Monday, July 28, 2008

Economics Effecting Local Food Movement

I found an interesting blog post from the folks at www.Sustainablefarm.com titled, "Does the recession threaten the localvore movement?" The basis of the blog post is from an MSNBC article which tells about the slowdown in the organic and local foods movement because of the economic slow down. I should point out that they use the word recession, but since I don't participate in recessions (farms have recessions too ... I think they call them floods or droughts) I don't want to use that word. I do understand that things are getting difficult financially, but that just means we have to tighten our belts and be smart ... it doesn't mean we need to continually talk about how bad things are and feel sorry for ourselves. People who work hard, save, scrounge, and basically survive will always make it through!

But, the post did make me think and evaluate the entire local foods movement (there is that word again). The article said that the people who are still buy fresh organic foods at stores or markets are not always the locals per se, but rather the more wealthy who come out to get the food. Now it isn't a bad thing that the organic/local food market can cater to the upper class, but does it have to be like this.

I believe it is important that farmers are paid an adequate amount for their work and realize that a natural/organic product will involve more labor, but are the prices getting a little too gourmet? I believe one of the benefits of grassfed natural beef is that it shouldn't cost as much to finish (even though it takes a little longer). But, I'm beginning to wonder if that savings is passed on to the consumers in all cases.

On the flip side I know that if you are selling organic hogs there will have to be a higher price because they will have to be feed more expensive organic grain. I think our sustainable farmers need to reach a good middle ground. A fair compensation for their work, but also a price that their local consumers can afford. If we can't do that then I'm not sure if we are truly sustainable farmers...

15 comments:

csa-farmer girl said...

I think that we need to add fuel costs into this equation.

As a small local farmer I try to price my produce somewhere inbetween a normal grocrey store and the organic/specility markets. But here is the diffrence, I get to keep 100% of that...

That being said, with fuel costs raising gone are the days of $.25 cent green peppers! I could not live on that. But at $4.00 a pound, I can.

I think people may end up spending more of their money on food, bringing us more in line with the rest of the world. But much of the food rise is because of feul costs, fuel not only to transport produce from around the world, but to grow, harvest, and store it on an industrial scale...

I think a recession may bring down some prices, but I think the people who make frozen meals need to worry more then the person who grows a tomatoe.

We have already started to notice with the co-op we belong to. Our local grass feed beef is right now the same price as the grocrey store stuff! That's a no brainer!

Steven said...

The only grass fed beef that I can get around here (until our friends butcher their bull) is awfully expensive and marketed towards wealthier customers online. If you go to the butcher shop that they bought they actually try to talk you out of the grass fed and try to get you to buy the "natural" instead. I'm guessing that the owners don't know they do this. Anyways, here is their online price for rib eye Shipping is probably included.

4 (8 oz.)
Natural
Dry Aged Grass Fed
Rib Eye Steak
Reg. $ 68.94 You Save $ 9.99 !
Today Only $ 58.95

Looks expensive to me, but it's still 10 cheaper/lb than Allen Brothers Dry Aged Rib Eye. jeeze

Kramer said...

I understand that it would be more "convenient" for the price of organic and grass-fed meats, free range eggs, and pastured chicken to be the same as your massed produce factoried meats and eggs, but I feel that that assumption is expected out of ignorance.

Those who are producers of these products, not just consumers or soon-to-be producers, will understand what it takes to create a sustainable eco system for your animals.

It would be very convenient for me to dump commercial fertilizers and weed sprays on my pastures in order to have a total stand of a hybridized grass. It would be convenient to worm my cattle with chemical wormers and control fly problems with sprays, tags, or pour-ons. It would be convenient to just turn my cattle loose, running a traditional open system so that I don't have to worry about rotating them up to 5 times a day if needed. It would be convenient in drought to simply just keep feeding hay, not providing our grass-fed beef with green grass.

I feel that America in a whole has fallen into the trap that everything must be convenient and everything priced that way. I feel that is what has gotten us here, lets let govt control our foods, subsidize them, and keep everything on a level playing field.

I feel that if uneducated consumers, would take the time to go and visit their local farm, maybe even work for a bit with them, that they would quickly see and be more than willing to pay the premium price for their premium foods.

