6
Drivers and Constraints Affecting the Transition to Sustainable Farming Practices

All individual farms, whether large or small, can contribute both positively and negatively to sustainability goals in various degrees. As discussed in Chapter 1, the committee views sustainability as a process that moves farming systems along a trajectory toward meeting societal-defined goals, as opposed to any particular end state. The determination of which sustainability goals are worth pursuing or the appropriate balance between gains along different dimensions of sustainability (for example, economic viability, ecosystem functioning, social responsibility, and food characteristics) is quintessentially a social choice. Depending on what is viewed as an adequate or optimal outcome, the necessary changes might range from incremental adjustments to existing farming practices to fundamental changes in the underlying structure, organization, and management of farming enterprises.

Earlier chapters discussed a wide range of farming practices and systems and reviewed scientific evidence for how they affect various indicators of sustainability. The earlier chapters, however, did not discuss the factors that influence farmer adoption of any of those practices or systems. Addressing the challenges outlined in Chapter 2 and meeting societal expectations for greater sustainability will depend on the ability and willingness of American farmers to adopt appropriate farming practices and systems.

This chapter analyzes some of the factors that influence farmers’ ability and willingness to change production practices or to convert to new farming systems that move their farms along the sustainability trajectory. All farmers make decisions in a complex environment in which broad contextual factors, such as markets, public policies (including regulation), and social institutions, create opportunities and barriers to change. The first part of this chapter explores how trends in the ownership and diversity of markets increase or decrease the latitude with which farmers can make production decisions that allow them to move further along a sustainability trajectory.

For some farmers, production decisions are further shaped by incentives inherent in federal and state policies, including trade policies, federal Farm Bill programs, national energy policy, and regulations that address animal welfare or environmental impacts of



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6 Drivers and Constraints Affecting the Transition to Sustainable Farming Practices A ll individual farms, whether large or small, can contribute both positively and nega- tively to sustainability goals in various degrees. As discussed in Chapter 1, the committee views sustainability as a process that moves farming systems along a trajectory toward meeting societal-defined goals, as opposed to any particular end state. The determination of which sustainability goals are worth pursuing or the appropriate balance between gains along different dimensions of sustainability (for example, economic viability, ecosystem functioning, social responsibility, and food characteristics) is quintes- sentially a social choice. Depending on what is viewed as an adequate or optimal outcome, the necessary changes might range from incremental adjustments to existing farming prac- tices to fundamental changes in the underlying structure, organization, and management of farming enterprises. Earlier chapters discussed a wide range of farming practices and systems and reviewed scientific evidence for how they affect various indicators of sustainability. The earlier chap- ters, however, did not discuss the factors that influence farmer adoption of any of those practices or systems. Addressing the challenges outlined in Chapter 2 and meeting societal expectations for greater sustainability will depend on the ability and willingness of Ameri- can farmers to adopt appropriate farming practices and systems. This chapter analyzes some of the factors that influence farmers’ ability and willingness to change production practices or to convert to new farming systems that move their farms along the sustainability trajectory. All farmers make decisions in a complex environment in which broad contextual factors, such as markets, public policies (including regulation), and social institutions, create opportunities and barriers to change. The first part of this chapter explores how trends in the ownership and diversity of markets increase or decrease the latitude with which farmers can make production decisions that allow them to move further along a sustainability trajectory. For some farmers, production decisions are further shaped by incentives inherent in federal and state policies, including trade policies, federal Farm Bill programs, national energy policy, and regulations that address animal welfare or environmental impacts of 

