Friday, June 14, 2013

The Failure to Link “Buy Local” to ROI

There were two conditions I had to meet before I could participate in my first roundup on the cattle ranch that had been homesteaded in my native Idaho by my paternal great-grandparents and grandparents and then run by my parents.

First, I had to graduate from drying the dishes after dinner to taking a turn from a step stool at washing them.  Second, I had to get past my fifth birthday.  I eagerly achieved both goals.

This year, the overall cattle herd in the United States is the smallest its been since 1952, the year before my inaugural roundup when our population was half what it is today.

Ours was a small, independent family operation.  Our 500 head of cattle were range-raised, grass-fed and free of the low-dose antibiotics so controversial today because when ingested as food, it lowers our response to those drugs when we need them.

The livestock cattle we grew were “Shorthorns,” ironically a breed improved from cattle that were namesaked for Durham, England, a sister-city to my adopted home of Durham, North Carolina.

In 1946, two years before I was born and as my parents were acclimating after my father’s return from serving in the 35th Tank Battalion, some of the first studies were documenting the importance of independent, locally-owned businesses like the ranch.

My now-concluded career helping to grow local business climates may have even been inspired by watching my parents run that ranch.

I was disappointed, but not surprised, when the American Tobacco Complex in Downtown Durham, which has been boosted by nearly $100 million from Durham taxpayers, elected recently to import a Raleigh restaurant to handle its event catering here, a snub that will be felt by many living in Durham, “The South’s Tastiest Town.”

This move essentially exports not only all of the catering revenue out of this local business climate but also many ancillary purchases such as equipment rentals and related economic impact into another business climate…the one where the owners are based.

Being successful at business is no guarantee of a grasp of the fundamentals of community economic development.

Many communities such as Durham fail to build “buy local” stipulations into agreements when they incentivize developments.  In some cases they may have their hands tied from doing so by state legislation, further undermining the very fundamentals of community economic development.

Even when they could have, officials and advocacy organizations often act instead as another developer-friend put it recently “like a desperate tween with an ‘oh-my-god-I-could-die’ crush who considers his/her world near-over when the object of desire doesn’t text back in 10 seconds.”

Also playing a role in this failure to connect the dots could be the decision-making by those who now hold two out of three jobs in Durham but don’t make this community their home.

One of the breakthrough studies validating the importance of buying local was conducted about the time I was born in the late 1940s by Dr. Walter Goldschmidt, a UC Berkley-trained sociologist and anthropologist attached to the Bureau of Agricultural Economics of the United States Department of Agriculture.

His study found that all else being equal, small or mid-sized ranches and farms like my family’s promoted higher quality rural communities than large farms and livestock growers.  A similar study at about the same time found that smaller businesses had the same effect on manufacturing communities.

According to Stacy Mitchell of the Institute for Local Self Reliance (ILSR,) under the sway of large agribusinesses, USDA officials actively suppressed Goldschmidt’s analysis and Congress ignored the study on manufacturing businesses, much like “desperate tweens” I suppose.

Goldschmidt, who later taught and researched at UCLA passed away in 2010 at age 97.  Coincidentally, our paths would cross again during my career in community-destination marketing when I was stationed in Anchorage, Alaska beginning in 1978.

He had also conducted the research that informed the 1971 Alaska Native Claims Settlement Act that paved the way for the Trans-Alaska Pipeline which had begun operation a few months before I arrived there.

The challenge for Alaska and Anchorage has been to leverage the impact of those developments into greater economic self-reliance.  That has meant buying local as a means to expand capacity and reap a full share of economic impact.

They had to learn stand up to Seattle just as Durham has had to stand up to Raleigh in order to foster a stronger local business climates and tax bases.

A few months ago, ISLR published its 6th annual Independent Business Survey with data gathered from nearly 2,400 independent, locally owned businesses across America, employing more than 37,000 people..

Half are retailers and half are a mix of service providers such as banks, farms and ranches, manufacturers, restaurants, wholesalers etc.  Two-thirds have five or fewer employees while only five percent have 50 or more.  This is much truer to small business than the federal government definition.

According to the report, places such as Durham with a grassroots “buy local” initiative saw these businesses grow more than two and a half times the rate of those elsewhere.

The survey found that “showrooming” was a significant challenge to independent, locally-owned businesses.  This is where people window-shop in local stores but buy later online.  Financing is still an issue as well.

But a major issue is that policies such as corporate subsidies, tax loopholes, and others give unfair advantages, or even fail as Durham did with American Tobacco, to connect the dots about the importance of using local businesses as part of its return-on-investment to the taxpayers.

As more and more communities pursue sustainability and the triple bottom line, it will be essential to also connect the dots for economic developers and officials about the importance of independent, locally-owned businesses.

1 comment:

a ji o ji suno ji said...

If you think that road was bad wait for the one from Bucamaranga to San Gil, hours and hours of climbing - doing it on a bus was tiring enough. Great views though, hope that's enough to keep you going if you come this way.
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