Each morning, I have work that I do regardless of how I feel. I feed all 400+ chickens, provide them with clean water, the same as we drink, and rotate their pens. Then I feed our hogs, 100% certified, non genetically modified grains, before turning them out to pasture. Next I have to go and move our irrigation sprinklers. We are in a drought so providing our cows constant access to green grass is crucial to allow for good Omega 3 counts and higher CLA levels. Then I go out and set up paddocks for our cows and they begin their rotation. Then to cut down on fly problems, I have to drag each paddock once they leave it to break the manure up for larvae control and fertilization.

Do you have to have irrigation, no, but to provide true grass fed beef, you have to provide green grass. This is a huge expense. It takes time to feed your micro organisms. It costs money and time to provide organic mineral free choice. It costs money to use homeopathic dewormers that are beneficial to your micro organisms rather than deadly as in chemical wormers. It costs money to feed non-genetically modified feed to your chickens and pastured hogs. It takes time to rotate your cows several times daily to build organic matter, cut down on weeds naturally, and give your land rest. It takes time and money to build a buffet of forage in your pastures rather than giving your cattle the same thing to eat each day.

What I am trying to say is in reality and life, you get what you pay for. Just as one may gripe about paying 3 times as much for organic fruits and vegetables, try growing them. You will be good to get a weeks worth of squash and zucchini without boarers getting them. That is why genetically modified, round up ready plants and disease resistent plants were made. Convenience.

I don't mean to seem irritated or lashing but it gets frustrating when you hear that your premium cared for products should be priced closer to factory farmed products. Back 60 years ago, people spent about 30% of their incomes on food. Food that was unprocessed and good for you. Now, we are at about 10% and we brag about it. If you like spending 10% of your income on what keeps you alive and healthy, keep buying food in boxes, and at factory stores.

Take time to walk in your local farmers footprints for a day, and see what kind of finances and resources he uses to provide you with good quality foods.

*****Just a note: Yes grass fed beef is cheaper to finish than grain fed beef but that is only if you compare corn to grass. How bout seed costs for premium pastures, irrigation, rotation supplies and upkeep, water lines for fresh water in each paddock, mineral, the fact you keep them for 24-30 mos before finishing weight is reached, the list goes on.

At the end of the day, we are grass farmers selling our grass through our beef, chicken, eggs, and pork. Or it may be milk, turkeys, goat, sheep, wool, etc.

Steven said...

Jason,

I understand your point, fully. I pay for naturally grown, pastured food at a local farm and it's all more expensive than the store, but I value how good it tastes, how good it is for us, and how it makes us feel to support the local family that raises it. But if they were charging 8 or 9 bucks per lb for ground beef, it would be too much for us. All of those conveniences that other producers use also cost money, that we get to save through pasturing. yes, pasture isn't cheap, but they should be cheaper than grain and hay.

Do you not think that prices like this are a little over board?
I mean, I want to make money on my product, but I also want my family members and neighbors to be able to afford it.

! ! ! OUR CURRENT SPECIAL ! ! !

10 lbs of
90 TO 95% Lean
Grass Fed Gourmet
Ground Chuck
PLUS
FREE Shipping

Reg. $ 119.95 You Save $ 30.00 !
10 lbs Only $ 91.95

I hear ya on the squash and zucchini, ours got all eaten up!

Kramer said...

Steven,

Yes, I didn't even reply on the prices of that farm you mentioned. That is totally unreasonable.

Just as Ruth's Chris Steakhouse (sp?) doesn't cater to me nor could I ever eat there, this place has apparently put its prices for a small sect of the population.

Our passion is to produce great food for families and individuals to enjoy. This means making it affordable for a mom to feed her kids grass fed protein sources rather than factory farmed protein.

If your taking the time to do things right, apparently it is a passion in your heart to provide food for others. Otherwise, there is too much work on a daily basis, and if it is not a passion, you will quickly get burned out.

Our price for ground beef is $5.00# and lean ground $6.00#. I prefer the ground beef personally because it has more grease and the fat in grass fed beef contains the CLA content.

