Locavores, Droughts, and Famines (and the Market)

By On July 21, 2012 · 39 Comments · In Current Events, Economics

I am currently in the middle of The Locavore’s Dilemma: In Praise of the 10,000-Mile Diet, by my long-time friends Pierre Desrochers and Hiroko Shimizu. It’s a wonderful book, so far anyway, that offers a really good critical assessment of the locavore movement using both good economics and a sound understanding of agriculture and geography. (Pierre is an economic geographer, so this should not be a surprise.) While reading it yesterday, waiting for the two of them to join me for coffee, I noticed that Hiroko had written a solo-authored epilogue. Those few pages nicely capture the whole spirit of the book.

After discussing the severe hunger her Japanese parents suffered during World War II, she writes:

[O]ne of the main lessons to be learned from my native country’s experience over the last century and a half is that pushes toward autarkic food policies can only result in disaster. As we wrote in the book – and as many other people have said before us – if goods don’t cross borders, armies eventually will. My parents’ generation is living proof that what militaristic people thought they could only achieve by force can be accomplished much more effectively and successfully through free trade and peace. …

As…Steven Pinker observes…we may be living in the most peaceful time in our species’ existence. This blessed state of affairs, though, was a long time coming and was only made possible through the worldwide exchange of products, resources, ideas, and culture. Despite our current economic woes, we have almost vanquished famine. Most of us living longer, healthier, safer, and more enjoyable lives than previous generations. It seems incumbent upon us to put forward some constructive proposals to improve the global food supply chain rather than turn back the clock to some imagined era of pastoral bliss that most people escaped from when given the opportunity….

It is my hope that “Buy Local” will soon be replaced by the more desirable slogan “Buy Global – The Planet is Our Garden.”

I could not agree more.

And I will add one more observation. Many parts of the US right now are suffering from severe to extraordinary drought, especially in the heartland. But notice: there’s no famine. No one is starving. No one is going to be any more hungry as a result. For that, we can thank globalization and the end of the local economy.

Were the residents of Indiana limited to a 100 mile diet, they would be in deep trouble right now as crops and animals are suffering. It is precisely their ability to tap into a nationwide and global trading network that softens the blow of drought and allows the surpluses in other places around the world stave off famine there. My local paper today had a story about Washington state farmer, who have had plenty of rain, being thrilled with the opportunity to ship their grain and other produce to the drought-stricken parts of the US. And let’s not forget that it is through the market and the price system that they are aware of the need to do so. The higher prices they can command for their grain more than compensate for the shipping costs. This is what markets do and globalized ones create more possibilities for filling the gaps that nature creates.

The globalization of the food supply, and the related economies of scale and reductions in cost, are like a giant insurance program for humanity. The more that every part of the world taps into that network by opening themselves to trade, and the more we in the US help by ending our agricultural subsidies and import quotas, the more people who really will have a “secure food supply.”

The goal of food security is a noble one, but the lessons of history and economics are clear: the best food security comes not from putting all of your eggs, grain, and cattle in one local basket, but by diversifying your options through the globalization of trade. The best protection we have against the whims of nature is the sophisticated flexibility of the market, and the larger the better. That global trade has largely ended famines is, almost by itself, reason to dismiss the more extreme forms of locavorism. It is more so a reason to celebrate the way in which the market serves the most important of human needs peacefully and humanely.

 
  • JackDoitCrawford

    Well said. Now I know what locavores are, I can fight their primitive ideas.

  • http://www.facebook.com/people/Christina-Lopes/621587029 Christina Lopes

    I am beginning to read the book and already love it. As a self professed “locavore”, I anticipate the book will not change my eating habits– mostly because I absolutely insist on knowing where my animal protein comes from (I do not want to buy animal flesh from a producer that mistreats animals). But I completely accept the premise that globalization has decreased famines and made our food supply more stable/cheaper. However, why should the local market disappear? Surely, I am also participating in the market when I make my food choices just as anyone else does. In other words: isn’t having choice also an intricate part of an open market? In the end, what matters most is that globalization has increased choice for all. And I will continue to exercise that choice by filling the trunk of my car with meat/veggies from farmers I know and trust. :)

    • Steven Horwitz

      Your last two sentences are fine with me. Expresses as a personal preference, not as a political mandate, that’s fine. I do worry, though, that if enough people have that preference, the effects on those who don’t will be significant. So yes, shop your local farmers’ market (I do!), brew your locally roasted coffee (I do!), but remember that’s a luxury of wealth, not a formula for ending poverty.

