The Economic Impacts of
Increased Fruit and Vegetable
Production and Consumption in Iowa: Phase II

Abstract

This report measures the potential net economic impacts that could accrue to the state of Iowa were it to achieve various levels of fruits and vegetable production and direct and grocery sales to consumers. Two of the scenarios anticipate expanded Iowa production of 37 fruits and vegetables so that they substitute directly for existing imported commodities for a quarter of the year. Both scenarios add a new industry where farmers directly market their production to consumers. Scenario one assumes that the entire increment to production is directly marketed, while the second assumes that half of the production is directly marketed. The third and fourth scenarios examine the economic impact that would occur under a consumption-based consideration where all Iowans followed a diet including five or seven servings of Iowa-grown fruits and vegetables per day for three months of the year. These scenarios proceeded with the assumption that half of the increase in production would be directly marketed and the other half would be sold at the wholesale level using conventional means.

All scenarios carefully offset economic losses that primarily would accumulate to corn and soybean farming and from the existing Iowa fruit and vegetable retailing sectors (primarily grocery stores). The scenarios also accounted for existing fruit and vegetable production in order to determine net potential regional or statewide economic gains. The study determines conclusively that, given the scenarios, there is the potential for substantial economic development to occur through import substitution. These gains are realized at the producer level as the amount of industrial output and value added per acre increase markedly in fruit and vegetable production as compared to conventional agricultural practices. These gains also are realized at the direct marketing level because payments made to the new direct marketing sector would, in the main, stay in Iowa rather than migrating to other fruit- and vegetable-producing states and distributors.


Note: The author and reviewers of this paper want to acknowledge Karen Jetter, James A. Chalfant, and Daniel Sumner for their groundbreaking work in 2004 linking potential economic gains for California fruit and vegetable growers with increased levels of fruit and vegetable consumption. Their research served as an inspiration for part of this study. For more information on this California study, go to http://aic.ucdavis.edu/pub/briefs/brief27.pdf