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Economic Costs and Benefits of Urban Agriculture in East London


James Petts
SUSTAIN the alliance for better food and farming
94 White Lion Street, London N1 9PF
Tel: 020-7837-1228 fax: 020-7837-1141
e-mail: james@sustainweb.orga
website: www.sustainweb.org


Acknowledgements

Thanks to Geoff Snelling, Jenny Usher, and Claire Pritchard and Vicki Hird of Growing Communities for their contributions to the case studies.

Preface

This paper explores some of the current issues and economic aspects of urban and peri-urban agriculture (UPA) in East London. There have been very few studies attempting to calculate UPA size and contribution to the economy in East London or elsewhere. One study(1) in the United States (US) found that the net economic value of 151 plots was between $160 and $178 per year, with a range between $2 to $1134. 6% of gardeners had a yield worth more than $500. Gardeners spent an average of $47 on plants, seeds and inputs, giving an average net yield of a plot at around $113. There are no studies attempting to measure the external costs and benefits of UPA in East London that the author is aware of.

Studies calculating UPA's income contribution are unlikely to accurately estimate the quantities of food produced because informal agricultural activities are not generally included. One estimate(2) calculated that the 30,000 or so allotment holders in London produce nearly as much fruit and vegetables in weight terms as horticultural enterprises. Prices are also difficult to measure due to fluctuations and variations at different markets.

A formal analysis of the economic costs and benefits is beyond the bounds of this paper. It is intended, however, to lead to discussion of the need to support a re-development of a sustainable, food economy in East London, support for sustainable, social enterprises, and a rethink of our cities' relationship to food.

Current situation and issues

The United Nation's Food and Agriculture Organisation (FAO) has warned that the 12 megacities (+10 million population) will experience increasing difficulty in feeding themselves(3) . London's 'ecological footprint' is estimated to extend to 125 times the capital's surface area with food accounting for around 40% of this(4) . London's residents, visitors and workers, consume 2.4 million tonnes of food(5) and produce 883,000 tonnes of organic waste per year(6) . The food industry makes a significant contribution to London's Gross Domestic Product (GDP) with around 11% of all jobs found in the food sector(7) .

The Lea Valley region of East London typifies a declining industrialised horticulture. This once thriving area for food production has shrunk since the war due to the relative scarcity of labour and competition from imports from an increasingly globalised food economy. The industry now covers an area of 120 hectares under glass. It has a high productivity with 200 or so horticultural enterprises ranging in size from less than an acre to 20 acres with production nearly always automated and hydroponic, often in peat based media and using artificial fertilizers. There is some pesticide use but it is now lower because of the adoption of an Integrated Pest Manangement (IPM) approach, whilst energy use has also been reduced through technological improvements. The enterprises sell nationally to wholesalers and supermarkets.

This remnant of urban agriculture (UA) could provide an opportunity to redevelop, modify, and diversify the industry towards a more sustainable system; further improvements in technology and IPM, conversion to organic, development of sustainable, social enterprises, and production for local London markets, such as Farmer's markets, shops, restaurants, and co-ops, etc, could utilise the existing infrastructure and change the modes of production and food system in London.

UA in East London is generally no longer a response to crises or 'coping strategy' as it once was during the first and second world wars and in previous centuries. Commercial activities are primarily motivated by profit although some producers, particularly organic, have a 'philosophy' attributed to their lives and see it more than simply a way to make money. Sustained losses to enterprises result in an erosion of capital, increase in debt, and eventual bankruptcy. Social and environmental objectives and policies of initiatives (local sourcing, price discrimination/sliding subscription scales, worker's rights and conditions, animal welfare, etc), need to coexist with financial profitability and economic sustainability if they are to survive and thrive.

Recreational food growing is motivated by factors other than profit such as therapy and enjoyment. UA activities do provide a way for low-income groups to have a supply of fresh fruit and vegetables along with many of the other benefits, contributing to household food security and nutrition. This is of particular importance to communities in East London experiencing problems in the availability of, and access to, affordable, fresh food or 'food poverty'.


