The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

The Economic Institutions of Capitalism

In a "nutrition transition", the consumption of foods high in fats and sweeteners is increasing throughout the developing world. The transition, implicated in the rapid rise of obesity and diet-related chronic diseases worldwide, is rooted in the processes of globalization. Globalization affects the nature of agri-food systems, thereby altering the quantity, type, cost and desirability of foods available for consumption. Understanding the links between globalization and the nutrition transition is therefore necessary to help policy makers develop policies, including food policies, for addressing the global burden of chronic disease. While the subject has been much discussed, tracing the specific pathways between globalization and dietary change remains a challenge. To help address this challenge, this paper explores how one of the central mechanisms of globalization, the integration of the global marketplace, is affecting the specific diet patterns. Focusing on middle-income countries, it highlights the importance of three major processes of market integration: (I) production and trade of agricultural goods; (II) foreign direct investment in food processing and retailing; and (III) global food advertising and promotion. The paper reveals how specific policies implemented to advance the globalization agenda account in part for some recent trends in the global diet. Agricultural production and trade policies have enabled more vegetable oil consumption; policies on foreign direct investment have facilitated higher consumption of highly-processed foods, as has global food marketing. These dietary outcomes also reflect the socioeconomic and cultural context in which these policies are operating. An important finding is that the dynamic, competitive forces unleashed as a result of global market integration facilitates not only convergence in consumption habits (as is commonly assumed in the "Coca-Colonization" hypothesis), but adaptation to products targeted at different niche markets. This convergence-divergence duality raises the policy concern that globalization will exacerbate uneven dietary development between rich and poor. As high-income groups in developing countries accrue the benefits of a more dynamic marketplace, lower-income groups may well experience convergence towards poor quality obseogenic diets, as observed in western countries. Global economic polices concerning agriculture, trade, investment and marketing affect what the world eats. They are therefore also global food and health policies. Health policy makers should pay greater attention to these policies in order to address some of the structural causes of obesity and diet-related chronic diseases worldwide, especially among the groups of low socioeconomic status.

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Uneven dietary development: linking the policies and processes of globalization with the nutrition transition, obesity and diet-related chronic diseases

Summary The increase in childhood obesity over the past several decades, together with the associated health problems and costs, is raising grave concern among health care professionals, policy experts, children’s advocates, and parents. Patricia Anderson and Kristin Butcher document trends in children’s obesity and examine the possible underlying causes of the obesity epidemic. They begin by reviewing research on energy intake, energy expenditure, and “energy balance,” noting that children who eat more “empty calories” and expend fewer calories through physical activity are more likely to be obese than other children. Next they ask what has changed in children’s environment over the past three decades to upset this energy balance equation. In particular, they examine changes in the food market, in the built environment, in schools and child care settings, and in the role of parents—paying attention to the timing of these changes. Among the changes that affect children’s energy intake are the increasing availability of energydense, high-calorie foods and drinks through schools. Changes in the family, particularly an increase in dual-career or single-parent working families, may also have increased demand for food away from home or pre-prepared foods. A host of factors have also contributed to reductions in energy expenditure. In particular, children today seem less likely to walk to school and to be traveling more in cars than they were during the early 1970s, perhaps because of changes in the built environment. Finally, children spend more time viewing television and using computers. Anderson and Butcher find no one factor that has led to increases in children’s obesity. Rather, many complementary changes have simultaneously increased children’s energy intake and decreased their energy expenditure. The challenge in formulating policies to address children’s obesity is to learn how best to change the environment that affects children’s energy balance.

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Childhood Obesity: Trends and Potential Causes

One-third of adults are now obese, and children's obesity rates have climbed from 5 to 17 percent in the past 30 years. The causes of the nation's obesity epidemic are multi-factorial, having much more to do with the absence of sidewalks and the limited availability of healthy and affordable foods than a lack of personal responsibility. The broad societal changes that are needed to prevent obesity will inevitably affect activity and eating environments and settings for all ages. Many aspects of the obesity problem have been identified and discussed; however, there has not been complete agreement on what needs to be done to accelerate progress. Accelerating Progress in Obesity Prevention reviews previous studies and their recommendations and presents five key recommendations to accelerate meaningful change on a societal level during the next decade. The report suggests recommendations and strategies that, independently, can accelerate progress, but urges a systems approach of many strategies working in concert to maximize progress in accelerating obesity prevention.The recommendations in Accelerating Progress in Obesity Prevention include major reforms in access to and opportunities for physical activity; widespread reductions in the availability of unhealthy foods and beverages and increases in access to healthier options at affordable, competitive prices; an overhaul of the messages that surround Americans through marketing and education with respect to physical activity and food consumption; expansion of the obesity prevention support structure provided by health care providers, insurers, and employers; and schools as a major national focal point for obesity prevention. The report calls on all individuals, organizations, agencies, and sectors that do or can influence physical activity and nutrition environments to assess and begin to act on their potential roles as leaders in obesity prevention.

