Monday, December 11, 2006

What are organic, fairtrade and local food producers really selling you?

The cover of The Economist magazine this week featured a headline that piqued my interest: “Good Food? Why Ethical Shopping Harms the World”. The article is short and accessible, so I refer you to the original for specifics (if you have access, you may find the article through LexisNexis Academic). The Economist is an intelligent and evenhanded publication, so when it questions our intuition, I generally take notice. In actuality, their conclusion that organic, fairtrade, and local food do not improve the world was not wholly surprising. If organic and local producers actually produced food of equal quality with comparable yields using less resources, they would be conventional. After all, industrial agriculture is run by “greedy” corporations that wouldn’t sacrifice the bottom line just to damage the environment out of ideological spite. As for fairtrade, there is no evidence that normal trade is unfair, but I will grind that ax another day. If The Economist is correct, why do consumers buy ethical foods and why do environmental groups promote them? It is quite easy to see why consumers would want to shop ethically – the terminology begs the question of why they would not. As The Economist remarks, organic, fairtrade and local “food allows shoppers to express their political opinions…everytime they buy groceries” rather than waiting for the next election. A seductive proposition indeed. Of course, the notion of shopping ethically is predicated on the proposition that what you are buying actually improves the world. Below I summarize the article’s primary reasons why it does not:
  1. Organic food may reduce the use of harmful fertilizers, but it generally lowers yield and therefore requires more land and energy.
  2. Fairtrade does not significantly help farmers because most of the mark-up for fairtrade goods goes to retailers. Furthermore, the guaranteed high price induces overproduction, the very cause of low wages. At best, buying fairtrade is an inefficient means of foreign aid. Given the choice between $6/lb for conventional coffee and $8/lb for fairtrade coffee, you would be advised to buy the former and send $2 to a third world farmer directly.
  3. Buying from local producers rather than grocery stores that import their food from the throughout the world often decreases fuel efficiency because you substitute efficient trasportation (tons of food packed tightly in a truck) for an inefficient one (a grocery bag in the back of your car). An environmentally friendly compromise might be locally produced food sold at grocery stores. However, food production may be so much more efficient in some locations that translocating it thousands of miles is more efficient than producing it locally. I highlight one example from the article further along.
Given the evidence that ethical shopping might not help the world, why do many environmental groups promote it? Perhaps they have alternative motives. In a world of 6 billion people, we feel pretty powerless and retailers know this. Taking advantage of our insecurity, some are liable to abuse ethical shopping to extract higher prices. The serious flaw with this argument is that many groups promoting ethical shopping, such as environmental NGO’s, don’t make any money at all. Another possibility is that environmental groups use ethical shopping to make an anti-corporate message. Of course, if this is true, why would they spend their resources on an unproductive and childish endeavor? The other problem is that organic and fairtrade are rapidly becoming quite corporate – just go into any Starbucks. I speculate that instead, environmental NGO’s act much like political parties. Their clout rests on public popularity. An easy way to make more environmentalists overnight is to prescribe quick solutions that don’t actually require any substantial change in lifestyle. In a consumer culture, nothing could be better than saving the environment through shopping.

What bothers me is that I had to find this information in The Economist rather than, say, from the Sierra Club. Why aren’t environmental groups doing the research and critical thinking about spurious environmental claims themselves? As the examples above illustrate, you do not need sophisticated techniques or reasoning to see why organic, fairtrade and local foods may not help the world. The explanation, I believe, lies in the fact the environmental impact of agriculture is complex and multi-faceted. As with my example below on minimum wage, this makes it easy to find numerous facts that support your previously held conclusion, even if on balance you are wrong. I hold out hope that organic and local agriculture are on balance better for the environment, (I don’t think there is hope for fairtrade), but I don’t think we will know conclusively until environmental groups treat the issue with the requisite complexity, taking into account all pertinant factors.

Until that day comes, I suggest a provisional solution. My interpretation is that in some cases there are positive environmental consequences of ethical food shopping, but organic, fairtrade and local labels are not reliable indicators. Consequently, consistently shopping in the most environmentally manner requires detailed information on inputs of energy, land, and labor at all points along the supply chain, the trade-offs between those factors (how many acres of rainforest are equal to a ton of pollution?), the scarcity of the product and its inputs, and how inputs and scarcity change through time. I propose that environmentalists adopt the use of a simple, universal index that, ceteris paribus, has the following properties:
  • Increases with increasing inputs of energy, land, and labor (signalling that you should buy less of it)
  • Increases with scarcity (signalling you to stop buying a resource as it becomes rare)
  • Takes into account all trade-offs
  • Adjusts rapidly to changing conditions (so you can change your behavior optimally)
Of course, the obstacle to such an index is the synthesis of continuous inputs from everyone in the world. Seems impossible, right? What if such an index already exists and that you use it everyday of your life? Fortunately, it does. It’s called price.