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY farming. Many public policies influence farmers’ management choices, and the influences they have on farmers’ choices frequently depend on the farm type. For example, federal farm commodity, domestic food aid, and nutrition programs (which make up the bulk of national government expenditures under the Farm Bill) have considerable influence on industrial, larger commercial farms, while agrienvironmental, niche-market development, and land use policies (often implemented at the local level) tend to be more important to the viability of smaller farms (such as those with annual sales below $250,000). Policy influ- ences are summarized in the second section of this chapter. The third section provides an overview of public and private knowledge institutions that play a role in fostering a change in farmer behavior and decision making by generating new knowledge and innovations and disseminating them among farmers. Those institu- tions include not only national and state research and extension services, but also private institutions ranging from large agribusiness research and development divisions to farmer- based learning and networking groups. All three major types of institutional contexts—markets, policies, and knowledge in- stitutions—are shaped by larger societal forces that have particular goals and objectives. In agriculture, different stakeholder groups and social movement organizations are constantly working to shape the structure and behavior of public and private institutions. The fourth section of this chapter uses some of the key groups and organizations to illustrate how they work to shape the viability and movement of farms along a sustainability trajectory. Two farmers facing similar contextual factors do not always respond in the same way to the incentives and disincentives created by markets, policies, and new knowledge. Deci- sions by individual farmers to pursue (or not to pursue) different farming practices and sys- tems depend also on what sort of land or other resource endowments they have available; their existing farming approaches, knowledge, and skills; and their goals and motivations, including personal ethics, religious beliefs, or world view. The last part of this chapter ex- amines evidence linking different characteristics of farmers with a willingness or likelihood to change production systems. In the face of many different drivers and constraints, the large corn producer in the Midwest, the Southwestern cotton grower, the rancher in the Mountain states, the South- ern part-time vegetable grower, the Northeastern dairy farmer, and the peri-urban hobby farmer face distinctly different challenges in their efforts to operate viable enterprises that preserve the natural resource base and produce all the additional benefits desired by society. Figure 6-1 presents a simplified illustration of the various types of influences on farmers, including broad contextual factors surrounding the agricultural system, the me- diating role of local assets and farmer values, and the emerging trends that could facilitate movement along the sustainability trajectory or make it more challenging in the future than at present. AGRICULTURAL MARKETS AS CONTEXTUAL FACTORS Concentration in the Agrifood System Farmers participate in agricultural markets as buyers and sellers. As buyers, they seek high-performing, competitively priced production inputs (for example, seeds, livestock, fertilizer, pesticides, fuel, and machinery). As sellers, some—those with less differentiated products—tend to compete mainly by lowering the cost of their production; thus, they are participants in a low-cost supply chain. Others—those with more differentiated products— tend to compete mainly by producing the most consumer-valued attributes of their product

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 DRIVERS AND CONSTRAINTS FIGURE - Drivers and constraints that could affect farmers’ behaviors. 6-1.eps bitmap per dollar cost of production; thus, they are participants in value supply chains. Some sell- ers seek out markets that provide the best prices for their production, some ascertain what type of crop will be the most valuable for the given year, some pursue marketing strategies that reduce their marketing risks, and some produce crops supported by the Farm Bill. The pricing, ownership structure, and direction of markets for farm inputs and products influ- ence farmer production decisions. Markets for Farm Inputs Over the last few decades, the degree of concentration of ownership and control among the major firms that supply farm inputs to U.S. farmers has steadily increased (Heffernan, 1999; Hendrickson and Heffernan, 2007). An example of that trend is the consolidation of the U.S. seed industry during the 1990s, when many small independent seed companies were acquired by or entered into joint ventures with major international corporations, in- cluding pharmaceutical and chemical firms like Monsanto, Dow Chemical, Dupont, and Aventis (Fernandez-Cornejo, 2004). As a result of the mergers, the top four U.S. commercial seed companies supply two-thirds of the corn seeds, half of soybean seeds, and almost 90 percent of cotton seeds in the United States. Consolidation among major chemical compa- nies, farm cooperatives, and seed companies has produced similar concentration of market power among sellers of chemicals, fertilizers, and other key farm inputs (Heffernan et al., 1999). Consolidation of ownership in input markets could result in increased prices paid by farmers for inputs and a reduction in the variety and sources of available inputs. For example, the market concentration of genetically engineered (GE) hybrid corn seed has led to significant increase in seed price (Shi et al., 2008). Triple-stacked varieties with genes for corn borer and rootworm resistance and for herbicide tolerance added $39.50 (about 40

