Let’s suppose that people do decide to “buy local” with the goal of saving the world and reducing their carbon footprint. This will increase the demand for locally grown foods, but it will also have an unintended and likely deleterious consequence; it will increase the demand for farm implements and labor.
Since the decision to buy locally is essentially the decision to forsake comparative advantage, every unit of agricultural output will be more resource intensive than it would be under specialization, division of labor, and trade.
In other words, each additional unit of output will require more resources than it would under trade. To take a concrete example, this means that the cultivation of spinach in Memphis will require more fertilizer, more rakes, more tillers, and more hoes than the cultivation of spinach in California. Producing these implements will (again) require resources, which will require specialization and trade. FULL ARTICLE
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I think it would be useful to always make a difference between people who try to talk the government into interventing and people who simply want to convince other people to change their preferences for various reasons. The second one is OK, a perfectly normal behaviour. People value some things and try to convince others to do so, nothing wrong with that.
I think care should be taken when writing as an economist to never criticise the preferences of people. The public sees economists as selfish materialists who only care about costs, so to change this unjustly bad rep one should always make it clear there is nothing wrong with altruistic, idealistic goals as long as they are not enforced.
The point is, our end goals are never rational. When we are rational such as f.e. example we want to save costs via trade, at the end of the day, we are going to spend that money (resources) on some other good we have no other reason buying other than loving something or someone. So if some others love the cleannes of oceans or something like that, nothing wrong with that as long as it’s not enforced.
It’s important not to alienate people from economics. If I were you I would have pointed out, just to make greenies feel better, that rising fuel costs will incentive less international trade and more buying local anyway. After all, that’s true.
I wouldn’t start off the article with a strawman denigration of the carbon crowd, as misguided as they are. I try to buy local as an extension of the Golden Rule: I would want my neighbors to start with me, so I’ll buy from them first.
Yes, New Zealand lamb is cheaper than from the shepherd down the road. But price is not the only determinant in the measure of value received.
It’s tricky to say what is meant by ‘local’. I remember the time I bought U.S.A. produced navel-oranges and they were good-looking on the outside and crap on the inside. So I stick with Aussie oranges. But does that mean I’m buying local? Australia’s pretty big and I haven’t a clue where the oranges are actually grown. I”m not sure all foodstuffs can necessarily be shifted around the world and remain fresh and healthful. :\
I think the point of the article is that localism carries hidden costs that result from shrinking the global division of labour. If localism is still attractive, then so be it – but the existence of those hidden costs, if unknown, tends to get people yelling about “unfairness” because they don’t know why their standard of living has gone down.
Hi Art,
Thanks for writing about the subject. However, I think your article points out that you aren’t very familiar with the “buy local” movement and have only listened to what’s been overblown in the media.
I buy local for several reasons, of which, environmentalism is the least. I buy local first for health reasons. It is scientific fact that food keeps more of it’s nutrient value the sooner it is eaten after picked. So if I buy something that is picked the day before (or sometimes even the morning of) from a local farmer (or your own garden), it is a better food product than the multi-day or week old produce from California or across the world.
Additionally, it is also scientific fact that the cheaper, more industrialized methods of farming, while also bad for the environment, also don’t produce as nutritive a food product as the more organic methods of farming. It is helpful to know in this conversation that a carrot isn’t always the same after different methods of growing it although industrial food companies would like us to think so. So technically speaking, when you pay more for a local product you are buying a better product, not just paying for more materials to produce it.
All to say, the #1 reason to eat locally is for a more healthy (and better tasting) food product which is something that industrial agriculture can’t produce.
Another aspect of your article that I thought was off-base was that you seem to convey the idea that a local farm uses the same materials, etc. to produce the same food. While that is sometimes the case, farms like Polyface Farm ( http://www.polyfacefarms.com ) show that people can use natural methods that are better for the environment to lower their costs in order to maximize the use of their arable land to in turn help maximize their profits (why buy synthetic fertilizer when the animals you sell can make it for free?). You can also read some of their material to find out how much current government regulation affects small farms and their competitive advantage.
You gloss over the fact that there is already a ton of government regulation, intervention, and subsidy and almost always favors big, agribusiness that uses cheap industrial methods. Without much of that intervention in a free market, the smaller, local farms would be much more competitive. Much of the external cost of industrial methods of farming isn’t just placed in the ocean or the air, it is paid for with billions in taxpayer dollars (just look at corn subsidies). These subsidies also undermine other foreign countries and their ability to compete with artificially low priced, tax subsidized food products). In case you thought it was, our current argri-conomy is not a free market.
All in all, though, food isn’t like everything else we manufacture. We have a much more intimate relationship with it…we put it into our bodies and it affects our personal physical (and other) health. I am one who thinks twice before choosing the cheaper product because it is my own decision of whether that product is healthy and will bring me a long, healthy life or not. I for one don’t buy into that cheaper food is always better.
