The Locavore's Dilemma
Page 10
Based on historical precedents, one can logically infer a few unavoidable outcomes of an all-out adoption of locavorism in Santa Barbara County. First, faced with the loss of their export markets, local farmers would have no other choice but to sell all their production locally at harvest time. This deluge of produce would quickly bring their price below production costs. While this situation may prove a boon to customers the first time around, most producers would soon either go bankrupt, drastically decrease the acreage devoted to produce in favor of other crops less suited to the local soil and climate, or get out of the agriculture business altogether. In the process, workers with unique expertise in the growing, harvesting, preparation, marketing, and shipping of produce would be laid off and in most cases be unable to earn as much income as they had before (otherwise they would not have been in this line of work in the first place). Local businesses that catered to these workers would suffer as a result. Some volume of local produce would then have to be preserved in one form or another in order to be consumed out of season. Whatever the preservation option selected, out-of-season local produce would be of lesser quality and more expensive than formerly imported fresh produce. In bad years—after all, even Santa Barbara County is not immune to pests, floods, and earthquakes—local residents might have to get by with very little, if any, produce. Seen in this light, the “Santa Barbara syndrome” strikes us as a blessing rather than a proof of economic derangement.
Economies of Scale
So far we have discussed the advantages of long-distance trade for agricultural producers and final consumers, but its importance for food processors and manufacturers should not be overlooked. The issue here is economies of scale in production—meaning, the more units of a good that are produced, the lower the cost per unit. Economies of scale can be achieved either by increasing the size of operations in a firm or by one firm working with another, typically located nearby. Perhaps the best historical case to illustrate the economic benefits of both types of economies of scale is the Chicago meat-packing district in the second half of the 19th century, a subject to which we will now devote a few lines.26
Although self-styled reformers maligned the meat packers for their alleged sins of collusion and greed—long before Upton Sinclair’s 1906 novel The Jungle indicted them for alleged unsanitary practices27—a case can be made that the real source of the industry’s success and its true economic impact has been mischaracterized by contemporary critics who were essentially local food activists. The main argument on behalf of the packers, as stated in 1908 by the pastor George Powell Perry, was that it was a common mistake “to attribute the financial success of some of these moneyed corporations to cheat and chicanery in business methods” for “to say that all this phenomenal accumulation of wealth has resulted from shrewd trickery that enabled a few to cheat their fellows of their dues is a false representation of the true workings of a system of savings that has done as much as anything else to make possible the extraordinary prosperity of our nation during the past century.” In his opinion, the fundamental truth of the matter was that “men of great business capacity and of untiring energy have been gathering up the fragments that nothing might go to waste.”28
American meatpacking first became big business in the early decades of the 19th century with the large-scale butchering of hogs, whose meat could be packed in barrels of brine and shipped over long distances. This process, however, proved unsatisfactory in the case of beef, whose meat became hard and tasteless when prepared that way. As a result, until the second half of the 19th century, most cattle destined for meat consumption were grazed in relatively close proximity to their final destination in order to minimize loss attributable to injury and shrinkage as they were walked to their deaths.29 Animals were then typically killed in relatively small-scale operations from which the meat was quickly sold to local consumers to avoid spoilage.
In time, the advent of a national railway network made possible the movement of cattle in railroad cars while the development of refrigeration led to the provision of “dressed meat” across the United States. At the forefront of the movement of cattle and meat on rails were the Chicago meat-packing industrialists whose strength lay not only in their ability to cut down costs by integrating forward in marketing, backward in purchasing, and by obtaining their own materials directly,30 but also in their capacity to turn what was once the waste of their “disassembly” activities into valuable commodities. In other words, far from encouraging them to throw their polluting production residuals back into the environment (in modern economic parlance, to “externalize” their pollution costs), the packers had every incentive to create wealth out of waste. After all, they had paid for whole animals, so why would they have thrown out “free” raw materials from which they could devise some innovative ways to earn extra money?
Writing in 1889, the economist David Ames Wells attributed the success of meat-packing districts to economies of scale, “which are not possible when this industry is carried on, as usual, upon a very small scale.” Crucially, the scaling up of operations had made it possible to turn animal parts such as hide, hoofs, horns, bones, blood, and hair, which in the hands of small butchers were “of little value or a dead loss,” into a range of profitable products that spanned the manufacturing spectrum, from glue and bone-dust to fertilizers.31 In the early days of the Chicago packing district, large refineries took the steam-rendered lard of packers, refined and bleached it, and sold it on the open market. Glue works made glue from bones, sinews, and various other residuals. Fertilizer plants carted off the pressed tankage and raw or pressed blood, dried and sold it as such, or manufactured mixed fertilizer. Soap factories bought various grades of tallow. Butterine manufacturers used neutral lard and oleo oil from packing plants for manufacturing oleomargarine. Other nonedible portions were turned into pharmaceutical products and lubrication oil.32 A few decades later, many of these operations had been integrated within larger firms. While meat-packing districts were noisy, smelly, and polluted, slaughtering animals in large agglomerations of firms of all sizes resulted in much less waste material being released in the environment than would have been the case in more numerous, isolated, smaller, and less efficient operations.
