Eric Garza

Musings on food, energy and adaptation

Return on Investment

In many of my food-related posts I present data on the energy inputs needed to produce food relative to the amount of food actually produced, yielding a handy ratio useful in assessing input-output efficiency for these systems. This approach is a particular application of the idea of Return on Investment, often abbreviated as ROI. Since ROI plays an important role in my own strategic planning and in how I analyze systems, I thought I’d explore the concept in greater detail.

CoinReturn on Investment is typically calculated as a ratio with the return an investment is expected to yield over a given timeframe in the numerator and the investments required to deliver that return in the denominator. ROI is most often used in financial circles, where returns and investments are measured in dollars or some other currency. Since the goal of an investment is to generate the largest return possible, ROI can be used to prioritize alternative investments, hopefully singling out those that will offer the greatest overall return.

While the idea of ROI originated in financial circles, anthropologists and ecologists also use the metric. Richard Lee, an anthropologist, used an ROI framework back in the 1960s to study the labor energy indigenous peoples invested to find food, and calculated ratios of food energy return on labor energy invested for their tribes. Ecologists, notably Howard Odum and later Charles Hall, did the same within studies of ecology, and Hall is well known for coining the phrase Energy Return on Investment and its associated acronym EROI while studying the energy cost of producing fuels from fossil energy resources. Today there’s a growing literature applying the ROI framework to food production in modern food systems, and I applied it to national data in The Energy Cost of Food and to small farming systems in The Energy Cost of Local Food.

While monetary and energy ROI ratios can be useful metrics, I’ve come to believe that the ROI framework is much more broadly useful. I’m currently teaching a course on voluntary simplicity, and a recent homework assignment invited students to keep track of every penny they spend over the course of a week and to explore the many types of non-monetary benefits they get from that spending. Does the money spent on dinner with a friend have the added benefit of strengthening that relationship? Does the money spent buying food at a farmers’ market have the added benefit of providing access to higher quality food than one can get at a local supermarket? Does supporting farmers’ markets pay added dividends by creating a space for people to come together, have conversations they might not otherwise have and support the building of community more generally?

All of these non-monetary benefits are also returns on investment, but in a system measured solely by money they’re invisible. We all make decisions on what to spend our money – or other resources like time and effort – and I think we’d all do well to explore the many non-monetary costs and benefits that accompany this spending. Economists increasingly recognize the value of these ‘external’ costs and benefits within the context of ‘full cost accounting’, but this is rarely practiced outside academic circles and a few government agencies and non-profits. One of my goals in the voluntary simplicity course I’m teaching is to strengthen my students’ intuitive senses of the many non-monetary costs and benefits that tag along with different purchasing habits, so they can better link their purchasing patterns with their values and with the identity they’d like to cultivate.

Let’s play with this a bit. Think about the last item you bought. If you only looked at the monetary benefits you got from that purchase, would it deliver a positive ROI? If not, why did you buy it? What other benefits did you get from that purchase that might offset its lack of positive ROI from a strict money standpoint? What other costs might be associated with it that might offset some of those non-monetary benefits? How many hours did you have to work to earn the money you needed to afford that purchase? These are all useful questions, and they can help lead us towards habits that make the best possible use of our time, energy and resources.

Local Food: A Bridge to Somewhere?

MarketYears ago a dear friend who owned a vegetable farm became pregnant, and as her belly grew she found herself less and less able to keep up with her farm chores and, consequently, earn the meager living she’d come to depend on. As any decent person would, I teamed up with a few friends to take over the farm’s operations: planting, weeding, harvesting, washing, bagging and, most importantly, marketing the products every Saturday at the local farmers’ market. We handed every penny of the revenues to Amy, and although many years have passed I still harbor an incredible appreciation for the hard work that goes into producing fresh vegetables and will always have a soft spot for farmers’ markets and the hard working men and women who sell at them.

