Economic impact assessment of public incentives to support farm-to-school food purchases

Farm-to-school projects have been widely supported by policy makers with funding provided at state and federal levels. Still, many of the outcomes of this inflow of policy and funding remain unclear, often due to insufficient data to examine them. In 2018, New York State (USA) announced the 30% NY Initiative that substantially increases school lunch reimbursements if school districts purchase at least 30% of their ingredients as New York food products. With detailed food purchasing data from the second largest school district in the state and the largest to qualify for enhanced reimbursement, we estimate the gross and net economic impacts of the policy through a customized input-output model. We observe clear shifts in food spending categories that suggest changes in what and where foods were purchased. Results demonstrate net positive value added impacts of the policy even when a negative impact is applied to account for the cost of the policy to taxpayers. For every dollar in gross domestic product lost in the state to support the program, $1.06 of gross domestic product is expected to be added. However, the results are only true to the extent that the increase in local food spending is commensurate with an expansion of the related farm and food product industries to meet that demand. Specifically, at least 67% of the growth in local food spending must contribute to new aggregate demand for the related food product industries, rather than reallocation from other local marketing channels.