10 Reasons Why “Local” is Challenging Industrial Food

Over the last several months, I have noticed a change in tone in online conversations (i.e., Twitter, blogs, comments, etc.) regarding local food.  At first I couldn’t quite put my finger on it, but then it became clear.  The “established” sustainable food online community was joined by people from the food industry (farmers, marketers, Monsanto, etc.), putting agendas, visions, and turf front-and-center.

Personally, I think this is a good thing, since I believe all sides need to be considered when initially trying to solve the complex problem of making our food supply sustainable.

Unfortunately, entrenched positions are difficult to get around. Industrial food appears to think that people advocating for sustainable food, whether large or small scale, local or national, are out to get them.  While at the same time, sustainable and/or local food advocates seem to believe that industrial food can’t or won’t change.

What we all need to try to understand is that sustainable food isn’t about industry and advocates.  It’s about consumers and communities. It’s about finding effective solutions to meet the needs of consumers based on where they live and what they value (see Pro Food Is post for list of core principles all interested parties can rally around).

In that spirit, I offer the following list of reasons why I believe “local” is making industrial food nervous. I strongly encourage readers to consider this any opening comment in what must be a constructive dialog. The objective is to get more people from all sides of the problem on the same page, so we can get to work on solving the problem.

1. Alternative Food Systems: There is no question that local, organic and sustainable are here to stay. How much market share products in these categories will take away from existing food companies is a big question, which is likely one reason why players in the industrial food system are paying more attention.  If I were them, I would be looking for signs of real traction in regional food systems, which could move consumers to a “tipping point” that changes America’s food systems for good.
2. Location, Location, Location: Given its size, industrial food can’t effectively scale down to meet the spirit of local, but this isn’t stopping it from trying. Consider the multi-million dollar budget and marketing campaign to position Lay’s as a local product. Never mind that Frito-Lay uses two billion pounds of potatoes every year. If it can redefine local, then it can slow or stop the threat.
3. Values-Driven Movement: Consumers interested in local foods are looking for more than cheap, widely accessible food, whether processed or fast food. They want flavorful, nutritious foods that come from local farmers and processors. They want enriching food experiences. Some want to keep their dollars in the local community to build value, which will drive more local supply. Judging by some of industrial food’s recent actions, it may try to spin its way through this latest challenge. That might work, for a while, but not likely if the local movement stays on course.
4. Brand Leadership: An important tenet of local is knowing where things come from. In the case of food this means that attribution goes to farms and farmers, not corporate brands. It’s hard for me to imagine how leading food brand companies could give up such recognition in an effort to be local. Consider Disney Garden, a full line of fruits and vegetables offered by Imagination Farms, which licenses the Disney name (see Disney Garden: A Figment of Our Imagination). The packaging is 100 percent dedicated to the Disney brand. If you want to know about the farmers, you have to visit the I-Farms web site and dig down a couple layers. It’s there, but clearly in a supporting role at best.
5. Traceability: How will industrial food offer transparent traceability (i.e., publicly available information on food sources on demand) to its business?  Can it realistically trace where every item comes from that is used in their products?  As recent food safety scares have shown us, it is very difficult to trace commodity and large-scale food products given the number of hands that touch them between farm and plate, even after weeks or months of effort. In the case of local foods, consumers will easily know where food comes from, and in some cases will know farmers first-hand.
6. Supply Constraints: Industrial food might have a point when it claims that local suppliers can’t meet potential consumer demands.  This is especially true in concentrated population centers, e.g., New York City, where it’s hard to envision enough local suppliers within 100 miles (often cited as meaning “local”) to feed NYC’s 8.2 million inhabitants.  At the same time, the amount of food being consumed from local suppliers is nowhere close to its potential.  The hard part for large food companies is envisioning how their products, dependent on commodity supplies and heavy processing can meet emerging consumer demand.
7. Profit Margins: Over the last 25 years, the amount of every consumer dollar spent going to the “marketing bill” (beyond the farm) has substantially increased.  At the same time, farmers have seen their income drop over 40 percent (from $0.31 to $0.19) during that time period (see Is Industrial Food Stealing Farmers Lunch Money?).  There are lots of contributing factors in this shift, but one thing seems clear, reversing course will be very difficult for top-heavy food companies.  Part of the problem with “real food” is that it can’t be marked up much beyond the farm, since the value-add really happens in restaurant and home kitchens.  Perhaps some well-known global brands (e.g., Disney) might be able to pull off premium pricing without adding much value, but those will be exceptions, and may not be that for long.
8. New Competition: While the market potential of local food sales may be limited by geography, demographics and supply chains, it still represents the type of competition that should make conventional food players nervous.  The development of local food retailers offering disproportionately local foods represents a beachhead for related products to thrive, e.g., sustainable, Fair Trade, etc. Over time, these competitors will be less reliant on the conventional food infrastructure to grow, which will likely result in a wave of “foodpreneurs” taking advantage of alternative food systems (see Slow Food with Entrepreneurial Twist and The Five Stones of Pro Food for more).
9. Government Subsidies: While recent news regarding the USDA’s support of small and/or organic farms has been encouraging for local food advocates, the vast majority of federal funds in support of agriculture continue to go to commodity crops.  Industrial food producers wanting to shift toward local markets will therefore have to give up at least some of those subsidies when converting acreage to specialty crops (e.g., fruits, vegetables).  The financial impact of losing subsidies may prohibit many large-scale commodity farms from moving toward organic and/or local market supply.
10. Consumer Demand: Possibly most important is the fact that consumers aren’t waiting for industrial food to “get it.”

One thing that should help industrial food sleep more comfortably at night is that developing regional food systems will not be easy work.  Government regulations continue to hamper local processing, thus impacting supply capacities.  Government subsidies are dominated by non-edible food commodity crops, although smaller amounts of money are being allocated to local, sustainable and organic farmers. And multinational food companies have the capability to saturate the airwaves and print with sophisticated marketing to shape perceptions and drive consumer behavior.

But all of that can, and likely will change over time. So, rather than fight what seems inevitable, it seems time for industry to embrace local, organic and sustainable foods, and work in concert with advocates and innovators to bring the right local, sustainable and other related products to market.

It won’t be easy, but what worth having ever is?

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