Recently, one of the community activist groups in our area hosted a screening of the prize-winning movie, The Economics of Happiness, followed by a Skype interview with Helena Norberg-Hodge, one of the co-directors and founder and director of Local Futures – Economics of Happiness, formerly known as the Institute Society for Ecology and Culture (ISEC).
It’s definitely worth seeing, if you haven’t already done so. In addition to information available on the Local Futures website, a YouTube film clip offers a quick overview of the main themes explored in the movie: The Economics of Happiness – Official Trailer.
In her commentary on the Skype call, Ms. Norberg-Hodge emphasized the importance of launching and supporting community-based initiatives that rebuild the local food economy and deliver education for action.
She encouraged attendees to mobilize democratic action and draw upon the power of the electorate to influence politicians to enact, rescind, or amend laws regarding taxes, subsidies, and regulations so that locally-sourced products have an even playing field with their globally-sourced alternatives.
Her rationale suggested that the resulting decentralization of corporate and governmental structures would increase the number of jobs. It would also provide community members with meaningful work based on values and skills resurrected from a nearly lost ancient wisdom inherent in our cultural roots. In many instances this worthy work translated into farming using simple tools and adhering to millennia-old agricultural practices.
While Ms. Norberg-Hodge did not openly discount technological developments, the significance of them as a defining force on the pace and degree with which our civilization continues to advance received short schrift.
The loss of jobs today comes primarily as a result of technology. The machine replaces human labor–period. Our challenge is to figure out what we do with our time as the machine continues to eliminate the need for us to spend it in drudgery. The increased redistribution of power as decentralization takes hold opens the door for a new definition of meaningful work WITH the machine, not against it.
No doubt, localization will give us the opportunity to learn how to invest our time in our personal development, care and support for one another, and adaptive community cultures. That would be a dream worth making a reality. But if the future of localization means becoming reacquainted with a shovel, rake, and hoe for hours on end, that seems more like a nightmare! Better to master the machine for our well-being rather than our destruction.
As one might infer from the title of this blog site and the objectives of our grant proposals, the concept of “local” featured heavily in the design and development of our projects. Local is one of those terms that carries multiple meanings. In some respects, it waxes nostalgic, recalling seemingly slower-paced times when we were more available in the present to do things that mattered for ourselves and those we cared about. Ah, if only we could return to that era.
For others, though, local translates into dull and boring and may even haunt some with the spectre of unwanted meddling, close-mindedness, and meanness that severely limits possibilities. We should get away and stay away.
Yet, there are those for whom local carries a more expedient meaning about survival over the long run. We belong to a community in which all our members commit to establish a sustainable course for this and many generations to come.
Of course, the truth for each person is a unique blend of these three. Local becomes a personal sense of place. It has a familiarity that says whoever is here belongs here; this is where I can do my best; this is where we can make our stand. It provides a measure of safety and security whereby I, along with my fellow community members, have the means among us to meet our basic needs and more. It establishes a foundation of community-centeredness and fair-mindedness for all to draw upon, yet encourages each of us to exercise personal freedom to pursue our individual goals, live our lives fully, and make a positive difference for ourselves by whatever criteria.
In this context, localization is the process by which members make their community that place where they and their families want to stay because there is nowhere else they would rather be. Localization is a community’s drive toward self-sufficiency and commitment to sustainability. It is an act of collective responsibility.
With this sense of “local” and “localization” in mind, community members direct more of their focus toward achieving self-reliance. This prompts them to take greater responsibility to meet their basic needs through the use of their own resources rather than importing from others much further away. Using terms introduced in my previous posting, such a shift in responsibility redraws the boundaries of the business ecosystem within a radius much closer to home. This opens the door for the development and application of business models that support the successful start-up and expansion of small-scale enterprises throughout the community and region. The net result is that more transactions occur locally, which keeps the wealth of the community at work for the community and goes considerable distance toward making the community the place to be and stay.
As a community localizes its business ecosystem, it produces more of its basic needs in terms of gallons of water, calories of food, kilowatts of energy, units of housing, articles of clothing, quality of sanitation, etc. This, in turn, spurs numerous opportunities for entrepreneurial activity specifically in agriculture and bioscience. Given these were focus areas for our grants, we could tap into the energy generated by the push for localization and the use of agriculture, particularly in food systems, as the economic development engine to advance our projects. In fact, our experiences with those dynamics in the course of our projects became the subject of multiple postings such as Which Food System Do You Use to Get Your Calories? over the past four years. Look for several more along similar themes to be referenced here in future posts under the Sustainable Local Economic Development heading and tagged as “localization.”