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY percent) to the price per bag of seeds on average compared to non-GE varieties seed in 2007. The consolidation of market power among the suppliers of farm inputs and the purchasers and processors of raw agricultural commodities has been linked to a diminishing farmer- share of the consumer food dollar (Gardner, 2002). Farmers might decide to increase their reliance on on-farm inputs to insulate their farms from rising input costs, but that relation- ship is difficult to document. Some farms discussed in Chapter 7 mention rising input costs as a contributing factor to their decisions to change their farming practices (for example, Brookview Farm and Thompson Farm). Markets for Products Rapid consolidation is apparent among firms that purchase and process major agri- cultural commodities. In the grain sector, for example, the top three or four companies control 60 percent of terminal grain handling facilities, over 80 percent of all corn exports, and two-thirds of soybean exports (Hendrickson et al., 2001). In the meat-packing sector, the largest four buyers control 84 percent of the beef market, 66 percent of the pork market, and 59 percent of the poultry market (Hendrickson and Heffernan, 2007). Concurrently, market power in the food manufacturing, wholesaling, and retailing sectors has consolidated. For instance, the largest 10 U.S.-based food manufacturers con- trol over half of the sales of food and beverages in the nation (Lyson and Raymer, 2000). The largest 50 food distributors (for example, Sysco, US Foodservice, SUPERVALU, and McLane Company) control more than half of the total food distribution market (Hoovers, 2008). Sysco Corporation alone controls 28 percent of the broadline (or nonspecialized) food service market (which represents half of U.S. food service distribution sales). The top four food service companies accounted for 27 percent of all wholesale food sales in 2001 (Harris et al., 2002). Although those firms used to be major suppliers of food to independent grocery stores, the consolidation in the retail grocery sector has led to the development of integrated internal sourcing and distribution networks controlled by grocery chains. Recent mergers and acquisitions in the food manufacturing and distribution indus- tries are thought to reflect a response to pressure from an increasingly consolidated food- retailing sector. Recent data suggest that the share of total retail-food sales in the largest five U.S. grocery store chains increased from 24 percent in 1997 to almost 50 percent in 2006 (Hendrickson and Heffernan, 2007). In the 100 largest U.S. cities, four firms controlled an average of more than 72 percent of the local grocery store market (Kaufman, 2000). As recently as 1998, independent retailers and smaller grocery store chains accounted for just 16 percent of the U.S. food retail market (Stanton, 1999). A consequence of the trends summarized above is that most farmers are facing increas- ingly consolidated and vertically integrated output markets for their agricultural commodi - ties. Decisions to use farming practices that might promote various aspects of sustainability are likely to be conditioned by the unique market opportunities and constraints presented by the increasingly large system. Growth in scale and vertical integration could contribute to greater efficiencies, econo- mies of scale, and lower transaction costs throughout the agrifood system, which could potentially benefit consumers, but the degree of concentration and consolidation among agribusinesses might create monopolistic or monopsonistic conditions and correspond- ingly anti-competitive behavior (Sexton, 2000; Barkema and Novack, 2001; Fulton and Giannakas, 2001). The shift in market power from the farm to output and food-retailing sectors is also likely to shift decision-making power and authority away from the farm operator. An example is the increased use of production and marketing contracts between farmers and commodity marketers and food processors in the United States.

