Actual Numbers from a Farm
An Upper Valley diversified farm shared the following information about its expenses in a farm newsletter and agreed to let us share it here, anonymously:
Year to date, the farm has logged $238,000 in expenses. An amazing $193,000 of that, or 81 percent, has gone to local people or companies (defined as New Hampshire or Vermont). The vast majority of that money stays right here in the Upper Valley, including more than $100,000 in payroll. The biggest non-VT/NH expenses? #1: the IRS for $19,000, #2: various tools totaling $7,500; and #3: Johnny’s Seeds over in Maine for $5,300.
There are various good reasons for eating locally and supporting farms, but the local-dollar multiplier is a great one. So thanks again for supporting the local economy by eating local food.”
Um, what is the “Multiplier Effect”?
Good question! Here’s how the North Carolina State Extension Service explains it:
The “multiplier effect” is the concept that money spent on local food [or other local businesses] is more likely to be re-spent within the local economy. This occurs when farmers and other local businesses buy inputs locally, employ local people, and otherwise work with other local businesses. The economic analyses estimating the multiplier effect are complicated and depend on a variety of contextual factors. Studies estimate multiplier effects for spending on locally produced foods to be between $1.32 and $1.90, meaning that for every dollar spent on local products, between $.32 and $,90 worth of additional local economic activity takes place with farmers.
Thanks to farmers markets participating in the Upper Valley Farmers Market Collaborative, we know that in a recent pre-pandemic year, estimated gross agricultural vendor sales at seven of our vibrant farmers markets is $768,444. Total sales across our 14 Upper Valley markets likely tops $1.5 million, all money going back in the pockets of our local farms, crafts, and food businesses, and in turn circulating–and multiplying–locally.
A little speculative math: $1.5 million times .32 = $480,000 circulating locally just from farmers markets sales in 14 towns!