2011-12-27 "Hyper-local markets provide big economic boost" by Stacy Finz from "San Francisco Chronicle"

[http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/26/BUCV1MCFLB.DTL]
In 1997, only 70 people were employed at businesses on the block of 18th Street between Dolores and Guerrero streets in San Francisco. Today, when California's unemployment rate is nearing 12 percent, there are 400 jobs.
Many in the city credit Bi-Rite Market, a specialty grocery store, with fueling the neighborhood's economy, not just by bringing other businesses to the street but by supporting other Bay Area companies.
"Our (mission statement) is knowing the person behind the product, and having them be local makes that possible," said Kirsten Bourne, marketing director at Bi-Rite. "Surely we sell Italian wines and French cheeses. But as much as possible we go with local."

Model of the future -
Michael Shuman - an economist, author and research director for Cutting Edge Capital, an Oakland company that specializes in innovative financing - calls a business such as Bi-Rite a "community food enterprise" and says it's the model of the future.
So-called CFEs are locally owned, employ locals, and use mostly local goods and services.
"There's good evidence to show that CFEs generate more jobs - two to four times the amount per dollar of sales - and generate more income and wealth for (their) communities than non-locally owned businesses, even ones that source goods from the area," said Shuman, whose report "Community Food Enterprise: Local Success in the World Marketplace" shows how these types of businesses grow local economies while becoming more competitive globally.
The report was issued by the Business Alliance for Local Living Economies and the Wallace Center at Winrock International and studied 24 local food enterprises across the country, including Swanton Berry Farm in Santa Cruz County.
 While Bi-Rite was not part of the study, it fits the mold. The San Francisco grocer uses local printers, local sign makers and local designers, and 90 percent of its employees live within walking or biking distance of the market.
 The store is well known for supporting and promoting regional purveyors - everything from produce and chocolate to jams and barbecue sauces. Last year it spent $6.9 million doing business with small companies, most of them from Northern California, according to owner Sam Mogannam.

Food startups take off -
 And the cycle continues. Last year Bi-Rite started showcasing Michele Manfredi's SFQ Original San Francisco-style Barbecue Sauce in its store when her company was a tiny startup and she did everything by hand.
SFQ is still fairly small, but now Manfredi can afford to outsource her kitchen work, jarring and label making. She could probably save money by scouring the Internet for cheap labor, cheap jars and even cheaper labels.
But she's decided to go regional - most of her ingredients are sourced in the Bay Area, her jars are from an Oakland company, her labels are from Napa, and her preparation and jarring are done in Healdsburg.
 "I looked even closer to home," she said. "But it was a challenge finding someone to work with a small producer."
Dafna Kory of Inna Jam, a Berkeley company, also sells her fruit spreads at Bi-Rite and 49 other specialty markets, mostly in Northern California. Kory's philosophy is simple - the ingredients for her jams have to come from within 100 miles of her kitchen. She said she spends about $50,000 a year just on produce.
"It's hard to be a farmer," she said. "As a high-volume buyer - I'll buy 30 flats of strawberries at a time - they're able to sell to me without a distributor and that means more profit for them, which enables them to pick longer and keep pickers on their payroll."
Kory also buys her jars locally, rents commercial kitchen space in Berkeley, and employs 10 people from the East Bay during her jamming season. She's not making a big dent in the unemployment rate, but she only launched last year.
"I've already had to quadruple my production this year to keep up with demand," she said, adding that she produced 30,000 jars of jam this year. "Next year I plan on having year-round staff."
Kathleen Merrigan of the U.S. Department of Agriculture said the government values local food businesses so much that it's willing to help with the cost of doing business.
In fact, Congress has mandated that 5 percent of the money set aside for the USDA's Business and Industry Loan Guarantee Program go to farmers who sell their products regionally.
 There's a good reason for it, she said.
 "Studies show that farmers who sell locally and regionally employ 13 full-time workers per $1 million revenue earned," she said. "Farmers who don't sell locally or regionally employ three workers for every $1 million in revenue earned."
 Economists suspect that local sales require more employees to work farmers' markets and fruit stands and to deliver to local stores. Because it fuels the market - a 2009 Iowa Department of Agriculture and Land Stewardship study showed that farmers' markets in that state pumped more than $71 million into the economy - the USDA is committed to farmers who practice the model.

Guaranteed loan -
That's why when Watson Coast Produce - a wholesale fruit and vegetable company that buys from local farms, distributes to 13 counties in California and has $30 million in annual sales - couldn't get a loan to expand, the USDA stepped in to guarantee a $4.6 million note.
 "We basically left no risk to the bank because we believed in what this company is doing," Merrigan said.
There are dozens of USDA programs through the "Know Your Farmer, Know Your Food" initiative geared toward helping local food businesses, she said.
"This is about jobs, the economy and community vitality," she said. "It's created a renaissance in agriculture and that's very exciting."

Shoppers stock up on produce at the Bi-Rite Market in San Francisco's Mission District. Economists say "community food enterprises" like Bi-Rite benefit their local economies significantly more than a typical non-locally owned business. Photo: Sarah Rice / Special to The Chronicle

In addition to supporting local food producers, the Bi-Rite Market uses local printers, local sign makers and local designers, and hires workers who live nearby. Photo: Sarah Rice / Special to The Chronicle

Inna jam, available at Bi-Rite, is made solely from fruit picked within 100 miles of the company's Berkeley headquarters. Photo: Sarah Rice / Special to The Chronicle

Local organic dried flower bouquets are for sale at the Bi-Rite Market in the Mission District. Photo: Sarah Rice / Special to The Chronicle

Liz Ryan, of San Francisco, shops the cold section at Bi-Rite Market in San Francisco, Calif., Wednesday, December 14, 2011. The market uses mostly local goods and local services, so their business has added jobs to the neighborhood. Photo: Sarah Rice / Special to The Chronicle