Competition for supplying local foods

This is from a new paper in the American Journal of Agricultural Economics looking at Community Supported Agriculture (CSA)"

“For farms considering entry into a CSA market and policymakers exploring policy scenarios to encourage local foods growth, this may serve as a cautionary note about the ability of the existing demand for local foods to sustain a substantial number of new entrants.”

A related footnote:

“We should note that several CSAs were excluded from our hedonic sample as a result of having ceased operations, suggesting that profitability could be a concern.”

The authors also find the interesting result that organic CSAs do receive a price premium over non-organic CSAs, answering the question which serves as the title of their paper, "Does Organic Command a Premium When the Food is Already Local?"  However, they only estimate about a 7% premium, which is much lower than that found in many other studies. I would interpret this to mean that local and organic are demand substitutes, but not perfect substitutes.

Is Local Food More Environmentally Friendly?

As should be obvious to anyone who thinks about it a bit, the environmental impacts of consuming a local food depends on how efficient your particular locale is at producing the particular food.  One of the ironies of this insight is that areas that have more intensified livestock operations may, at least in some dimensions, be more environmentally friendly than areas with less intensified production (because greater intensity often means more efficient).

Some empirical support for these these insights was recently provided in an article by  Misak Avetisyan, Tom Hertel, and Gregory Sampson just published in the journal Environmental and Resource Economics.   

The abstract:

“With the increased interest in the ‘carbon footprint’ of global economic activities, civil society, governments and the private sector are calling into question the wisdom of transporting food products across continents instead of consuming locally produced food. While the proposition that local consumption will reduce one’s carbon footprint may seem obvious at first glance, this conclusion is not at all clear when one considers that the economic emissions intensity of food production varies widely across regions. In this paper we concentrate on the tradeoff between production and transport emissions reductions by testing the following hypothesis: Substitution of domestic for imported food will reduce the direct and indirect Greenhouse Gas (GHG) emissions associated with consumption. We focus on ruminant livestock since it has the highest emissions intensity across food sectors, but we also consider other food products as well, and alternately perturb the mix of domestic and imported food products by a marginal (equal) amount. We then compare the emissions associated with each of these consumption changes in order to compute a marginal emissions intensity of local food consumption, by country and product. The variations in regional ruminant emissions intensities have profound implications for the food miles debate. While shifting consumption patterns in wealthy countries from imported to domestic livestock products reduces GHG emissions associated with international trade and transport activity, we find that these transport emissions reductions are swamped by changes in global emissions due to differences in GHG emissions intensities of production. Therefore, diverting consumption to local goods only reduces global emissions when undertaken in regions with relatively low emissions intensities. For non-ruminant products, the story is more nuanced. Transport costs are more important in the case of dairy products and vegetable oils. Overall, domestic emissions intensities are the dominant part of the food miles story in about 90 % of the country/commodity cases examined here.”

Farm Size and Productivity

There seems to be a lot of consternation about "large farms" in the foodie community and a desire to enact policies to support "small farms."  One of the issues often missed in such discussions is that larger farms tend to be the most productive farms and countries that tend to have the smallest farms tend to be the poorest.

These "stylized" facts were summarized in this paper by in Adamopoulos and Restuccia in the most recent issue of the American Economic Review.

(i) There are striking differences in the size distribution of farms between rich and poor countries with the operational scale of farms being considerably smaller in poor countries. Using internationally comparable data from the World Census of Agriculture, we show that in the poorest 20 percent of countries the average farm size is 1.6 hectares (Ha), while in the richest 20 percent of countries the average farm size is 54.1 Ha, a 34-fold difference. In poor countries very small farms (less than 2 Ha) account for over 70 percent of total farms, whereas in rich countries they account for only 15 percent. In poor countries there are virtually no farms over 20 Ha, while in rich countries these account for 40 percent of the total number of farms.