My point in the statement is that people can't expect to look at our pricing and see ground beef on sale for $1.99#. We aren't Kroger. Our cows are not spent Holsteins getting ground for hamburger meat.

That is where I was coming from. Thank you for bringing me back to that point after I got off on my tantrum.

Ethan Book said...

Kramer - I totally see what you are saying about the pricing, etc ... but I think I was talking more along the lines of the grass finished beef that is raising the price to the gourmet just because they can. There is always going to be a place for gourmet, but everything can't be gourmet just because of grass.

I guess I was specifically talking about the $9 ground beef as the problem ... regardless of my level of farming experience I know ground beef, even with all of your hard work, doesn't have to be $9.

Also, I think the gist of the article was that only the upper class was buying the organic/natural ... if that is the only market you have a problem. Obviously farmers in other areas have been able to make it work so I don't think it is impossible, just saying in order to be sustainable it has to be financially possible for consumers to buy (and we have to educate them that it is a good purchase). If consumers can't/won't buy it ... well then no matter how good you are to the land you won't be sustainable without sales.

That is kind of where I was coming from...

Mellifera said...

Once upon a time I was reading an article in a Newsweek-type magazine about Fun With Pricing. There's a lot more to it than just what a product cost to make. Basically, if you are in the retail business, you have two goals:

1. Sell as much high-margin product as you can.

2. Also sell a cheaper version of the same thing so you can still corner the "poor people" market.

The example they used was printers (I can't remember which company it was, but I'm sure they're not the only ones.) They have a splendid, costly top-of-the-line printer that rips out 100 pages/minute. They also have a cheaper version of the same thing for the home user that gets maybe 50 pages/minute. The only difference between the two is the cheap one has an extra computer chip in it to make it go slower, so it still does the job but the top-end customers wouldn't want it.

I think you see a lot of this in the grocery store as well. White bread takes more processing than whole wheat, so it *should* be more expensive- but because the whole wheat is more desirable right now, it's the upmarket version and priced accordingly. Same thing with white vs. turbinado sugar, normal vs environmentally-friendly unbleached toilet paper, etc.

Not to mention there's still a big difference in how much conventional vs organic food there is- with supply & demand, that's going to drive up organic prices no matter how much it actually costs to grow.

Also, if prices between the two evened out at the supermarket, there'd no longer be any reason at all for shoppers to buy conventional... what would they do with all the leftover conventional produce?

So basically, I think the rising price of organic right now has a lot more to do with marketing gymnastics than it does with actual production costs (*especially* if we're talking grass-fed meat). Retailers will still charge more for it just because they can, end of story.

Rich said...

"...I believe one of the benefits of grassfed natural beef is that it shouldn't cost as much to finish... I'm beginning to wonder if that savings is passed on to the consumers in all cases..."

Isn't one of the reasons for direct-marketing your farm products to "cut out the middle-man" and instead retain that portion of the price increase for yourself? What is the difference in keeping the middle-man's cut and NOT passing the "savings" from grass finishing your cattle to the consumers?

"...A fair compensation for their work, but also a price that their local consumers can afford..."

One of the reasons businesses fail is either under-charging or over-charging for their product or service. Charging a little less for your product isn't a way to guarantee profit by attracting more customers.

If your customers are mainly choosing your product based on price, they will eventually find something cheaper and you will need to lower your price or go out of business.

If your customers are drawn to your product because of the combination of quality, uniqueness, and a "decent" price (but not cheap), they will be more likely to pay more and less likely to seek a cheaper alternative (as long as the price doesn't become outlandish).

The difficult part is defining the lines between cheap, a decent value for the dollar, and outlandish luxury pricing.

Steven said...

On the other hand, I'm afraid that alot of local people are going to expect to buy from us like they do from a family member or neighbor. Which is usually market value plus or minus a few cents, plus butchering. Last year my sister bought a 1/4 beef for $1.35/lb + butcher cost. In the end they had no idea what the actual cost was /lb but they now have the idea that "local meat" should be less than $2 /lb. For this reason, we're going to try not to use the terms whole & half to keep from giving the impression that you're going to get a "bottom bargain price".