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 DRIVERS AND CONSTRAINTS Although more than half of U.S. sales of farm products still occur in open commodity markets, the share of total U.S. farm sales sold through contracts has risen from 11 percent in 1969 to 41 percent in 2005 (MacDonald and Korb, 2008). Contracting of farm products in 2005 was particularly prevalent in certain commodity sectors, such as poultry (94 percent of production), hogs (76 percent), dairy (59 percent), vegetables (54 percent), and fruits and nuts (64 percent). Contracts provide farmers with some level of certainty in the price they will receive in the market, quantities to be sold, or attributes of the product that are most valuable to the end consumer, and, in some cases, remove some of the marketing risks (USDA-ERS, 1996; Kunkel et al., 2009). Two common types of products contracts are marketing contracts and production contracts. Marketing contracts are written agreements between farmers and contractors that specify the price and outlet for the commodity before the commodity is produced. Typically, production and management decisions are left to the farmer. However, some marketing contracts can specify quality requirements (USDA-ERS, 1996) that can cre- ate pressures on producers to deliver standardized products and varieties to meet specified standards. Those contractual terms can force farmers to use production practices to meet quality or cosmetic requirements that might not be suited to local ecological conditions. Hence, they might create disincentives for the use of some farming practices that could enhance sustainability (Busch and Bingen, 2005; Bingen and Busch, 2007). Production contracts usually specify the production inputs to be supplied by contrac- tors, the quantity and quality of products, and how the farmers are compensated (USDA- ERS, 1996; Kunkel et al., 2009). Because production contracts shift the locus of control from farmers to contractors, farmers who produce under contract often cannot adopt innovative practices that might promote various aspects of sustainability in addition to productivity in their farming systems unless the contracts specify the practices. On the other hand, retailers are interested in meeting the demands of their consumers. As consumers become more demanding about how their food is produced, some retailers have begun to require different production practices from their suppliers. Such shifts in re- tailer demands can create conditions where contractors might require their producers to use particular types of practices that improve multiple aspects of sustainability. Consumer de- mand as a driver of improving agricultural sustainability is discussed in the next section. Emerging Markets Changes in Consumer Preferences Studies and surveys suggest that consumers’ preference for foods that are perceived to be grown using “sustainable practices” and that are considered to be natural or healthy is increasing, and the demand is having an impact on agricultural markets. U.S. food consumers are increasingly requesting foods that are pesticide free, hormone free, fair traded, eco-friendly, locally grown, cruelty free, and otherwise associated with “ethical” approaches to production (Bell, 2004; Pollan, 2006; Packaged Facts, 2007). A nationwide study published in 2007 found that consumer awareness and acceptance and practices that relate to sustainability has been shifting (The Hartman Group, 2008). The study estimated that U.S. retail sales of grocery products that include some form of ethical claim reached nearly $33 billion in 2006, an increase of more than 17 percent from 2005. That amounts to roughly 6 percent of the $550 billion spent by U.S. households in grocery stores annually (Food Marketing Institute, 2009). Most consumers want foods that they perceive to be safe, nutritious, tasty, and envi- ronmentally friendly (Food Marketing Institute, 2008; Lusk and Briggeman, 2009). Some

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY consumers believe that organic products taste better (The Hartman Group, 2008). Some are increasingly interested in foods that are grown locally, because freshness and support to local producers are important to them (Allen, 2004). However, what consumers think they are getting out of “natural” and “organic” foods might not always correspond to the real- ity of what they are consuming (Demeritt, 2006; see also discussion on nutritional quality in Chapter 4). Nonetheless, retail establishments have taken notice of consumers’ interest, because those consumers are willing to pay a premium to get these types of products. When directed toward issues of health, environmental quality, and food quality, the growing power of consumers within the U.S. food system can become a force for driving farming systems toward increasing sustainability (Allen, 2004). Farmers, particularly those who are engaged in direct sales or value supply chains, tend to adjust their production practices in response to consumers’ demand. Moreover, the consolidation of the agrifood industry presents a situation where changes in the purchasing behavior of a few large in- stitutional actors toward purchases of food with value traits can have major influences on farmers’ production practices (Sligh and Christman, 2003; Dimitri and Oberholtzer, 2008). Sustainability Initiatives Driven by changes in consumer preference, the last decade has seen a great upsurge of interest in the idea of sustainability among numerous influential food-marketing com- panies, including large multinational retailers (such as Wal-Mart and Costco), large super- markets (such as Safeway and Kroger), expansive restaurant chains (such as Starbucks and McDonald’s), and very large food processors, distributors, and food service providers (such as Unilever, Nestle, Tyson, Sysco, and Sodexho). Sustainability initiatives are well devel- oped in Europe (Fulponi, 2006). Box 6-1 describes a recent global food industry initiative to coordinate the efforts to improve sustainability. Several retailers have developed sustain- ability standards or “green” guidelines, and some retailers require their food suppliers to use the standards or guidelines to meet the sustainability goals that each retailer considers important. Several industry groups and trade associations also have established guidelines or standards to encourage the use of practices that can improve sustainability among their suppliers and vendors. Although some skeptics criticize those efforts and question the overall sustainability of such mega-corporations, the initiatives have an important impact in the food system because they drive changes toward increasing sustainability in the supply chain by affecting purchasing decisions, food processing and transport systems, and agricultural production practices at the farm level (Doane, 2005; Aragón-Correa and Rubio-López, 2007). Organic Food Markets Organic price premiums have been documented as early as the 1970s (Greene, 2001). Access to price premiums is important to the economic viability of organic production because production costs tend to be higher than in conventional production (McBride and Greene, 2007, 2008). Although organic food markets began as a niche market found mainly in health-food stores and local food cooperatives, organic foods and beverages have become increasingly mainstream. Consumer demand for organic products has grown rapidly during the 1990s and the first decade of the 21st century (Dimitri and Oberholtzer, 2008). Organic sales account for approximately 3 percent of total U.S. food sales (USDA- ERS, 2009b), and the market has maintained a growth rate of about 20 percent per year in retail sales since 1990, as shown in Figure 6-2 (The Hartman Group, 2008). By comparison,