Obviously, if the price mechanism were enough, there wouldn’t be environmental problems, but prices are distorted by many sources. Government outlays and taxes alter prices, changing the signals given to producers and consumers. For example, domestic agricultural subsidies incentivize overproduction. Restrictions to trade, such as tariffs and quotas, shift production from efficient sources to inefficient sources, increasing prices. The article cites a finding that lamb produced in New Zealand and shipped to England uses less energy than lamb produced and sold in England. A hypothetical trade barrier between the two countries would harm the environment by causing the English to produce more lamb domestically. Lest someone accuse me of being a libertarian, we must also consider market failures, where price does not accurately reflect cost. For example, taxes on fossil fuels, while distorting the market price, arguably improve economic efficiency by mitigating the adverse impacts of climate change. As The Economist advises, environmental progress will be made by pressuring politicians to enact such taxes rather thean by ethical shopping.

If you still want to send a message at the grocery store, trying spending less. It may not be as fun as ethical shopping, but less demand for food will undoubtedly decrease agricultural output.


Anonymous said...

I have a few problems with this Economist article.
1) I was saddened to notice that the author didn’t spend more time researching the measures of crop yield. He takes it for granted, as almost all consumers do, that industrial agriculture is “more productive” and therefore you can grow more food on less land. This assumption is extremely misleading and dangerous but who can blame people for believing agricultural yield statistics? The problem is that traditional “yield” statistics are delivered in units of crop (bushels, tons, etc) per acre. So if we’re talking about the amount of soybeans per acre that are produced by an industrial farm vs. an organic farm, the industrial farm would win. However, the main facets of organic agriculture (especially on a small scale) include intercropping and crop rotation. So of course the amount of soybeans grown on a monocropped acre would be greater than the amount of soybeans grown on an intercropped acre. It is almost undisputable that actual productivity (in terms of biomass/acre) is much greater when land is farmed using organic techniques. Kind of ironic that I wrote this before I read your posting on biomass increase with biodiversity (above), so people should read that for more well-written proof. So, I count point number 1 of their article as just plain wrong.
2) In terms of efficiency and the true cost of food, the author severely simplifies the amount of resources put into traditional and organic foods on their way from the farm to the hands of the consumer. He discusses the amount of fuel that is required to transport large amounts of industrial foods around the world versus the amount required to transport smaller amounts shorter distances (I still disagree with his conclusion). However he omits the discussion of inputs associated with the production (using fossil fuels) of tons of chemical fertilizers and pesticides, the transport of these things to the farm, the increased amounts of mechanical (as opposed to human, fossil fuel-free) labor, and much else. Not to mention that the inputs of things like fertilizers and pesticides increase every year as soil productivity and pest resistance severely decreases as a result of monoculture.
The Leopold Center at Iowa State ( frequently does efficiency analyses of certain crop configurations and rotations. They account for the rising costs of fossil fuels and inputs of energy in order to devise the system with the least amount of purchased inputs. They find that longer crop rotation schedules (1 different crop each year for 4 years as opposed to the same crop every year or every 2 years) allow for the reduction of fertilizer and pesticide input as well as increased yields. They consider the amount of labor input (yes, human labor hours increase in the 4-year system) but conclude that the practices consistent with organic farming are more energy efficient.
3) I wholeheartedly agree with the true cost of food concept that you discuss briefly. I think that whether we decide to charge customers the true cost of food, it would be a good point to refer back to when we get into discussions like this. I am of course inclined to believe that the true cost of industrial food is greater than organic food, but until we have a moratorium on agriculture subsidies (and a lot of people starve) we won’t really know for sure.
4) Spending less at the grocery store won’t decrease demand for food…people will still be buying the same amount. They’ll just be buying cheaper.

Emily said...

hey chris! the economist is not god, you know. haha im just teasing you. i agree very much with the other comment made, and i just wanted to say two things. i might not be justified a post because i didnt read the article but whatever.
1. the fuel efficiency thing - i dont know statistics but common sense tells me that if my produce requires high fuel-powered machinery to grow, and then travels hundreds or thousands of miles across the country, and the i drive to get it at the grocery store, that uses more fuel than if i drive to a farm or if i drive to a house where the food has been dropped off, and it has been grown by hand. that is fuel-efficient local food.
2. environmental groups have looked into this issue, the reason you are not hearing the same things from them is that not everyone agrees about the issues of fuel effiency and yield. i agree there are plenty of bullshit popular articles about sustainable ag, and the labels organic, fairtrade are controversial at best. but there are also a good number of scientific articles out there that document higher yield with less chemicals, greater soil productivity, more nutrients in chemical free local food.
3. one more thing - if we're talking whats best economically for the world, which is probably where the economist (and you) are coming from, well i really dont know. but GNP doesnt necessarily measure quality of life, which can be vastly improved when people have access to local food. (it also promotes diversity, which is good for ecosystems as well as our palates)
ok enough of my semi-informed ramblings. i like your blog.

Emily said...

I thought I was logged in- the first comment was made by me, in case you couldn't tell. Seems like me and the other emily are coming from the same place...maybe it has to do with a class that we took in common togehter? Just a guess...

andree said...

ha! i should have known it was you, there probably arent a whole lot of people who spent an entire semester becoming articulate in the issues of sustainable ag. that was a really good post! you sounded like a professional, which i guess you are now in the wilderness of antartica! funny to connect on some crazy person in germany's blog...

Chris Muir said...

hey emilies. some interesting points that I will respond to in a subsequent post as I have done some more digging and found some interesting things. buh-bye.

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