    • Dug

      Christina nails it. More options, supporting local and global producers alike, has to be the best approach. Buying local helps support the community immediately around you – where you actually do your living – while buying global not only feeds families in communities around the world but helps to assure the functioning of a lifeline we can both contribute to and rely on when necessary.

      A stranger approached me in the grocery store a few years back when I was picking up a bag of popcorn. He said his sister and brother in law owned the farm that produced this particular brand of popcorn. I switched and have bought that brand ever since. It’s sentimental, but there’s a value to that, too.

      That said, I’m glad someone’s presenting the case for the underappreciated benefits of the global market (despite their flaws).

      • TracyW

        Although, the more that people in other communities buy local, rather than buy from your community, your local community is worse off.
        In other words, the Internet is the worst place to argue for “buying local”.

        • j r

          Worse off by whose standards? If people have a preference for buying local, they’re by definition better off. Unless your definition of better off is a paternalistic one.

          • TracyW

            Perhaps I’ve misinterpreted what Dug said. But let’s take the buying local case from an economic view.

            Take community A, which is part of a global community. People living in A buy goods made in communities A, B, C, etc. People living in communities B, C, etc buy goods made in communities A, B, C etc.

            Now Dug and Christina persuade people living in A to preferentially buy goods made in community A. Therefore the people living in A must be spending less on goods made in communities B, C, etc. As far as this goes, this is good for community A. But let’s say that people living in community B are also persuaded by Dug and Christina to preferentially buy goods made in community B, and people living in community C preferentially buy goods made in community C, and etc. Therefore what community A gains from preferential local buying from people living in A is offset by their losses from preferential local buying from people living in B, C, etc.

            But, it’s worse than that. People living in communities A, B, C, etc are worse off because they are no longer gaining from trade, they’re more often now buying goods from non-efficient resources. Everyone has to spend more time making the basics, and thus less on pleasant matters like free-range eggs.

            If you want to make your local community better off in economic terms, you should be persuading people to only buy from your local community. So you want to wisk round your neighbours and sell them on the benefits of buying locally, but to the rest of the world you should be saying “Buy globally! Come to our fantastic community and buy our products!”

            Now, the thing about the Internet is that it’s not that local, it’s a global thing. Anyone can read a website. And this website isn’t targeted at a local community. So to the extent that Dug or Christina persuade anyone reading this, they’re probably making their own local communities slightly worse off. Such local arguments should be made offline.

            However, I don’t claim omniscience. There may be some preference set I’m not thinking of that makes Dug and Christina’s argument here on the Internet makes sense. If you can explain it, please let me know.

          • Al Bundy

            I get this hypothetically, but I can’t imagine the locavore trend really leading to communities halting trade with each other to the extent that they are actually harmed or global trade being noticeably effected . Exactly because as has been said before, it’s a luxury that only a relatively small minority is situated to participate in, and the majority of those that do don’t fully drop out of the global food system anyway.

            In my opinion the “BHL position” on locavorism and the global food system ought to be: Everyone has to right to make their own choice on where to obtain their food, locally or globally, free from government price manipulation. Tariffs, subsidies, and barriers to trade should be eliminated across the globe, especially and most importantly in first-world countries where they are most damaging.

          • TracyW

            I can imagine the locavore trend leading to communities passing laws that do affect trade with each other. Perhaps I’m overly pessimistic though.

          • SimpleMachine88

            No, but this is a good example of a common economic fallacy.

            Free exchange, trade, benefits both parties. Liberalizing trade benefits your country, not just trade partners.

            If country A stops importing, then consumers in country A don’t get foreign products. This is bad. As for producers, remember that exports=imports over the long term. If the other countries don’t export stuff to country A, they can’t import from country A because they don’t have any of country A’s currency to buy it with. Those people making exports lose their jobs. This is bad.

            If country A actually managed to import, without exporting, this just means they are giving stuff to other countries. This is bad for country A, not other countries.

