Local growers help companies cut costs

Lettuce grows at Holthouse Farms in Ohio, one of Chipotle's local suppliers


Kai Ryssdal: It's not just consumers who aren't driving as much now that gas is so expensive. Companies have cut back as well, a fact that's changing how they do business -- and in some cases, how we eat.

The buzzword you've probably heard already: Locavores, people who try to eat locally-grown food. It's usually fresher and better for the environment since it's not being trucked across the country.

Companies like Whole Foods, Wal-Mart and Chipotle have embraced it and as Marketplace's Alisa Roth reports, they're finding a nice side benefit as diesel pushes $5 a gallon.

Alisa Roth: It's a hot, sunny day in the fields at Homestead Farms in southern New Jersey. Farm workers walk along the rows, picking green peppers and tossing them into baskets. A tractor collects the full baskets and takes them to the processing area where the vegetables are dumped on a conveyor belt, washed, then sorted by size and boxed. Then they're put on a truck and driven to Manhattan.

They'll end up at Chipotle, the Mexican fast food chain, where they'll be chopped up and added to burritos and tacos.

Peppers aren't the only things Chipotle buys from New Jersey farms. Jim Donio's one of the farmers.

Jim Donio: We produce green peppers, some jalapeno peppers, as well. And then we source romaine lettuce along with tomatoes and some other products as well ... cilantro.

It's about 100 miles from Donio's farm to New York. Not exactly next door, maybe, but certainly a lot closer than it could be.

Ann Daniels: Generally, most of the produce for the country, for the U.S., comes from California.

Ann Daniels is in charge of purchasing for Chipotle.

Daniels: Obviously, when we're able to approve a local farmer in New Jersey, then that's cutting out significant miles.

Companies like Chipotle and Wal-Mart aren't buying produce locally just to save on gas money. They say it's a way to get fresher food, help local farmers and it's good for the environment. But they're finding the fuel savings are an added bonus. Transportation makes up about 20 percent of the energy used for food, and it costs about 4 cents of every dollar spent on food to get it from one place to another.

Jim Donio explains.

Jim Donio: If Chipotle was buying romaine lettuce from California to service and source stores that are located in New Jersey and Philadelphia and the Northeast, that's 3,000 miles worth of fuel for that case of romaine lettuce. I mean, the economic impact is it could add $2-4 per case to the cost of the romaine.

If Chipotle buys romaine from local farmers during the summer's 10-week growing season, Donio calculates it could save as much as $100,000 on transportation.

Chipotle's Ann Daniels says the company's trying to find sources within 200 miles of the final destination, but it's hard, even in the Garden State.

Daniels: We started with some farmers that were significantly smaller and some of them were simply too small to have the food safety measures and the traceability measures.

Climate and growing seasons are problems, too. You just can't grow avocados in New Jersey, for example. So Chipotle's starting small. For now, each restaurant will get a quarter of at least one produce item from local sources.

Greg Keoleian: You're talking about a very small part of their supply chain in terms of the food and logistics.

Greg Keoleian directs the Center for Sustainable Systems at the University of Michigan.

Keoleian: I think it is something that we need to move more towards, in terms of enhancing sustainability. And that is really looking at more regional solutions to meeting our needs and so I think this is an important step towards that.

An important step toward sustainability, though maybe not toward savings. Buying locally may save on fuel, but smaller farms can't offer economies of scale so their produce costs more and that may eat up any savings on gas.

In New York, I'm Alisa Roth for Marketplace.

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I believe that Chipotle's "local purchasing" program is all smoke and mirrors. It's nice PR for the company but isn't a sincere commitment to helping the environment like Chipotle claims.

Nearly two years, Chipotle says it suspended all its tomato purchases from Florida. Why? Because a Florida farmworker organization called the Coalition of Immokalee Workers demanded that Chipotle contribute to improved wages and ensure the human rights of workers who pick tomatoes that the company buys. So instead of actually heeding this call and improving farmworkers working conditions, Chipotle fled the seen.

This means that during the dead of winter, Chipotle is sourcing tomatoes from Mexico or maybe California for its East Coast restaurants when it could be sourcing from nearby Florida. Heck, maybe of its Florida restuarants would fall within the 100 mile radius of farms when it comes to tomatoes. But Chipotle has gone out of its way not to buy local just so that it could try to avoid collaborating with a workers' rights organization.

While we're on the subject, I wonder how the farmworkers at Jim Donio's farm earn. Assuming they fall within the national averages, they probably make about $10,000 a year according to the Department of Labor. And they have no right to overtime pay or to form a union. That's the reality for farmworkers around the country.

David's correct Steve. The california grower and the new jersey grower might both charge $30/case for the lettuce, but the california case costs $4-6 in gas to truck across the country, and the new jersey case costs 25 cents to truck to the restaurant. It's beginning to just be good economics...

Steve, it's the fuel costs of getting the food from California to New York that makes the food more expensive, not the proximity in and of itself. We pay for those transportation miles.

There's more depth to the local food approach than you described. Yes, not adding to carbon pollution by buying local is significant. Keeping costs down by eliminating extra fuel dollars is significant. But to a true locavore, it's also important to buy and consume what is able to grow locally and in season. Avocados don't grow in New Jersey. The tough implication there is that based on these principles, Californians can eat guacamole and Chipotle doesn't get to offer guac in NJ. NJ can offer beans, corn and squash in all kinds of creative combinations. This might sound terrible and based on the habits of cheap oil, companies and consumers won't stand for it, I know. But this is an old principle and this is how and why 'regional' dishes developed in cultures that have had to use what's available in their region, when it's available. In current times, this is what separates the committed from the trendy. We may all find ourselves going back to this approach which is healthier for both body and local economies. The days of the 3,000 mile Caesar salad are riding into the sunset.

Why would locally grown food be cheaper? A head of lettuce is a head of lettuce. A local farmer should be able to charge the same price as distant farmer. I guess being a smaller grower, he might not have the market leverage.

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