4.2 Article

What are the economic impacts of short food supply chains? A local multiplier effect (LM3) evaluation

Journal

EUROPEAN URBAN AND REGIONAL STUDIES
Volume -, Issue -, Pages -

Publisher

SAGE PUBLICATIONS LTD
DOI: 10.1177/09697764231201572

Keywords

Agricultural policy; EU food policy; local economy; local multiplier effect (LM3); rural development; short food supply chains (SFSCs)

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Shortening food supply chains has gained increasing support from policymakers due to its potential to improve returns to farmers and stimulate rural development. This article quantifies the impacts of short food supply chains on local economies using the LM3 method and a dataset of 122 farm businesses from five European Union countries. The results show that short food supply chains have similar multiplier effects as long food supply chain equivalents, highlighting the potential for local economic development.
Shortening food supply chains attracts increasing support from policymakers, to improve returns to farmers and stimulate rural development. However, there is a lack of empirical evidence regarding the impacts of short food supply chains on local economies. To address this, the article quantifies the impacts of short food supply chains on local economies, using the Keynesian-based Local Multiplier 3 method (LM3), applied to a unique dataset of 122 farm businesses from five European Union countries (France, Hungary, Italy, Poland and the United Kingdom). Estimations cover 305 market chains, comprising both short and long food supply chains, in which sampled farmers participate. The results indicate that the revenues from farm production remain largely within local economies, generating a substantial multiplier effect (LM3 > 2). This effect stems from purchases of farm inputs locally including, in the first instance, hiring local labour, as well as the expenditures of local suppliers that re-spend part of their revenues within the local area. The multiplier effects of short food supply chains are similar to long food supply chain equivalents as both use largely local labour and source tradable inputs locally. In shaping food chain policy a broader set of socioeconomic benefits to local development from selling through short food supply chains should be considered.

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