The most important characteristic of business models in a local economy is universal participation by community members. In other words, all community members contribute to their local economy however they can. This may be counterintuitive if one thinks of business models from a typical global economy perspective. Let’s consider some of the main differences between the two economic views.
In a local economy, members are both the market for and the means by which their needs are met. This is quite the opposite of what happens in the global economy where those who produce, process, prepare, and distribute are often separated from one another by considerable distance and even further removed from the end-user or customer. Because of this, the consequence of buying decisions on a particular community does not impact consumer choices within the global economy.
As a result, the purpose of a local economy is to assure sustainability of the community that defines it. The community is the central focus. Community members contribute in whatever ways they can to establish, manage, and maintain the requisite level of business activity within the community that meets their needs. The intent is to advance interdependence among many businesses in the interest of resilience, adaptability, and self-reliance.
In contrast, each business in the global economy strives to be first to market, remain alone in that market for as long as possible, and be deemed best in the market among any other competitors should they appear. The business is the center of attention. A wide array of stakeholders comprised of management, employers, suppliers, and investors promote the business in an effort to gain acceptable returns. The objective is to survive in an intensely competitive environment that challenges the right of each business to exist on a routine basis.
Given participation in a local economy is so important, what does it look like?
Essentially, community members participate in their local economy along five pathways of action:
They buy from local businesses
They believe that interdependent local businesses must be successful to assure community sustainability
They advocate on behalf of local businesses and the local economy
They administer to the rules of the local economy so that businesses within it have opportunities to function more effectively and efficiently
They invest in businesses
The following graphic recasts the five paths mentioned above as vectors positioned on a backdrop of concentric circles that represent level of participation as indicated by the teardrop scale at the bottom which begins with limited involvement at the status quo center and progresses through three levels to much wider participation in the outer ring.
The view below offers additional descriptors for each vector, level by level. Although this particular example relates to a local food system, the diagram applies to any product or service related to meeting the basic needs of a community.
But these details are not answers. They are merely placeholders to spur your thinking.
How do you participate in YOUR local economy?
What are the appropriate labels to indicate involvement by you and your community members?
Whether you want to go into business within the global economy to satisfy customer wants in markets around the world or a local economy to meet the needs of community members close to home, an effective business model is essential. However, a business model that applies in the global economy is different than one in a local economy. Why?
The global economy is driven by people’s insatiable desire to have more than what is required to sustain their lives. In contrast, a local economy is focused on meeting the basic physiological (food, water, energy, housing, and clothing) and safety (security, education, and health) needs of its immediate members. In the former, I can live without it, whereas in the latter, I can’t.
In a global economy, customers have two choices: first, do they want something, in general—a car, for instance; and second, do they want a particular item within that general category—a specific car by make, model, year, and other specifications. Any number of factors influence customers in their decisions to buy at all and, if so, which ones. As a result, in the global economy, customers rule.
In a local economy, the market is automatically defined as all who live in the immediate area. The common factor is that everyone must have food to eat, water to drink, air to breathe, shelter as protection from the elements, energy to heat and cool the home, and clothing to wear outside. In addition, everyone must have a reasonable measure of security, means to manage their health, and access to education opportunities so they can better care for themselves and contribute to the sustainability of their local community. The capacity of a local economy to sustain community members predicts how well and for how long those members can participate in the global economy. As a result, in a local economy, the community rules.
Two Business Models:
Given the emphasis on customer choice, a successful business model in the global economy is one that:
Anticipates customer readiness for proposed products and services
Strengthens company readiness to deliver to customers
Adapts quickly to customer reaction and responses to what’s delivered
The net result is to establish and maintain a competitive edge among countless others who want the same outcome for their companies.
For further insights on the development and use of adaptive business models in the global economy, consider Steve Blank (@sgblank) an excellent resource. Steve brings his extensive firsthand experience in building early stage businesses to bear through informative posts about entrepreneurship, start-ups, and applied business principles on his website. Business models is one topic he treats particularly well. In his posting, “What’s a Startup? First Principles,” he describes what is a business model and how to apply it. He also contrasts it to business plans, an analysis he carries forward in a later posting, “No Plan Survives First Contact with Customers – Business Plans versus Business Models.”
