Is Buying Local Always Better?
People often associate locally-produced products with adjectives like organic, sustainable, and healthy. According to the National Consumer Survey conducted by food industry research firm Packaged Facts in November 2014, 53% of the respondents said that they “specially seek out for locally grown or produced foods,” and almost one in three was willing to pay up to 25% or more for them [1]. What is so desirable about local products that so many Americans are fervent about consuming them?
Undoubtedly, consuming food that is grown or produced nearby gives people the sense of transparency and authenticity, especially because the path food travels from a farm to a grocery store is very unclear. While an usage of chemical food preservation is unavoidable to keep some products fresh during transportation, more modification on food will almost always mean having a negative impact on people’s health. It is no surprise why local food is so popular since many local producers already engage in organic and sustainable farming practices that are beneficial to public health and environmentally sound.
Is purchasing locally grown or produced food economically viable? Yes, but to a certain degree. In fact, local purchases help keep local income within the community while reducing the “leakages of income” presented by consuming imported goods [2]. Not only does it boost local producers’ incomes, but a larger volume of local production also creates more jobs for people within the community. Thus, purchasing locally produced food is a great way to revive a local economy. However, how does it affect the global economy?
Unfortunately, global trade does not favor local farmers or small businesses. They usually lack negotiating power and processing, marketing infrastructures to compete with large-scale farms, factories, and/or corporations in a global setting. Since it is challenging for local producers to meet buyer requirements, such as production volume and variety, they cannot grow as fast as large-scale producers.
Now, let’s think about the concept of comparative advantage. Generally, comparative advantage refers to one’s ability to produce goods or services at a lower opportunity cost than anyone else. Through specialization, one economy can benefit itself and even its trade partners. For example, having the reputation of being the sweetest, Georgia peaches make up the majority of peaches produced in the United States. However, what if all residents of Boston decide to buy peaches produced by their local producers instead of Georgia peaches? Not only would the producers in Georgia lose a significant amount of profit, but the residents of Boston would have to pay a premium to eat peaches that are most likely to be less sweet and tasty.
According to Jason Winfree and Phillip Watson, co-authors of the article “Welfare Economics of “Buy Local”, “buying local” negatively affects the welfare of other regions even though it might raise the profits of local producers. If all regions decide to “buy local,” then all regions do not benefit, because two regions can generally be better-off through trade [2]. Additionally, many regions would lose specialization and end up producing a good that they do not even have a comparative advantage over. Thus, it does not make sense to only purchase locally-produced food in terms of economics.
The ‘Buy Local’ movement, an approach to educate consumers that locally-owned businesses matter in their communities, has grown in popularity in the U.S. over the past few years, and buying local is certainly a great way to encourage local production and consumption. However, it is critical to understand that difficulties come in making the economic trade-offs: Do benefits of purchasing locally produced food exceed those of specialization and trade?
Edited by Haejin Kang.
Sources:
1. https://www.packagedfacts.com/about/release.asp?id=3717
2. https://academic.oup.com/ajae/article/99/4/971/3097250
