Author: Frank Seo

The upward trend in the South’s population growth has been further accelerated by post-COVID-19 migration. According to the U.S. Census, southern cities dominated both the 15 fastest-growing cities and the 15 largest-gaining cities between July 1, 2022, and July 1, 2023 (Figure 1). The distinction between these two groups lies in their composition: the top 15 largest cities on this list are predominantly major urban cities, whereas the fastest-growing cities are mostly small towns that have benefited from larger cities’ migration outflow. Accordingly, this new list of the fastest-growing cities in the U.S. raises an important question: How has the housing price landscape changed in the South since the pandemic?

Figure 1. Top 15 Fastest-Growing Cities and Largest-Gaining Cities between July 1, 2022 and July 1, 2023

To answer this question, the Zillow Home Value Index (ZHVI), a smoothed and seasonally adjusted measure of typical home values in the 35th to 65th percentile range, was used to observe the percentage changes in house prices from March 31, 2020, to March 31, 2024, following the World Health Organization’s declaration of COVID-19 on March 11, 2020.

Figure 2 illustrates the percentage changes in house prices across southern states from March 31, 2020, to May 31, 2024. Overall, significant increases were observed in most states, with notable rises exceeding 50% in five states: Florida (58%), Georgia (56%), North Carolina (55%), Tennessee (52%), and South Carolina (50%) since the onset of the pandemic. Conversely, Louisiana and Washington D.C. saw a modest increase of less than 10% during this period, distinct from the upward trends observed elsewhere. In addition, the county-level map (Figure 3) provides geographical insight into the house price landscape. As we can see, house prices in the counties along the Mississippi Delta and a large portion of western and southern Texas counties increased noticeably less or even decreased compared to other regions. These clustered patterns resemble the recent net domestic migration map (2021-2022) from the U.S. Census (U.S. Census Bureau,  2023, March 30). One notable difference is that negative net domestic migration in big cities has rebounded, whereas the net domestic migration around the Mississippi Delta area continues to face challenges, resulting in decreased house prices.

Figure 2. House Price Percentage Changes by State from March 31, 2020, to May 31, 2024, in the Southern Region

Figure 3. House Price Percentage Changes by County from March 31, 2020, to May 31, 2024, in the Southern Region

So, what exactly does the house price landscape tell us? The sharp increase in house prices across the southern region of the U.S. since the pandemic underscores the immediate need for supportive measures. As housing costs escalate, there is a critical need to prioritize actions that enhance affordability and ensure equitable access to housing. Considering the rising population trend in the South, it is likely that home prices there will keep climbing, exacerbating the issue of housing affordability. In contrast, underserved regions, such as the Mississippi Delta, which are experiencing negative domestic migration trends worsened by the pandemic, may see community development challenges intensify in the future. Therefore, by addressing these dual issues with strategic and supportive approaches, policymakers can promote a more inclusive and sustainable recovery across the diverse landscapes of the South.

References

U.S. Census Bureau. (2024, May 16). Population rebounds for many cities in Northeast and 

Midwest. Census.gov. https://www.census.gov/newsroom/press-releases/2024/subcounty-population-estimates.html

U.S. Census Bureau. (2023, March 30). Domestic Outmigration From Some Urban Counties Slowed, 

Smaller Gains in Rural Counties. Census.gov. https://www.census.gov/library/stories/2023/03/domestic-migration-trends-shifted.html

The popularity of Community-Supported Agriculture (CSA) has been on a downward trend for over 20 years. As such, the continuous decline of CSAs raises the question of whether their traditional business model can compete with other local food sources. Since the first CSA program was introduced in 1986, CSAs have not changed their core model; farmers and consumers maintain a direct relationship, ensuring financial support for the farmers while providing members with locally grown food. Typically, CSA members pay a seasonal up-front fee ranging from $400 to $800 in exchange for predesignated boxes of raw ingredients, which can be picked up or delivered. Though many CSAs have partially modified their model with up-front pricing policies and CSA box options, their core model has yet to change since its inception. Meanwhile, CSAs became the least favorable option for local food customers (Seo & Hudson, 2023). Many larger retailers provide local food with greater accessibility, diverse selections, and entertainment options like live music. Similarly, farmers’ markets offer fresh local food with a strong emphasis on community engagement & support, and various entertainment, which CSAs typically lack. Thus, the continuous diminishing of CSAs suggests that they need to reconsider their outdated business model to remain competitive and sustainable among other local food sources.

However, the local food model in South Korea sheds some light on how CSA farmers could better position themselves among local food sources. In Korea, numerous small local food shops run by small cooperatives effectively bridge the gap between micro farmers and customers in rural communities. The common thread among these local food shops is their utilization of the Wanju Local Food Cooperative‘s local food model. This model won awards at the Milan Urban Food Policy Pact (MUFP) in Governance for “Local Food No. 1 Project” in 2018 and in Social and Economic Equity for “Equal Healthy Food for All: Wanju Type Food Plan” in 2022. It was also praised by the Food and Agriculture Organization (FAO) as a successful regional food localization strategy (FAO, 2017). As such, the Wanju Local Food Cooperative is an excellent example of how CSAs can revive themselves and become popular once again.