(ii) Larger farms have much higher labor productivity (value added per worker) than smaller farms, implying that farm size differences can potentially have large effects on measured agricultural productivity. Using data from the US Census of Agriculture (USDA 2007) we document a 16-fold difference in value added per worker between the largest and smallest scale of operation of farms reported. Available data from other sources, based on national censuses and farm surveys, indicate that labor productivity rises with size in a large set of developing countries as well (see, for instance, Berry and Cline 1979; Cornia 1985). This occurs despite differences in land scarcity, soil, geography, agrarian structure, and form of agriculture observed among these countries. In India, Foster and Rosenzweig (2011) show that efficiency also rises with farm size.

They also show this interesting graph relating average farm size in a country to GDP per capita in a country

Adamopoulos and Restuccia conclude that one of the main causes of inefficiently small farms in poor countries is government policy. Here are some examples they discuss

Many countries have set direct restrictions on farm size. In most cases these restrictions were ceilings on the size of permitted land holdings and were imposed as part of postwar-period land reforms that redistributed land in excess of the ceiling (e.g., Bangladesh, Chile, Ethiopia, India, Korea, Pakistan, Peru, Philippines). In many cases the ceiling on land holdings was accompanied by prohibitions on selling and/ or renting the redistributed land. Other countries have distorted size by also imposing minimum size requirements. This is done either directly by setting an explicit lower bound, as in the case of Indonesia and Puerto Rico, or indirectly by setting conditions for subdivisions, such as a “viability assessment” in the case of Zimbabwe. Several countries have imposed progressive land taxes where larger farms are taxed at a higher rate than smaller farms (e.g., Brazil, Namibia, Pakistan, Zimbabwe). Several African countries have offered input subsidies for fertilizer and seed that are either directly targeted at smallholders or disproportionately benefited them (e.g., Kenya, Malawi, Tanzania, Zambia). In other cases smallholders were provided with subsidized credit (e.g., Kenya, Philippines) or grants to purchase land (e.g., Malawi). Tenancy regulations, such as rent ceilings, tenure security, and preferential right of purchase (e.g., India), can also provide smallholders with an advantage.

However noble or virtuous it may seem to want to subside "small farms", we should at least acknowledge the adverse consequences and inefficiencies of such policies, which this paper shows are nontrivial because of  lower productivity,  and as a result lower wages, less economic growth, and higher food prices.   

The more things change the more they stay the same . . .

I ran across this poster created sometime around 1917 by the US Food Administration (which was created during WW I and no longer exists).

 Looks like the playlist of any number of current popular food books . . .

How problematic are food deserts?

Not very according to this piece in Slate:

Unfortunately, more fresh food closer to home likely does nothing for folks at the bottom of the socioeconomic ladder. Obesity levels don’t drop when low-income city neighborhoods have or get grocery stores. A 2011 study published in the Archives of Internal Medicine showed no connection between access to grocery stores and more healthful diets using 15 years’ worth of data from more than 5,000 people in five cities. One 2012 study showed that the local food environment did not influence the diet of middle-school children in California. Another 2012 study, published inSocial Science and Medicine, used national data on store availability and a multiyear study of grade-schoolers to show no connection between food environment and diet. And this month, a study in Health Affairs examined one of the Philadelphia grocery stores that opened with help from the Fresh Food Financing Initiative. The authors found that the store had no significant impact on reducing obesity or increasing daily fruit and vegetable consumption in the four years since it opened.

and

Earlier research suggesting that better fresh-food access improves diet and would therefore improve the health of people living in poverty was drawn from small samples or looked at store availability in narrow geographical slices—often without information about how or where the people who lived there shopped. “They never link the neighborhood characteristics to actual individuals,” explains Helen Lee, author of the Social Science and Medicine study. “Without that, all you have is speculation.”

Lee also notes in her study that, on closer inspection, food deserts don’t actually exist in the U.S., at least not as a national problem—on average, poor neighborhoods have more grocery stores than wealthier neighborhoods.

The writer concludes on a note which which I agree.  The real issue here probably isn't access to fruits and veggies.  These are simply symptoms of a larger problem.  Poverty.  Alas, solving the problem of poverty is no easier or no less complex than solving the problem of obesity.  But, if you could made headway on poverty, I'd argue people would have a greater incentive to consider their own future health outcomes.