The practice of eating organic and locally grown foods dates back thousands of years to when the first nomadic hunter-gatherer put down his bow and arrow and took up a hoe to farm. However, the Industrial Revolution of the early 1900s introduced new techniques for crop cultivation, including the use of chemical applications as well as the invention of mass transportation methods to move foods far and wide.

The History
In the early 1970s a small movement, spurred by events like the publication of Rachel Carson's bestseller "Silent Spring" (1962), which argued that widespread pesticide use was harming birds, animals and people, began crusading against industrial, chemically-treated food and instead encouraged the growth and consumption of organic, locally grown food products, both for health and environmental reasons. (Put a little green in your wallet by investing in these Top 10 Green Industries.)

The movement grew incrementally over 20 years and found its legs in the 1990s, rapidly going mainstream. Today big-name corporate conglomerates such as PepsiCo (NYSE:PEP) and Coca-Cola (Nasdaq:COKE) have jumped on the bandwagon producing a flood of organically labeled products and helping introduce more competitive pricing to the organic market niche.

The Movement Today
In the last few years a new, related movement - the "eat local" or "localvore" movement - has taken root. The concept behind the movement is that buying food from local farmers and producers can help improve the environment (no transportation costs means no energy consumption and pollution), improve people's health, and improve small farmers' likelihood for financial sustainability.

While you may have more organic and locally-grown food options, the bottom line for your personal budget is how much is it going to cost you? Let's look at the financial pros and cons for eating a local and/or organic diet. (Trim the fat from your grocery bill to reduce the impact of food cost on your budget with 22 Ways To Fight Rising Food Prices.)

Cons:
Unfortunately there are a few financial realities to eating locally and/or organically, such as:

It's More Expensive
It seems counterintuitive, but the reality is that on average organic and locally grown food is still more expensive than non-organic, "imported" food that is flown, trucked or shipped in from far away. Organic food is more expensive to produce because it requires labor-intensive cultivation and harvesting techniques and most farmers produce small volumes so they have to charge more per unit than their large, mass-producing non-organic farming and food-producing competitors.

There May Be Fees
Community sponsored agriculture (CSA) is one way that many Americans choose to obtain their locally-grown and/or organic produce and food products. When you join a CSA you are, in effect, buying a "share" of a farm and your investment reaps a food dividend - you periodically receive deliveries of fruit, vegetables, meat, dairy and/or grain products produced on the farm. It's a delicious investment, but one that still requires that you lay out some cash up front in the form of a membership fee, potentially in addition to the cost of food.

Those cons aside, let's look at the financial benefits of eating organic and/or locally-grown foods.

Pros:
While most naysayers cite the higher cost as the reason for not changing their diet, the reality is that there are tangible financial benefits to eating organic and/or locally-grown foods including:

Healthy Foods Can Mean Healthcare Savings
One of the most obvious potential benefits of eating organic foods is that they are typically much healthier than non-organic foods. Think crunchy carrots instead of cellophane-wrapped cupcakes. While an organic diet isn't going to solve all of your health issues, it does offer one way of potentially improving your overall health and producing a healthier wallet. Better health means that you may very well be able to:

  • Save money on over-the-counter drugs costs
  • Qualify for a health plan that offers lower health insurance premiums, lower (or no) deductibles, and lower co-pay costs
  • Make fewer visits to the doctor's office, saving money on office visit co-pays and prescription drug costs

With healthcare costs outpacing wages and inflation by a wide margin (131% increase in healthcare costs over the past 10 years compared to a wage increase of just 38% and inflation of 28%, according to the Kaiser Family Foundation), eating healthfully may be your best weapon to reduce your healthcare spending.

Better Food Means You'll Eat Less
Another financial benefit of eating organic food is that it tends to be a higher-quality food containing fewer high-calorie, low-nutrient fillers that lead to being hungrier sooner. When you eat whole, healthy foods you are likely to require less food to make you feel full. Less food to buy = more money saved.