            The only trade restriction that could possible benefit country A is if countries B and C stopped trading. That is just generally a bad, because their trade partners become poorer.

            It’s good if trade partners liberalize trade with you, but it’s also just good if you liberalize trade with any other country on your own. Also, this fascination with exports needs to end. Exports are good only for getting imports in return.

          • TracyW

            I read Dug and Christina argument for supporting your local community as being at a more local area than a country. Lots of countries in the world are far bigger than 200 miles in at least one dimension. So the currency argument doesn’t apply.

            I agree with what you say here. However, I was not trying to write an essay on “Everything I know about trade theory”, I was just responding to Dug and Christina’s argument as I best understood it.

          • good_in_theory

            You’re assuming comparative advantage and treating it statically. Comparative advantage is dynamic. Domestic produce from country A could end up outcompeting imports from country B on the merits.

            Comparative advantage in an industry is not a natural given, it’s an artifact (not that nature doesn’t play a role). There’s no reason to think that bearing high start up costs to an industry in country A won’t end up with country A having a comparative advantage relative to B down the line and trade being a complete wash with C because of transaction costs.

            It’s perfectly appropriate for people to have preferences about the composition of industry where they live. That’s part of how comparative advantages develop and change over time.

          • TracyW

            You’re making the infant industries argument. But that isn’t an argument for preferentially buying local in general, which is the argument of Dug’s I was responding to. Comparative advantage, static or dynamic, only makes people better off if they do trade, at least eventually. If you dynamically create a comparative advantage but every other community prefers to inefficiently buy local goods than yours, your comparative advantage is no help.

            It’s one thing to have preferences about the composition of industry where you live. It’s rather silly, however, given those preferences, to make arguments that would be self-defeating of those preferences if generally accepted.

          • TracyW

            And, on your last point, I don’t think that it’s perfectly appropriate for people to have preferences about the composition of industry where they live. I know this is not a topic that economics addresses, but such a preference strikes me as dangerous to happiness as it depends on getting a lot of other people to go along with your desires, so it’s very unlikely to be fulfilled. I think it’s better for happiness to have a preference for enjoying watching the world unfold in interesting new ways around you.

    • Sean II

      Christina,

      Let me apologize for being blunt, but I’d like to go a step further than Steven and try to convince you to reconsider the whole organic enchilada.

      The preference you describe is more than a luxury, it’s a frivolity. Be honest and ask yourself what you really know about those local producers. Unless you conduct regular inspection of their farm like the characters in Portlandia, you probably don’t know very much beyond the fact that they seem like nice people who profess certain values, and use the jargon of localism and sustainability as part of their niche marketing. Whether they live up to those ideals is another question.

      And even if they do, why are you so sure you know what conditions are best for the animals? Who says cows would rather forage than be fed? Who says Berkshire pigs are capable of enjoying long walks through the paddock? How do you know if the fear of predators experienced by a free range chicken isn’t somehow worse than the boredom felt by a chicken confined to a coop?

      Given the long list of things a consumer does not and cannot know, localism reduces down to something like provincialism. It becomes merely a prejudice in favor of people you happen to have met personally, at the expense of people you have not. And provincialism is generally something to be avoided. Why privilege one person over another based on some accident of geography?

      I admire your refusal to force your preference on anyone else, and I would never try to force you away from your preference, but I hope you can pardon me for trying a bit of persuasion, even so.

  • Sergio Méndez

    What I resent of this text is the idea that in any way we have a free agricultural market in the world, when the main agricultural powers (mainly the US and the EU) rely largely in massive subsidies for their products and want, at the same time, to compete in “equality of conditions” with poor third world countries. It also imagines that having a true global open economy will imply that local harvests will be decimated as they actually are. How many peasants in third world countries are broken because of unfair competence from first world countries? Who says that countries with good land and climate to produce grain (such as maize or wheat) wouldn’t be cheaper locally produced without having to compete against massive subsidies or first world nations (just think of the reduced transportation costs)?

    • Steven Horwitz

      Sergio,

      Did you actually read what I wrote, including this sentence?

      “The more that every part of the world taps into that network by opening
      themselves to trade, ***and the more we in the US help by ending our
      agricultural subsidies and import quotas,*** the more people who really
      will have a “secure food supply.”

