A question of quality Triangle foodies should ponder

As residents of the Triangle are perhaps overly fond of pointing out, the area is home to an extremely vibrant food culture. Indeed, with its many renowned boutique farms, celebrated farmers’ markets, thriving CSAs, opulent natural food stores, lavish gourmet shops and chic-chic farm-to-table restaurants, the Triangle is about as close to foodie heaven as it gets these days.

But food systems are complicated and sometimes lead down counter-intuitive paths. For example, why is it that in this locavore Valhalla one often finds good, very good and sometimes the best produce, fruit, meat and fish brought in from other parts of the country, if not the world? And why are such food products readily available in the aisles of mid-range supermarkets and superstores – not to mention Asian and Hispanic grocery stores?

There are many reasons. Any short list would include our country’s exceptional food-transport facilities, cold chains and logistics. Then, of course, there are what might be called “food arbitrage” possibilities, such as bringing in certain foods from areas that produce them much more cheaply than they can be produced in North Carolina.

I’d like to focus, however, on another economic factor, often glossed over, if not overlooked altogether, that has been observed in the exchange of food and other commodities, products and goods over time.

This factor, generally known as the Alchian-Allen effect after the economists who first described it in the 1960s, grew out of an attempt to explain a perplexing food question: Why is it that higher-quality agricultural products are often more readily available in distant markets than in the locales that produced them? Armen Alchian and William R Allen wrote originally with regard to wine grapes in California, but the problem – and the effect – is applied most often to apples and is sometimes known as the “shipping the good apples out” phenomenon.

Why was it often difficult to buy good apples in Washington

when that state produced the best apples in the United States? A knotty problem, to be sure, but Alchian and Allen came up with an explanation that, though subject to specifications and qualifications, is still widely accepted today. Their thinking went something like this:

In production/exchange relationships involving substitute goods – for example, high-quality apples and low-quality apples – any cost that is incurred per unit regardless of quality will lead (other things being equal) to a shift in consumption toward the higher-quality item. If high-quality apples cost $3 per pound and low-quality apples $1 at the point of production, and the charge for transportation across the country is $0.50 per pound, the effective prices at point of consumption are $3.50 and $1.50 respectively. In other words, though the differential between high- and low-quality apples was 300 percent before shipment, it falls to 233 percent after shipment.

So it makes sense for more or less rational consumers to opt for more higher-quality apples and for more or less rational producers to ship relatively more of the same. Note that if the costs of transportation go down (and remain fixed per unit), the comparative advantage of the high-quality apples will diminish, and vice versa if per-unit transport costs increase.

In any case, this effect helps explain why so many scrumptious (I almost said delicious but caught myself) apples from Washington find their way here. And why so many other nonlocal food products of good to high quality do as well: catfish from Vietnam, also known as basa (Pangasius bocourti), for example, as well as tomatoes from California, Florida and Mexico, and specialty cheeses from Wisconsin.

The same “effect” holds true, I might add, with a lump-sum tax or import duty, which arguably helps to explain why good imported Scotch rather than imported rotgut dominates the shelves at Triangle ABCs (the relative affluence of the area’s Scotch drinkers obviously also plays a role). And why, speaking more broadly, you often find – to ardent locavores’ consternation – very nice, tasty, nutritious foods sold relatively cheaply in nontrendy venues and produced thousands of miles away.

Before getting out of Dodge, one implied corollary of this effect, which is also relevant in our foodie-crazed habitat, should be addressed. Given the fact that some of our beloved local farms also sell extra-regionally, are we, at our farmers’ markets and in our CSA boxes, getting lesser-quality product than consumers farther away? At least in some cases? If so, is locavore demand for local food sufficiently inelastic to accept such a fact on the ground? Just asking.

Peter A. Coclanis is Albert R. Newsome Distinguished Professor of History and director of the Global Research Institute at UNC-Chapel Hill.