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Market Forces Alone Likely Won't Solve the Food-Security Problem How and why philanthropy can solve a vexing 21st-century food problem for North Americans.

By Todd Hirsch

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

North Americans live in an amazing age of food production, consumption and distribution. On one hand, it's incredible that most average citizens in frigid Minnesota can buy a fresh pineapple on any given day in January. The miracle of modern global-transportation systems makes this possible.

On the other hand, thousands of other consumers struggle with food security, living in what we now know as "food deserts." Fresh food and healthful options are not readily or locally available, leaving some in danger of food deprivation. Highly processed junk food is sometimes the only option.

Additionally, even those more fortunate food consumers with regular access to high-quality food may be at risk if food supplies, transportation systems and distribution mechanisms go awry. The ongoing Covid-19 pandemic has given many consumers a foreboding taste of what could go terribly wrong when supply chains break down.

Concern around local food security is growing. While "the market" is often the default mechanism to solve human questions of distribution, it's clear that it does not always provide the best or most desirable solutions for human activity. More localized food production and security is one of those areas where issues beyond profit maximization must be addressed.

Related: With an Aim to Make Food Accessible and Equitable, the GCC Agtech Revolution Has Begun

Could philanthropy play a role in addressing local food security? There's no reason why it couldn't. Here are four broad areas to consider in which philanthropic efforts could assist in stimulating more local food production.

1. Ethical considerations

If food security for everyone is deemed more important than simple economic factors (e.g., profit, competition, quality and price), then a strong ethical argument could be made that more should be done to stimulate local food production. Philanthropy plays this role in dozens of gaps ignored by the market, such as the arts, faith communities, health care and aid for the most vulnerable. Food security could be another area where philanthropy needs to play a larger role, simply because it's the right thing to do for the community.

2. Infrastructure and marketing

If local food production is not viable because of a lack of affordable transportation or consumer awareness, philanthropy could play a role in addressing these specific shortfalls.

Perhaps it's too expensive for a single farmer to drive three hours to sell her wares at a poorly attended urban market. In response, philanthropic dollars could help establish more efficient local transportation options, assist in marketing of local food and increase the public's awareness of local food markets. An independent study of the actual cost of locally-produced food, funded with philanthropic dollars, might be worthwhile. And philanthropic dollars could also be used to lower the cost of local food for low-income consumers (for example, by working with food banks to ensure fresh, locally produced food is a basic staple).

Related: The Business of Giving Back: 5 Reasons Why Philanthropy Should Be at the Core of Your Corporate Strategy

3. Proving the business case

All other things being equal, more economic activity is preferable to less because it generates jobs and creates wealth (assuming it's not causing other problems such as environmental or health issues). But the viability and profitability of local food production might be lost on potential investors, even if a solid business case exists.

If the business case does exist, and all that is needed is to prove it to skeptical investors through pilot projects or test cases, philanthropic dollars could help get projects over this hump. Put another way, the economic case for selling local food is probably just as good as any other viable business venture — but it needs help in demonstrating this to the skeptics.

4. Attracting investment

It can be hard to attract investment in local food production if the return on investment is low, but philanthropic dollars could address this by setting up non-profit organizations or cooperatives that both make money and serve the community's greater good. This dual focus is the backbone of social enterprise, but it may need the financial backing of philanthropy, at least in the start-up phase. This, in turn, would assist in attracting more investment dollars in later phases of production.

Related: 7 Tips for Startup Food Entrepreneurs

The quality of our food, where it comes from and how we get it are growing concerns. Free market forces of competition and profit have delivered incredible results over the past 50 years, and that will continue. But if we are truly concerned about a safe, local and reliable flow of healthful food for all, philanthropy will have to play a larger role.

Todd Hirsch

VP and Chief Economist

Todd Hirsch is the vice president and chief economist for ATB Financial and is the author of four books. His podcast, titled "The Future Of," won a national award in 2021 and was ranked No. 2 in the top Canadian banking podcasts.

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