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 DRIVERS AND CONSTRAINTS BOX - T he Sustainable Agriculture Initiative Platform According to its website, “the Sustainable Agriculture Initiative (SAI) Platform is an organization created by the food industry to communicate and to actively support the development of sustainable agriculture. SAI Platform supports agricultural practices and agricultural production systems that preserve the future availability of current resources and enhance their efficiency” (SAI Platform, 2009). It attempts to address the three aspects of sustainability—economic, social, and environmental—and to involve all stakeholders of the food chain. Many global food industry companies, such as Coca-Cola, General Mills, Kellogg’s, Fonterra, McDonald’s, Nestle, Sara Lee, and Kraft Foods, are included in the initiative. Among the industries’ sustainability initiatives, Wal-Mart’s is one of the most widely publicized (see http:// walmartstores.com/sustainability/). With nearly 4,000 stores in the United States and more than 2,200 stores internationally, the company wields tremendous economic power in the retail system. In addition to improving energy efficiency, increasing energy conservation, and reducing wastes, the company has been expanding its purchases of organic products. Wal-Mart has become the largest seller of organic milk and the largest buyer of organic cotton in the world (Gunther, 2006). Wal-Mart also started the Heritage Agriculture Program to encourage farms within a day’s drive of one of Wal-Mart’s warehouses to grow crops and supply them to its local stores (Kummer, 2010). Analysts have criticized the company by pointing out its continued weaknesses in employee policies, contribution to structural inequities, price reductions that are potentially unfair to organic producers, and other inadequacies (Tocco and Anderson, 2007). However, it is working with nonprofit environmental groups and other advisors and suppliers to establish metrics and standards for sustainability attributes, and to encourage changes broadly in the supply chain. Because of the scale of the company, Wal-Mart’s initiative has great influence on hundreds of food suppliers, among other types of suppliers, who are being asked to use production and processing processes that meet the company’s sustainability goals (Vandenbergh, 2007). the conventional food market has grown at a rate of only 4 to 5 percent annually over the same period. The organic sector certified by the U.S. Department of Agriculture (USDA) is the fastest-growing segment of food sales in North America. As USDA-certified organic foods become popular, an increasing number of mainstream retail establishments carry them (Sligh and Christman, 2003). In 2008, the U.S. organic food industry was estimated to have generated almost $21 billion in consumer sales, and more than two-thirds of U.S. FIGURE - Growth in U.S. retail sales of certified organic food products. Reprinted with permis- 6-2.eps sion from Nutrition Business Journal. bitmap