Case Study 1: Geoff Snelling

Geoff Snelling has been an allotment holder for over 15 years. He has 2, 10 rod plots (10-rod plot is 30'x 90') at the Seven Kings' allotments in Redbridge. He grows a very wide range of soft fruit and vegetables and composts all waste. He tends to grow mainly higher value/priced produce such as asparagus, loganberries, chillies, and rare potato varieties. His primary reasons for allotment gardening are therapy and a supply of fresh, organic produce.

Geoff and his wife have a mainly vegetarian diet and nearly all their fruit and vegetable requirements come from the plot. He gives away any surplus produce to his family or exchanges it (barters) with other plot holders. Geoff spends between 30-35 hours per week gardening in the summer, and between 10-15 hours in the winter. He generally drives to the site which is less than a mile away because of difficulty walking and the amount of things/produce to carry. He pays £52 per year in rental for the 2 plots to the allotment association.

Geoff Snelling is a member of the East London Organic Gardeners (ELOG), contact ELOG on 020 8550 2818


Most holdings in peri-urban regions of East London have, or are, either diversifying into recreational activities such as golf courses or pony paddock, continuing to produce cereals and/or meat for national and international markets, or 'setting-aside' land under the government's grant scheme. No subsidies are available under the Common Agricultural Policy (CAP) for horticulture or small-scale, sustainable schemes. This factor has contributed to the lack of sustainable food and horticultural enterprises on the urban fringe producing for local, London markets.

UPA is under extreme pressure from other, more lucrative, land use demands such as housing and work spaces. This is expected as cities grow, but partly because of planning regulations (Green Belt) this has meant holdings on the urban fringe continue to be large, producing 'bulk' crops (cereals, potatoes, etc) for national and international markets, rather than transforming into small-scale holdings producing horticultural crops for local food industries and markets.

Processing and storage infrastructure, and markets of sustainable, regional systems are rare and underdeveloped in East London. Appropriate processing and manufacturing industries are important to ensure a consistency of supply, adding value to produce, and increasing incomes and profits of enterprises(8) . However, processing enterprises themselves need a reliable supply from producers to ensure regularity, efficiency and productivity. Appropriate storage is important to ensure regularity and a balance to seasonal variations. There is some vertical integration both up and down stream from markets to production and visa versa illustrated by Growing Communities and Jenny Usher (see Case Studies). However, this is relatively limited and more often enterprises and holdings are continuing to specialise in particular commodities and/or areas of the food chain.

The eight farmers' markets in London contributed over £2 million last year(9) to the income of the capital and more markets are opening all the time. Farmers must come from less than 100 miles away -double the usual distance rule of other farmers' markets but a great improvement on the 600 miles which the average vegetable travels before reaching market(10) . This 'food mile' allowance can only be reduced when more urban and peri-urban producers switch to direct marketing and sales channels, diversify production for local industries and markets, and reduce seasonal fluctuations.

Urban-rural linkages are crucial to sustainable enterprises and initiatives in East London. With a lack of producers in urban and peri-urban areas producing for local markets, initiatives are forced to source from further afield, for example, Growing Communities buying from farms in Oxfordshire and East Anglia.


Case Study 2: Jenny Usher

Jenny Usher is an organic grower in Essex, 20 miles from London. She is also a trustee of the Soil Associaton, and the Spitalfields Market co-ordinator. Jenny farms 3.2 hectares producing herbs, soft fruit, vegetables, greenhouse crops, and top fruit - although no bulk crops such as potatoes, carrots, etc. Jenny's own produce accounts for about 10% of all the produce she sells (40% in summer, 5% in winter). She buys in additional produce from wholesalers and sells through farm gate sales, a box delivery scheme (30 boxes per week) and the Spitalfields' Organic Market and other farmers markets (accounting for 52% of turnover).

The growth in the retail of organic foods by the major supermarkets is undermining the markets she has traditionally sold at. Jenny has a turnover of about £100K per annum, and usually breaks even, although she sometimes makes a small net profit. Jenny also notes that the cost of transport and loss of yields due to pests are significant threats to profitability. Jenny spends over 40 hours per week working, and employs 1 person for 35 hours per week during the summer and 18 hours in the winter. She employs other casual workers in the summer, drivers, and market 'helpers' to assist activities. Jenny cites the weakness of the Euro as a cause of imports becoming relatively cheaper, therefore making her own produce less profitable.

