Fresh Food, Urban Centers and Fuel
Last week, Derek Singleton, an associate through social media, sent me a link to an article he wrote and asked if I would post a response to it. It was a crazy week, but I finally had a chance to give it some attention. Thank you for the opportunity Derek.
The Future of U.S. Food Distribution was a look at some trends related to demand by consumers for “fresh” food, food hubs in urban centers and the potential effect of higher fuel prices on distribution. Derek believes that the current trends in United States could cause a significant disruption in current food distribution practices and potentially lead to a system as is in place in Europe.
Demand For Fresher Foods
While I concur that demand for fresh food has and is growing, as is the demand for organic food, I feel it is important to distinguish between these two segments. It is important to mention that simply because food is organic, does not necessarily mean that it is “fresh.” I should note that when I think of “fresh,” I am applying the definition of having been just picked or harvested. Derek presents clear evidence of the growth in the US organic market:
“The growth of the U.S. organics industry is informative: since 1990, the U.S. organics market has exploded in revenue from $1 billion to $26.7 billion.”
However, in my opinion, the success of the organic market is due in large part to the national demand, organics are no longer being consumed primarily locally, they are now also being shipped, out-of-state, cross-country and internationally. Certainly, companies like Whole Foods Market are performing very well, but as much as they like to sell local and regional, they still have to have out of season produce delivered from someplace. So, is demand higher for fresh and organic foods, yes, but just because something is organic, does not mean that it is “fresh.” It is not uncommon to find organic produce in the store or in a restaurant that has traveled several thousand miles and in some instances, from out of the country.
Urban Centers As Important Food Hubs
I agree with Derek that the growing demand for local food is complemented by the opportunity for urban gardens and a potential for European-style grocery markets. However, fuel prices, which I will discuss in the next section, will not play favorably towards “lower volume, higher frequency” sales. Essentially, if a person has to drive 50 miles round trip, gets 20 miles to the gallon, whether hauling 500 pounds or 2000, logically, they would want to deliver once per week, rather than make the trip four times. Having said that, I do believe that urban agriculture holds promise for providing consumers another choice for food. Derek cites some wonderful examples of successful urban gardening and reminded me of a futuristic article that I saw on Fortune Online, related to urban agriculture in Detroit.
While I agree with Derek that urban agriculture, if successful on larger scales, will provide additional supply, I do not necessarily see it as causing less dependence on traditional forms, whether organic, conventional or somewhere in between; primarily due to the projected population growth of our country and the world. I would also politely mention that while farms in the US are typically larger than those in Europe, over 90% are family owned and operated and that the farmers in Europe are not exactly “thriving.” Europe’s vast farm subsidies are facing challenges, especially as 2013 approaches. Further, with the limitations that have been placed on European farmers, there are many who are questioning the ability of their farms to be able to meet future demands. I believe that urban agriculture serves as a compliment to rural agriculture. I do not believe that it is an “either/or” situation; rather an opportunity for both to be successful and meet different demands.
Gas Prices and Distribution
Derek’s final factor to encourage a European style of distribution is the cost of fuel. No argument from me…fuel prices are going to play a major role in the production of food. However, I also believe Derek makes the argument that supports our current system:
“a food distribution network that relies heavily on centralization, which makes it cost-effective to ship high-volume loads.”
Centralization and being cost-effective and efficient in shipping high volumes is part of what makes American agriculture so unique and successful.With technology continuing to provide tractors with more horsepower, more fuel-efficient and more precise, I would offer that higher fuel, equipment and input cost could actually cause smaller farms to be absorbed by larger farms, simply due to efficiency of production and lower costs per yield; resulting in the opposite effect as described by Derek.
With no disrespect intended, I believe that the styles of distribution, between the United States and Europe, are a result more of how the continents were settled, rather than due to cost of fuel. I look at the New England states and see some similarities with Europe. However, as one moves west, away from “densely populated” areas, the style of agriculture production changes. Europe historically was divided into kingdoms, that essentially had to be self-sufficient and that ability to provide regional food has continued and should be commended. On the flip side, once the United States was settled and expansion west began, commodities were produced to provide for the family, not a kingdom and the extra was sent to the “city” for sale. The introduction of the railroad further encouraged this style of production and delivery. Further, with the tremendous diversity in climates in the United States, specialization in crop production, within regions, is actually beneficial.
Finally, while I believe that Derek makes some very significant points that might lead some to believe that we will move towards a European style of distribution, I struggle to see that outcome with the continuing increase in population. That is not to say, however, that we will not continue to see a growth in market share for local and organic food. I also have seen and believe we will continue to see improvement in the ability, in some areas, for regional food systems to thrive. Certainly, increased input costs will play a major role in shaping availability and impacting demand of food. However, the American farmer and rancher have been and always will be able to adapt and overcome the challenges they are faced with. I foresee a very bright future, for all involved in agriculture; whether urban or rural, small or large, organic or conventional…it will take all of us to provide for and meet the needs of future generations.
Once again, thank you Derek for asking me to provide a response.