Will local food trump California commodities?
Thursday, January 31, 2008
by MARY BAXTER
In the one corner was Mike Schreiner, spokesperson for Local Food Plus (LFP), a Canadian non-profit organization that links consumers with local growers. In the other was Stuart Woolf, spokesperson for the California-based Woolf Family Farms, a family-owned processing and farming operation.
Referring to research surveys conducted within recent years, Schreiner argued that consumer interest in locally grown products is rising. “Locally grown is the most powerful value-based logo in Ontario,” he said, noting one survey indicated 55 per cent of Ontarians buy local food once a week.
He suggested local food campaigns won’t capture higher profit margins for the producer or a greater market share although they might create more room on retail shelves. A preoccupation with the idea of sustainability, fueled by concerns about issues such as global warming and food safety, lies behind the interest in locally grown.
Products shown to address the components of this underlying interest are better able to capture higher profit margins, he argued. To this end, LFP has introduced a sustainable practices certification program for its growers. Conservation practices, avoiding the use of antibiotics, protecting wildlife habitat, providing safe working conditions as well as humane care for livestock and reducing energy consumption are among the conditions of certification. Participants see a 10 per cent price premium over unbranded products, he said.
Woolf, on the other hand, was betting that consumers would buy more low cost foods if the global economy slows down.
U.S. policies to boost ethanol production are having a positive effect on food prices, he said. He suggested a weakened U.S. dollar is also good for exports, as could proposed changes to European agricultural support programs. These conditions have already opened international markets that his company’s tomato processing arm hadn’t previously accessed, he said.
Nevertheless, both agriculture and the processing industry in California have its challenges. One of these is a serious water crunch, resulting in high water prices and lack of access. Fuel costs are also high.
Plummeting processing profit margins for the processing industry has eliminated most plants in the state. His company recently bought one of the state’s three remaining major plants. With product values going up, retail prices will also go up and there may be a better profit opportunity for processing, he predicted.
Woolf doubted consumers were willing to pay extra to support sustainable practices. “They’re focused on cash flow.” He described his family’s farm operation — they grow tomatoes, garlic, onions, almonds, pistachios and wine grapes — as conventional where the focus is put on increasing the amount of product grown per acre.
“To me, that’s a very sustainable way of doing business.” BF