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY consumers bought organic products at least occasionally (Dimitri and Oberholtzer, 2009; Greene et al., 2009; The Hartman Group, 2008). The demand in organic products and the maintenance of a price premium contribute to motivating some farmers to transition to organic production. Although the acreage for organic production doubled in the United States between 1997 and 2005, consumer demand outpaces supply. Consumer demand seems to play a small role in driving an increase in organic production as the overall adoption rate of organic agriculture is still low—about 0.5 percent of U.S. cropland and pastureland was certified organic in 2005 (Greene et al., 2009). Other factors affect farmers’ decision to tran- sition to organic production. As mentioned earlier, organic production costs more than conventional production, and farmers are likely to have lower economic returns in the first few years of transition as a result of lower yields and inability to access organic premiums until the transition is completed. Although organic food markets are frequently supply constrained, few organic food handlers have worked to assist farmers to make the transi- tion toward organic production (Dimitri and Oberholtzer, 2008). Direct-Sales Markets Direct-sales markets have the potential to enhance the feasibility of using farming ap- proaches for improving sustainability and motivating farmers to use them. The various direct-sales markets provide important new opportunities for farms that use practices and farming systems that can meet the demands of those new consumers. As discussed in Chapter 4, direct marketing allows farmers to capture a larger share of the end consumer’s food dollar. Farmers, in particular small or mid-sized farms that make most of their sales as direct sales, can afford to use practices that enhance environmental and social sustainability that are not necessarily the lowest cost and still make a profit. However, in many cases, direct-sales farmers have to take on responsibilities, such as doing their own marketing, in addition to producing the products. Many farms have been able to tap into increasing consumer interest in local sources of foods and public perceptions that food transported long distances not only adds to the atmospheric carbon burden, but also tastes less fresh than local foods. In addition, an in- creasing number of consumers seem to want to develop a closer connection to the farms that produce their food. That interest provides impetus to the development of localized food markets that allow farmers to bypass mainstream distribution channels and market their products directly to consumers at the local and regional levels (Allen, 2004; Hinrichs and Lyson, 2007). Some farmers who are unable to compete in, or are locked out of, distant markets have been able to build a thriving local business (Allen and Hinrichs, 2007). Direct sales are proportionally more common in small and mid-sized operations (firms with sales under $250,000, which generated 57 percent of all U.S. direct sales according to the 2007 Census of Agriculture) than on larger farms (USDA-NASS, 2009). Farm production sold directly to consumers has grown rapidly since 1980 and tripled between 1992 and 2007. In 2007, about 6 percent of all U.S. farms engaged in direct market- ing to consumers, generating more than $1.2 billion in gross receipts (USDA-ERS, 2009a). Direct sales occur primarily through farmers’ markets, followed in importance by Com- munity Supported Agriculture (CSA). Growth in traditional direct marketing in roadside stands and in U-pick operations has been more modest than farmers’ markets and CSAs. The amount of locally produced foods sold directly to consumers is expected to grow over the next decade and a half, but at a slower rate than the growth rates from 2005 to 2008. Meanwhile, local sourcing of food supplies by institutions such as restaurants, schools,