MarketDataThis past weekend, while wandering through my local farmers market – one perhaps a thousand miles from Amy’s land - I noticed how few and far between the actual farmers’ booths were. I succumbed to my geek-urge and collected some data: 52 booths featuring prepared or processed foods, 49 booths featuring local artisans selling their wares, and a scant 27 booths where farmers sold food or flowers grown on nearby farms [1]. When I first moved to my town about 7 years ago, farmers occupied most of the booths at the farmers’ market. Alas, those days are gone. Today, at my local farmers’ market, farmers are now a minority.

Most farmers I talk to – and I talk to plenty – are trapped between a rock and a hard place. They’re motivated by a love of working landscapes and lofty environmental and social ideals, but meeting these ideals requires them to charge far higher prices for their food than what consumers today are accustomed to. In Treating Food as an Investment I make the case for paying the higher price, but even as I happily shell out $5 for a pint of blueberries harvested the day before or $10 per pound for sweetbread from a grass fed bull I wonder whether markets are ready to bear the real cost of quality food [2].

During the comedy that was the 2008 US Presidential election, Vice Presidential candidate Sarah Palin was chided for supporting, then abandoning and finally mocking a project dubbed the “bridge to nowhere”. The proposed bridge would have connected the mainland Alaskan town of Ketchikan to its airport, which was built on an island, to facilitate easier access than the current ferries provided. The airport happens to be Alaska’s fourth largest as measured by passenger boardings, so the proposed bridge wasn’t really a bridge to nowhere, but once media caught onto that phrase they wouldn’t let go. Palin’s willingness to pander to political sentiment and abandon – and eventually mock – a project she initially supported didn’t do much for her public image, either nationally or in her home state of Alaska. I can’t help but think that hidden in Palin’s ‘bridge to nowhere’ fiasco are overarching lessons that leaders in the local food movement should be mindful of.

As I walk through my local farmers’ market and see heritage meats, heirloom vegetables and all sorts of ingredients fit for the menus of gourmet restaurants, I wonder what the point of the local food movement really is. Is it to make fresh, locally produced, healthy food available to consumers? If so, why are the number of farmers selling fresh, whole food dwindling at my farmer’s market? Why are booth spaces increasingly occupied by artisans selling wares that are intriguing but inedible, or by vendors selling high-priced, processed food that, as best I can tell, contributes to obesity, diabetes and other chronic diseases just as readily as the industrially produced junk that lines grocery and convenience store shelves across the country? Are changes at my farmers’ market exceptional? What value is there in celebrating locally produced junk food, and giving the vendors who produce it space at a farmers’ market? How can they be part of the problem, and part of the solution?

In the many documentaries and books that idealize the local food movement, a common thread is a vision of local food that gives people agency, that lets them take responsibility for their health in ways our nationalized or globalized food systems doesn’t. My fear is that if the local food movement strays too far from this mission of providing higher quality, healthy food, it risks being written off as another interesting fad that was co-opted by profit-seeking. If the local food movement can be thought of as a bridge, are its leaders and supporters willing to make sure the bridge leads somewhere useful?

Notes

  1. The term ‘nearby’ is relative; some of the vendors drive over 50 miles to attend this farmers’ market, as it gets a lot of visitors. Whether these farms’ food counts as ‘local’ is up for debate, but at least they’re farms that sell whole, unprocessed foods and not junk food vendors.
  2. ‘Sweetbread’, for those who are unfamiliar, is the commercial name given to an animal’s pancreas.

Focusing on Food Miles is a Mistake

In The Energy Basis of Food Security I note how tightly linked food prices are to energy prices, pointing out that the primary reason for this link is that food production is incredibly energy intensive. A series of recent posts have explored the energy intensity of different modes of food transport within food systems, and these have attracted a fair amount of attention. This doesn’t surprise me as many in the local food movement value highly the fuel savings attributed – sometimes falsely – to reducing the number of ‘food miles’ associated with their grocery lists. While I’m all for reducing the energy demands associated with food production, I think the singular attention given to the issue of food miles is misguided, and I’ll use this post to explain why.