Most citizens benefited from these developments. Because they were able to create more wealth out of every single animal, the Chicago packers were able to outbid their less efficient competitors and to pay a higher price for cattle, something that was obviously welcomed by producers in this industry. Higher purchase prices, however, did not ultimately mean higher selling prices to final consumer, because, through their more efficient and creative use of raw materials, Chicago packers were able to sell their meat cheaper and still make a profit. Not surprisingly, a growing number of American meat consumers switched their meat purchases from local offerings to those delivered by rail from the Windy City.
Source: Rudolf A. Clemen. 1927. By-Products in the Packing Industry. University of Chicago Press (insert, no pagination)
The main businesses hurt in this process were the traditional competitors of the large packers, small but numerous local butchers, who, unable to offer similar products at comparable prices, took to the political arena where they created a vocal and politically powerful lobby that called for a boycott of the nonlocal meat. The reasons invoked ranged from the unknown health effects of new preservation technologies to worries about the shady unsanitary practices of distant producers. Besides, the unchecked concentration of economic power in the hands of a few large corporations would surely result in “monopolistic profiteering” at the expense of the consuming public.
The public relations campaign launched by small-scale butchers was fierce and quickly relayed by journalists and politicians with a natural proclivity to go after the “big guys.” The protest movement became more organized in 1886 with the formation of the Butchers’ National Protective Association in Saint Louis. As the environmental historian William Cronon pointed out in 1991, however, while th
e stated goal of the movement was to “secure the highest sanitary condition” for consumers, public health was in fact “a convenient way of putting the best face on a deeper and more self-interested economic issue.”33 In fact, health complaints about smaller slaughterhouses and urban dairy operations long predated the rise of the Chicago packers and were common in other countries.34 According to economists Donald Boudreaux and Thomas DiLorenzo, the most plausible explanation for the adoption of the first antitrust legislation in Missouri in 1889 is to view it as an attempt by politically powerful local producer groups, mostly independent retail butchers, to shield themselves from the lower prices and intense competitive pressures of Chicago packers.35
In the meantime, other small-scale attempts to circumvent the packers were set up in locations closer to production sites. One such initiative was spearheaded by a Frenchman, the Marquis de Mores, who not only built a number of slaughterhouses and cold storage houses in Montana and in what is now North Dakota, but also procured refrigerator cars. The venture, however, failed miserably. As the economic historian Fred A. Shannon observes: “Because the supply of matured beef was not year-round, slaughtering on the Plains proved impractical except for taking care of the local market . . . Furthermore, only medium-grade cattle were offered, and the small slaughterhouses were not equipped to make use of the by-products that furnished so much of the profits for the greater packers.”36 Despite small-scale butchers and some cattlemen’s recriminations,37 consumers ultimately voted with their wallets and purchased the offerings of the more efficient large-scale operations. As with many other mature urban industries, however, in time the advent of new technologies (in this case, mostly trucking) and the development of better alternatives to animal by-products (such as petroleum-derived plastics to replace animal bones in the making of countless products) led to their delocalization closer to their sources of supply.
The trend towards the increased concentration of American slaughtering operations has also been pronounced in more recent times, with their number declining from 1,211 in 1992 to 809 in 2008.38 This development has made locavorism a difficult reality for idealistic livestock producers who find themselves forced “to make slaughter appointments before animals are born and to drive hundreds of miles to facilities, adding to their costs and causing stress to livestock.” As a result, many new small-scale operators are reportedly “scaling back on plans to expand their farms because local processors cannot handle any more animals.” 39 Not surprisingly, Michael Pollan and others have urged the U.S. government to step in and fill this need at taxpayers’ expense,40 but one should at least understand the economic and environmental (and, as we will argue later, food safety) benefits of large-scale operations before denouncing the regional concentration of these activities and the need to subsidize less efficient ones. Small might be beautiful, but bigger is ultimately often better for consumers who want to stretch their food budget as much as possible. Of course, if there is at some future point in time enough of a price premium associated with the locavores’ approach to meat production, small and flexible processing operations might be profitable enough to be worth building.
