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Tom Reardon of Michigan State University Speaks Out: Wither Local?

Jim Prevor’s Perishable Pundit, August 30, 2010

Our piece analyzing a session at PMA’s Foodservice Conference was titled, Everyone Is In Favor of Better Flavor But Is ‘Local’ A Solution Or An Ideology? In it, we lamented that everyone on the panel seemed to be in agreement and, as such, hard questions weren’t being asked.

We’ve received many letters on the piece including a piece from some of the panel participants. We thought, however, that we would start with a submission from a distinguished academic who sees local from halfway around the world:

Jim, as usual I found your writing brilliant, and this time it was regarding the “local foods” issue. At dawn here in Beijing I wanted to send some additional and/or confirming thoughts. I hope you accept these points, even though I am writing from more than 50 miles away from you.

First, let’s face it, the Chinese, the French, and the Italians (and I can add the Mexicans and Indians, and have actually listed what foodies often list as the great original cuisines) are (or I can soften that by saying, are among) the greatest food cultures on earth, with the greatest variety, taste, refinement, obsession with freshness, the history of each dish, mania for regional specialties.

I have found that the average (I mean average) Chinese, Italian or French person I know talks, thinks and knows as much about produce as the “industry practitioners and experts” as one finds in PMA meetings and so on. (I love PMA so I am not “dissing” them, I am just saying the obvious for anyone who spends time in the great food culture countries.) I think that these countries “have it right” in terms of local foods — they think “FOOD REGIONS.”

At any time, in my offices in China or India, or the university where I spend time in France, I can just grab anyone… secretary, professional, local baker, trucker… anyone… and I can say “what’s in season and where is it from?” Anyone… anyone… will tell me in enthusiastic, vivid, and voluminous detail about what peaches or mangos are “coming in” (please remember the verb… “coming in”) coming in from what region.

They can describe exactly when they start “coming in”, and when they “are over” and aren’t worth a word or a chew. In my office in Beijing the other day, I watched everyone (not “food experts”!) crowd around a table at a work break; we were all cutting up, shouting, laughing (the usual scene, I have found, in China, one of the great fun places to work); they were obsessing about … Thai mangosteen (we had a few open and the crowd was digging into them with a kind of food insanity), peaches from Xianjin (these will give my home state California a run for their money…), melons from a local province (only 200 miles away), and an apple from the US.

They liked these things and paid their lower incomes for them because they think they have good TASTE. They CELEBRATED the regions they are from. They did not say, oh, I am sorry, I only eat things grown 100 miles around Beijing! IF and ONLY IF the BEST version of that kind of produce were grown that close to Beijing would they eat it, unless it is just some commodity product that anyone can grow anywhere about the same, unless they mess it up.

I have seen the same scene in offices and homes in France, Italy, India (for fruit and certain vegetables) and obviously Mexico. As usual, France, I think, is leading the way in marrying the modern food system with this traditional food love and culture of “food regions.” They have programs (one of the government, one of the private sector), one of which is called “Reflets de France”, reflections of France. They SELL each region’s specialities (of many foods) … ALL OVER FRANCE.

So a “consumer” in Bordeaux will go to the supermarket and pick up, savor, love, discuss, celebrate, the specialties of departments in the South, North, East, and West. (It is never “local versus non-local” that dominates their choices, or I have never seen this… it is the taste, the season, the tradition of specialty, and if the local is producing something good, they just pull it into the general set of things they love.)

These same persons will ooh and ahhh over an orange from Israel, a mango from India, and berries from Serbia. IF and ONLY IF their local producers can produce the best option for taste (for things with taste differentials), they will buy it. They will eye it, sniff it, touch it, figure it out. Typically they will… already know… what things the local folks can do well, and when, and just then judge among the local producers, assuming that anyone worth his/her salt will do well the local traditional thing, or if they introduce a new thing, they will have the common sense to make sure that it upholds the same quality tradition as the other things made.

But of course these same consumers will pick over bargains for produce and other foods that they are not looking for particular flavor or differentiation in, and if they are poor or lower middle or even middle, those things may be most of what they buy. So they will combine looking for cheap commodities, and looking for the “regional home runs” … whatever region, inside or outside France, that they can find. The same I see in China, the same in India, in Mexico, in Italy. In my personal life, I try to follow the food ideas of these people, as I think that they know … a lot more than I do about food. I go to the local farmers market when I can because I know there are some local things around my Michigan area and San Diego area that folks there do well, and when they do it, and little by little, I learn who can do it.

