Eating locally produced or imported food: Which is ...

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Eating locally produced or imported food: Which is ‘better’? By Oleg Nekrassovski

There is a lot of information, both in the popular press and in academic articles, extolling the virtues of buying directly from local farmers. Not surprisingly, many sources on the subject give a good list of such virtues, which tend to appear quite logical. So, let’s first take a look at an example of such a list, which happens to be from a journal article written by an academic proponent of UK’s farmers’ markets. According to La Trobe (2001), direct marketing of food from local farmers to local consumers, thus eliminating the ‘middlemen’ from the supply chain, provides people with fresh and healthy food, which is often organic and is sold at affordable prices. Also, the direct sale of food from local producers to local consumers reduces the distance that the food has to travel from producers to consumers. A reduction in the distance travelled means a reduction in the use of transport, which equals a reduction in environmental pollution (La Trobe, 2001). But the key virtue of shopping at local farmers markets, according to La Trobe (2001) and many other patriotic sources, appears to be the undeniable financial support that it provides to local farmers, and by extension, domestic rural economies. Thus, there exists a standard set of claims regarding why it is better to buy one’s food from local farmers than from supermarket chains. But are these claims true? Let’s analyze each one in turn. According to the first claim, the food produced by local farmers, whether organic or not, is fresher and healthier than that sold at the supermarkets. This, however, is most likely to be


false because even some supporters (Friedmann, 2007) of organic farmers in the Toronto area, for example, admit that the farmers in question were, at least before being helped, producing food of such low quality that they had trouble entering the market. In particular, even though those farmers were growing their produce without chemicals and with attention to ecosystem sustainability, they apparently were incapable of handling their produce properly, so that it would spoil by the next morning, despite being refrigerated. It is suggested that this problem stemmed from the fact that organic farmers often had no background in farming (Friedmann, 2007). The claim regarding the supposed ‘affordability’ (whatever this vague term may indicate) of prices asked for the produce of local farmers, will be addressed later, together with another claim. On the other hand, the validity of the environmentalist argument, described above, in support of consuming food produced by local farmers, will not be analyzed in this paper, owing to the complexity of relevant evidence and independence of the relevant disciplines from production and economics of food. However, addressing the claim, that the key virtue of shopping at the local farmers’ markets is the consequent financial support of local farmers and rural economies, will be the highlight of the present paper. So, why is supporting local farmers and domestic rural economies supposedly such a great thing to do, at least according to those who promote this idea? And is that really so? Instead of attempting to give quick and easy answers to these questions, let us first take a look at how the government can support domestic producers and whether this support leads to any social good. Governmental support of domestic producers is called protectionism, and it always takes the form of an attempt at curtailing free international trade. Governments tend to interfere with


free international trade using four key methods (McConnell et al., 2002). Protective tariffs are special taxes charged for each batch of “undesirable” imported goods. The aim of protective tariffs lies in the protection of domestic producers from competition with foreign producers (McConnell et al., 2002). Protective tariffs effectively impede international trade by causing an increase in the prices of imported goods. This increase in prices causes the local market demand to shift toward domestic products. Domestically produced apples, for example, will be made relatively less expensive for domestic consumers if a tariff is placed on imported apples (McConnell et al., 2002). Import quotas refer to the limits placed on the total quantities of specific items that may be imported during a specified period of time. Once a quota for a certain product is “filled,” that product can no longer be imported until the beginning of the next quota period (McConnell et al., 2002). Import quotas can have a greater negative effect on international trade than tariffs. A “tariffed” product can still be continuously imported in large quantities; while with an import quota, all imports of the product must be stopped once the quota is filled (McConnell et al., 2002). Non-tariff (and non-quota) barriers include unnecessary licensing requirements, unrealistic standards regarding product quality, or simply complicated and time consuming customs procedures created by bureaucrats (McConnell et al., 2002). In some nations, importing a foreign good requires a license, which is very hard to obtain because the number of the licenses that can be given out is purposely limited. Other nations require many imported products to go through a lengthy, unnecessary inspection (McConnell et al., 2002).


Export subsidies refer to the payments that the government makes to the domestic producers of goods destined for export. The subsidies enable producers to use less of their own money to finance production, which in turn enables them to charge lower prices and thus to sell more of their goods on the global market (McConnell et al., 2002). Canada, for example, has artificially lowered the price of their food produce on both domestic and the world markets by subsidizing domestic farmers (McConnell et al., 2002). But why would the Canadian government want to protect domestic producers and curtail international trade? There are several reasons. Many economic laymen firmly believe that exports are good for the country’s economy because they increase domestic employment; whereas imports are bad because they decrease domestic employment by undermining domestic production industries (McConnell et al., 2002). In reality, of course, a nation can have full employment with or without international trade. However, international trade and specialization increase the nation’s total economic output by increasing the productivity of its resources (McConnell et al., 2002). In fact, just like for individuals, specialization and trade for a nation, results in greater overall output and income. Moreover, specializing and trading is profitable even to a nation which is more productive in all economic activities than any of its potential trading partners (McConnell et al., 2002). While it is true that a nation experiences a net economic benefit from free trade, some domestic resource suppliers and industries may be harmed by it. Such industries and suppliers often try to preserve their economic positions by persuading the government to protect them from foreign competition, especially from imports (McConnell et al., 2002). Altogether, there aren’t that many people who directly benefit from import protection, but they have much at stake


and a lot in common. So, it is easy for them to band together and to pursue political activity to help them achieve their protectionist goals (McConnell et al., 2002). However, the financial benefits to the local producers are usually greatly exceeded by the overall cost to society. Quite frequently it is found that the annual cost to the public of protecting a domestic job is $100,000, while the job in question pays less than half that amount. However, because such costs are spread out over millions of citizens, in virtue of being buried in the price of goods, each individual citizen bears a fairly small and hence barely noticeable cost (McConnell et al., 2002). The political voice of a few producers demanding protectionism is loud and constant, while that of the millions of adversely affected consumers is soft or non-existent. In fact, the public may be seduced by the apparent truthfulness and nationalistic appeal of the protectionist arguments (McConnell et al., 2002). While the costs of protectionism to society, cited by economists, are spread out over the entire economy and are far from clear to the public, the alleged benefits seem immediate and straightforward (McConnell et al., 2002). Hence, whether through privately financed propaganda or through direct interference with the free market by the government, artificially created, powerful social and economic forces push many Canadians into subsisting on food which is largely produced in Canada. Pushing Canadians into buying Canadian made food, benefits Canadian food producers, but harms Canadian consumers who are forced to pay higher prices than those that would exist under free international trade (McConnell et al., 2002). The higher prices of primary food produce also harm Canadian food processing industries, which use this primary produce as input, but have nowhere else to go for cheaper produce (McConnell et al., 2002). Also, the protection of Canadian food producers from foreign competition makes them less likely to become interested


in developing cost saving strategies, higher quality or higher yield products (McConnell et al., 2002). Finally, overall, the protection and support of Canadian food producers harms the Canadian economy by decreasing the productivity of its resources and reducing its total output.

References Friedmann, H. (2007). Scaling up: Bringing public institutions and food service corporations into the project for a local, sustainable food system in Ontario. Agriculture and Human Values, 24, 389–398. doi: 10.1007/s10460-006-9040-2 La Trobe, H. (2001). Farmers' markets: consuming local rural produce. International Journal of Consumer Studies, 25(3), 181-192. doi: 10.1046/j.1470-6431.2001.00171.x McConnell, C. R., Brue, S. L., & Barbiero, T. P. (2002). Macroeconomics. Toronto: McGrawHill Ryerson.