To help get a little more educated on the subject, I would recommend Michael Pollan’s “Omnivore’s Dilemma” and/or “In Defense of Food” and Barbara Kingsolver’s “Animal, Vegetable, Miracle” as easy to read overview texts that summarize many of the issues with the current industrial food industry.
Happy eating,
Kevin
I recently started eating locally, but not really out of any concern for the environment. My reasons for eating local are captured in the final caveat of the article: quality.
Buying local food, I get a chance to talk to the people that are growing/raising my food. I know that the meat I’m eating hasn’t been loaded with growth hormone or antibiotics, because I talk to the guy that’s raising the animals. I know the vegetables I’m eating haven’t been genetically modified or drenched in poison because I talk to the guy that’s growing them. These people recognize that there’s a market for food that’s raised locally, that’s actually healthy. It may be a little more expensive, a little more labor intensive, and maybe not as environmentally friendly, but I like to know where my food comes from.
Also, now that CSA (Community Supported Agriculture) farms are becoming more widespread, eating locally can be a lot more like investing in any other business. You buy “shares” in the farm, and every week you get a box of fresh, local vegetables. And since they’re competing locally, they do little things here and there that make it more than just a farm: monthly newsletters, recipes, tours and picnics on the farm, and stuff like that. For me, this is probably one of the most accessible small business investment possibilities around; it may not pay out cash dividends like stock in GE or MS but I bet the food at their shareholder meetings isn’t as fresh, and they don’t have hayrides or harvest parties.
> I buy local first for health reasons.
So, what is wrong with the food produced by corporation? – Corporation by law has to maximize profits of shareholders, i.e. required by law to produce not the food which would max the avarage health of consumers, but the food which would max shareholder profit.
Possible solution, which does not depend on buying local: by from sole proprietorships! They have all the rights to factor buyer’s health into equation!
interesting.
i may just be an old fart, but art seems too young, naive and isolated in academia to have a very deep understanding of his subject.
yes, he did go to the effort to gain some experience by growing his own tomatoes at great ‘expense’ but only a fool would price the cost of an item by making it once or twice: do it ten or twenty times and see what it costs. cheap is relative.
he also doesn’t seem to really understand that when oil gets very scarce and expensive his assumtions about ‘costs’ will be frighteningly inaccurate. there’s a lot of sweat equity in a gas-powered tractor or car. i’d suggest art dig a 6′ hole with a backhoe and then dig another one by hand with a shovel to gain an effective phenomenological understanding of this difference. the ‘efficiencies’ of large scale specialization, division of labor and trade now practiced only exist at this scale due to the cheap oil era (an era that has almost run its course). similar rules, of course, will apply at a smaller, local scale, once people become accustomed to the new conditions (this needs to start happening now). what does art think folks did for thousands of years before cheap energy was developed? fertilizer will be replaced by compost. buying a bunch of hoes and shovels is a one time expense that would last for generations and doesn’t equate to seasonal shipping carried out by powerful, fast diesel engine powered ships chugging back and forth between chile and memphis, running on cheap oil. try that trick on wind power. people in memphis during the civil war didn’t eat bananas for good reasons. Rules of trade are changing fast.
i’d suggest he and all his students first go get some real world experience and common sense, then get ready for ‘local’ now, while there is some transition time, even if it doesn’t add up under today’s short term conditions. it is the only realistic option. the arguments about trade and wealth creation will shift from global to many, many local markets, after a bumpy ride. how bumpy will depend on how soon the ‘arts’ in our society wake up to the modern realities of this world and quit living in the recent past. see books by matthew simmons, ken deffeyes, c. j. campbell, jim kunstler, richard heinberg, etc.
lars
Hi Art,
I read through the article, looking at the idea’s you were putting forward, and I don’t understand why seasonally grown spinach in locally grown in Missouri would require more input of materials to produce a pound of spinach in California. Why would the farmer in Missouri require more fertilizer and other inputs, compared to one is California? How did you come up with your calculations?
Lars aiken, you can’t dig a hole with a shovel, unless the material is already loose; it’s a scooping tool. You need a spade, which is a digging tool. At least it’s not as bad as the post I ran across the other day, talking about tilling with an adze…
Art’s point is that comparative advantage results in greater efficiency (i.e. higher production and lower prices) wherever that advantage exists. His assumption for the purpose of the article is that local production of food is less efficient than production and shipping of equal food from somewhere else (although his caveats explain that this assumption is not always true), and thus that the non-local food is cheaper than the local food. By choosing to pay more for something produced less efficiently, resources are diverted away from their most economic use. If this happens on a large scale, especially through governmental enforcement, there can be gross distortions in the economic use of resources.
