Local Food Market Orientation and Labor Intensity

This research uses descriptive analysis to provide a preliminary examination of the role of human capital in farms and ranches that sell through local food markets. We first provide an in‐depth review of previous research investigating the role of human capital in local food markets. Then, we use U.S. Department of Agriculture Agricultural Resource Management Survey data to provide national descriptive statistics to investigate if the repositioning of food and agricultural supply chains towards more localized markets affects the role of human capital in the business model (in terms of the share of business activities spent on human capital), and secondly the returns to human capital (in terms of wages). Given the place‐based nature of these strategies, we also investigate how these human capital investments vary across the rural urban continuum. We find that local food producers devote a larger share of total variable expenses to labor, and have significantly higher average estimated wages; this is especially true for operations with intermediated‐only or intermediated and direct sales, as opposed to direct‐only sales. We also find that wages are higher for local food producers in more urban locations.