Family farms are well-placed to ride out the credit crunch, with local food proving so popular that sales could be worth £15bn within a decade, according to a report which says the sector has the potential to supply 10% of the UK food and drink market.

Rising sales mean local food already supplies around 1.5% of the market, equivalent to an annual turnover of £2.34bn, reveals the study. Farmers should take a fresh look at the opportunities to increase sales of British local produce, it adds.

The document is significant because it was prepared by former government adviser Henry Brown and Cumbrian farmer John Geldard, who successfully supports more than 12 local food producers and supplies more than 80 branded products direct to supermarkets.

Annual growth would need to be in the order of 20% for the local sector to realise its potential, says the report, which was published on Thursday (13 November). But Mr Geldard told Farmers Weekly: "If you are not ambitious in this world, you are not going to succeed."

Recommendations include the use of "food hubs" or regional distribution centres. Local food products delivered to these centres would then be distributed without any need for customers to adapt their centralised systems. At the retail level, the report calls for better in-store merchandising of local food.

Despite the economic downturn, retailers and food service businesses report ongoing strong consumer interest in local food. At the same time, companies such as Sainsbury's believe farmers should be more consumer driven (see Business, page 20).

But there are practicalities to be addressed, says the report. These include a lack of market awareness among producers, a reluctance to work with large customers, a lack of scale and difficulties with distribution.

A steering group will oversee the report's recommendations, including the need for producers to scale up production to supply large customers and collaborate to promote sales to the public sector.

Finally, a local food information centre will be established to develop and promote to the customer and consumer concerted messages about the benefits and availability of local food.