Sticky Money

Local produce is cheaper than local police, at least if you believe that a good way to keep communities safe and flourishing is to have a local economy that sustains local jobs and livelihoods.

A new study we have published today shows that every £10 you spend in a co-operative food store generates an additional £4 for local suppliers, customers and employees, providing a real boost to the local economy.

The research by independent economic analysts K2A follows money that is spent by customers of the local co-operative in the county of Lincolnshire. It draws on a method that we refined when I was at the New Economics Foundation. After all, if you want to regenerate a local economy, one way is to attract new money in, but a second, no less effective, is to plug the leaks and keep money local.

Money stays local, because co-operatives like Lincolnshire employ local people, are owned by local people and try to source from local firms that do the same. Every pound spent in a co-operative shop is a real boost to the local economy.

Overall, this means that Lincolnshire Co-operative, rather than generating profits for outside investors or national or even global suppliers, generates nearly £100 million annually for the local economy. This comes from 75 stores across the county, with the dividends shared with 219,000 member owners living in Lincolnshire. Every pound spent in a co-operative store changes hands five times, at diminishing levels, until the final penny leaves the local economy.

The co-operative uses more than 600 local suppliers, who in turn are deeply embedded in the local economy, sourcing 75% of what they need from the local area. One example is Jenny’s Jams. This started as a kitchen table business, but when the co-operative offered to list the produce, wonderfully tasty jams and chutneys from local fruit, in 2011 then Jenny Smith moved to a workplace to grow the business. A second is Chapman’s Fishcakes which combine Lincolnshire potatoes and Grimsby fish – a wonderful video on this as a case study of local suppliers is here.

Of course, there is also national sourcing, through joint purchasing by co-operatives and international buying groups that include co-operatives from different countries. But, in terms of public perceptions, 81% of people see co-operatives as being local in their orientation, so it is a strength to build on.

Ursula Lidbetter, Chief Executive of Lincolnshire Co-operative, spoke today on the research findings: “Everything we do as a co-operative society is for the benefit of our members who own the business, and their local communities. We support these communities in a numbers of ways – by providing the rural services important to people like food stores and post offices, by giving local producers an outlet for their goods, by giving grants and donations to local groups and by making our members better off by sharing profits through the dividend.”

The co-operative is the first significant food retailer to publish this kind of analysis on its local impact. Rather than sucking wealth and life out of the community, fuelling crime and unemployment, this is sticky money, which helps to sustain a local economy.

According to the charity CPRE, local food sales in England now sustain 61,000 jobs. In work completed as part of the Making Local Food Work partnership, with agencies such as Plunkett Foundation, Country Markets, FARMA, Soil Association and Co-operatives UK, CPRE conclude that spending in smaller, independent food stores supports three times the number of jobs than at national grocery chains, while, with re-circulation of money locally, this contributes to £6.75 billion to local economies.

In tough economic times, buying local if you have the choice and chance is not just good for you, but good for those around you.