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 DRIVERS AND CONSTRAINTS universities, and especially grocery stores and chains is likely to be an important source of growth for direct sales in the next 15 years. Farmers’ Markets and Farm Stands Between 1980 and 2007, the number of farmers’ markets nationally nearly quadrupled from an estimated 1,200 to 4,385 (USDA-AMS, 2008a), and they generated total vendor sales of more than $1 billion in 2005 (Ragland and Tropp, 2009). Sales at farmers’ markets grew between 2.5 to 5 percent annually from 1996 to 2006 (Cobb, 2008; Ragland and Tropp, 2009). Farmers attribute the sudden increase in demand to families concerned about food safety of distantly produced or imported foods, their need for a greater sense of “com- munity,” and their desire to talk to a person growing their food (Hinrichs, 2000; Lamine, 2005; Smithers et al., 2008). The direct connection between farmers and consumers allows farmers to adjust their production practices in response to consumer demand. Although the rate at which new farmers’ markets are formed is expected to slow, the number in America could reach 6,000 by 2015, with some 65,000–180,000 small farmers and vendors generating gross revenues approaching $1.5 billion. Although the projected revenue represents only a small percentage (1.5 to 2 percent) of the gross revenue of the U.S. food system from retail and from hotels, restaurants, and institutions, farmers’ markets and farm stands represent a marketing channel that can support the use of practices for improving sustainability in many small and mid-sized farms. Farmers’ markets will continue to be community based, run by farmer or community volunteers, and open seasonally in public spaces. Community Supported Agriculture Two CSA projects in the United States emerged in New England in 1986. By 2009, an estimated 2,877 CSAs operated in all 50 states (Table 6-1; Local Harvest, 2009). Data from the 2007 Census of Agriculture included a question on CSAs for the first time, and the results suggest that there could be as many as 12,000 farms that describe themselves as participating in a CSA (USDA-NASS, 2009). Assuming an average of 50 subscribers each (Lass et al., 2003), the CSAs listed on the Local Harvest website (Table 6-1) are estimated to supply almost 150,000 U.S. households with various vegetables and other produce during the growing season. The original idea of CSA was to reestablish a sense of connection to the land for urban dwellers and to foster a strong sense of community with a social justice goal to provide TABLE - Estimated Number of CSA Farms by State as Measured by USDA and Local Harvest (LH) Website USDA LH USDA LH USDA LH USDA LH USDA LH AK 6 9 HI 3 13 ME 32 65 NJ 16 46 SD 8 44 AL 7 20 IA 39 70 MI 40 141 NM 16 20 TN 56 17 AR 4 18 ID 16 41 MN 35 99 NV 1 15 TX 75 24 AZ 9 24 IL 20 93 MO 18 62 NY 101 209 UT 15 2 CA 81 179 IN 12 53 MS 2 4 OH 31 110 VA 86 32 CO 27 71 KS 8 34 MT 3 17 OK 4 15 VT 89 36 CT 22 44 KY 15 50 NC 26 95 OR 45 120 WA 152 60 DE 4 7 LA 3 9 ND 2 8 PA 69 161 WI 148 71 FL 15 42 MA 60 113 NE 5 15 RI 10 16 WV 16 9 GA 5 57 MD 36 67 NH 21 54 SC 4 24 WY 11 4 SOURCE: Local Harvest (2009); USDA-NASS (2009).

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0 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY food security for disadvantaged groups (Allen et al., 2006). Some CSAs also are involved in farmland preservation, and they offer insurance against unexpected disruptions of the food supply line. Another aim of CSA was to enlist support from urban consumers for local agriculture that emphasizes various aspects of sustainability. A key concept of early CSA organizers was to assert local control over a food system that was growing increasingly consolidated and to offer small farmers a fair return for their products. Although CSAs currently only serve a small proportion of the U.S. consumer food market, the CSA model offers an alternative approach to mainstream marketing channels for producers and con- sumers in some regions. Farm to Institutions One of the most rapidly growing forms of direct marketing consists of direct sales from farmers to institutions, particularly schools, hospitals, and government agencies. Farm-to- school programs are emerging all over the United States. As of October 2009, farm-to-school programs had been established in a total of 42 states and are estimated to serve approxi- mately 8,943 schools in 2,065 school districts (Occidental College, 2009). The other types of direct marketing institutional arrangements for food service—for hospitals and other institutions—are more difficult to monitor and measure than farm-to- school programs, partly because the other types have been established at such a rapid pace in recent years. Several hospitals throughout the country are developing “farm-to-hospital” linkages that bring fresh, healthful food to medical facilities and offer new markets for local farmers. For example, in Billings, Montana, the Community Food Campaign urged a local hospital, Billings Deaconess Clinic, to procure food locally. The clinic amended the contract with its food provider and now procures locally raised turkey. Sutter Maternity and Sur- gery Center in Santa Cruz, California, buys almost 20 percent of its produce from trainee farmers working on the Agriculture and Land-Based Training Association (ALBA) farm in nearby Salinas. Duke University in Durham, North Carolina, holds a weekly farmers’ market in an area between its clinic and hospital. The establishment of farmers’ markets at several Kaiser Permanente Hospitals in California has sparked discussions about the need for a company-wide food policy to bring fresh food to patients, visitors, and surrounding communities. These few examples show how health care facilities and hospitals around the United States are creating new opportunities for food procurement and provision that can potentially improve environmental sustainability (by decreasing the distance of food delivery), economic sustainability of farms (via new market opportunity), and social sus- tainability (by providing access to fresh food). Linking local farms and hospitals has the potential to improve the freshness, quality, and nutritional value of hospital food while opening new institutional markets to small farmers (Beery and Markley, 2007). Several government agencies at federal, state, and local levels have established new marketing arrangements that enable direct marketing with farmers. Employees have initi- ated many of those initiatives (for example, USDA cafeterias in Washington, D.C., and the California Environmental Protection Agency’s food service in Sacramento). Grades, Standards, and Certification Labels Marketing tools such as grades and standards, certifications, labels, and branding can create niches of profitability for farmers whose products meet specific requirements related to the nature of their products or the way in which they were produced. In many instances, standards reflect characteristics that make farm commodities and food products easier to

