In today’s Victual Reality I discussed how a few companies dominate U.S. food production, and how their market girth weighs heavily on efforts to rebuild local-oriented, environmentally and socially responsible food networks.

Now I’d like to add a few words on what might be done to remedy the situation.

First of all, it’s important to note that heavily consolidated food markets rig the game to favor large-scale, industrial-style farming. As companies like Cargill and Tyson have grabbed more and more control over food production in the past 30 years, they’ve systematically dismantled local infrastructure and concentrated their operations in a few regions.

The withering away of local processing and distribution facilities dramatically boosts the costs of small-scale farming. The celebrated meat farmer Joel Salatin, who runs Polyface Farm in Virginia, estimates that regulations that force him to ship his cows to a distant USDA-approved processor add a dollar per pound to the retail price of his beef. Huge feedlots concentrated in places like Kansas, a beef-processing center, don’t face those costs.

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I believe the local-agriculture movement — which, despite its surging popularity, still only supplies a fraction of our food needs — will be severely constrained by these factors going forward.

I can think of two policy ideas that might remedy the situation. First, we need a return to competitive markets in the food industry, and that means breaking up the food giants — or at least regulating away the advantages conferred by their girth. One step in the right direction is the Competition Bill sponsored by Sen. Tom Harkin (D-Iowa). There’s a movement afoot to build the Harkin proposal into the farm bill by adding a “competition title.” That move deserves support.

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But curtailing the anti-competitive practices of the giants won’t be enough rebuild local food infrastructure. Forty years of federal policy that favor their interests has given them an enormous competitive advantage that won’t be easily legislated away. The infrastructure they tore down will not reappear as if by magic. Small farmers don’t have the cash flow to finance the rebuilding of local slaughterhouses, canneries, milk processing plants, and the like. To redress the loss of such things, we need public investment, and that leads to a second policy proposal.

Henry Herrera and Katherine Mendenhall of the New York Sustainable Agriculture Working Group have come up with an elegant idea [PDF]: create a funding stream, within the farm bill, for regional and local food-infrastructure projects — indexed directly to the commodity payments now flowing to large-scale farmers who produce corn and soy for the global food (and increasingly, energy) industry.

They propose committing a dollar to infrastructure projects for every $100 now going to commodity support. Between 1995 and 2005, the federal government doled out $129 billion to growers of corn, soy, cotton, and other commodity crops. If the Herrera/Mendenhall proposal had been in place, that would have meant $1.29 billion in investment funds for local infrastructure over that period — which would have literally amounted to a rounding error compared to the commodity payments, but given a significant boost to sustainable food.

The proposal has a certain Machiavellian appeal: No one seriously thinks that commodity payments will dry up in the 2007 farm bill, so let’s at least leverage their momentum to create funding that’s actually constructive.

How would such a program be administered? Here are Herrera and Mendenhall:

Eligible organizations will include non-profit organizations and for-profit small businesses that would institute and uphold commitments to local and regional food distribution and promotion while also maintaining transparent fair trading for all parties involved.

So in addition to adding a “competition title,” the time has come to add a “reinvestment title” into the farm bill, providing funding for infrastructure projects equal to 1 percent of commodity subsidies.

Unhappily, this idea remains on the fringes of the policy debate, and to my knowledge isn’t part of the agenda being pushed by major environmental and sustainable-ag groups. But that doesn’t mean you can’t plant its seed in the minds of policy makers now.

Please harangue your representatives about these topics as soon as possible. You can reach them here.