Food produced on small farms close to where it is consumed—or “local food” for short—accounts for only about 2% of all the food produced in the United States today, but demand for it is growing rapidly. According to the U.S. Department of Agriculture, sales of food going directly from farmers’ fields to consumer’s kitchens have more than tripled in the past twenty years. During the same period, the number of farmers’ markets in the United States has quintupled, and it’s increasingly easy to talk about “CSAs”—community-supported agriculture operations where consumers pay up front for a share in the season’s output—without explaining the acronym.
But as local food has grown, so have the number of critics who claim that locavores have a dilemma. The dilemma, prominently argued by Pierre Desrochers and Hiroko Shimizu in their 2012 book The Locavore’s Dilemma: In Praise of the 10,000-mile Diet, is that local food conflicts with the goal of feeding more people better food in an ecologically sustainable way. In other words, well-meaning locavores are inadvertently promoting a future characterized by less food security and greater environmental destruction. The critics are typically academics, and while not all of them are economists, they rely on economic arguments to support their claims that the globalized food chain has improved our lives.
Why are critics pessimistic about the trend toward local food? Their arguments hinge on what we call the CASTE paradigm—the idea that Comparative Advantage and economies of Scale justify global Trade and lead to greater Efficiency.
The CASTE Paradigm
Efficiency, or maximizing benefits relative to costs, is the guiding principle in most economic analysis. For the critics, local food simply cannot be efficient because it does not take advantage of CASTE.
The theory of comparative advantage, developed by economist David Ricardo in the 19th century, says that because regions have different relative advantages in production, they should produce the goods and services that can be produced at the lowest “opportunity cost.” Even the best use of a resource—land, capital, time, labor—has an opportunity cost, which is the benefit that would have been gained from the next best use. Land devoted to growing food, for example, has a lower opportunity cost in Iowa than in New York City, since land in New York City is highly valued for office space or housing. So Iowa grows corn, this line of argument goes, because the alternatives are simply not as profitable to the owners of the land. As a rule, CASTE critics assert that food should be grown where it has the lowest opportunity cost, which will tend not to be close to most potential consumers.