Why ‘the market’ alone can’t save local agriculture

  Why 'the market' alone can't save local agriculture

By Tom Philpott
Grist Magazine, August 2006

Straight to the Source – The local-food movement has reached an interesting juncture.

Through one lens, things are looking better than ever. According to a USDA report (PDF), the number of farmers' markets leapt 79 percent to 3,100 between 1994 and 2002. Community-supported agriculture programs — wherein consumers buy a share of a farm's output before the season starts, sharing the risks and rewards of the harvest — have followed a similar trajectory. According to one source, North America boasts 1,200 CSAs. Just 25 years ago, the concept didn't exist in these parts.

All that growth aside, though, the overall market for local produce remains tiny. The USDA reckons that farmers' markets account for less than 2 percent of the more than $70 billion Americans spend on produce. And, as I've pointed out before, the overall income picture for small commercial farms is dismal. Key USDA stat: Farms with annual revenues between $10,000 and $99,000 — which describes the vast majority of farmers' market vendors — have an average operating profit margin of negative 24.5 percent.

Simply put, small farms lose money, and their losses are financed by the off-farm incomes of the families that run them. From this angle, so-called sustainable farming looks like a precarious enterprise.

Why, then, do farmers' markets and CSAs continue to grow and multiply? Why do people still farm? The local-food revival, it seems to me, runs on passion: people's desire for connection to the seasons, to the soil that feeds them, to powerful flavors that can't be manufactured with chemicals or preserved over 1,300-mile delivery hauls. Aside from the dot-com bubble of the 1990s, I can think of no great boom in American history built more on enthusiasm, and less on profit.

Yet passion has practical limits (as investors in, say, Pets.com learned in 2000). For local farms to supply significantly more than 2 percent of the nation's produce (or meat, dairy, and eggs, for that matter), small-scale farming will have to become an economically viable activity.

Some optimists argue that market forces are already quietly working to achieve that goal. The argument goes like this: surging consumer demand for local food — coupled with rising energy costs — has convinced the large supermarket companies to rethink their far-flung supply chains and seek out small-scale producers near individual retail outlets. These corporate buyers will pump cash into local farm economies across the nation, reviving the fortunes of small-scale farmers.

Certainly, evidence for this scenario abounds. The phrase “local is the new organic” has become commonplace. Having turned organic food into another consumer fetish drained of much of its original meaning, the big corporate retailers are setting their sights on “local” cache. Shoppers entering Whole Foods outlets can hardly grab a basket without reading “buy local” propaganda. One pamphlet that confronted me on a recent visit poses the question, “What is local?” The answer seems a bit lenient to me: produce labeled “local” must “travel no more than … seven hours from the farm to our facility.”

Still, Whole Foods has committed resources to local foodsheds. After a scrape with industrial-agriculture critic Michael Pollan, CEO John Mackey pledged $10 million per year in loans to small-scale farmers, among other initiatives.

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