Economic Potential of Increased Fruit and Vegetable Production in the Upper Midwest
Posted April 2010
Expanding the fruit and vegetable industry in the Upper Midwest could have a huge economic impact in the region.
A new analysis from the Leopold Center for Sustainable Agriculture at Iowa State University, in collaboration with CIAS and other regional partners, estimated potential state and regional economic values associated with increased production of fresh fruit and vegetables in a six-state area. The study was conducted by Iowa State economics researcher David Swenson and included data from Iowa, Illinois, Indiana, Michigan, Minnesota and Wisconsin.
This analysis is detailed in a new report: Selected Measures of the Economic Values of Increased Fruit and Vegetable Production and Consumption in the Upper Midwest. This report is available on the Leopold Center’s website.
One of the key assumptions in the study was that farmers in the region expand their production of 28 kinds of fruit and vegetables to meet demand during a typical four-month growing season, and longer for storage crops such as onions and garlic. The study did not include potatoes, sweet corn, pumpkins, apples, grapes, cranberries and cherries. Swenson noted that the region has the capacity to grow enough fruits and vegetables to reach targets outlined in the study.
Two separate scenarios were considered. The first provides state-only estimates that consider each state’s farmers and consumption. The second scenario evaluates both the capacity and potential of individual counties in each state to produce fresh fruits or vegetables for medium to large metropolitan regional markets. This second analysis is indifferent to state boundaries.
Swenson warned that economic values from the two scenarios should not be added together. Furthermore, this analysis estimates the total value of fruit and vegetable production in each scenario, and does not account for existing production. To determine a net increase in jobs or labor incomes, additional research would be needed.
In the first scenario, increased production of 28 fruits and vegetable crops in those six states could mean about $882 million in sales at the farm level, more than 9,300 jobs and about $395 million in labor income. An estimated 270,025 acres would be needed to produce those crops, roughly equivalent to the average amount of cropland in one of Iowa’s 99 counties.
Although relatively few acres would be required to significantly increase fruit and vegetable production in the region, the study found that the job gains could be significant, compared to the number of jobs currently generated by the same amount of land under conventional agricultural production.
Another key assumption was that half of the increased production would be sold in producer-owned stores, resulting in additional impacts on regional economies. The six-state region would need about 1,405 establishments staffed by 9,652 people earning $287.64 million in labor incomes.
In Wisconsin, increased fruit and vegetable production could mean farm-level sales of about $115.1 million, with a potential retail value of $431.1 million and a total of 1,322 farm-level jobs, compared to the 313 jobs currently generated from this acreage under corn and soybean production. If 50 percent of this production were directly marketed in-state, it would require 183 fruit and vegetable establishments that would require 1,259 jobs.
“This the first multi-state study in the Midwest to examine potential economic benefits from increased regional fruit and vegetable production and marketing,” said Leopold Center Associate Director Rich Pirog, who has worked with Swenson on a number of related projects in Iowa and coordinated the regional partners for this study. “Since the same assumptions were made across all of the states in the study, we can examine both state-level and regional potential impacts.”
A second scenario in the study looked at 28 metropolitan areas with populations that exceed 250,000 in and near the six-state region. Swenson’s previous modeling work has shown that potential demand from metro areas for locally grown food could nearly triple fruit and vegetable production in surrounding rural communities, and those regions often cross state lines. Cities such as Omaha, St. Louis and Cincinnati were included in this scenario because some of their markets were within 150 miles of the six-state region, the distance that farmers could travel to sell their crops and remain competitive.
Swenson estimates that increased fruit and vegetable production for the 28 metro markets would result in $637.44 million in farm-level sales and 6,694 farm-level jobs, compared to 1,892 jobs under corn and soybean production. The farmer-retail direct economic impact portion of this activity would generate 6,021 jobs.
Increased fruit and vegetable production in Wisconsin to meet demand for regional metro areas would mean $72.1 million in Wisconsin farm sales and 828 jobs, compared to the 196 jobs currently generated from this acreage under corn and soybean production. The farmer-retail direct economic impact portion of this activity would generate an additional 537 jobs.
The research was funded primarily by a grant from the Leopold Center for Sustainable Agriculture at Iowa State University. Other organizations provided funds to purchase state-level data sets used in the analysis. Among them were the Fresh Taste Initiative in Illinois, the Institute for Agriculture and Trade Policy, the Minnesota Institute for Sustainable Agriculture at the University of Minnesota, Land Stewardship Project, Center for Integrated Agricultural Systems – University of Wisconsin, the Michael Fields Agricultural Institute, Indiana Cooperative Development Services, Michigan Food and Farming Systems and the C.S. Mott Group for Sustainable Food Systems at Michigan State University.
For more information about the Wisconsin research done for this study, contact Michelle Miller, CIAS: (608) 262-7135, firstname.lastname@example.org. For more information about the overall study, contact Dave Swenson, Iowa State University: (515) 294- 7458, email@example.com.