In a local economy, community members can choose to source their needs from suppliers far afield from their community. However, to do so puts at risk long-term sustainability due to interrupted supply lines. As a consequence, business models for a local economy offer attractive choices to members so they can meet their needs from local sources.
Key characteristics of business models for a local economy include the following:
Universal participation by community members
Initial focus on meeting the needs of community members without fail
Integration across all value-added steps from the point of consumption back to the points of production
Utilization of community assets and resources without reliance on outside funding
Application of performance metrics that deepen the resolve to establish a fully functioning local economy, spur creativity and innovation to find business solutions, increase the rate and degree of adaptiveness, and significantly improve the odds of long-term sustainability
As indicated by these qualities, business models that deliver the basic needs of community members within a sustainable local economy are quite different than those that satisfy wants of customers throughout the global economy. Given the importance of these local economy business models, they warrant further attention. Look for more details in future postings.
Meals on Wheels America (MOWA) delivers affordable, healthy noon meals to seniors in their homes or at MOWA-sponsored group dining locations. In that single instance each day MOWA fills the food gap between the point of preparation and the point of consumption for seniors. And with that meal come the only calories some seniors will have for the entire day.
What if a local food system delivered ALL the calorie needs for each person in that community every day? Kind of a MOWA on steroids! Yet as far-fetched as this proposition might seem, it is the challenge every community faces if its members choose a sustainable path. After all, everyone NEEDS food and to not have it puts survival at risk.
…to provide tasty, nutritious meals to residents of our community who need and want our service, regardless of age or income.
That’s quite a statement. Add “affordable” and “familiar” to the description of the meals and the stage is set for meeting the food needs of the community.
The current MOW of Boulder tagline reads, “Building a Future, Nourishing Our Community.” Formerly, it read, “We Deliver Energy”! And that’s exactly what nourishment is—energy in the form of calories for the human body!
Here’s the rub, though. On average, each of us needs 2,000 calories per day. Those calories are delivered via three meals plus a snack. Like all MOWA chapters, MOW of Boulder delivers one meal per day for a sliding-scale fee based on ability to pay. If we take the cost of a meal yielding 600-700 calories times three in order to meet the 2,000 calorie daily requirement, the total cost may well exceed the threshold of $10 per day. That brings us back to the challenge of affordability each community faces if it is to have a self-sustaining local food system.
The key to the solution rests in how well value-added operations throughout a local food system fit and function together. As a result, sustainability depends on the successful integration of local food preparation and distribution, such as what MOW of Boulder provides, with upstream local food processing and food production. When done effectively, the result is a flexible, interdependent food value chain that stretches from the points of consumption to the points of production. Interestingly, MOW of Boulder shows significant progress enrolling value chain partners with the inclusion of several Community-Supported Agriculture (CSA) shares and other fresh produce from local farms and community gardens.
The community of Boulder has a long way to go before its local food system has the capacity to serve all members and be sustainable. But the efforts of MOW – Boulder and its partner organizations has given it a tremendous leg-up in the process. Keep it up, Boulder!
What can YOU do to help YOUR community establish a Meals on Wheels chapter? And if there is a MOW chapter already up and running, what can YOU do to help it extend its scope to fill the food gap wherever it exists in YOUR community?
Is there an alternative to the global food system where a person in the U.S. can get 2,000 affordable (no more than $10 / day), accessible, available, nutritious, tasty, familiar, quick, convenient, and safe calories? Obviously, the global food system is quite capable of hitting most of those guidelines as evidenced in Tom Barlow’s posting on Aol, “Eat for a Dollar a Day; Thanks, Costco”. Such foodstuffs comply with government regulations and they are acceptable to consumers who cannot afford or find otherwise.
Unfortunately, these same foods contain high levels of saturated fat, sugar, and sodium. When eaten to excess, which is too often the case when the target markets are those demographic groups that rely on them most to meet their basic food needs (see Natasha Singer’s posting in The New York Times, ”Fixing a World That Fosters Fat”), they contribute to serious obesity-related conditions such as hypertension, heart disease, stroke, and diabetes. But is health reason enough to go for another food system?
