By DOUG SCHMITZ
Iowa Correspondent

AMES, Iowa — A new study released by Iowa State University’s (ISU) Leopold Center for Sustainable Agriculture estimated a huge state and regional, economic boon associated with increasing fruit and vegetable production in the Upper Midwest.

“This is the first multi-state study in the Midwest to examine potential economic benefits from increased regional fruit and vegetable production and marketing,” said Rich Pirog, Leopold Center associate director. “Since the same assumptions were made across all of the states in the study, we can examine both state-level and regional potential impacts.”

Conducted by ISU Economist David Swenson last November, the new analysis, entitled Selected Measures of the Economic Values of Increased Fruit and Vegetable Production and Consumption in the Upper Midwest, included two scenarios of the six-state area of Iowa, Illinois, Indiana, Michigan, Minnesota and Wisconsin.

According to the study, released March 30, one of the key assumptions of the research was that farmers in the region grow enough of the 28 kinds of fruit and vegetables to meet demand, based on population, during a typical growing season (about four months of the year) and longer for crops that could be stored, such as onions or garlic.

Since ample supplies were already being grown in the region, potatoes, sweet corn, pumpkins, apples, grapes, cranberries and cherries weren’t included in the study.

Scenarios
In the first scenario, increased production of 28 fruits and vegetable crops in the 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, the study said.

But in order for this to occur, Swenson said 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.
While relatively few acres would be required to significantly increase fruit and vegetable production in the region, the study found that the job gains also could be significant, compared to the number of jobs currently generated by the same amount of land under conventional agricultural production, he added.

Swenson said 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 Iowa, increased fruit and vegetable production could translate to farm-level sales of about $61.4 million, with a potential retail value of $230.1 million and a total of 657 farm-level jobs, compared to the 131 jobs currently generated from this acreage under corn and soybean production, the study estimated.

If 50 percent of this production were directly marketed in-state, Swenson added that it would require 98 fruit and vegetable establishments, requiring 672 jobs.

In the second scenario, 28 metropolitan areas with populations that exceed 250,000 in and near the six-state region were examined.
“The reason for the second scenario is that economy theory argues strongly that local foods development success will occur first where demand is most dense relative to regional supply capacities,” Swenson said.

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, since those regions often cross state lines.

Cities such as Omaha, St. Louis and Cincinnati were included in this scenario because a portion of their markets was within 150 miles of the six-state region, the distance that farmers could travel to sell their crops and remain competitive.

“This scenario picks up nearby metropolitan cities like Omaha and St. Louis, but it is not focused on satisfying non-metropolitan markets, so the results are lower than in scenario one,” he said.
The study said producers closest to dense demand stand the best chances of developing production scale and scope that allows them to be the most profitable and therefore durable over time.

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 – with the farmer-retail direct economic impact portion of this activity generating 6,021 jobs.
Moreover, increased fruit and vegetable production in Iowa to meet demand for regional metro areas would mean $34 million in the state’s farm sales and 364 jobs, compared to the 72 jobs currently generated from this acreage under corn and soybean production.
That would mean the farmer-retail direct economic impact portion of this activity, he said, would generate an additional 263 jobs. But Swenson offered one caveat: the two scenarios must not be added together, since they overlap significantly.

Lastly, Swenson said, besides eliminating crops that are already produced in excess of regional demand, the study doesn’t account for net growth.

“There are significant amounts of fruit and vegetable production among the states, most especially in Michigan, but this study does not measure exactly how much of each studied fresh fruit and vegetable is actually supplied by within region producers,” he said. “That analysis will be done by others.”

Swenson added that the first scenario provided state-only estimates with economic values compiled from each state’s farmers and each state’s consumption. The second scenario evaluated individual counties within the six-state region and their capacity and potential to produce fresh fruits or vegetables, and was indifferent to state boundaries.

The analysis estimates the total value of fruit and vegetable production in each scenario, and doesn’t account for existing production. To determine a net increase in jobs or labor incomes, additional research would be needed, he said.

”Population drives the economics of all of this,” he said. “That means that the most populous state, Illinois, has the greatest statistical potential for gains, given my assumptions, followed by Michigan. Iowa, with a low population, has the least gains to anticipate under either scenario.”

To read the full report, visit www.leopold.iastate.edu/research/marketing_files/midwest.html