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.
Comments
Don't Mix Apples and Oranges When Designing a Local Food System
Steve has done an excellent job of illustrating the error of mixing business models for local/regional markets and global markets. Since the business model specifies "who will pay for what" in the value chain, get the business model wrong and you are likely to lose your shirt.
I hope that Steve will continue to explore the implications of changing business models and value chains. For instance, the industrial food economy is wasteful. Can local/regional markets reduce this waste? Who would gain from reducing waste? Who would not?
Bill