HomeFocus On Local Economic Systems

Local Economic Systems

by Rich Fegley

It is estimated that the average American meal travels about 1500 miles to get from farm to plate. If our food is grown that far from where we live, it is safe to assume that a fair percentage of the money that we spend to purchase food will go to the grower who is located 1500 miles away and to the food distributor, possibly located in Texas or Illinois. It is highly unlikely that that same grower or distributor will travel 1500 miles to visit my local community and purchase local goods or services, which would ultimately return the money to the local economy that made the initial purchase.

Working in the food service industry, I’ve noticed that a large percentage of restaurants’ “standard operating procedure” is to source food and supplies from large, national wholesale food distributors. Most chefs and owners do not think twice about this because the large nationals are typically the most convenient, lowest-priced food distributor. The top food distributors are Sysco, headquartered in Houston, Texas and U.S. Foodservice, headquartered in Rosemont, Illinois. These large national, corporate-owned food distributors have historically given little concern to where the food is grown or how the food is grown, although, they are starting to change their ways for the better. Most food sold to (most) restaurants is produced by large national corporations that manage large scale farms located hundreds, even thousands of miles from where they are finally consumed. Most of the goods provided by these national food distributors are not sourced from the local economy.

Why should we be concerned about our local economic system? Why is local better than global? Wikipedia defines an economic system as, “the structure of production, allocation of economic inputs, distribution of economic outputs, and consumption of goods and services in an economy.” Within this system, human and material resources are “converted” into goods and services which in turn are exchanged with others for other goods and services. Goods or services that you have are traded for goods or services someone else has. Bartering is not always possible or feasible so money is used in place of actual good and services. Money allows us to exchange or compare apples to oranges. Today the world largely operates under a global economic system based on the capitalist mode of production. What started as a small economic system among a tribe or small town has grown to become a system that includes the entire planet.

Economies were not always strictly local. The spice trade is a excellent example of a non- local economy that existed before “cheap energy”. Prehistoric cultures were trading goods and materials over long distances but these were luxury items and did not represent the majority of economic activity. What are the most important goods and services? Essential items such as food and water which we all must consume on a daily basis are important. Sourcing these necessities as local as possible is the first thing that we need to do in order to ensure basic survival. Any RTS (real-time strategy) computer gamer understands the importance of having basic resources (e.g. trees for buildings, mines for energy crystals) that are located as close as possible to their “home base”. The more local these resources are, the more quickly they can be gathered and transported back to the gamer’s “home base”. It’s fast, efficient, reliable; and it’s how RTS games are won.

So what can we learn from these gamers? In order for an economic system to sustain itself, the energy (money) of the system needs to stay within the system whenever possible. We now have economies that range from the enormous global and national economies to state and county economies and finally local economies. We are presently sourcing more and more goods and services from global economies as opposed to our local economy and these global goods and services are cheap because energy (fuel) is still cheap and the cost of labor in developing nations is also cheap. But rising energy costs will increase transportation costs and new “Fair Trade” practices will bring an end to “slave labor” and provide fair wages to our global workers, ultimately increasing labor costs.

As energy costs, transportation costs, and labor costs continue to increase, people will be- gin to once again buy local because it’s cheaper. We should attempt to source locally whenever possible from local farmers and smaller, locally headquartered food distribution companies. We must be willing to pay a small price premium for the overwhelming benefit of keeping money circulating within the local community rather than directing most of it off to a corporate office or grower that is quite possibly located out of state or worse, the country.

Think Local — Buy Local — Be Local

by Rich Fegley

Rich is co-owner of Fegley’s Brew Works
located in Bethlehem and Allentown

Other Voices of the Valley essays2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 – 2012 – 2013 – 2014 – 2015 – 2016 – 2017 – 2018

This entry was posted in Economy, Business, Finance.

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