Local Food System Economics

October 2009

Ag-Bio Cluster EconomicsBusiness Model

Alex Osterwalder 2006, from Slideshare.com slide 2http://business-model-design.blogspot.com/2006/11/business-model-template-designing-your.html

Ag-Bio Cluster EconomicsBusiness Case

• A business case captures the reasoning for initiating a project or task.

• It is often presented in a well-structured written document, but may also sometimes come in the form of a short verbal argumentation.

Ag-Bio Cluster EconomicsBusiness Case

A Business Case Contains:• Reference - Project name/reference, Origins/background/current state• Context - Business objectives/opportunities, Business strategic alignment (priority)• Value Proposition - Desired business outcomes, Outcomes roadmap, Business

benefits (by outcome), Quantified benefits value, Costs/ROI Financial scenarios, Risks/costs of not proceeding, Project risks (to project, benefits and business)

• Focus - Problem/solution scope, Assumptions/constraints, Options identified/evaluated, Size, scale and complexity assessment

• Deliverables - Outcomes, deliverables and benefits planned, Organizational areas impacted (internally and externally), Key stakeholders, Dependencies

• Workload - Approach, Phase/stage definitions (Project (change) activities, Technical delivery activities, Workload estimate/breakdown, Project plan and schedule, Critical path)

• Required Resources - Project leadership team, Project governance team, Team resources, Funding

• Commitments (required) - Project controls, Reporting processes, Deliverables schedule, Financial budget/schedule

Consumers Spend $10

Today, You Will Spend $10 on Food;Do You Know Where It Goes?

Everything Else: $5

Distribution, Storage, Packaging, Labeling, Inspection, Certification, Wholesaling, Retailing, Marketing, Advertising

Food Processing: $1.50

Food Production$2

Food Preparation: $1.50

Consumers Spend $10

$4 of That $10 Is for Labor

Labor$4

Consumers Spend 20¢

2%, or 20¢, Will Be Spent on Locally Sourced Food (within 100 Miles)

Everything Else: 3¢ – 7¢ (15% – 35%)

0¢ – 4¢ (0% – 20%) more food for the money

Food Processing – 4¢ (20%)

Food Production5¢ (25%)

Consumers Spend 20¢

40%, or 8¢, of That 20¢ Is for Labor

Labor8¢

Food Consumption

The Differences Are Crucial!

Food Processing

Food Production

Food Preparation

Global Food System

Food Processing

Food Production

Local Food System

SubsidizedSustainable

Food Consumption

Global vis-à-vis Local Sourcing of Food

Food Processing

Food Production

Food Preparation

Global Food System

98%

2% Local Food System$3M / year Spent by 40,000 Linden Residents

$147M / year Spent by 40,000 Linden Residents

.9 Employed / 1000 residents = 36 Jobs @ $30K / year

Local Food System

Food Consumption

What if you choose more locally-sourced food?

75%

25%

Food Processing

Food Production

Food Preparation

Global Food System

Food Processing

Food Production

Local Food System

$37.5M / year Spent by 40,000 Linden Residents

$112.5M / yearSpent by 40,000 Linden Residents

.9 Employed / 1000 residents = 450 Jobs @ $30K / year

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

Food Processing

Food Production

Local Food System

If sourced locally, 20% of the calories you consume each day come from

400 / 2000 Calories

Vegetables and Fruitswhich are seasonal and expensive

What if you choose more locally-sourced food?

Wider Variety of Food Products with More Calories

Season Extension and Year-Round Food Production

Integrated Processing and Preparation

+ +

New Harvest Financial Overview

Local Food Systems Economics—Jobs

• Today, 40,000 people in North and South Linden Spend $3M / year on locally sourced food (2%) $1.2M / year for labor (90% outside the community)

• What if you brought what’s outside, inside? $1.2M / year for labor (90% INSIDE the community) 36 MORE jobs paying $30K / year (livable wage)

• What if you spent $6M / year (4%)? $2.4M / year for labor (90% INSIDE the community) 36 MORE jobs paying $30K / year (livable wage)

Spend more on food locally sourced from the North and South Linden community and MORE

People arehealthier

and happier!Multiplier effect occurs spurring business growth

in green energy and distributed manufacturing

Money is spent, captured, and reinvested in the community

Jobs are created

Food processing and preparation operations

are established

Vacant, abandoned, and underutilized properties are put

into food production

Getting Involved in Local Food Systems—The Curriculum

• Introduction to Food Production in a Local Food System• Soil Production• Business Planning in a Local Food System• Seasonal and Extended Season Food Production• Branding / Reputation / Food Safety Standards / Compliance• Food Processing Incubation• Mobile Kitchen / Food Cart Operations• Year-Round Food Production Under Glass and Underground• Aquaculture: Tilapia, Yellow Perch, Freshwater Prawns

Get Ready for Business in 2010!

Workshops Begin in November 2009Enroll at the New Harvest Urban Arts Center