Industrial economics reward efficiency in the market because efficient businesses are able to sell products at lower cost than their competitors. To combat price efficiency, firms also practice product differentiation and create a niche for their goods that can justify a higher price (quality is a form of product differentiation, so are features). This system is great for the consumer; at its ideal point, free market competition puts quality goods at low cost on the shelf.
Chain supermarkets offer discount prices on grocery items. This is possible because the chain is able to purchase food products at volume discounts from suppliers and wholesalers; these savings are then passed on to customers. To support this structure, chains use regional distribution to pass inventory along to individual locations. That is, an apple goes from a farm to a distribution center, to a truck, to the loading dock of a store, and finally to the display case and a customer’s shopping cart. This organization has led to an unsustainable structure in which the average American meal travels thousands of miles before arriving at a dinner plate.
For the industrial food economy to work efficiently and low prices to saturate grocery store aisles, it is helpful for distribution centers to purchase the bulk of their food products from humongous suppliers. This is where large corporate-owned farms come in; it is simply easier to buy from a big operation than ten smaller ones.
While the idea of market efficiency in agriculture seems positive, it comes at a cost. Large farms tend to be monocultures—growing a single plant over hundreds of acres—and leech soil’s nutrition without reconstituting it. Historically, farmers have replaced a soil’s fertility through crop rotation, polycultures (growing several kinds of plants in one field), and by spreading compost/manure. Monstrous, sprawling farms are not able to replicate these techniques on a broad scale, so they use chemical fertilizer & pesticide instead.
The reliance on chemical fertilizer & pesticide raises a problem because the manufacture of such products requires energy input and this energy comes largely from fossil fuels. A 2002 Johns Hopkins study estimates that three calories of fossil fuel energy go into every calorie of food grown by our industrial farms. Oil and petroleum are also used to transport food products those hundreds and thousands of miles between destinations. When you factor transportation in, the average calorie of food requires about ten calories of energy to get it to your supermarket.
If it’s not apparent where this discussion is headed, allow me to make it clear: industrial agriculture’s reliance on fossil fuel inputs (in the forms of fertilizer and excessive transportation) is not sustainable. As the price of oil/petroleum marches upward, so will the cost of the average American meal. Doomers who predict societal breakdown on the strength of a major spike in oil prices could very well be right; most people are not aware that ten percent or more of all oil we buy is used for food production. Rather than societal breakdown, however, it is more likely that Americans will increasingly turn to local agriculture, and historical farm practices (which use very little fossil fuel input) will again become viable. Food will cost more, but that’s the way it really should be anyway.
A final consideration worth mentioning is the definition of efficiency. In industrial economics, a highly-efficient firm churns out the lowest-price goods while still retaining some quality. Industrial agriculture has modeled this definition of efficiency and does not seem to care about the energy burden placed on fossil fuels (remember the 10-to-1 calorie trade off). Sustainable agricultural practice, like management-intensive grazing, is much more efficient in that it requires almost no input other than the sun; quite literally, it is solar-powered food. At the same time, however, farms that operate like this tend to be localized; shipping their products outside the region would also bring troublesome fossil fuels back into the equation.
While industrial agriculture certainly can (and will) continue to play some role in the mass-production of food products, a more viable solution for the long-term health of the United States is localized, sustainable food production. With the re-emergence of farmers markets we have seen food economy’s compass begin to shake a little bit. Sadly, however, it may take a serious shock to the industrial agriculture industry to change mainstream consumer habits.