Rich said...

"...I'm afraid that alot of local people are going to expect to buy from us like they do from a family member or neighbor. Which is usually market value plus or minus a few cents, plus butchering..."

If they expect to pay "market value plus or minus a few cents" then why don't they go to a sale barn and buy their beef? Obviously, they would prefer to buy from someone they know, why shouldn't they be expected to pay extra for the privilege of knowing how their beef was raised?

Why should I go to the trouble of selling my beef to consumers, arranging buyers for each side or quarter, hauling cattle to the butcher, dealing with late payments and bounced checks, etc. and then making about the same amount of money as if I had just sold them at a sale barn?

Of course, if they are willing to pay the "market price" for a properly finished side of beef that is a whole different matter.

Thomas Supercinski said...

For the record, I'm not a farmer (yet), only a wannabe. An interesting article on pricing (that I think was mentioned in the comments here) from the world of software where I come from is http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html. I think a great deal of what is mentioned there applies, and really to any business.

My opinion is that the local/clean food movement will succeed, primarily because the industrial food complex will inevitably crumble upon itself (whether helped by catastrophic events or not), leaving only local farms to produce.

The $9.00# ground beef seems inflated to me as well, particularly with the fact that local farms around me seem to be doing just fine at not even half that price.

Eventually, even those folks who are paying $9 will want to see a real reason for the price over and above others. Again, just like any other business, it would come down to trust and the value the business creates. If it is not an honest price, those sellers will reap what they sow.

I agree with Kramer that American culture demands convenience. Most Americans are thickly insulated from the reality that everything doesn't just come easily, particularly food.

Finally, here is a quote from Joel Salatin on food pricing -

"... whenever I hear people say clean food is expensive, I tell them it’s actually the cheapest food you can buy. That always gets their attention. Then I explain that with our food all of the costs are figured into the price. Society is not bearing the cost of water pollution, of antibiotic resistance, of food-borne illnesses, of crop subsidies, of subsidized oil and water — of all the hidden costs to the environment and the taxpayer that make cheap food seem cheap. No thinking person will tell you they don’t care about all that. I tell them the choice is simple: You can buy honestly priced food or you can buy irresponsibly priced food. "- Joel Salatin in The Omnivore’s Dilemma

csa farmer girl said...

We buy ground beef from our co-op for $5 a pound. Roasts are $6. Steaks between $6 and $12... None are aged. For milk we pay the equivalnt of $5 a gallon not including the buy in to the herd share. I think those prices are fair, but then I raise veggies not meat!

I guess my point was only that as fuel prices rise industrial food costs will as well, quickly and steeply. The way they produce is very fuel dependant. The was I grow is less so, this will, in the long run, I believe, help equalize the diffrence a little. As their prices go up fast my products will look less boutique...

Steven said...

The raw cow or goat milk that we get is $6/gallon after we buy the jars. We would pay this every week, but we have to drive pretty far to get it. I think we're going to start doing it again now because we want to feed are little girl (11 months old) goat's milk and stop paying for formula. We've only been feeding formula for about 3 or 4 weeks and I can't believe how expensive it is! I figured it was costing $16 / gallon if we didn't get it on sale.

Yeoman said...

Here's an interesting angle on this, industrial agriculture and endangered regional foods:

http://health.msn.com/nutrition/articlepage.aspx?cp-documentid=100214330&GT1=31036

The "Pineywoods" cattle breed is mentioned, which I'll confess I've never heard of.

Rich said...

"...The "Pineywoods" cattle breed is mentioned, which I'll confess I've never heard of..."

There is a small herd of them in SE Oklahoma,

http://www.kerrcenter.com/overstreet/heritage_breeds.htm

They are about the same size as Dexters, (in addition to Florida Crackers and Corrientes) and were also bred as triple purpose cattle (beef, dairy, and draft).

In the past, I've wondered about the possibilities of assembling a herd of "cheaper" Corrientes and breeding them to a "higher quality" bull (such as a Dexter or a Pineywoods).

I wonder what a Corriente-Dexter crossbred calf would look like and how fast it would grow?

Related Posts Plugin for WordPress, Blogger...