What's good for countries is good for communities

A new paper by Trevor Tombe in the American Economic Journal: Macroeconomics provides a cautionary tale for those who think we'd be better off economically if we sourced more food closer to home.  

The paper starts off with this stylized fact

“Agriculture in poor countries has low productivity and high employment relative
to other sectors. Differences in aggregate productivity and income between
rich and poor countries are therefore primarily due to differences within agriculture;
Schultz (1953) calls this the Food Problem”

The problem, it seems, is that poor, agricultural-based countries don't trade.

“Trade data, though, presents a puzzle: with low relative agricultural
productivity, developing countries should be massive food importers; yet, they
are not (see section I.B). The “missing” food imports suggests trade costs may
be important for international productivity differences.”

These "trade costs" that are holding up trade include bad policies like tariffs but also bureaucratic problems like border delays.

The paper has a nice set graphs, and the following shows a few of them related specifically to agriculture.

First, when you don't trade agricultural products with you're neighbors, you tend to be poor.

Countries that have more agricultural trade have higher GDP/worker.  The correlation is 0.68.  Countries that have more agricultural trading partners tend to be richer and more productive.

A lot of local food advocacy is premised on the idea that we need smaller farms with more farmers.  I don't think anyone would argue that greater local food production would mean  more employment in agriculture.  Well, would that be good for the economy?  According to this paper, no. This graph shows a very clear negative correlation between a country's employment share in agriculture and GDP/worker.  More workers in agriculture is typically going to mean lower economic output.  

Finally, this graph shows that the higher the share of food spending on domestic output (i.e., the more local foods purchased), the lower the country's GDP/worker.   

There's no reason to believe what's true of countries wouldn't also be true for states or cities trading with each other.

The author concludes:

“Agricultural trade costs account for roughly 25 percent of the aggregate differences between rich and poor countries. Trade costs in agriculture and manufacturing together account for over 40 percent. Even observable, policy-relevant trade costs (tariffs and border
delays) have important negative productivity effects in poor countries. The food
trade is missing in poor countries and in our models; it should be no longer.”

Buying local good for the economy?

Here's a nice video by Don Boudreaux for MRUniversity on the myth that buying local is good for the economy.  Sometimes a picture (or in this case, video, is worth a 1,000 words). 

Local Foods on Stossel Show

Here's a slice of my interview with Stossel about local food that they released on YouTube (which I presume means this portion of the interview got cut from what will appear later tonight on Fox Business).  

Study Shows Most Americans Could Eat Locally, but Should They?

This paper in Frontiers of Ecology and Environment by Andrew Zumkehr and Elliott Campbell conducts a type of simulation to suggest that most Americans could eat locally (see the accompanying press release here).

That seems like the wrong question.  It shouldn't be whether we CAN eat locally but whether, WHY would you want to eat everything grown locally?  

The paper basically assumes local is "good" and asks how do we get more of it.  A few, uncritical references are made to the fact that local food systems may "result in large GHG emission reductions" or that it "shortens the distances required for economic and energy-efficient recycling of waste streams between farms and cities" or it " may increase community involvement in food production issues, potentially leading to improved environmental constraints on landuse practices."  Yet, there is good reason to believe that local food systems would generate more GHG emissions, result in less food choice and dietary diversity, increase price and availability risk for consumers, and drive up food costs.  There is a lot written on each of these issues, none of which is referenced here.

In any event, the authors do some calculations to suggest it may be technological feasible to provide enough calories to feed everyone in this country with local production.  The authors used yield data from each county in the US to infer the productivity of growing crops in each location.  However, it is likely a mistake to assume that yield would remain constant as production expands to more marginal lands.  In fact, it is almost certainly the case that observed yields near urban locations are an upper bound for the productivity in the area because only those lands that are currently productive enough to out compete other uses are those currently in use for crop production.  That is, you're only observing yield from the most productive lands and you're not observing yields from the least productive lands.

It might not be surprising to hear that the authors don't calculate the cost of all this.  The words "cost" and "price" appear exactly three times in the paper, the latter of which in reference to the fact that they don't study price effects.  The paper concludes that: 

“current foodshed potential of most US cities is not limited by current agronomic capacity or demographics to any great extent, and that the critical barriers to this transition will be social and economic.”

Saying the main barrier is "economic" is akin to saying the main barrier is reality.  The reality of the resource constraints that nature deals us and our willingness to pay to overcome some of those constrains.

Nonetheless, that doesn't keep them from proposing some grand plans .  From the press release: 

“Campbell’s maps suggest careful planning and policies are needed to protect farmland from suburbanization and encourage local farming for the future.”

I don't see anything in this paper that suggests we need "careful planning" or to "encourage local farming."  If people want local foods and are fully willing to pay for them, farmers will provide it.   

The Local Trap

It seems other disciplines are waking up to the fact that "local foods" are not the panacea they're often made out to be.  Here is an interesting article by Born and Purcell in Journal of Planning Education and Research aimed at city planners.  An excerpt:

“The local trap refers to the tendency of food activists and researchers to assume something
inherent about the local scale. The local is assumed to be desirable; it is preferred
a priori to larger scales. What is desired varies and can include ecological sustainability,
social justice, democracy, better nutrition, and food security, freshness, and quality. For
example, the local trap assumes that a local-scale food system will be inherently more
socially just than a national-scale or global-scale food system. This article argues that the
local trap is misguided and poses significant intellectual and political dangers to foodsystems
research. To be clear, the concept of the local trap is not an argument against
the local scale per se. We are not suggesting that the local scale is inherently undesirable.
Rather, the local trap is the assumption that local is inherently good. Far from
claiming that the local is inherently bad, the article argues that there is nothing inherent
about any scale. Local-scale food systems are equally likely to be just or unjust, sustainable
or unsustainable, secure or insecure.”