Contact the Soil Association on 0117 929 0661


Urban-rural links and UPA could be an effective buffer in London to external economic 'shocks' such as rapid increases in prices and problems with domestic supply caused by factors such as disease [foot and mouth] and transport/energy [petrol crisis]. This buffer would assist the regions food security and add to the sustainability of the capital. It currently benefits the informal grower more in London because the multiples and wholesalers usually source supplies from elsewhere. Larger volumes of imports caused by shocks may result in higher external costs such as the cost to business and NHS from pollution related illness, effects of climate change, and higher transport maintenance costs.

Recreational gardening and community growing initiatives are not financially profitable especially when the opportunity costs of alternative labour activities are considered. However, as noted earlier, profit is not a motive for the informal food grower. Participants cite therapy, recreation, exercise, and a household supply of fresh produce as their main reasons. (See Case Study: Geoff Snelling). Also noted earlier, as well as the health and other benefits of 'Growing your own', participants benefit from a fungible income and improved household food security.

All the case studies in this paper use an organic mode of production which can include aspects of IPM, agroforestry, soil control, 'permaculture', companion planting, etc. Organic methods of production are to be favoured for their environmental and animal welfare benefits [But, this is not to say that bad management, even with organic methods, will not lead to negative impacts such as soil erosion, water pollution, etc.]. There are concerns, however, that the organic industry is being subsumed by global agri-business through takeovers, and new product ranges [Seeds of Change –owned by Mars, Anchor Organic butter, etc.] -resulting in a loss of social and environmental advantages(12) . There is a rapid growth in the organic food sector in the UK but few domestic producers have been able to capitalise on this. Domestic supply of organic produce is increasing at a slower rate than demand with the result of more imports of organic foods from Europe and elsewhere . The government's organic conversion scheme was heavily oversubscribed by producers, unlikely to convert if no subsidy or grant exists to compensate for a fall in yield, higher costs of production, and an inability to command higher prices during the conversion period.

The bargaining power of the multiples in negotiations with producers over price, uniformity, etc has been critised. Their expansion into the organic sector may have affected consumer confidence and sales of producers in more traditional markets (See Jenny Usher). Longer supply chains may increase the risk of fraud in the sector affecting sales and confidence still further(13) . The 'organic' label only describes the method of production and not the journey or transformation the food has taken. However, any 'local' or 'sustainable' labeling/certification proposal must be approached with caution. So should any proposal to develop the marketing aspects of London produced food which would have to overcome the very real barriers of the risks and perceived risks of soil and air contamination, lack of knowledge of cooking with local, seasonal produce, and consumer desire for some exotic/convenience/highly processed foods. It would also need to carefully consider the requirements of ethnic groups, accounting for over 20% of London's population, encouraging the production of crops new to the farmer.



Costs and Benefits

The internal economic benefits of production range from profit, income, employment, etc. As noted in the previous section, non-commercial participants will benefit from a fungible income through a reduction in purchases of food from markets [This will also apply to commercial participants but to a much lesser extent given the degree of specialisation].


Case Study 3: Growing Communities

Growing Communities is a well-established, organic box scheme in North East London. The group distributes 180 or so boxes per week mainly to families, with 20% of customers being on low incomes. The group sources supplies from a farm in Oxfordshire, farmers in East Anglia, and elsewhere in the summer. The group also buys from wholesalers in the winter but has a policy of not buying produce from outside Europe except bananas. A typical 'veggie' box contains carrots, potatoes, onions, tomatoes, mushrooms, cabbage, etc, delivered weekly, and costing £35 per month. Fruit bags usually contain oranges, bananas, apples, plums, kiwis, etc, costing £78 per month. The group is starting to do 'salad bags'. Growing Communities has 8 part-time staff and 2-5 volunteers. The box scheme is considered to be financially sustainable and makes a small surplus which is reinvested in the scheme.

The group has also set up two food growing projects in municipal parks. Although there has been some concern with possible contamination, they have been successful in gaining funding to conduct testing. The growing projects have help from volunteers although the proportion they contribute to the box scheme is minimal. There are plans for this part of the scheme to expand.

Contact Growing Communities on 020 7502 7588


The close proximity to home for these gardeners saves time and effort and reduces their shoe leather costs –the incidental costs incurred by travelling to and from sites.

