Keynote speaker, Michael Shuman, brought some new ideas to the Florida Small Farms and Alternative Enterprises Conference, held July 27–29, 2012. In his new book, Local Dollars, Local Sense: How to Move Your Money from Wall Street to Main Street and Achieve Real Prosperity, Shuman challenges everyone to take the "Eat Local, Buy Local" movement to the next level.
An economist, attorney, entrepreneur, and advocate of the “Buy Local” movement, he stressed that for local economies to succeed, the concept needs to go deeper than just buying locally grown food from your favorite franchise.
The business you buy your local food and other products from needs to be locally owned, using locally sourced suppliers, vendors and services. Keeping all the dollars earned and paid out in the local economy provides more jobs for people. More dollars earned locally also means more taxes from sales to help municipalities succeed.
Shuman claimed that “Self-reliant local economies have added protection against calamities happening around the world.”
Can local business compete against big business? According to Shuman, since 1900, monies paid to farmers for food went from 40 cents per $1 to 7 cents per $1 due to increases in distribution costs. Food averages 1,500 miles from farm to consumer. When oil costs go up, distribution costs escalate. “Sole proprietorships are three times more profitable than a large c-corporation,” says Shuman.
When oil costs go up, distribution costs escalate. He says that if local businesses collaborate, they can bring better quality and speed of delivery of perishable products, making local business very competitive. Cooperation and organization is the key.
Shuman gave more specific ideas on how to further support a local economy by redirecting investments and pension funds to local business. Some of his ideas:
- Encourage local banks to issue special CD’s that invest in local businesses.
- Cooperative investment: coop membership is not a recognized security so exempt from federal taxes.
- Internet lending through websites like Kiva, Prosper, and Funding Circle for capital needed by local small business startups.
- Slow Muni: use local municipal bonds as collateral to support loans to local food businesses.
- Formation of “Local Investment Clubs.”
- Self-directed IRA’s allow you to invest in local business.
To address the objection that local investing is ‘more risky’, Shuman added, “The real S&P average rate of return for the last 100 years has been 2.6 % whereas the average rate of return on local investment has been 5%.”
If your interest is peaked, you can purchase Michael Shuman’s latest book at Chelsea Green.
Michael Shuman is the Director of Research & Marketing for Cutting Edge Capital. He has authored, coauthored, or edited eight books. His previous book, The Small Mart Revolution: How Local Businesses Are Beating the Global Competition (Berrett-Koehler, 2006), received a bronze star from the Independent Publishers Association for best business book of 2006.