In The Energy Cost of Food I articulated how energy is used throughout the US food system [1, 2]. The component of this that equates to the energy cost of ‘food miles’ is quite small; of the 12 calories of industrial energy invested in each edible calorie of food in 2002, only 0.4 calories were used in long-distance food transport, which means the other 11.6 calories were used elsewhere in the food system, such as on farms, in food processing plants, at wholesale and retail food outlets, at restaurants and other food service establishments, and, of course, in people’s homes. In Towards an Energy Standard of ‘Local’ I presented data that suggests that local food transported from a producer directly to a retail outlet such as a farmers’ market can indeed use less fuel per unit food delivered, but as a percentage of the total energy used in food systems these savings are tiny, perhaps even negligible. If we want to make a meaningful dent in overall food systems energy use, we aren’t going to do it just by reducing the amount of energy used to transport food.

ECoFFigTransportation of food, over long distances or short, represents a tiny share of the total energy invested in food production. Far more energy is used on farms, in food processing plants of all sorts, in the wholesale warehouses and retail outlets where food is stored or displayed before sale, and finally within households where consumers refrigerate, freeze, process and cook food after driving to a grocery store, farmers’ market or food service establishment to acquire it. If we really want to make strides in reducing the energy intensity of food, these latter areas are where we’ll find most opportunities for efficiency gains.

On many of the farms I’ve worked on, fuel use associated with machinery and indirect energy use associated with fertilizers, pesticides, animal feeds and other farm inputs make up most of the energy use. Exactly how to reduce these energy inputs while maintaining yields and overall farm viability will vary from farm to farm, but at the farm level this is where attention needs to be focused. As for food processors I’m sure there are efficiency gains to be found within most operations but, at the end of the day, I find myself wondering why we process so much of our food? Controversial as this suggestion will surely be, I think we’d do well to eliminate most commercial food processing and switch to diets of foods as whole and unprocessed as possible. This would take a sizable chunk out of our food system’s energy budget straight up, and would probably leave us healthier. The local food movement, insofar as it pushes direct marketing, could well reduce the energy intensity of food by reducing our reliance on wholesale and retail outlets, which use lots of energy in food storage and displays, although small farms still use some energy to wash, package, refrigerate and freeze certain products. As far as food service establishments go, with the exception of some veritable gourmet outlets that legitimately serve really good food, most restaurants don’t exactly offer healthy fare so cutting our reliance on this sector will also offer benefits besides just energy savings.

Finally, within households, where over a quarter of the energy invested in food is used, consumers actually have direct control over how much energy they use in the service of storing and preparing the foods they buy. Modern refrigerator-freezers, while certainly more efficient than those of 30 years ago, are often the single largest user of electricity in a household unless electricity’s used for heat, and adjusting buying patterns to allow for a smaller unit can pay big dividends. Beyond this, fermentation is an excellent way to preserve vegetables and some fruits and meats without the need for refrigeration or freezing. Cooking can also be fairly energy intensive, with many dishes requiring far more energy input from modern cooking appliances than they deliver in edible food calories.

My goal with this post isn’t necessarily to pull the rug out from beneath the local food movement, but rather to encourage ‘foodies’ to reconsider how their movement can fit within a broader goal of reducing energy use within food systems. Focusing on reducing food miles is a mistake, and to see a meaningful reduction in energy demand throughout the food system will require a far broader approach.

Notes

  1. Patrick Canning, et al. (2010) Energy Use in the US Food System. Report by the US Department of Agriculture’s Economic Research Service.
  2. Food Availability (Per Capita) Data System. United States Department of Agriculture’s Economic Research Service. Estimates of food availability corrected for waste and spoilage are called ‘loss-adjusted’ by the USDA, and are used as a proxy for food that’s eaten by a person.