Many of the criticisms above are making Art’s point for him. Arguments that the quality, nutrition, community spirit, cost, and sustainability of local foods are better than non-local foods are simply arguments that local production has a comparative advantage over non-local production, to people who value those things.
Hi Tim,
I understand where you are coming from, however, the caveats Art states are extremely weak and a bit misleading.
First, I think the underlying assumption of his article is that environmental intervention will be the only government action in food production. However, one of the reasons it is still cost effective to send food across the ocean is that oil is not only still cheap, but also heavily subsidizes by the government. Even with subsidies, people are complaining about the rise in food cost as oil prices have risen. Add to that other food subsidies and other current government intervention in place and we realize that Americans are paying more for their “cheap” food not just in environmental cost, but also in tax payer dollars. If the current government subsidies weren’t in place, maybe the environmental concerns wouldn’t even be an issue? This is a very important part of the economics of our food industry that is totally ignored in his article.
He also emphasizes the principle “that trade also conserves valuable resources” at the end of the article. While food has become more “manufactured” rather than “grown”, manufacturing a carrot is much different than manufacturing some technical widget. On a small farm, you can easily produce multiple species of plants (and animals) and using standard methods of polyculture such as tilling, crop rotation and counter cropping (planting plants that deter pests, etc. that feed on the plant you want to grow) you can find an optimal order of things to help replenish soil, limit erosion, etc. extremely cheaply. Polyface Farms is a great example of this. However, in order to produce lots of carrots, you have to go to huge fields of monoculture (only one species). Monoculture means that you have make up for the lack of polyculture, so all of a sudden you have to start adding resources in order to keep the monoculture alive such as synthetic fertilizer, etc. because nature doesn’t like monoculture. Even with the addition of additional resources, farmers are finding out that their soil is still being depleted in monoculture. This brings us back to the current government subsidies as synthetic fertilizer and many of the other products used in industrial agriculture are yet other oil derivatives whose low price benefits from government hand outs. Which again brings us to the question about whether we would have the current environmental issues without the current government intervention? All to say, when you know anything at all about farming, Art’s shaky (if not outright faulty) assumption that big agri-business somehow “saves resources” versus the a local farm becomes rather obvious, don’t you think?
Nevertheless, it’s a great discussion to have, however, Art’s article seems very incomplete as a discussion on the economics of local vs. non-local food and while I’m sure he’s a great economist…if he can’t take a little more time to understand at least some of the complexities of the industry he is economizing, he should probably not make such simplified, bold statements in a blog about it.
Kevin
The comments about quality touch on the healthcare issue, but I have noticed none which state the link explicitly.
Locally grown food, produced organically, including in soil that is properly managed, is more healthy.
I have friends who produce eggs, milk and beef and sell other organic foods. Young people who are brought in as a last resort, but who find themselves relieved of unhealthy symptoms in a matter of days, illustrate the point. The organic food is cheaper than the doctor visits and medications, even in such a finite comparative analysis.
Better health reduces health costs. We currently spend mulitples more in healthcare than we save in food prices. This cost is in large part because of the food system. (in addition to third party pay, regulation, cartels, etc.)
This substantial health repair cost must also be factored in to comparative advantage.
There are many more issues, including those noted in comments above, that need to be covered and correlated with this locally grown topic in order to provide reasonable treatment.
The comments about quality touch on the healthcare issue, but I have noticed none which state the link explicitly.
Locally grown food, produced organically, including in soil that is properly managed, is more healthy.
I have friends who produce eggs, milk and beef and sell other organic foods. Young people who are brought in as a last resort, but who find themselves relieved of unhealthy symptoms in a matter of days, illustrate the point. The organic food is cheaper than the doctor visits and medications, even in such a finite comparative analysis.
Better health reduces health costs. We currently spend mulitples more in healthcare than we save in food prices. This cost is in large part because of the food system. (in addition to third party pay, regulation, cartels, etc.)
This substantial health repair cost must also be factored in to comparative advantage.
There are many more issues, including those noted in comments above, that need to be covered and correlated with this locally grown topic in order to provide reasonable treatment.
I won’t claim to know much of anything about agriculture, industrial or local but I do feel obligated to question Kevin’s argument.
To me, it seems his argument is centered on the idea that locally grown food may be more efficiently produced when compared to industrial grown products due to tab the government picks up these industrial farmers in the form of subsidies. I’m sure everything Kevin has stated about poly and monoculture farming is more true than false, moreover, I agree that these subsidies provided to industrial famers make their means of production appear more efficient than they really are. However, I think Kevin has failed to see Art’s main point-which is understand how a free market economy would play out in the long-run (and in this case the long run could be a lot shorter than expected). This begs us to step back and actually apply our understanding or lack there of (I’m still learning) of economics.