The diagram below illustrates the flow of food from points of production that can be almost anywhere in the world, through processing, preparation, and retail, to points of consumption that can be almost anywhere else in the world. Various non-profit, for-profit, governmental, and non-governmental organizations have assigned or assumed responsibilities to inspect food for compliance with safety regulations as it travels throughout the global distribution system on its way to consumers in communities and neighborhoods wherever they are located. The system is highly evolved and marvelously effective given its design specifications. However, it is also highly subsidized through trade agreements, tariffs, duties, taxes, incentives, price controls, and limited accountability for externality costs, which offset costs and keep prices low.
The major issue with total reliance on the global food system is that residents of a community / neighborhood are dependent on others outside their jurisdiction for food. Their lives are literally in the hands of those who do not suffer the abject consequences of failure to deliver. Climate change, natural disasters, unavailability of or exorbitant prices for fuel, political upheaval, and widespread pandemic outbreaks can singularly or in combination set a series of events in motion that threaten food security and safety. It is this risk to survival that makes the establishment of a local food system in every community, neighborhood, and rural area an imperative.
How does a local food system compare to the global food system? The diagram below offers a quick look. First of all, residents of a given local community / neighborhood take significant responsibility for their food supply, hence, the title “People-Centric Food System”. People are the social fabric or operating system by which skilled / licensed practitioners conduct food production, packaging, processing, and preparation so that “accessible, available, nutritious, tasty, familiar, quick, convenient, and safe calories” are delivered to community members through myriad retail outlets.
But does such a system provide sufficient calories to sustain residents? That depends on its business model and key metric. The diagram below offers three alternatives:
Food products of special types that target high-end niche markets and command top prices. The consumer subsidizes the local food system by paying a premium for unique, locally sourced products that cannot be easily purchased from global food system retail outlets. The key metric is cost / type.
Food products packaged in units (pounds, quarts, containers, bunches, etc.) generally available from the global food system for a lesser price. However, the locally sourced products are subsidized through grants and gifts (property, equipment, inputs, labor, etc.) awarded to those who produce, process, package, and prepare them so that prices are comparable to global system offerings. The key metric in this instance is cost / unit.
Food products are packaged into meals that, when consumed in a given day, yield 2,000 accessible, available, nutritious, tasty, familiar, quick, convenient, and safe calories for no more than $10. Additionally, the businesses involved in producing, processing, packaging, and preparing those calories for eventual consumption are profitable. As a result, the local food system is sustainable, not subsidized. The key metric is cost / calorie.
The first two are prevalent business models for local food enterprises in the U.S. today. They require subsidization through prices, grants, or gifts to remain solvent. However, they do not provide sufficient affordable calories in a given day for each community / neighborhood resident. The third alternative claims to meet all the criteria, but how does it work?
The graphic below begins to answer the question.
First, the clear intentions of the people-centric food system are as follows:
No more than $10 is spent by each person in the system for 2,000 calories per day
The businesses involved are profitable
The system is sustainable.
That intent drives the design of the system.
Second, community members transfer the knowledge they need to be successful through multiple forums, systems, processes, and tools made available by the community / neighborhood. They use this know-how to set the rules for local food security and safety, license food businesses, and build the community’s skill base in food system operations, In other words, they establish a strong foundation of competency upon which to take ownership of their food supply and focus on attaining self-sufficiency.
Third, the entry point is delivery of affordable calories where people live their lives. Mobile kitchens and food carts strategically distributed throughout communities and neighborhoods is the most effective way to accomplish this. The startup investment and operating expenses are low, the market penetration is high and offers a wide range of excellent meals from which to gain the needed calories, and the opportunity to catalyze significant interdependence among all manner of businesses throughout the local food system is substantial.
Today, less than 5% of the food (and calories) consumed in the U.S. is locally sourced. The answer to the question posed in the title is decidedly obvious–the global food system is the major source of calories. But the point of the question is to prompt thoughtful consideration as to the consequences, understand that there is a way out of the predicament, step up, step out, and make a difference in your community / neighborhood by participating in its local food system.
Future postings on this blog will go into more detail about how to implement a people-centric food system. Meanwhile, you are welcome to ask questions.
Food needs to be affordable. The USDA’s Center for Nutrition Policy and Promotion Cost of Food at Home report for June 2010 and a University of Washington study estimate the average American spends $7 / day on food. Depending on one’s economic circumstances, that average may drop as low as $5 / day. All too often the nutritional value of the 2,000 calories drops along with the cost as stated in this March 1, 2010 Institute for Agriculture & Trade Policy article, “Cheap food policy contribution to childhood obesity.” Unfortunately, cheaper calories contribute to greater instances of obesity and related health issues.