Buying and Budgeting
One of the financial benefits of becoming a CSA farm member is that you know in advance how much you'll be charged for your produce/products which can help you better budget for grocery shopping. In addition, when you know what food you'll receive each week (i.e. a basket of fruits or vegetables or an order of meat), you can plan menus around your CSA goodies; shopping from a predetermined menu is a proven way to save money. (Stick to your budget every day with these 15 simple tips to Squeeze A Greenback Out Of Your Latte.)

Supply and Demand Works to Your Advantage
Eating locally involves not only eating items grown in your area, but also foods that are grown in-season. By eating in sync with the growing season, you're eating items when they're at their most plentiful. Remember Econ 101? Ample supply = lower prices.

Mainstream Means Savings
As the organic and "eat local" food movements have swelled in popularity, big business has responded. Today grocery stores nationwide and big box stores (like Wal-Mart) are stocking more organic foods which, in turn, lowers the relative price.

While the price for organic items can be incrementally higher than non-organic, the trend means that you don't have to shop at high-price health food stores to get organic staples including fruits, vegetables, grain products, meats, dairy foods, seasonings and more. As more consumers create a demand for organic or locally-grown items, sellers will respond and the prices will continue to drop.

Buying In Bulk
Buying in bulk almost always lowers your price per unit, and it's no different when it comes to buying locally-grown food. If a certain crop is in season, buying it in bulk can save money in two ways. (Find out why getting more for less isn't always a great deal in The Dark Side Of Bulk Buying.)

For example, buying a bushel of blueberries from a local farmer's market will cost less than buying non-locally grown produce from your grocery store (saving money method #1) and enables you to whip up batches of homemade blueberry muffins, pancakes, pies and more for a fraction of what you would pay for similar pre-made products in the freezer section (saving money method #2).

In addition, buying and freezing crops at the right time means you won't pay higher prices when they are no longer in season. And chances are frozen, in-season fruit will be better quality and taste than fruit forced to grow out of season.

Learn more about eating organic and locally-grown foods, and find sustainable farms in your area, through LocalHarvest.org or SustainableTable.org.

Related Articles
  1. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  4. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  5. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  6. Investing Basics

    10 Companies That Yuppies Love

    Learn about 10 companies loved by the modern Yuppie, including how this demographic's impressive buying power has boosted these companies' earnings.
  7. Markets

    Trader Joe's Stock Doesn’t Exist. Here’s Why

    Learn about Trader Joe's and how it operates. Understand why Trader Joe's has chosen not to be a public company and why it should remain that way.
  8. Entrepreneurship

    How Does ClassPass Work and Make Money?

    Find out how ClassPass makes money, how the company aims to help both businesses and consumers, and why it has been so successful.
  9. Stock Analysis

    Is the Apple Watch a Real Threat to Fitbit?

    Examine the potential for marketplace competition between Fitbit and the Apple Watch in the rapidly growing consumer wearables industry.
  10. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
RELATED TERMS
  1. Substitute

    A product or service that a consumer sees as comparable. If prices ...
  2. Fast Fashion

    Definition of "fast fashion."
  3. Duty Free

    Goods that international travelers can purchase without paying ...
  4. Mobile Health

    Mobile health is the practice of medicine using new mobile technologies.
  5. Online-To-Offline Commerce

    A business strategy that draws potential customers from online ...
  6. Chargeback Period

    The timeframe during which a credit card issuer can dispute with ...
RELATED FAQS
  1. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  2. How can I invest in electronic retailing (e-tailing)?

    Electronic retail is one of the fastest growing segments of the economy. Every year, more people are choosing to purchase ... Read Full Answer >>
  3. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
  4. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  5. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  6. What factors make it difficult to compare performance ratios between retail stocks?

    Companies that operate in the retail sector significantly differ in terms of their profitability and efficiency, making stock ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!