Saturday, April 11, 2009

Smaller Farms = Higher Prices?

By Diana Hsieh

Why is food purchased from local farms often so damn expensive? I recently ran across two interesting essays on the topic via the blog Food Renegade, both focused on livestock.

First, in Unfair Fare, part-time New York farmer Bob Comis argues that the problem stems from a failure on the part of many small farmers to take advantage of economies of scale. Instead, these farmers tend to rely on the willingness of some not-so-bright folks to pay exorbitant prices for locally-produced food. Undoubtedly, many consumers do need to be smarter shoppers.

Second, in Why Local Food Is More Expensive, farmer Joel Salatin argues that the high prices are largely the product of massive government controls. These controls are not merely ill-suited to the workings of the small farm; they also entail fixed costs that burden small farms far more than large farms.

Whether you will ever buy food direct from a farm or not, I heartily suggest reading this second article. The inanity, burden, and expense of these government controls on farmers is worth glimpsing in its concrete details. It's not a pretty picture.

Notably, while these two explanations for high prices of locally-produced food differ, they are not mutually exclusive. However, in the long run, the government controls over farms are clearly far more significant than the poor judgment of some farmers and consumers. The market can and will weed out inefficient farms via competition over time. In contrast, government controls can only be remedied by a massive cultural and political u-turn toward free market agriculture. Given the general confusion about and hostility to free markets today -- and given that large farms often support such controls as a means of suppressing their competition -- that u-turn will be no easy task.

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