An informal comparison between a 2,000 calorie typically “Western” menu and its healthier “Mediterranean” counterpart conducted by U.S. News & World Report writer, Katherine Hobson, pegs the average cost at $10 / day for the Western fare. Ms. Hobson alleges it could be done for less with more judicious planning and shopping.
To that point, the My Money Blog author does an interesting riff on the prices of several food items each in 200 calorie increments. He concludes we could eat reasonably well on substantially less than $10 / day.
Lastly, the USDA reimburses schools $2.72 / lunch (2010-11 school year) for those students who meet the National School Lunch Program guidelines. Each fully prepared lunch provides at least one-third of the Recommended Dietary Allowance (RDA) for calories and essential nutrients. That suggests that $10 / day for 2,000 calories delivered in three meals plus a snack is a reasonable estimate.
Given the above argument, 2,000 calories for $10 / day is the upper limit of affordability for the average person. However, at this level these same 2,000 calories must be accessible, available, nutritious, tasty, familiar, quick, convenient, and safe. If otherwise, the risk is run that the consumer will default to a less healthy option that is easier to come by, less expensive, and tastes better.
Can local food systems routinely deliver 2,000 accessible, available, nutritious, tasty, familiar, quick, convenient, and safe calories for $10 / day to each person within them? A topic for a later posting!
Not to detract from the value of having fresh fruits and vegetables available in urban food deserts, but the article “Vegetable Truck Pushes Nutrition in Detroit” by David Runk, Associated Press, August 11, 2009, referenced in Dana’s posting highlights yet another opportunity within neighborhood-based food systems:
“I can’t say if they have their own jingle, but I can imagine the sadness a child might feel when they run out to the front yard telling, “Ice Cream!” and instead find lettuce and string beans. But it’s about time eating healthy goes mainstream. Two Detroit teens hired to help with the vegetable truck service were presented with zucchini and had no idea what it was.”1
The last sentence suggests that people would benefit not only by having access to fresh, locally-grown food, but by having it processed / prepared on the spot into tasty meals that preserve natural nutritional value and are served quickly, conveniently, and affordably.
Perhaps some Veggie Vans or Peaches and Greens trucks could be outfitted as mobile kitchens that offer a full-range of options for neighborhood residents concerning their food supply. Then, imagine that the source of fresh food for those mobile kitchens is local in terms of food produced on vacant lots and abandoned properties in the neighborhood rather than within 100 miles. Then, imagine further that the owners / operators of the mobile kitchens are residents of the same neighborhood so that a complete food system begins to take shape within the community.
This lays the underpinnings for a local economy based, in part, on a local food system. It initiates a process by which resources are “grown” in the community, reinvested in the community, and used to strengthen the community through wider participation. This a local food system that truly means something to those who own it and care about it – community members.
Imagine. And with only a couple of converted vans and trucks to get it underway!
Originally posted to Local Food Systems by Steve Bosserman on Friday, October 2, 2009 16:31
Version of article with this quote is not available online ↩
Over the past three months several of us have made presentations to various groups providing an overview about the recently awarded USDA-SCRI grant proposal and our general strategy for the ensuing program. Our primary purpose is to facilitate the continuing development of local and regional food systems as a viable and sustainable counterbalance to the predominate global food system. Ideally, local and regional food systems work seamlessly with the global food system to form a total food system that provides the overall advantages of price, variety, and quality while contributing to community health, vitality, and well-being.
Local and regional food systems, together with renewable energy and distributed manufacturing, are an integral part of local and regional economies. The interdependence of these three features prominently in the design of our strategy. While the mission of our USDA-SCRI initiative is focused on food systems, when seen in the bigger picture these systems become a platform by which local and regional economies are established, strengthened, and grown. Building local and regional economies is our broader agenda.
A local or regional economy is shaped by the social, political, cultural, and geographic context and conditions in which it exists. Such an economy is defined by complex webs of interwoven interrelationships and behavior patterns. Because of this characteristic, our understanding of them is benefited by adopting an ecological perspective or seeing them as part of ecosystems.
Such an index is especially helpful when determining which course of action among several alternatives achieves the imperative at hand with the least amount of collateral damage and unintended consequences or side-effects. An obvious instance is with agriculture because of its pervasiveness and the degree of environmental impact its practice has on a local, regional, and global scale. Under the aegis of the USDA-SCRI grant there will be ample opportunities to apply the metrics of agroecosystemhealth in helping local and regional food systems become more efficient, effective, and less disruptive counterparts to the global food system.
