Local food: the economics: in the second part of this two-part series, we learn that local food is better for local economies. In some ways.

• Author: DeWeerdt, Sarah

One drizzly Sunday last March, I went to the weekly farmers market in my favorite Seattle neighborhood and bought a bag of potatoes. I stopped at a stall where a farmer, his hands caked with dirt, was filling mesh bags with small, just-dug potatoes and singing a silly made-up ditty as he twirled each bag shut. "That one looks good," I said, pointing to the bag in his hands. "Can I have that one?" "Yeah," he agreed with me, "it has a nice mix of spuds." I held out a few crumpled dollar bills and he passed me the bag.

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Eating local has economic benefits for communities, say proponents of local food, and after such a quintessential farmers market moment that conclusion seems obvious, the logic inescapable. After all, I'd handed my money directly to the farmer who grew my food--rather than passing it along a chain of faceless and distant middlemen--and what's more, he honestly seemed to be having a good time.

That's different from the economic logic of the mainstream food system, which de-emphasizes place and sees trade as a disembodied, win-win endeavor. Different communities can specialize in growing different foods--or in activities other than growing food altogether--thereby developing production efficiencies that enable them to offer their products at a lower price. Money flows freely among communities, and everyone gets a more varied diet for less money.

Well-drained Farms

The trouble is, that's not all that's going on. Over the past decade, Ken Meter, president of the Minneapolis-based Crossroads Research Center, has documented the way the current food system drains money and vitality from farming communities throughout the United States. His first investigation, focusing on the seven-county Hiawatha region of southeast Minnesota, is representative. In that 2001 study, Meter and Jon Rosales, of the Institute for Social, Economic, and Ecological Sustainability at the University of Minnesota, found that farmers in the region sold an average of US$912 million worth of farm commodities every year. But they spent $500 million on farming inputs--things like seed, animal feed, fertilizer, and (crucially) credit--sourced from outside the region. Moreover, the region's consumers spent an additional $500 million on food purchased from elsewhere. All of the money--and then some--that the region earned from farming was drained right back out of the community by the food system itself.

Meter has found a similar pattern in landscapes as diverse as Iowa, Arizona, and Washington State: farmers often operate at a loss, spending more to grow their crops than they earn from selling them. (In the southeast Minnesota study, farmers spent $996 million to grow $912 million worth of crops. Some of this difference, but in many regions not all, is made up for by farm subsidies.) Most of the inputs necessary to produce those crops come from outside the community. And most of the food that farm families eat is purchased from far away.

Even where farmers aren't producing at a loss, the food system as a whole drains money from the local economy. In Meter's study of the eastern shore of the Chesapeake Bay, farmers collectively earned $70 million more each year than they spent to produce their crops. Yet they sourced about $375 million in farm inputs from outside the region annually, and consumers in the region purchased about $400 million in food from afar. That amounts to a net loss of $700 million from the region each year--about the same as the value of all agricultural products produced there. "Basically every region that I've studied is losing hundreds of millions of dollars a year" as dollars flow out of the community, Meter says. He adds, "It's building wealth for some people, but not for the farmers." Instead, most of the profits in this system flow "to the supply industries, the service industries, to agriculture, and the financial sector--not to the farm and certainly not...