Second, it seems to me that the mix we now see of “globalization” (just another way of saying what Jim said, the development first of national rather than local, then international rather than only national, markets with great variety of foreign produce and other products to choose from) and the “buy local” “movement” are inevitable partners, neither will go away, and neither will beat out the other for the next 10-20 years — and then the “markets” side will (again, as it already did once.. in the 1950s/1960s) win. For several reasons I note below:

1. Consumers AND producers LOVE the growth of national and international markets — the formation of national, and then the development of international markets — for everything, and produce is part of that. One famous berry grower in Michigan told me when I asked him about “buy local movement”, he said, “Well Tom, I can’t sell a lot of berries within 100 miles of my operation.” I am sure that anyone who is COMPETITIVE (on quality or cost or both) and has a SHIPPABLE product would say that. Producers want big markets! They want FREE MARKETS, not quotas, tariffs, blockages and constraints; they want the right to compete for their apples to get in and duke it out in Beijing with Chinese apples, their grapes and cherries to be sold in Japan, their oranges to sit on French supermarket shelves. Having little local markets means that the producer cannot get scale, return on her investment, and become more and more competitive to expand her market and grow. This is, of course, obvious. Consumers also want big markets. They want choice. They want to save money, they want to find the best product. They want things in season, wherever that product is coming from. They want to buy from the most competitive (in quality, or cost, or both) producers… from anywhere. That is why a local major retailer in Michigan told my class that the “country of origin” thing had nearly no effect on his sales; he noted that by far the regular consumer does not even register any of that. They want quality, or price, or both, and assume the supermarket chain has the sense to screen product to make sure they buy safe.

2. Consumers AND producers LOVE the growth of local markets — for the things that local suppliers can produce with quality and/or good price. I obsessively buy Michigan peaches and tomatoes in season, and go into a kind of juice-covered trance eating them by the bushel. These peaches are like the ones I ate as a boy in California. We all want that. Few consumers really want to eat “pink baseballs” (my term since a kid for the tomatoes found in most supermarkets at least until the recent trend toward slightly better tomatoes). Consumers love to be able to “connect” (so little experienced in modern life) with farmers and the “land” through at least thinking that “hey, this is produced by the local folks, I feel part of their community;this is not some ‘big farm to big box’ cage I am confined to…” and so on. This love and yearning for the local will only grow and grow as several things happen: (a) for defensive reasons, as it slowly dawns on us that foreigners are doing things more and more with the same or better quality but lower cost, and we panic and hug our local produce to reassure that we are still somehow more important and better than the foreigners are; (b) for proactive reasons, as the local produce becomes better or cheaper or more available as local producers, such as in delicate greens, scale up, and hopefully have a big enough market to make enough money to make the needed investments in food safety!

Third, however, it seems to me that over time the “buy local” movement will simply wither on the vine. Not that I want it to (this letter is odd because when I am in any place, including Michigan or China, I obsessively buy the local specialties, frequent farmers markets, etc.) … but … modern packaging and shipping methods are … more and more… making it possible to keep a product, even a delicate one, fresh even if shipped, and allow harvesting when the product is ripe.

Greenhouse technology is constantly improving. My usual dinner in East Lansing is Indiana chicken, cooked in California Meyer lemons, with a salad of Mexican tomatoes and organic arugula from a massive organic farm in California, and Hawaiian or Brazilian papaya or Michigan or Chilean berries for dessert (yet I am still fat! Explain that!!!). I was amazed a few years ago when I could get the delicate — and I thought unshippable Meyer lemons, arugula, and papayas — and a few years later, I think of that as commonplace. And it all is more and more. The LOCAL operations, in other places, became more and more competitive, and the shipping technology better and better, so that THEIR LOCAL BECAME MY MEAL.

As these technologies develop, the local producers will lose any “automatic advantage” in the local market. In fact, of course (as this is already happening), the COMPETITIVE producers of delicate fresh produce will be PROMOTING the development of better packaging and shipping, so they can grow their market beyond the local. That is exactly the story of the Michigan berry producers, or the Chileans. I think those competitive companies would find the “buy local” movement in fact a way to TORPEDO the development of competitiveness in their industry… just like subsidizing soybean production etc.

