classroom presentations, farm field trips, by providing networking connections, and even working with the students on a one-on-one basis, Homegrown is helping give these young people some valuable skills and insights that could turn into a lifelong and successful career in agriculture.

The White Paper findings prove the importance of the outreach efforts of Homegrown, Inglewood, and countless other organic champions, plus the absolute necessity to have engaged organic certifiers to expand organic.

“The findings of this research show that organic certifiers and the transfer of knowledge and information play a critical role in developing organic,” said OTA’s Batcha. “Outreach, technical assistance and the ability to have a network are vital in creating organic hotspots.”

Turning the findings into policy

The answer to the White Paper’s over-arching research question of whether organic agriculture can be used as an economic development tool is a resounding yes. Policymakers at all levels—local, state and national—now have a proven economic reason to support organic agriculture and to create more economy-stimulating organic hotspots.

“This is a really good reminder for us that we need to be looking at the state and county levels to create policies that expand and live at those local levels to truly maximize the effects of the organic hotspot,” said Batcha.

Five policy recommendations have been made as a result of the findings:

  •  Promote organic agriculture at the federal, state and local level.

  •  Focus on rural development, organic transition, capital structures and barriers to investment.

  •  Expand outreach efforts and facilitate network effects.

  •  Target specific geographic areas for development.

  •  Build broader coalitions to help promote organic agriculture.

“The outlier counties offer real promise for rural development,” said Batcha. “Now we need to figure out how to have a steady investment into organic, and increase the access to capital and to loans and remove other barriers that block organic from moving forward. Organic has been proven to have broad economic benefits for local communities, and now we can work to craft beneficial policies for all.”

“The organic community from its beginning has been focused in grassroots and has been community focused,” said Mabs of Homegrown. “People who cared about what they were eating started the organic movement, and we care about our communities.”

Case in point: After Homegrown’s significant growth over the past decade, the company was searching for a bigger headquarters. The decision was to stay in Porterville. The company purchased a large vacant building, renovated it, and now has around 80 employees in the headquarter office.

“We’re providing tax dollars, and we’re providing good jobs,” said Mabs. “There’s continued growth in organic in this area, and we want to be invested in the people, the land and the community.”

Organic. Good for us. Good for the earth. And good for the economy. //

 
The U.S. Organic Hotspots and their Benefit to Local Economies White Paper is available for download, along with an interactive map that identified hotspots across the country, at OTA.com/hostpots.