Advantages and Limitations of Local Food Supply Chains

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I have listened to several friends and neighbors lately telling me about their new kitchen gardens, and a local rancher told me that he would like to convert some of his old barns into a meat processing facility. The recent disruptions in the food supply chains due to the coronavirus have inspired new interest in interest in buying food locally through farm-to-table markets. The question is, How feasible is it to transition our food supply system to more local supply chains?

There are several advantages to local food supply chains. Consumers can easily learn where they food comes from. There are fewer links in the supply chain, so local food supply chains are likely more adaptable to market shocks. However, it may not be feasible to produce locally the quantity and diversity of food products that U.S. consumers are accustomed to.

According to a recent essay by Dawn Thilmany McFadden and Trey Malone, local food chains differ from traditional food systems in that they are more proximate, shorter, and smaller. I briefly summarize what they mean by these descriptions below:

  1. More proximate

By definition, local supply chains cover a smaller geographic area. We can see this value in the branding and pricing of geographic indicators, like “Grown in Idaho”, “Yellowstone Grassfed”, etc. Since more consumers are cooking meals at home due to the pandemic, many consumers are seeking out more unique ingredients, including locally produced options.

  1. Shorter supply chains

COVID-19 has drawn attention to the complexity of our traditional food supply chains. Selling locally can eliminate some of the middlemen and reduce the complexity of the food supply chain. This likely has some benefits, but local supply chains do not currently have the capacity to meet all of consumers’ needs.

  1. Smaller Production Capacity

Local food chains are generally characterized by relatively small firms. Small firms have greater flexibility to respond to market disruptions. However, they also lack the volume and diversity of goods that are produced by larger firms.The COVID-19 pandemic has led to increased policy discussion to reduce regulations for small-scale producers. Reducing regulations may help producers reduce costs so that they can compete more efficiently.

There are numerous advantages to local food supply chains, one being greater flexibility. However, local food production is currently far from sufficient to meet the country’s food demands.

 

You can find Thilmany McFadden and Malone’s full article titled “Local Foods and COVID-19”  in the Council for Agricultural Science and Technology (CAST) and the Agricultural & Applied Economics Association (AAEA) special issue “Economic Impacts of COVID-19 on Food and Agricultural Markets

 

 

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About Author

Diane Charlton is an assistant professor in the Department of Agricultural Economics and Economics at Montana State University. She received her Ph.D. in agricultural economics from the University of California, Davis. She has done research on agricultural labor markets in Mexico and the United States along with researching the determinants of migration. She never tires of talking about agriculture with her sister and brother-in-law from their almond orchard in the Central Valley of California, and she is looking forward to learning more about and researching agricultural production in Montana and the northern Great Plains.

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