The Business Ecosystem
Adopting an ecosystems view is also helpful within a business context. In the mid-1990’s, Jim Moore observed the dynamics of natural ecosystems and noted the similarities they have with those in a business setting. He coined the term business ecosystem to label the dense webs of interrelationships among suppliers, service providers, customers, competitors, communities within a social, political, and economic environment in which any given business starts, survives, and is sustained.
Moore’s “business ecosystems” thinking has led to a unique and powerful understanding about business strategy and in so doing significantly expanded the business development repertoire. It has also encouraged the growth of small and medium-sized enterprises (SMEs) in several areas. Perhaps the greatest experimentation with this approach has been Europe where the European Commission (EC) linked Moore’s concept business ecosystems concept with Information and Communications Technology (ICT) to form digital business ecosystems. The primary purpose at the outset was to establish networks of connectivity among participants in SME ecosystems in order to stop the decline in the numbers of SMEs in several European countries. Early results show this strategy is successful as indicated by a reversal in the decline of SMEs complemented by signs of an increase in their numbers across the Continent.
Business Ecosystems in the Context of the USDA-SCRI Grant
Fundamentally, the strategy underscoring the USDA-SCRI grant proposal is the digital business ecosystems approach applied to local and regional food systems. The graphic below illustrates the flow dynamics among ecosystem participants in the interconnected regions across the upper-Midwest and mid-Atlantic states:
Social network facilitation, as part of the ICT backbone for the project, catalyzes regional networks and convenes leaders within them to prompt the formation of business ecosystems.
Business ecosystem particants conduct research, deliver education and training, and launch pilot projects directed toward building local food systems within given regions.
Local food systems development links with complementary efforts in renewable energy and distributed manufacturing systems to drive relocalization. This heightens participation at local levels which increases the experience base among players and drives changes in the formulae for land use practices, inclusion, workforce development, and government collaboration. The net effect is that the rules are rewritten so they facilitate the rise of functional and sustained local and regional economies.
Healthy, vibrant, adaptive, and innovative local and regional economies offer a constructive counterbalance to the global economy; they become attractors for new business start-ups and the expansion of existing businesses. Glocalization results as fully-functioning local and regional economies mitigate the downsides of the global economy and position the total economy for sustainable growth. Successful glocalization feeds larger regional networks of players and leadership of business ecosystems providing the wherewithal to fuel additional research, education, and pilot projects. This closed-loop cycling generates AND reinvests resources within the same local and regional economies which relieves the dependency on outside funding, like the USDA-SCRI grant, to spur local and regional economic sustainability and vitality.
A Broader Vision
The bottom line is that with thriving, interconnected business ecosytems, local and regional economies capable of maintaining themselves while spurring business growth and community well-being will result. Although the USDA-SCRI grant is directed toward social networks and local food systems, these are milestones along the path to a broader claim. Our vision is of capable local and regional economies operating in concert with the global economy to provide people with the means to enjoy a reasonable quality of life in communities assured of survival and sustainability. For us, this is the ultimate goal of the grant proposal. Thanks in advance for your participation over the next three years to make the vision a reality!
On Monday, 24 November 2008, I attended a Poultry Processing Working Group meeting convened by Megan Schoenfelt at the Ohio Agricultural Research and Development Center (OARDC) in Wooster, OH with a video link to the main campus for The Ohio State University in Columbus, OH. Over 20 interested individuals and key representatives from various agencies, institutions, and businesses gave thoughtful consideration to the feasibility of designing, developing, manufacturing, operating, and maintaining mobile poultry processing units, e.g., slaughterhouse or abattoir, in support of small to medium sized poultry production enterprises throughout Ohio. At the conclusion, commitments were made by several to develop plans further, put them into action, and move the concept forward. Megan’s minutes will provide you with an excellent overview of the session.
Although the meeting achieved its objectives and assured progress to goals, one topic that surfaced frequently during the session concerned the design criteria for local food systems versus those for a global food system. The difficulty arises when elements of a global food system are mixed into the specification for a local / regional food system. The two systems have unique organizing principles. The business model / value proposition for one is fundamentally different than the other. For this reason, comparing the two haphazardly or indiscriminately blending elements from both into a hybrid is the equivalent of mixing apples and oranges — doing so puts subsequent plans at risk for unsuccessful implementation.