Lets start by hypothesizing…
Say by some miracle the government decides to eliminate all subsidies to these industrial farmers. In the short run, we should expect their costs to rise-perhaps significantly—since as Kevin stated it would require more resources to make these monoculture farms economically efficient.
As a result, we may see some of these big industrial farming companies close down to avoid these new costs- local farmers now stand in a better position not only from a price standpoint but from a “look at us our way of polyface farming is more efficient and less wasteful†standpoint-score one for the greenies and the popular media. Ok now let’s look out a year or so maybe even less-on second thought lets not award our greenie friends a point just yet. Why should I believe that these huge industrial agricultural companies will not immediately adjust to the now free market setting of the farming industry and use their access to capital–banks will likely be salivating on the prospect of providing these industrial farmers the resources to adjust their farming techniques to a free market farming economy.
It seems to me that these previously subsidized industrial farmers already have superior technology when compared to Bob our local farmer who is out there with his shovel digging up carrots. True that in the short term these local farmers could see their profits bolstered since the industrial giants will be at work adjusting their farming techniques. These short term profits may even give local farmers the resources to expand production-maybe even become an industrial player? Is that not how a free market would work?
I think the more realistic outcome is this: The big industrial players adapt to the changing market and find a way to refine their monoculture techniques in a way that will afford them a comparative advantage over these smaller local farmer’s subsidies….(exhale).
To sum it up, at first glance Kevin’s argument seems to put Art’s analysis in a sticky situation but in thinking it through am I (or you) really expected to believe that many of these big industrial farmers would not be able to find a way to regain the efficancies they once maintained with government subsidies—maybe some can’t, I’ll be the first to admit that I’m no oracle. I’m just an apprentice of economics interested in looking past short term consequences.
I’m sure I overlooked many things in my argument-but I can only write so much on a short lunch break.
I think there are certainly benefits to trade and division of labor, but to the extent that government subsidizes huge agribusiness, shields companies with limited liability laws, manipulates the market for capital through inflationary monetary policy, etc., we’re certainly not talking about anything even approaching a free market.
Bastiat would ask that we examine “ce qui l’on ne voit pas.”
What we don’t see is how widespread some of these manipulations reach, keeping nations impoverished, people indebted, incentivizing urban sprawl, etc…
In Canada, foreign produce tends to be cheaper than domestic produce. Most of our produce comes from the US, even when the local produce is in season. A large part of it is simply that the US has a longer growing season; the southern US can produce food all year round. Nevertheless, I generally prefer domestic produce because it’s much higher quality, despite the higher price (especially if it’s from the farmer’s market). California strawberries look pretty but taste like cardboard. I don’t care much about where food comes from, but I do care if it tastes good.
Art,
I enjoyed your article and it’s explanation of the conservation of resources which occur with free trade. Here’s a further thought:
If you apply Hazlit’s analysis to the concept of environmental “externalities,†you will find that the concept looses all usefulness. The “cost†of shipping grapes may include “ocean pollution†–but many benefits of this trade are also externalized with no meaningful way to calculate them: cheaper, more efficiently provided food directly frees up resources for the advancement of human well-being in numerous other areas, including additional jobs and higher relative wages; provision of cheaper food contributes to a healthier population which can then be more productive, adding to further wealth creation and improvement of the general standard of living, and so forth.
The “costs†of pollution only appear onerous when divorced from the multitude of benefits provided by that very same industrialization. “Pollution†and production are two sides of the same coin. To focus on the production of waste while ignoring the production of wealth is to look at less than half of the equation. Less than half, because overall, the human condition has advanced explosively during this era of technological progress. Industrialization has given us the prosperity and wealth to first eliminate macro-pollutants, from water supplies in the form of sewage contamination and malaria-infestation, and from the air in the form of the indoor smoke of cooking and heating fires. We now have the relative luxury to worry about micro-pollutants released into our air and water.
Attempts to force the elimination of the “externality†of pollution can not proceed without also eliminating the “externality†of the coexisting production of wealth. A true cost/benefit analysis would have to take both into account. It is impossible to take into account all the indirect benefits (“positive externalitiesâ€) of a private enterprise. This inability to calculate all the externalities, both positive and negative, is what makes the entire concept irrelevant for economic policy decisions.
For me buying local means to support my community and country. If something needs to be shipped then maybe I just don’t need it. I’d rather go without then to keep poisoning the planet and stealing jobs from my fellow countryman. Plus, if we don’t demand those products from other countries that we can produce here they can start doing the same thing there. Every country on the planet should start fixing themselves internally. It is a dream that everything one day will all “get better”, though. There will laways be greedy politians that hurt their own people for their own wealth. But that doesn’t mean we can’t make some good changes. Every bit helps. First thing I believe is to teach respect for your fellow man. Period.
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