      Nowhere do I suggest that the ag market is a “free” market. The phrase never appears in my post.

    • SimpleMachine88

      I think you don’t understand how trade works. A country can benefit from opening trade with another no matter what the make up of the others economy, but only so long as it is non-identical.

      I can’t quite tell if this is right, but I think you are saying that the conditions of countries have to be equal for trade to be fair. Gains from trade take place precisely because of different comparative advantages.

      Take two countries where consumers want an equal balance of manufactured and agricultural goods. Each one can produce 4 manufactured goods or 4 agricultural goods (or any 1/1 combination). They don’t need to trade. Each one produces 2 of each and consumes 2 of each. But, now take two countries where one can produce 6 manufactured goods or 2 agricultural goods, and the other 2 manufactured goods or 6 manufactured goods (or any 1/3 combination, you get the idea). They both go all in on the area in which they have a comparative advantage (manufacturing and agriculture respectively). One makes 6 manufactured goods, the other 6 agricultural goods, they trade, and then each country can consume 3 of each. They are now 1/3 richer.

      They are richer because they do not have “equality of conditions”. Equality of conditions is a terrible impoverishing thing. By the way, this works even if one country is better at producing both products. It also works even when the first country idiotically insists on producing a few agricultural goods (like Europe). Sure, it’s not good for anyone in the first country who just had his heart set on being a farmer, but there is no right to engage in unproductive labor. Ontario’s aspiring coffee growers just have to deal.

      “Who says that countries with good land and climate to produce grain
      (such as maize or wheat) wouldn’t be cheaper locally produced without
      having to compete against massive subsidies or first world nations (just
      think of the reduced transportation costs)?”

      I do. The cost of the local goods would be higher than whatever foreign goods people are buying now. That’s why they are bloody buying them now.

  • Jersey Patriot

    Unfortunately, the actual history of “opening food trade” means government-corporate collusion and land theft on a massive scale. Ironically, with all the improvements in food production and transportation, there are still billions who are food-insecure, not because the food isn’t being produced, but because they’re impoverished by the food production system.

    In a twist of irony, Indianans are both more and less food secure because of long-distance food trade. They are more secure because they can trade for food when the weather turns bad, and they are less secure because that trade is, in part, responsible for wrecking the climate that produces good growing weather.

    • SimpleMachine88

      “Centrally Planned Europe (CPE) is the only region of the world where releases of CO2 due to fossil-fuel use are generally declining. Despite annual increases the past five years that has raised CPE fossil-fuel emissions to 898 million metric tons of carbon, the 2008 level is indicative of early 1970s emission levels and well below emission levels of the late 1980s. Remarkable growth characterized fossil-fuel CO2 emissions for the period from the mid 1940s through 1988 in Eastern Europe. During 1989-90, CO2 emissions from Eastern Europe fell 7.9% to early-1980s levels. Since peaking in 1988 at nearly 1.42 billion metric tons of carbon, emissions have dropped 37% to 898 million metric tons of carbon in 2008.” http://cdiac.ornl.gov/trends/emis/tre_cpe.html

      Markets 1, Environment 1. Non-zero sum game ftw!

  • Joseph R. Stromberg

    The British Empire collapsed, too, and was thus able to cause fewer famines in India and Ireland. This is not meant of course as a recommendation of any later empire that might come to mind. Brother Pinker would so recommend, but I wouldn’t.

  • Gordon Barnes

    Imagine that I am a poor, rural farmer in a third world country. When global corporations import food into my country, they can sell large quantities at low prices, and this drives the price of food down in my country. The supply of cheap food outruns the demand, and I make very little money. Moreover, the higher ratio of supply to demand keeps my production low, or even reduces it. I produce very little and make very little money, but at least food is cheap, so I can get by. But then 2007 approaches, and lots of things happen. First, the price of oil goes up, and that increases the cost of transporting food for those big corporations who are transporting food to my country. Second, emerging biofuel companies start demanding more maize as well. There are also people speculating on food futures to make a quick buck. All of these things, which happen far away from me, in other parts of the world, suddenly cause a huge spike in food prices. People in my country are very poor — many of them spend more than half of their income on food. When food prices soar, it causes political and economic instability, and sometimes violence. I, too, have a hard time buying enough food to eat. You might think that I could benefit from the high prices when I sell my own food, but remember that I have been producing very little because I was being undersold by global corporations. So I am not producing enough to benefit enough from the higher prices to offset the new high cost of food. All in all, life has become a living hell in my country, and it will stay this way until well into 2008, and then the whole thing will happen again in 2010 and 2011. There are some people in the United States who call themselves “Bleeding Heart Libertarians,” and they say that the globalization of food is actually helping people like me — poor and vulnerable people. But when I look at the facts, I just don’t see it.

