Can Hyperlocal Production Transform the U.S. Food System?

The COVID-19 pandemic significantly strained global supply chains and food systems. It was a wake-up call, and as we enter the climate crisis, the carbon footprint of these costly and inefficient networks is glaring. Global organizations, governments, and CEOs now realize the fragility and impact of extended supply chains amidst a “polycrisis” of global issues.

In the U.S. food system, it’s estimated that a typical meal travels 1,500 miles to get from farm to plate and that every calorie we consume costs ten calories of fossil fuel energy.

Supply chain issues are causing grocery store shelves to be emptied.

Does the U.S. need a better food system?

Even though the U.S. is the world’s leading agricultural commodities exporter, heading the rankings for corn, seed cotton, and rice, it still imports around 15% of its food supply, and those food miles (per foodwise.org) soon add up given the sheer size of the country. For example in the U.S. food system, apples can travel 1,555 miles and tomatoes 1,369 miles into a Chicago “terminal market” where brokers and wholesalers buy produce to then sell to grocery stores and restaurants. In contrast, the same type of produce grown locally travels around 100 miles to get to a farmer's market.

Transporting food accounts for 20% of total food system emissions. Transportation, across all industries, is the largest source of GHG emissions in the U.S, and road transport accounts for 81% versus rail at 2%. Rail transport has better capacity and fuel efficiency and is more environmentally friendly when compared to trucking, but underutilization makes land transportation a major emitter in the U.S.

This is just one example of how food travel affects our planet. The impact of extended food & beverage supply chains can be measured in fossil fuels, carbon emissions, packaging waste, food waste, and the cumulative markups for shipping added to grocery prices.

The U.S. food system, like its global counterparts, is inefficient and directly contributing to climate change. Critically, such extended networks also have extensive vulnerabilities, as proven by the COVID-19 pandemic and outlined by McKinsey’s US food supply chain: Disruptions and implications from COVID-19 at the time. Supply chains ground to a halt, food became stranded upstream in the value chain and was subsequently destroyed while grocery store shelves emptied. Restaurants and food chains canceled orders, but there was no way to redirect much-needed supplies, almost unbelievably, because of packaging sizes and this was just the start.

Conventional US food systems span from farm to factory and ultimately to the point of retail.

How do we improve food systems?

The pandemic triggered waves of concern over the fragility of global supply chains and drew attention to how localized food systems have been allowed to grow fallow. This supply chain shock and the subsequent realization of the “polycrisis,” summarized by the World Health Organization (WHO) and which includes instability, inflation, and climate change, have led to many initiatives designed to mitigate these risks, strengthen supply chains and most importantly focus back on local food systems for resilience. For instance, in June 2022, the U.S. Department of Agriculture (USDA) announced its “Framework for Shoring Up the Food Supply Chain and Transforming the Food System to Be Fairer, More Competitive, More Resilient.” Its first goal is a resilient food supply chain with better market options for consumers and producers while reducing carbon pollution. The USDA expands this particular goal by adding:

“The food system of the future needs to be more distributed and local. Having more capacity to gather, process, move, and store food in different geographic areas of the country will provide more options for producers to create value-added products and sell locally.”

The USDA is investing in food production, processing, aggregation, distribution, and markets to achieve its goals, including substantial investments in capital projects, infrastructure, and, to a degree, technology.

The role of technology in improving food U.S. food systems

Digitalization and technological innovations, predominantly led by the private sector, such as artificial intelligence (AI), are now reaching food systems. Machine learning and AI significantly enhance crop yield modeling. Satellites and drones can monitor crops from the skies, and Internet of Things (IoT) devices and computers can monitor and automate tasks such as watering. Other technologies and software are designed to track and trace food, limit waste, and improve accessibility and affordability.

Digitization in the food system (Source: Brookings authors)

Technological progress has immense potential to create efficiencies in food production and processing, even transportation, and improve the food choices we make, but many innovations focus on enhancing component parts of the food system rather than changing the way food is produced and supplied.

Is decentralized food production the answer for U.S. food systems?

Shoring up local agricultural systems, improving local accessibility, and reducing food miles are all prudent efforts, but focusing on eliminating inefficient steps in supply chains can reduce complexity and the risk of a single point of failure. Given that the U.S. is capable of producing much of its own food, decentralized food production could be the key to permanently improving U.S. food systems.

If food systems have multiple small independent chains or even better - circles - they are more resilient and efficient than long, expensive, and risky individual chains. The creation of localized production, processing, and distribution networks provides diversification that mitigates supply chain risk as well as reduces those critical food miles. Food that’s processed either at the point of production or the point of distribution has a significantly lower carbon footprint, is fresher and healthier, and is less likely to be impacted by national or global crises. Such systems work even better when local populations prioritize seasonal products or foods that contain local in-season ingredients.

Conventional thinking is that decentralization, building small local chains, and localization will inevitably increase costs. While this has historically been true, the prohibitive cost of logistics and the ready availability and affordability of technology such as robotics and AI are changing this paradigm. Technologically enabled local production can outcompete conventional centralized production.

Imagine a hyperlocal food system supported by AI and robotics.

Decentralized, scalable, hyperlocal food systems

Enter Relocalize, a transformative force developing hyperlocal food systems. A Relocalize hyperlocal food system uses AI, robotics, and IoT to streamline production processes locally within an autonomous micro-factory. This solution is thus cost-effective and scalable, it cuts out extended supply chains, creates food system efficiencies, and minimizes waste and the carbon footprint of food storage, processing, and distribution.

Localization is often proposed in the context of fresh and farm produce, but Relocalize believes relocalization easily goes beyond agricultural production. Hyper-localizing production for heavy products can make a significant impact when products made from water that travel over 1,000 miles produce 95% more CO2.

Relocalize has launched with a focus on products made of water because of their weight and hence cost and carbon footprint and is developing microfactories for the packaged ice and beverage industries (our first micro-factory makes packaged ice). Shipping large quantities of mostly water is simply irresponsible in geographies where water is available from taps in every municipality, just like in the U.S. food system. Why not simply add water to products locally? Contact Relocalize today to learn more.

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Can Hyperlocal Production Transform the U.S. Food System?

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