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Local growers help companies cut costs

Alisa Roth Jul 28, 2008

Local growers help companies cut costs

Alisa Roth Jul 28, 2008


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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