The Debate Over Land Use
In the realm of food production, prices factor in (albeit imperfectly, mostly because of subsidies and barriers to trade) the opportunity costs associated with energy consumption, transportation costs, irrigation, growing season, fertilization, and labor costs. As such, they help agricultural producers and corporate buyers determine the most suitable crops and animals for specific locations. Prices also convey important information about alternative land uses. As the economist Steven Landsburg observes, locavores should not only care about the energy signature of a California tomato trucked to New York City, but also about the other potential products that were sacrificed in order to grow the tomatoes; the other kinds of work that the California tomato growers might have done; the longer morning commutes that would be needed if New York greenhouses were to be built in the place of a conveniently located housing development; the alternative employment that hypothetical New York greenhouse workers might find; the other applications to which the inputs required to produce additional fertilizers and farming equipment might have been used for; and so on.41 When looking at the broader economic picture, Landsburg argues, the energy costs that so worry locavores turn out to be “quite small compared to the many other social costs involved with growing a tomato.”
In the context of locavorism, the most basic land use trade-off is whether grounds within or on the margins of rapidly growing cities should be devoted to food production or to something else. Understanding the relevant trade-offs, however, requires a basic understanding of why large urban agglomerations make some individuals and activities much more productive than if they were located in rural settings. This basic fact of economic life explains why agricultural producers have long been driven out of urban land markets by other lines of work.
Unfortunately, local food activists do not see any value in converting some agricultural land to other uses and favor a number of policies to prevent the process. To quote an important player on this issue, the American Farmland Trust website states that “[s]ustaining local farms and farmland is a sound community investment, as it ensures the public will continue to receive the multiple benefits of agriculture. This involves protecting a strategic land base, providing property tax relief for farmland owners, supporting the business of farming, and investing in agricultural and community economic development.”42
While “running out of land” to feed future generations might sound like a dire prospect and somewhat worth investing much taxpayers’ money to prevent, local food activists blow the issue out of proportion. As we will now argue, far from being deplorable, land conversion around thriving urban areas is the most sensible way to use our scarce resources.
One way to better illustrate basic trade-offs in terms of urban land and agricultural production is to look at why “vertical farming” or stacked agricultural production projects—essentially, high rise buildings devoted to agricultural production, whose basic concept has existed for decades but is now mostly associated with the work of public health professor Dickson Despommier43—never materialized in practice. To their proponents, their most distinctive qualities are that they would allow 24 hour a day cultivation (as opposed to being dependent on natural sunlight), eliminate the use of pesticides because their production would take place indoors, and obliterate the need for long distance transportation because of their location. The first two items, however, are untenable because conventional greenhouses can already be operated around the clock if so desired while the claim that a pest-free agricultural environment can be maintained on this planet is simply implausible. After all, insects and plant diseases found their way into the Biosphere 2 project, a self-contained ecosystem built in the middle of the Arizona desert.44 This leaves the basic economic trade-offs of such proposals, which essentially boil down to the fact that their additional costs (from building these structures to lighting, heating, and powering them) negate any economic benefits attributable to an urban location. In a critique of urban designer Gordon Graff’s “SkyFarm” project, a 59-story-high and a half-dozen-story deep tower in which hydroponic plants would be grown year round,45 agricultural economist Dennis Avery argues:• Even if a pilot building was erected, about 500,000 such skyscrapers would be needed to make up the 400 million acres of American farmland;
• Using the average price per acre of Iowa cropland, the usable surface of this building in Iowa would cost about $5 million, a sum that would buy about an acre of land in Manhattan on top of which a very costly vertical structure would need to be built;
• Each floor of this high-rise building would have to support about 620,000 pounds of either water or water-soaked soil (by comparison, two hundred people and their office furniture weigh about 40,000 pounds);
• Replacing sunlight with “grow lights” and heating the structure in winter would require gigawatt
s of power;
• Sky farms would need to rely on outside suppliers to feed their chickens and pigs. Since a few pounds of grain are required to produce one pound of meat (typically a four-to-one ratio in the case of pigs), it makes more sense to transport pork chops rather than animal feed into cities;
• As in the past, slaughterhouses would need to be located much closer to downtown centers or else city-reared animals would need to be trucked elsewhere to be processed before being brought back to the city in a usable form;
• City taxes and labor costs are always much higher than in the countryside.
No wonder, Avery tells us, that such proposals will always remain “pigs in the sky.”46 Urban land can be much better used for other purposes, which is exactly what urban land prices have long indicated. Of course, additional trade-offs are also present in the case of more modest urban agriculture proposals, from rooftop gardening to the raising of backyard chickens, whose small size and consequent inability to generate economies of scale (try using a tractor on top of a high-rise building or obtaining large-scale discounts on the costs of inputs when farming small backyards) will always confine the practice to the realm of hobby gardeners, or, at best, high-margin luxury producers—either way, a result that is a far cry from the affordable and abundant food promised by locavores.