    • SimpleMachine88

      This is a terribly confused post. According to this, the problem with the price of food is that it is too high and too low. Well, it can’t bloody well be both.

      I believe that you are trying to make an argument based on strategic underselling. The critique here is that a producer sells at below market prices thereby driving his competitors out of business so that he is then free to raise the price.

      Unfortunately, the global market of food is far too large to be cornered. If you are asserting that it has been, I would love to see some evidence for this rather bold claim. Agricultural subsidies in the developed world are not some clever ploy, they are political stupidity and corruption.

      Prices go up, and prices go down. The trick here is to buy when its low, and sell when it’s high. It’s true that swings in prices can be harmful. If only there were some group of people who could buy low, and sell high, evening out long-term prices. Oh shit! There are, speculators.

      You’re talking about a person who tried to sell when the price was low, and then tried to buy when the price was high. This is a bad idea. When the price of food was low, don’t be a farmer, go to the city and work in a factory, then when the price is high, move back to the countryside and be a farmer. Problem solved. You actually have to respond to market demands.

      The way American farmers do it, who are “in the market” to a greater extent, is by hedging. They buy insurance, from speculators, ensuring that their crops will be sold at a certain price. That means their losses were offset when the price was low allowing them to stay in business, at the cost of less gain when prices rose.

      • liberty

        ”
        When the price of food was low, don’t be a farmer, go to the city and work in a factory, then when the price is high, move back to the countryside and be a farmer. Problem solved. You actually have to respond to market demands.”

        Wouldn’t it be lovely if it were this easy. Do you really think you can just “move back to the country and become a farmer” every time prices change? It takes YEARS to set up a farm, buy tractors and farm equipment, find a customer base, set up deliveries, re-salers, marketing, etc., particularly if you want to actually make a decent living. And do you really think they can find and afford decent insurance in 3rd world countries?

        • SimpleMachine88

          Not everyone is “on the margins”, but some workers are. Because of diminishing returns, when they move, the rest benefit as their competitors leave.

          Actually, the price that a farmer in third world country receives is hedged for him already by some speculator on the CME buying when the price drops and selling when it is high. He doesn’t have to do anything to benefit from this.

          If you want to reduce your exposure to low prices as a farmer, stay on the farm, have your cousin move to the city and work in a factory, and split your incomes. People in the third world do this all the time.

      • Gordon Barnes

        There’s no confusion. The price can be too low and then, AT A LATER TIME, too high. I have no idea why you don’t understand that. And the narrative that I told is essentially what happened all over the world in 2007-2008, and then again in 2010-2012. So the narrative was an attempt to convey a lot of factual information in a short amount of space. If you want the facts about those spikes in food prices, and the causes and effects of them, then just go do some reading about it and you will see that my narrative reflects the facts on the ground.

        With that said, I’m done with this. The bloggers on this site don’t respond to objections, and many of the other people on here are just not worth the time.

        • SimpleMachine88

          If you are objecting to trade, you need to clearly state what the effect of trade is that you are objecting to. “Ceteris paribus, trade causes negative effect A” Therefore I tried to deal with either the objections that trade causes prices to rise for consumers, fall for producers, become more volatile, allows for strategic manipulation, or otherwise causes prices to rise or fall when most damaging.

          I’m glad that you realize that it you realize you can’t say that it causes long term prices to be too low and too high. That’s why I moved on to strategic underselling, or “dumping”, which seemed to be what you were talking about, and its usually the excuse given for tariffs under WTO rules, such as when the US put a tariff on steel.

