Question

The author of “The Inefficiency of Local Food” argues that eating local can be cost inefficient because it forgoes the gains arising from regional comparative advantage in food production. Explain how comparative advantage in food production works and its role in the costs and benefits of eating local.

Answer 1

Comparative advantage in food production occurs when a country known to efficiently produce a certain good, exports that product to another country. Comparative advantage occurs when countries allocate scarce resources in order to produce goods and services for which they enjoy comparative cost advantage.

Country A can produce 60 tonnes of carrots at $2/tonne while the local country can only produce 40 tonnes of carrots at $4/tonne. If the local country sources these carrots, it can easily get 40 tonne for $80, but consumers are paying $160, which is double the cost. The local country could benefit from trade and economies of scale.

Localisation leads to more inputs in order to produce a given quantity of good. This would lead to use of chemicals as more crops will be grown in areas which don't support large scale production for certain goods.

This increases inflation in the economy and lowers the purchasing power of the currency. It leads to people consuming less as the local food is expensive but in terms of nutrient value local food has its health benefits as it often has more nutrients and it supports the local economy.  

Thus on a small scale local food can sustain the demand for local goods and crops, but on a large scale, modern farms help to reduce the costs and improve efficiency to serve the rising demand to meet food production.