Employment and training opportunities could be increased in London's food economy and in auxiliary industries such as plant nurseries, manufacturers and auxiliary businesses. UPA activities, especially when organic, generally have higher labour demands compared with more industrialised systems. However, unemployment in East London, as in the UK as a whole, is no longer such an important political issue or social problem as it once during the 1980s and 1990s [Although there are some areas in East London which still have very high unemployment rates]. More critical to food enterprises is the scarcity of unskilled labour, shortage of skilled labour, and high wage costs. Training in horticulture, food processing, etc, will develop labour skills and increase participants' 'employability'.

External economic benefits of UPA include cost savings to various sectors including waste management, and reduced cost of transport. The ability of UPA to recycle organic wastes reduces the municipal authorities' potential costs associated with waste disposal and landfill. UPA in London could play a major role in any municipal authorities' waste minimisation strategy.

Cost savings may accrue to municipal authorities and the private sector through the reduced need for storm water infrastructure and management. Soils will retain water for longer periods especially when high in organic matter, whilst hard surfaces often result in a rapid run-off of rainwater into drains and catchment channels leading to a greater potential risk of flooding and flood damage.

Improvements in air quality brought about by sustainable UA activities may lead to improvements in the health of the population and productivity of labour resulting in cost savings accruing to individuals, Government health departments and companies.

The internal economic costs of UPA enterprises include items such as wage labour, plants and seeds, and transport. New UA enterprises may incur very high initial start-up costs. The cost of land, machinery, labour, and other inputs can be a significant barrier to entry to new potential entrants. Cost savings of UA are not generally 'internalised' and will accrue to other sectors. They may also occur over a number of years and hence are likely to be heavily discounted.

Other barriers to entry to UA in East London include access to, and security of, land, relative labour scarcity and undeveloped labour skills, underdevelopment of downstream activities (processing, storage, markets, etc.), and competition from food imports. The cost of transportation of produce to markets can also be a major factor in determining economic viability.

The external economic costs of some UA activities can include factors such as pollution abatement and remediation where chemical inputs are used. The cost to the water utilities of cleaning water contaminated with pesticides and other biocides can be substantial. Thames Water plc has sought to reduce pesticide use by farmers and others in the Thames Valley as this is more cost effective than treatment.

External costs of UA can also include the costs associated with transport related activities (vehicle emissions/pollution) although these will be significantly lower than those associated with imported produce and air freighted food.

Opportunities and challenges

Regional, national, and international policy changes are needed to overcome structural barriers. Potential new entrants operating sustainable modes of production would be encouraged by the internalisation of the external economic costs and benefits. Appropriate standards, incentives, taxes, and regulations could all be used to internalise costs and benefits and shift profitability in favour of sustainable practices and systems.

Local food sourcing policies in the statutory sector provisions (hospitals, prisons, schools, etc.) under 'Best Value' could provide a major impetus to the development of UPA given that a good proportion of all food consumed is through this sector. Price and quality comparability would be needed to enable justification by relevant authorities.

Strategic support from local and regional authorities including the Greater London Authority (GLA) and London Development Agency (LDA) is essential. GLA strategies, monitoring and research of UA and LDA funding for development of sustainable activities would encourage food sustainability in the capital. As would changes to, and modification of, 'less sustainable' enterprises and the 'mainstream' food economy. The GLA should consider setting up a 'multi-stakeholder partnership' (Food Sustainability Council, Food Security Working Group, Food and Nutrition Committee) which could advise the GLA and Mayor on food and farming issues in London.

Informal food growing in London makes a significant contribution to the economy and sustainability of the capital, as well as to household food security. Policies need to address the concerns of urban gardeners including soil contamination, security of land tenure, municipal support, and distribution of, and access to, areas for food production.

UPA and sustainable, local food initiatives and enterprises would benefit from an independent network in London, representing them at a regional level and giving a voice to their concerns and issues. Many similar networks already exist in other regions such as Powys Food Link, Devon Food Link, etc providing financial, political, strategic, and technical support.

There are demand-led opportunities in London for urban agriculture and horticulture specialising in niche and other products such as; fruit and vegetables, eggs, dairy, poultry, meat and fish(14) . The demand-led opportunities need to be matched, however, by supply-led growth in more deprived areas and 'food deserts' to encourage equity of access and affordability between different social groups.