          As I pointed out, the market we are talking about can not be strategically manipulated because it is too deep. It has too many buyers and sellers. Deepening the market by removing tariffs and barriers actually makes it more difficult to corner. Also, trade is profitable between two non-identical economies, no matter the make up of their economy. The fact that Europe and America are not at an intelligent point on the PPF with respect to agriculture/other stuff, does not mean that trade in agriculture is not beneficial, only that it is less beneficial than it could be.

          If you go back to how the market can’t raise and lower prices, actually it can raise prices for producers and lower prices for consumers through gains from arbitrage. Agricultural exporters get higher prices from access to consumers, and consumers get lower prices from access to producers. That’s the whole genius of trade.

          As for volatility, liberalizing trade makes prices less volatile. The article talked about this at length. Trade evens out regional disparities through arbitrage, keeping the price for consumers from rising because of local droughts or the price from falling for producers because of a bumper harvest. Essentially, the local price is hedged because of trade- If the price rises, food is imported, the price falls and vice versa for exports.

          So, finally, lets go back to the idea that somehow prices could be low and high at particularly damaging times because of trade. This is completely wrong. Precisely when a country needs to import or export food, allowing imports and exports helps. If you have too much of something, people sell it: if not enough, people buy it. This is what a market is for.

          To use your example of an agricultural producer during a period of low times, that just means they aren’t benefiting from the market as much as they would like to, but they are still benefiting. If this is in an agricultural exporting country, they are not importing as you say, but if they are in an agricultural importer, this just means that the farmer is not able to gouge his also poor neighbors as he would like to.

    • TracyW

      Imagine you’re a poor farmer in a third world country. No one imports food. When the rain falls, or if a local war breaks out, the price of food sharply rises, and you go hungry, and life becomes a living hell.

      To paraphrase Churchill: “Market economies are the worse of all possible economic systems, apart from all the other systems that have been tried from time to time.”

  • good_in_theory

    “Locavorism” is not about autarky. From many reports (and what perusal of their own policy paper suggests), this book is just the typical story of a blowhard economist doing insufficient research into another field and then knocking down a bunch of straw men. “Food miles” are not a crucial part of the arguments for locavorism. Based on the sloppy argument contained in their policy paper, I suspect their book-length polemic is a failure. No one is arguing for all localities to limit their consumption by a 200 mile radius. No one is arguing for an end to trade in the food system. But hey, surely our pair of expert economists know better than those crazy hippies. After all, “if comparative advantage, then the best of all possible worlds”!

    • Steven Horwitz

      Neither is an economist. Pierre is a geographer who actually does know some things about food and land and the like. Hiroko is in public policy. So put away your biases and try reading the book, then come on back.

      • good_in_theory

        I’ve read their policy paper and multiple reviews. I’ll be saving the time and the money. They didn’t put away their biases (against the supposed hordes of romantic luddites); that’s what has biased me against them. I’m not a locavore and have no problem purchasing “global” food. I don’t much care about “organic” or “gmo,” and I shop almost entirely on price, so I don’t exactly need much convincing when it comes to my purchasing habits.

    • SimpleMachine88

      “”Locavorism” is not about autarky.”

      No one’s saying that. Locavorism is about idiocy.

    • TracyW

      See
      http://cambridgecarbonfootprint.org/blog/why-eat-local-food/, in particular the point on “Ensuring food security”.

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  • ThaomasH

    The resolution of the locavore’s dilemma is to price environmental externalities and optimize food consumption given one’s tastes and income.

  • Joseph R. Stromberg

    Then again, if you want to reduce your exposure to wage labor, you move your cousin to the farm and with the extra help you grow mainly food, with a little cash crop on the side.

  • gdolesfunk

    Many things I’ve read point to the conclusion that massive monocultures of corn, soy, wheat, etc., deplete the soil and make it much more susceptible to drought. The soil in which the U.S.’s corn monocultures are grown, for instance, has suffered from decades of erosion and poor management. A farm practicing both plant and animal diversity builds a soil that is more resistant to drought with more water-retention capabilities. If the residents of Indiana were drawing from a bunch of well-managed local farms with healthy biodiversity, it’s not a sure thing that they would be suffering much at all. It’s surely a good thing that when a drought hits, the market allows folks to trade with others; but a well-managed patch of land, with healthy soil and manmade ponds to act as water reservoirs, is a different creature when it comes to drought. Not all soil is created (or maintained) equal.