So what are the main characteristics of a global food system versus a local food system?
Characteristics of a Global Food System
Below is a diagram that illustrates the flow of food from production to consumption in a global food system. Key points include the following:
Producers have a narrow portfolio often consisting of a near monoculture of crops, e.g., corn and soybeans, animals for meat, e.g., cattle and hogs, or dairy and poultry. Their objective is to produce as much as possible of one item for the least unit cost.
Aggregators and distributors span significant geographic distances in support of the overall system as it relentlessly pursues lowest cost labor, easiest access to natural resources, and highest performance of technology wherever that may be in the world. Their objective is to optimize transportation payloads from one value-add stage to another.
Value-add processors and packagers make major investments in capital equipment and facilities to increase capacity and automate operations. Their objective is to appropriate technological innovation that facilitates economies of scale in their operations, amortizes investments across high volume runs, provides consumers with an array of choices within discrete product groups and reduces dependency on human labor.
To quickly summarize, global food systems prompt producers to focus on growing / raising a limited portfolio, logistics and distribution become big ticket items due to the global reach of the system, and value-add processors centralize their operations to command as much margin as possible.
Characteristics of a Local Food System
The diagram below depicts the flow of food from production to consumption in a local food system. The main elements include the following:
Producers have a diverse portfolio of crops grown and animals raised. Many of the entries in such a portfolio are indigenous, have mixed use applications, and are interspersed / intercropped. The objective is to optimize the portfolio to include as wide a selection of offerings as possible and effectively leverage assets. This combination provides a hedge to protect revenue and cap costs despite unexpected swings in supply and demand for particular products or failures due to unexpected conditions.
Food processing, preparation, and retail occur within a contained geographic space – 1-100 mile radius – so that as food is produced it travels a short distance for just-in-time delivery to the next step in the value chain. The objective is to place the sale of fresh food in close proximity to food preparation and processing so that quality, taste, freshness, ripeness, and appearance are maximized and waste and spoilage are minimized. What doesn’t get sold as retail or is used in preparation moves immediately to value-add processing. This type of highly-integrated stacking of functions assures the highest return on investment of time and resources.
The dynamics of a local / regional market create a situation where the community or cluster of communities participating in the local / regional food system impart a “brand” on the food produced, processed, prepared, and sold within it while consumers enjoy a wide variety of locally-produced foodstuffs. The objective is to draw upon the virtues of economies of scope, leverage brand recognition within the community, and establish sufficient market participation due to ample selection to drive the emergence of a local economy. And as widespread participation persists, the local economy is sustained and the community is stabilized.
As a recap, local food systems encourage participants to diversify their portfolios, leverage investments, take advantage of integrated food processing, preparation, and retail operations within a 10 – 100 mile radius, and utilize economies of scope to lay the groundwork for local economies to be established.
Beware Mixing Global and Local Food Systems
As is obvious by their definitions, the differences in organizing principles and business models between global and local food systems are significant. While both certainly can and must co-exist within the total food system, an indiscriminate mix of one with the other almost always disadvantages the local food system. In many instances it will prevent such a system from forming or becoming sustainable.
So, what about that mobile poultry processing unit? How would a local food system work with poultry?
Diversify the production portfolio by including as many different kinds of domesticated birds, waterfowl, game birds, and exotic / specialty species as possible distributed across a wide range of small-scale producers.
Keep the processing unit in close proximity to clusters of food retail, preparation, and value-add processing facilities to assure quality, timeliness, variety, and price advantages in local markets.
Develop a strong brand identity in the local / regional market for the complete package of locally produced, processed, and prepared poultry products which obviously includes the mobile poultry processing unit.
Of course, attempting to operate as a global food system would be fraught with danger. Three actions to avoid:
Limit producers’ portfolios to one of two kinds of birds. Worse yet, consolidate the number of producers into one or two large-scale producers.
Distance the mobile poultry processing unit from the producers or those in downstream food preparation and value-add processing.
Target consumer markets that are far afield from the point of production and processing so that local branding is difficult. Worse yet is to limit the range of product offerings so severely that sustainability is at risk due to lack of market exposure and penetration.
While this example of sorting through local and global food systems characteristics concerns poultry operations, it applies to all other food products. Perhaps you will find this checklist a useful guide when developing such food systems.
Originally posted to Local Food Systems by Steve Bosserman on Saturday, November 29, 2008 09:59