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 DRIVERS AND CONSTRAINTS handle, process, and transport. In other cases, standards are designed to maintain a consis- tent level of quality, the cosmetic appearance of fresh food products, or the safety of food products at the retail level. Grades and Standards Standards are the measures by which products, processes, and producers are judged, whereas grades are the categories used to implement the standards (Busch and Bingen, 2006). Grades and standards can define what is to be traded on the market, establish agreed- upon production processes, fix levels of consistent product quality, and make possible the location of exportable production around the world by ensuring compatible products and processes (Busch and Bingen, 2006). For example, U.S. federal law allows growers and handlers of many fruit, vegetable, and specialty crop products to develop formal market- ing orders as standards and grades to coordinate production, processing, and marketing of specific commodities. Marketing orders are often used to raise money for production research, marketing research and development, and advertising. In addition, they can be used by industry actors to create binding rules (enforced by USDA) regarding allowable production, packaging, and handling practices designed to ensure consistency, quality, safety, and cosmetic appearance of food products (USDA-AMS, 2008b). USDA also pro- vides standardized grading, certification, and inspection services as a service to commodity sectors that voluntarily want those services as part of their marketing strategies. However, the need for global harmonization of standards and local adaptability of farming systems to meet such standards remains unresolved (Vogl et al., 2005). Although marketing grades and standards theoretically create similar expectations for all producers and can communicate to consumers about the attributes of the products, they can affect the ability of producers to use certain production practices. For many fruits and vegetables, grades and standards might inhibit the use of practices that can improve environmental sustainability if they affect the ability of the product to meet the grade and standard that leads to the highest price. For example, increasingly strict defect action levels (DALs), established by the U.S. Food and Drug Administration partly to enhance safety from microbial contamination (sometimes by mandating the production practices to be fol- lowed), have been linked to increased pesticide use in many commodity sectors (Hart and Pimentel, 2002), although Lichtenberg (1997) found an opposite effect on apple production. Mandatory behaviors and financial assessments under marketing order rules could disad- vantage some producers and handlers of organic products because they might not benefit from generic commodity research, supply control, and marketing efforts supported by those orders (Carman et al., 2004). Similarly, standards established for farm worker protec- tion might encourage the replacement of hand harvesting with mechanical harvesting and reduce employment opportunities for farm workers (Friedland et al., 1981). Aside from governmental rules, privately developed systems of grades and standards designed to ensure safety, quality, and appearance have increasing influence on the way that food is produced in the United States (Henson and Reardon, 2005; Hatanaka et al., 2006). Private standards systems and third-party certification are increasingly replacing “hard regulation” (that is, traditional regulatory) approaches to governing international trade (Hatanaka et al., 2005; Ponte and Gibbon, 2005; Higgins and Hallström, 2007). Global coalitions of private firms that set harmonized standards for food have been emerging. They facilitate coordination of production and distribution (Nadvi and Waltring, 2003) and protect the firms’ reputation for consistent quality and safety (Fulponi, 2006). Harmonized

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