When the Wanju Local Food Cooperative initially started, they used the traditional American CSA box delivery model. Though they still offer CSA boxes to customers, their success began with their first offline local food shop in 2012, right around the same time that the number of CSAs in the United States started to decrease. To launch their first offline shop, the cooperative created contracts with 1,011 local farmers and developed detailed crop production plans to offer customers a small but diverse selection of produce. Since then, the shop has functioned as an open market for micro farmers who have completed training courses and submitted production plans to sell their produce freely. To ensure the highest quality products, the Wanju Local Food Cooperative maintains a strict list of policies, including: 

• Fresh produce must have been harvested the same morning that it is brought to the market for sale

• Farmers independently pack, display, and price their own produce

• Unsold produce is either discarded or returned to the original farmer

• Farmers pay a 10% commission fee to the cooperative 

Furthermore, the cooperative managing the local food shop extends its services to restaurants within the shop, provides online shopping options, offers food processing facilities to farmers, and even enhances community engagement through agrotourism initiatives such as farm tours and cultural events. As a result, it is common to see residents and tourists flock to the shop early in the morning to buy the freshest locally grown produce and enjoy the restaurants serving local food. This successful local food model spread nationally and became a popular community support model throughout Korea. Because the local food shops offer a variety of the freshest produce, good accessibility in residential areas, competitive prices from competition between farmers, entertainment events, and no exclusive membership or up-front fee policy, these local food shops have established their unique place among local supermarkets and farmers’ markets.

The success of the Wanju Local Food Cooperative underscores two pivotal elements for an effective local food model: minimizing market entry barriers for small farmers and offering a diverse range of produce to customers under one roof. Many small farmers struggle to access markets due to quantity constraints, which deter both existing farmers and potential newcomers. The Wanju Local Food Cooperative has overcome this challenge through its open-market approach.Additionally, while local food consumers do seek shopping experiences that support local farmers and foster community engagement, their primary desire is a convenient location to purchase their weekly groceries. In contrast, the traditional CSA model often receives criticism for its limited selection. However, the Wanju Local Food Cooperative addressed this by coordinating farmers’ production plans to offer a broader array of produce, prioritizing variety over quantity to fulfill the objective of convenient grocery shopping. Therefore, if CSAs in the United States seek to remain competitive with other local food sources and genuinely support community farmers to be more than just a produce box delivery service, they should reconsider their traditional approach to running their organizations. 

References

Food and Agriculture Organization of the United Nations. (2017). Wanju: Supporting Local Agriculture 

through Direct Food Marketing, Milan Urban Food Policy Pact Category: Governance, Food and Agriculture Organization of the United Nations (FAO). https://openknowledge.fao.org/handle/20.500.14283/ca0491en

Seo, F., & Hudson, D. (2023). Attributes that Influence Consumers’ Preferences for 

Choosing Locally Grown Food Sources During and After the COVID-19 Pandemic. Journal of Agricultural and Applied Economics. 2023;55(4):626-650. doi:10.1017/aae.2023.27

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Seo, Frank. “Is the Current CSA Model Sustainable? A Lesson from Korea.” Southern Ag Today 4(27.5). July 5, 2024. Permalink

Cooperative manager groups, comprising the boards and managers, play a pivotal role in the success of cooperatives. However, what if their management performance deteriorates as a result of the Principal-Agent (PA) problem? The principal-agent problem highlights the inherent dilemma that emerges when an individual or entity (the principal) entrusts tasks or decisions to another party (the agent), who may prioritize their own interests over fulfilling the principal’s objectives, often stemming from information imbalances.

Should we be concerned about the possible PA problem in our local cooperatives? The short answer is “yes.” In fact, many existing studies have pointed out that cooperatives’ relationships between manager groups (the boards & managers) and members are actually more vulnerable than investor-oriented firms (IOFs). This is because while shareholders of IOFs can continuously monitor their management groups’ performance via external information, such as stock exchanges, cooperatives do not have a market for their equity, which hinders their members from monitoring the actions of their manager groups. 

Furthermore, the lack of monitoring from coop members may not only lead to a moral hazard where managers incentivize themselves, but might also intensify the adverse relationship between the boards and managers if they already had a hostile relationship. A recent study (Seo et al., in press) suggested some possible instances of internal governance issues and structural characteristics that may lead to such hostile relationships between the boards and managers. For example, the managers of agricultural cooperatives, who are also members of their cooperatives, tend to experience increased conflict despite the high level of loyalty towards their organizations. Because becoming a board member does not necessarily require board candidates to have accredited business management skills, the board of directors’ management knowledge, such as understanding of governance management or sector of supply chains, is often questioned (Park et al, 2019). In this situation, conflict may arise due to the board’s lack of perceived knowledge if board members attempt to over-manage managers’ boundaries. Moreover, if non-member board members, who potentially lack knowledge of their cooperative’s sector in the supply chain, influence cooperatives’ investment decisions, then conflict may arise in a similar way. This is why many existing studies emphasize the importance of cooperative board leadership training.

Though the PA problem is pervasive across almost every firm, existing studies have suggested some possible factors that alleviate the PA problem in cooperatives. Some potential solutions include enhancing social capital (trust), building favorable conditions that enhance the relationship between principals and agents, providing appropriate incentives for agents, and creating elaborate contract structures (i.e. laws and sophisticated contracts lead to human behaviors). Using one or more of these measures is recommended to create “anti-PA problem” environments in local cooperatives to prevent possible management performance loss and maximize manager groups’ performance.

References

Seo et al. 2024. Managers, Boards, and the Principal-Agent Problem in Cooperatives: A Survey 

of  Cooperative Managers in Texas. Accepted for publication in the Journal of Cooperatives on 30^th. January, 2024.

Park et al. 2019. A Framework for Training and Assessment of the 21st Century Cooperative. 

Western Economics Forum. Volume 17,Issue Number 2. https://ageconsearch.umn.edu/record/298048/

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Seo, Frank. “What is the Principal Agent problem, and should I be concerned about it in my local cooperative?” Southern Ag Today 4(14.5). April 5, 2024. Permalink