Are Calls to Buy Local Just Another Marketing Trick?

With environmental concerns growing, calls for consumers to buy local have been getting louder lately. Environmentalists and business groups alike have been calling for people to choose local goods over imports, and replace exotic vacation destinations with local ones. (Oddly enough, I have yet to hear a call for employers to recruit local job applicants who would not have to commute long distances to get to work – but this is a separate topic.)


On the face of it, the argument in favour of buying local makes sense: Shipping a box of tomatoes from a farm on the other end of the Planet to your local grocery store causes more pollution than bringing in the same box from your local farm… And the plane that takes you to your exotic vacation destination burns lots of fuel, which, in turn, produces lots of pollution.

 

But wait… What happened to the notion that buying from third-world farmers lifts them and their families out of poverty? Isn’t buying their products a form of help that is more effective than donating food to them after they go broke? Wouldn’t the lack of international travel eventually make our society more isolated, less open, and, perhaps, less tolerant? And finally, if everyone curbed international trade, wouldn’t our own manufacturers and service providers loose their access to international markets that they sell to today?

 

We obviously can’t have it both ways: If everyone buys local, we can’t enjoy the benefits of free trade – and these include lower prices and higher overall productivity (both in direct response to more competition, in competitive markets, those who are inefficient or sell expensive will simply run out of business). The question becomes: Which objectives are the more urgent ones?

 

To answer this, we need to look into another question:
How green are local products anyways?

 

I should start by admitting that I don’t either avoid or prefer imported goods.

On one hand, rising oil prices are already curbing international travel and trade by making imports and exotic vacations more expensive.

On the other hand, third-world farmers are not so dependant on demand from the “rich” world as they once were: The worldwide food shortage and increasing food prices have meant that, on a free and open market, they have no problem getting good money for their products, even if it is not the “rich” world who buys them. (Mind you, on a “free open market” nobody gets dumping subsidies from their government for selling their products below cost – which is not the case in the “rich” world.. But this is a topic for a separate discussion.) In fact, nowadays, much of the developing world’s exports go to other developing countries, and not to “rich” ones.

Still, the argument that buying local saves the environment sounds a bit hollow. Sure, buying local does help somewhat, but its impact is miniscule compared to a number of other measures that can be taken but are ignored. Calls to “buy local” focus on a rather irrelevant detail while ignoring the big picture. I think that their purpose seems to be to generate easy cash rather than protect the environment.

Transportation is only one of the many ways in which products that we buy affect the environment: Business practices and manufacturing technologies are no less important.

If the objective really is to help the environment, then it only makes sense to favour manufacturers who show a strong commitment to the environment and employ environmentally sustainable technologies and business practices – regardless of where these manufacturers are located. For example, if a locally manufactured product comes in a non-recyclable plastic packaging, while the imported variety is sold in bulk – with no packaging at all – then, on balance, the imported product may be leaving a smaller carbon footprint than the local one – despite the different transportation efforts involved. To complicate things even further, goods branded as “local” are often “manufactured locally” using imported components or resources. Assembling things locally may be good for the local economy – but it is unclear whether it helps the environment.

Distribution is more than just transportation

Distribution (the process of getting goods from the manufacturers to the end-consumers) involves transportation, as well as warehousing. Because transportation is only part of the distribution process, its impact on the environment cannot be evaluated in isolation: We need to look at the distribution process in its entirety.

The number of days that goods spend in warehouses waiting to be sold has an indirect impact on the environment as well – as warehousing activities also consume energy and produce pollution (especially specialized warehouses such as those providing refrigerated storage). The route that goods take from the manufacturer’s facility to your local store, or the number and sizes of the warehouses used along the way have an impact on the environment too. Since these generally remain hidden to consumers, so we must assume that companies are making decisions that are good for the environment.

Distribution also inevitably involves certain percentage of waste. Some of the goods that manufacturers produce simply never make it to the consumers’ hands – they get wasted in the distribution process. Just how much of the goods that are produced get wasted?

On May 15th, 2008, the Economist magazine published an article titled “America‘s food retailers should wage a tougher war on waste”. America‘s major food retailers in general consider their figures on waste proprietary, and are not willing to share them with the public. However, the article points out that an estimated that 8 to 10% of total “perishable” goods in America are wasted in the distribution process. This percentage is apparently double the rate of European retailers. Further, in a report published on May 14th, the United Nations estimated that retailers and consumers in America throw away food worth $48 billion each year. My guess is that the situation in Canada is not very different.

Wouldn’t it be ironic if you, as a conscious consumer, buy locally produced (and more expensive) apples as a substitute for imported (and cheaper) bananas, only to find out that the bananas that you don’t buy end up in the garbage can? One could argue that if those imported bananas do not sell, retailers will revise the quantities that they order. This is true in theory. In reality, it is at odds with the high percentage of perishable goods that get wasted: If retailers were able to reduce waste, one would expect that they would be doing this more efficiently already?

Think of the mountains of fresh produce on display at your local grocery store. We have grown to expect those food displays as something we as customers are entitled to. Ironically, they are one of the reasons for the high waste rates: The food on food store displays generally perishes faster than items that are stored appropriately. If retailers did not need to stock so much food in an effort to “impress” the consumers, then they would probably waste less. But this would also require a change in the consumers’ attitudes and expectations. Arguably, retailers could probably also do a better job tracking and projecting demand, so they don’t have to throw away as much.

The goods distribution process – which transportation is only part of – affects the environment in many more ways than just through the consumption of fuel required to transport goods. For the sake of the environment, the whole process needs to become more efficient. Encouraging people to buy local may be helping local businesses, but it does little to help the environment. In fact, s far as the environment is concerned, I think that it is a counter-productive distraction: It makes people believe that they are doing something for the environment, while, in fact, they are really only helping the businesses in their neighbourhoods.

Being green does cost businesses money, and carries a risk: If a company “unilaterally” increases the cost of its products to make them “green”, its business will suffer if its customers decide that they don’t want to pay the premium. But around here (in Canada) local products often cost more than imports anyways. If consumers are expected to pay premium for local goods for the sake of protecting the environment, then they are entitled to expect the same from manufacturers of those same goods.

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