Accelerating Progress in Obesity Prevention: Solving the Weight of the Nation

The risks confronted by grain and cotton farmers are of particular interest, given the changing role of the Government after passage of the 1996 Farm Act. With the shift toward less government intervention in the post-1996 Farm Act environment, a more sophisticated understanding of risk and risk management is important to help producers make better decisions in risky situations and to assist policymakers in assessing the effectiveness of different types of risk protection tools. In response, this report provides a rigorous, yet accessible, description of risk and risk management tools and strategies at the farm level. It also provides never-before-published data on farmers' assessments of the risks they face, their use of alternative risk management strategies, and the changes they would make if faced with financial difficulty. It also compares price risk across crops and time periods, and provides detailed information on yield variability.

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Managing Risk in Farming: Concepts, Research, and Analysis

This comprehensive overview of local food systems explores alternative definitions of local food, estimates market size and reach, describes the characteristics of local consumers and producers, and examines early indications of the economic and health impacts of local food systems. There is no consensus on a definition of “local” or “local food systems” in terms of the geographic distance between production and consumption. But defining “local” based on marketing arrangements, such as farmers selling directly to consumers at regional farmers’ markets or to schools, is well recognized. Statistics suggest that local food markets account for a small, but growing, share of U.S. agricultural production. For smaller farms, direct marketing to consumers accounts for a higher percentage of their sales than for larger farms. Findings are mixed on the impact of local food systems on local economic development and better nutrition levels among consumers, and sparse literature is so far inconclusive about whether localization reduces energy use or greenhouse gas emissions.

Local Food Systems: Concepts, Impacts, and Issues

Consumer demand for food that is locally produced,marketed, and consumed is generating increased interest in local food throughout the United States. As interest grows, so do questions about what constitutes local food and what characterizes local food systems.
What Is the Issue?
This study provides a comprehensive literature-review-based overview of the current understanding of local food systems, including: alternative defi nitions; estimates of market size and reach; descriptions of the characteristics of local food consumers and producers; and an examination of
early evidence on the economic and health impacts of such systems.
What Did the Study Find?
There is no generally accepted definition of “local” food.
Though “local” has a geographic connotation, there is no consensus on a definition in terms of the distance between production and consumption. Definitions related to geographic distance between production and sales vary by regions, companies, consumers, and local food markets. According to the definition adopted by the U.S. Congress in the 2008 Food, Conservation, and Energy Act,the total distance that a product can be transported and still be considered a “locally or regionally produced agricultural food product” is less than 400 miles from its origin, or within the State in which it is produced. Definitions based on market arrangements, including direct-to-consumer
arrangements such as regional farmers’ markets, or direct-to-retail/foodservice arrangements such as farm sales to schools, are well-recognized categories and are used in this report to provide statistics on the market development of local foods.
Local food markets account for a small but growing share of total U.S. agricultural sales.
• Direct-to-consumer marketing amounted to $1.2 billion in current dollar sales in 2007, according to the 2007 Census of Agriculture, compared with $551 million in 1997.
• Direct-to-consumer sales accounted for 0.4 percent of total agricultural sales in 2007, up from 0.3 percent in 1997. If nonedible products are excluded from total agricultural sales, direct-to consumer sales accounted for 0.8 percent of agricultural sales in 2007.
• The number of farmers’ markets rose to 5,274 in 2009, up from 2,756 in 1998 and 1,755 in 1994, according to USDA’s Agricultural Marketing Service.
• In 2005, there were 1,144 community-supported agriculture organizations, up from 400 in 2001 and 2 in 1986, according to a study by the National Center for Appropriate Technology. In early 2010, estimates exceeded 1,400, but the number could be much larger.
• The number of farm to school programs, which use local farms as food suppliers for school meals programs and promote relationships between schools and farms, increased to 2,095 in 2009, up from 400 in 2004 and 2 in the 1996-97 school year, according to the National Farm to School Network. Data from the 2005 School Nutrition and Dietary Assessment Survey, sponsored by USDA’s Food and Nutrition
Service, showed that 14 percent of school districts participated in Farm to School programs, and 16 percent
reported having guidelines for purchasing locally grown produce. 
Production of locally marketed food is more likely to occur on small farms located in or near metropolitan counties.
Local food markets typically involve small farmers, heterogeneous products, and short supply chains in which farmers also perform marketing functions, including storage, packaging, transportation, distribution, and advertising. According to the 2007 U.S. Census of Agriculture, most farms that sell directly to consumers are small farms with less than $50,000 in total farm sales, located in urban corridors of the Northeast and the West Coast.
In 2007, direct-to-consumer sales accounted for a larger share of sales for small farms, as defi ned above, than for
medium-sized farms (total farm sales of $50,000 to $499,999) and large farms (total farm sales of $500,000 or more).
Produce farms engaged in local marketing made 56 percent of total agricultural direct sales to consumers, while accounting for 26 percent of all farms engaged in direct-to-consumer marketing. Direct-to-consumer sales are higher for
the farms engaged in other entrepreneurial activities, such as organic production, tourism, and customwork (planting,
plowing, harvesting, etc. for others), than for other farms. In 2007, direct sales by all U.S. farms surpassed customwork to become the leading on-farm entrepreneurial activity in terms of farm household participation. Barriers to local food-market entry and expansion include: capacity constraints for small farms and lack of distribution systems for moving local food into mainstream markets; limited research, education, and training for marketing local food; and uncertainties related to regulations that may affect local food production, such as food safety requirements.
Consumers who value high-quality foods produced with low environmental impact are willing to pay more for locally produced food. Several studies have explored consumer preferences for locally produced food. Motives for “buying local” include perceived quality and freshness of local food and support for the local economy. Consumers who are willing to pay higher prices for locally produced foods place importance on product quality, nutritional value, methods of raising a product and those methods’ effects on the environment, and support for local farmers.
Federal, State, and local government programs increasingly support local food systems. Many existing government programs and policies support local food initiatives, and the number of such programs is growing. Federal policies have grown over time to include the Community Food Project Grants Program, the WIC Farmers’ Market Nutrition Program, Senior Farmers’ Market Nutrition Program, Federal State Marketing Improvement Program, National Farmers’ Market Promotion Program, Specialty Crop Block Grant Program, and the Community Facilities Program. State and local policies include those related to farm-to-institution procurement, promotion of local food markets, incentives for low-income consumers to shop at farmers’ markets, and creation of State Food Policy Councils to discuss opportunities and potential impact of government intervention. (WIC is the acronym for the Special Supplemental Nutrition Program for Women, Infants, and Children).
As of early 2010, there were few studies on the impact of local food markets on economic development, health, or environmental quality.
• Empirical research has found that expanding local food systems in a community can increase employment and
income in that community.
• Empirical evidence is insuffi cient to determine whether local food availability improves diet quality or food security.
• Life-cycle assessments—analyses of energy use at all stages of the food system including consumption and disposal—suggest that localization can but does not necessarily reduce energy use or greenhouse gas emissions.
How Was the Study Conducted?
Existing analyses of local food markets by universities, government agencies, national nonprofit organizations, and
others of local food markets were synthesized to evaluate the definition of local foods and the effects of local food systems on economic development, health and nutrition, food security, and energy use and greenhouse gas emissions. The
report’s content relies on data collected through the 2007 Census of Agriculture, as well as other surveys by USDA’s
Agricultural Marketing Service, the National Farm to School Network, university extension departments, and others, to
provide a comprehensive picture of types of local food markets, their characteristics, and their importance over time.