A major investment programme in the derelict and dilapidated infrastructure of the Lea Valley region and other traditional areas for food production is necessary to revitalize this once thriving industry.

Glossary

Ecological Footprint: the area and resources providing goods and services to a city or region

Shoe Leather Costs: incidental costs incurred travelling to and from places

Fungible Income: household income due to a reduction in purchases from markets

Food Poverty: problems in access and availability of healthy foods

Food Deserts: geographical areas of acute food poverty

Organic: production without artificial chemicals, strict animal welfare standards, and more

Best Value: statutory authority framework for internal purchasing policy

Food Miles: the distance food has travelled from field to table

Acronyms

CAP Common Agricultural Policy
FAO Food and Agriculture Organisation
GDP Gross Domestic Product
GLA Greater London Authority
IPM Integrated Pest Management
LDA London Development Agency
NHS National Health Service
UA Urban Agriculture
UK United Kingdom
UPA Urban and Peri-Urban Agriculture
US United States

Useful Contacts

Association of London Government www.alg.gov.uk

Bioregional Development Group www.bioregional.com

Countryside Agency www.countryside.gov.uk

Department for Environment, Food, and Rural affairs (DEFR) www.defra.gov.uk

Department of Transport, Local Government, and the Regions (DTLR) www.dtlr.gov.uk

Food Standards Agency (FSA) www.foodstandards.gov.uk

Greater London Authority www.london.gov.uk

Henry Doubleday Research Association www.hdra.org.uk

Local Food Finder www.bigbarn.co.uk

London21 Network www.london21.org

London Development Agency www.lda.gov.uk

London Farmers Markets www.londonfarmersmarkets.com

London Food Link (proposed) www.londonfoodlink.org (under construction)

National Association of Farmers Markets www.farmersmarkets.net

National Farmers Union www.nfu.org.uk

National Society of Allotments and Leisure Gardeners www.nsalg.demon.co.uk

New Economics Foundation www.neweconomics.org

NHS Executive (London) www.doh.gov.uk/london

Organic Food in London http://www.infolondon.ukf.net/organic/

Soil Association www.soilassociation.org

Social Enterprise London www.sel.org.uk

Sustain: the alliance for better food and farming www.sustainweb.org

References

1. The Philadelphia Urban Gardening Project, Journal of Nutrition Education, US, 1991 (JNE 23:161-167 1991

2. T.Garnett, City Harvest: the feasibility of growing more food in London, Sustain, 1999.

3.FAO, Feeding the Cities, Sofa report, 1998

4. H Giradet, Urban Growth and the Environment. Congress Report, Hong Kong 1995.

5. H Giradet, Urban Growth and the Environment. Congress Report, Hong Kong 1995.

6. R Murray, Reinventing Waste: towards a London waste strategy, Ecologika, 1998

7. M Heasman, Getting a Quart from a Pint Pot: Restructuring and the UK Food Industry. The Impact on the West London Food Economy, West London Training and Enterprise Council, 1999

8. R. Nugent, Growing Cities: Growing Food, The impact of urban agriculture on the household and local economies, DSE, 2000

9. East London Food Futures Newsletter No. 4, 'Farmers markets growing in strength', pg. 2, 2001

10. Envolve website, www.envolve.co.uk/n005, May 2001

11. M Pollan, Behind the Organic-Industrial Complex, The New York Times Magazine, 5/14/01.

12. Organic Food and Farming Report, 2001, Soil Association

13. The Money Programme, 'How organic is organic?' BBC 2, Monday11/06/01

14. T. Garnett, City Harvest the feasibility of growing more food in London, Sustain 1999

Note:

This paper does not necessarily represent the views of Sustain or any of Sustain's members. Sustain (formerly the National Food Alliance and the SAFE Alliance) advocates food and agriculture policies and practices that enhance the health and welfare of people and animals, improve the working and living environment, promote equity, and enrich society and culture. Sustain represents over 100 national public interest organisations working at international, national, regional and local level. James Petts is an economist and Projects Co-ordinator for City Harvest - Sustain's urban agriculture and sustainable food economies programme.






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Revised November 30, 2001

Published by City Farmer
Canada's Office of Urban Agriculture

cityfarmer@gmail.com