Subsidize the producer (that is what the “buy local” movement boils down to), and, of course, the producer gets some short-term gains, but as usual, because thus protected from competition, does not invest enough, stay safe enough, keep quality in mind, thinks she has a captive local consumer, and then lets quality decline or costs creep up. The local consumers, of course, eventually tire of that, and they embrace non-local product, and the local guy is wiped out. Is this not a story we hear over and over and over, not just in agriculture?

So I think that what will happen is that the “buy local” movement will be caught from two sides in a pincer — the formerly non-shippable (ripe fruit, delicate greens, etc.) products will become increasingly cheap and shippable and undermine the advantage of any firm hoping to be protected from competition by the transport barrier — and the local firms that are producing products that were by nature supposedly local (like organic arugula! Usually cited a decade ago as the super duper local-only product!) will compete with each other and a handful per region and product will emerge victorious, maybe surrounded by a cluster of smaller firms serving niches (that add up to say 10% of the main market for the product).

This seems to me to be exactly what has happened in organic greens in the US… Then these local strong firms will use the increasing shipment and packaging technology to ship all around (and will fight to keep markets free and open) — and/or they will pepper the cities of the US and other places with roboticized greenhouses that reproduce their product and ship it locally by special train compartments in the elevated trains that will replace freeways…

Tom Reardon
Professor
International Development and Agribusiness/Food Industry
Department of Agricultural, Food and Resource Economics
Michigan State University
East Lansing, Michigan

We have known Tom for quite awhile now and have been honored that he has occasionally contributed to the Pundit as in these pieces:

Pundit’s Mailbag — China, COOL And International Opportunities

Pundit’s Mailbag — Labor Shortages And Globalization Will Soon Lead To Mechanical Harvesting

Wall Street Journal Piece Gets Accolade From Abroad

His perspective on “local” is especially intriguing because he travels for extended periods due to his global work. So he has come to see local from the standpoint of being many different places. This is an enriching perspective and Professor Reardon’s views are enlightening.

Professor Reardon is, though, an economist, and one wonders if the economically sensible comeuppance he envisions for local might not be superseded by politics.

Stated most rationally, those who promote local as a virtue in and of itself are really claiming that there exist externalities in shipping food long distances that are not properly being reflected in the price of food brought into an area. These externalities could include anything from the costs of global warming, to the need to maintain a navy to protect shipping lanes transporting food, to nutrient loss from food being shipped for extended periods.

This is a weak argument, though, because, first, it is not sufficient to proclaim the vague existence of externalities; those who want to claim this are obligated to detail what specific externalities exist and what burden they impose. Second, although moving produce may result in externalities, so does local growing. So, for example, although transport may cause carbon emission, so does farming and at differential rates in different places utilizing different methods. If the claim is externalities, one must contrast externalities.

Third, the proper solution to externalities is typically taxation — not a ban. So, if transporting produce does emit carbon more than local grower, the policy response would be to impose a tax that would allow us to rectify that situation. If, even with the tax, the distant produce can compete, there is no reason to not use it.

Though the externality argument strikes us as the strongest argument for the local movement, in most cases advocates don’t even attempt to make it.

Very often actions are advocated as a kind of protectionism. The whole COOL effort, which we wrote about here in Pundit sister-publication, PRODUCE BUSINESS, was less about any consumer demand for such labeling than about producers hoping it would change consumer behavior.

As Professor Reardon writes, improved transport and packaging and the spread of sophisticated horticultural techniques means that many production communities that were once isolated now face competition and are seeking solutions.

The danger is that they may turn to politics to achieve protection from international trade and use a “locavore” cover as justification. This would stop the withering away of the local movement that Professor Reardon projects — but it would be a shame. It would deprive consumers of the produce they would like to buy; it would deprive shippers of the economy of scale needed to be most efficient, and, perhaps saddest of all, it would in the end atrophy the local producers. Think of French cinema, protected, nurtured, subsidized, — and barely watched.

For producers to be world class, the only answer is competition.

We enjoy locavore interests. To taste locally grown Red Amish Deer Tongue lettuce that doesn’t ship and is always suffering from crop failures is neat, it is fun — but it is not a way to feed the world.

Many thanks to Professor Reardon for providing a different perspective.

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