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Recent changes in structure of the U.S. pork industry reflect, in many ways, past changes in the broiler industry. Production contracts and vertical integration in the broiler industry facilitated rapid adoption of new technology, improved quality control, assured market outlets for broilers, and provided a steady flow of broilers for processing. Affordable, high-quality chicken products have contributed to continual increases in U.S. chicken consumption, which has surpassed pork and beef on a per capita basis. Incentives for contracting and vertical integration in the pork industry may yield comparable results. If so, these arrangements might be expected to result in larger supplies of higher quality pork products at economical prices.

Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products

This report provides an overview of local and regional food systems across several dimensions. It details the latest economic information on local food producers, consumers, and policy, relying on findings from several national surveys and a synthesis of recent literature to assess the current size of and recent trends in local and regional food systems. Data are presented on producer characteristics, survival rates and growth, and prices. The local food literature on consumer willingness to pay, environmental impacts, food safety regulations, and local economic impacts is synthesized when nationally representative data are unavailable. Finally, this report provides an overview of Federal and selected State and regional policies designed to support local food systems and collaboration among market participants.

Trends in U.S. Local and Regional Food Systems: A Report to Congress

The economic development of South Korea is often considered a model for developing countries. We use 1975 and 1990 data in a general equilibrium framework with a highly disaggregated sector specification to evaluate the opportunity cost of its agricultural protection. We show that although agriculture's share of the gross domestic product (GDP) declined between 1975 and 1990, the cost of agricultural protection, as measured by the loss in GDP, did not fall. The larger gap between domestic and world prices for the protected sectors exacerbated the distortions in resource allocation. Simulated removal of 1990 agricultural border protection reduced the share of agricultural GDP to the level actually observed in 1996, demonstrating how protection can impede economic structural development. The public policy implication is for developing countries to adopt policies that help the agricultural sector become competitive. Otherwise, as in Korea, the resource costs of delaying adjustment grow over time.

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Steve Martinez

Papers

Local Food Systems: Concepts, Impacts, and Issues

Local Food Systems: Concepts, Impacts, and Issues

Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products

Trends in U.S. Local and Regional Food Systems: A Report to Congress

Vertical Coordination of Marketing Systems: Lessons From the Poultry, Egg and Pork Industries