Why does local food cost so much?

I’ve often gotten the question, “why does local food cost so much?” Well the answer is “it’s complicated!” Here is a list of the big issues that go into setting the price of the food you eat. These are fairly generalized, there are some farms in all production systems who do better and worse on the metrics, and each farm has to find what works for their particular situation. (I hope to find the time to make this a fully referenced article, but for now if you have questions, leave a reply and I can send it)

To simplify, there are three methods of pricing. Commodity pricing is what is used for the majority of foods in the U.S., the assumption is that beef or wheat or oranges grown anywhere in the world are all exactly the same, so everyone is paid the same. In theory, the price is based on the average of the production price, so half of all farms are losing money (this is a big reason we we see thousands of farms going out of business every year). Everyone gets paid the same no matter where or how they raise the food. So it literally pays to externalize the cost of everything you can. Externalities are things like social & environmental costs that are paid by society as a whole rather than the individual grower. This system penalizes those who have spent money to care for their land, animals, and employees, and so, many of them have gone out of business. It is a race to the bottom of the barrel.

The first alternative to this pricing system is to pay for some ‘certifications.’ This can be organic, fair trade, animal welfare approved, etc.  I think this is a step in the right direction, but can limit the improvements to the specifics of the certification system. These certifications add cost based on what they are improving, such as paying higher wages in a fair trade system. And they add the bureaucratic cost of certification, both in time for record keeping, and the fees to pay for the inspections, these can run in the thousands of dollars, and are often a barrier for small farmers.

The second alternative is some form of direct marketing. This could be farmers markets, roadside stands, CSA, buying clubs, and many more. This allows a more direct relationship to form between the farmer and the buyer, more trust, and more questions can be asked, and more value can be added to the product.

Let’s look at some of the top issues that go into the cost of the food. Hopefully these can be a good starting point for both farmers and eaters:

How are they paying their labor?  This is usually the biggest driver of price here in the U.S.  Surveys have shown that commodity meat, eggs, and veggie growers now use at least 50% undocumented workers, that are paid very poorly (many are true slaves, even in the U.S. there have court documented cases of slavery for 1000s of farm workers), these workers often have very poor working conditions, and are taken advantage of for everything from healthcare & housing to sexual assault.

Are they beginning farmers? Beginning farmers that haven’t inherited the farm have to be making payments for the farm land on top of making a living. This is hard to compete with those who have all the equity of a inherited land. They also have a lot of learning yet to do, they may not be very ‘good’ farmers yet, but they are learning, and we need to support them while they are learning. Third they have young families to pay for, it is hard to compete with nearly retired farmers (the average age of farmers is now 58), they only have themselves at home again, so have much lower living expenses.

Is the food in season? Its costs more to raise produce off season, either in infrastructure or in shipping. Meat, milk & eggs are also seasonal, particularly if they are grass-fed.

Do they use pesticides?  Pesticides are usually replaced with labor and labor is much more expensive. There is sometimes a yield loss, but I know a lot of organic farmers who get better then the county average in grain crops, and recent studies have shown that for many fruits & veggies there is no yield loss. This is balanced by the societal costs of pesticide residuals in our food, water, and soils and the resulting impacts on health of people and wildlife.

Are they using heirloom/ heritage genetics? There is value in keeping a wider genetic pool, however they may not be as productive as the more hybridized genetics.

Are they building their soil? Many areas are experiencing depletion of micronutrients & organic matter because we are only adding in NPK fertilizers. This leads to inferior nutrition of the food, more disease prone plants & animals, and loss of water holding capacity. Some farmers are focusing on building these things. Water holding is particularly important for our society as it gives resilience in drought and stores more rain reducing flooding.

Are they keeping their soil and nutrients on their farm? Nutrient pollution is a huge problem with billions in both private losses and taxes being used to clean up the Gulf of Mexico, Chesapeake Bay, Lake Erie, nearly every river and inland lake. Even Rocky Mountain National Park! Some farms are using buffer strips and other methods which take land out of production therefore add to the cost of the food.

Are they supporting the surrounding environment? Farms can be a haven for wildlife & plant diversity or they can be a barren wasteland. Cover crops, buffer zones, diversity all help native pollinators (monarch butterflies are being considered for the endangered species list, bees are having huge collapses), amphibians, birds (both of these keep our nuisance insects in check, so without them we have millions of dollars of more expenses to try and do the control ourselves), the whole food chain and people as a whole are reliant on what are called “ecosystem services” some farms are doing what they can to build these services others are degrading them.

Do they use growth promoters? These make the meat cheaper, but at cost to human, animal, and environmental health. Sub-therapeutic antibiotics are one of the sources of antibiotic resistant microbes, which costs us millions of dollars to treat, and kills more people every year. Arsenic compounds in poultry have led to toxic soils and questionable impacts on health. Hormone implants & injections in cattle cause issues in soil & water, and are debated in health spheres. Racopamine is banned in many other countries but used in our pork & poultry. B-agonists have been linked to animal welfare issues. The list goes on…

How are the livestock housed? More extensive systems require more labor and sometimes more land adding to the total cost of production. However, there are health improvements both in terms of the quality & taste of the final meat, milk, or eggs and in terms of health & well-being of the animals.

Who are they using for a butcher? There is a large range in the quality of meat processors, from large firms that rely again on often undocumented labor working in terrible conditions, often being treated worse than the livestock. To the quality of animal welfare. Local butchers or on-farm processing again cost more but can address some of these concerns.

What type of market are you buying at? It is more expensive to drive into farmers market and sit there for 2-4 hours than more aggregated market outlets. Are they charging ‘what the market will bear’? This is what the classic economics say we should do. Even grocery stores change their prices based on location. There are several sides to this: 1) Why should farmers have to live by a different economic standard? Should they stay poor just to keep food prices low? People pay a HUGE mark up for the latest i-phone or coffee drink, put can’t pay a little more to support the very food they eat? However, food is special, we HAVE to eat, therefore the logical end to the mentality of ‘what the market will bear’ means only the richest will afford food. This clearly isn’t a good strategy either. So we have to find some balance. As a society these are tough questions: do we subsidize farmers? If so which farmers? (Right now it is just grains, sugar, and animal products, and you have to be conventional to fit in most programs) Do we offer more in food stamps? Just let the market figure it all out? No simple answers.

Are they building their community? Are they involved in the community, supporting fundraisers, participating in politics, etc.

As Wendell Berry says “Eating is an Agricultural Act” For me it comes down to making purchases that build the world I want to live in. I am fortunate to have the income and privilege to do that and would much rather pay the farmer directly than clean up the mess later with tax dollars.

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