Farmers' markets are springing up under bridges in cities that are at least a day's drive from the nearest farm. Restaurants and retailers are showcasing regional products. Supermarkets from Orange County, California, to Cambridge, England, affix stickers showing how far that apple traveled to get to the produce shelf.

It's an interesting time for foodies - and for investors searching for growth among local, organic and natural goods.

Price growth, certainly, is easy to come by. Interpretations vary widely, but products meriting the label "organic" or "natural" are generally free from pesticides, animal hormones and by-products, and genetically modified organisms; and such products take more time, effort and care. Local natural and organic goods can be more expensive because small-scale producers concentrate on quality and authenticity at the expense of economies of scale.

But rapidly rising prices for conventional foods and related goods and services are narrowing the cost differential and highlighting the appeal of companies that are focused in their geography, mission and quality, according to analysts.

Consumers have already proved that they are willing to pay. The organic market in the United States, for example, has grown 15 percent to 20 percent a year, according to the Organic Trade Association, despite price differentials of 20 percent on average and, in some cases, as much as 300 percent.

"Externalities are driving a game change now," said Jack Robinson, manager of the Winslow Green Growth Fund. "Transportation, fertilizer and pesticide costs are getting so high that small-scale farming is really able to compete. Local, natural products are soon going to be at least as cheap to grow and to transport."

Robinson, like most investors, can't put his money where his mouth is by investing directly in the family farms near his Boston neighborhood. These, like local farms everywhere, tend to be privately owned and to rely on cooperative distribution agreements.

Instead, one of his long-term holdings is Whole Foods Market, the world's largest retailer of natural and organic foods, which he sees as an appealing takeover target for the British supermarket company Tesco as it expands in the United States. In 2007, Whole Foods embarked on an expansion of its own, buying a rival, Wild Oats Markets, for $565 million and opening a flagship store in Kensington High Street, the London shopping area.

"Whole Foods is promoting local goods at many of its regional stores," Robinson said. "That is something that both Whole Foods and Wild Oats used to do but had moved away from when they couldn't maintain local suppliers. But increasingly reliable suppliers and rising transport costs mean that we are going to see more and more focus on local products."

In the interim, Robinson said, Whole Foods is starting to digest the acquisition of Wild Oats and its international expansion, making it an attractive stock in its own right. Shares of Whole Foods have tumbled from their 52-week height of $53.65 and now trade around $19.20, or 18 times earnings.

Other analysts are less confident about the retailer's prospects, saying that they are waiting to see how well Whole Foods executes on its growth strategy. The company expects total sales to grow as much as 30 percent this year, with same-store sales rising as much as 9.5 percent.

It's worth noting that definitions of local can vary by region and nationality. Whole Foods, which is based in Austin, Texas, defines local as within 200 miles, or 320 kilometers. Texans may be willing to drive that far for an organic or even conventional ice cream. But as some shoppers at the new Whole Foods store in London have pointed out, local for them can include imports from France and undermine their effort to support local English farms.

Besides, there are almost certain to be good, if not great, organic grapes growing in southeastern England. The definition of local is likely to contract if, as expected, local producers address supply problems by generating longer growing seasons and a greater variety of products, with the help of plastics and geothermal heat.

While no one expects to see Canadian oranges or a really good British wine soon, the range in local markets and restaurants is increasingly diverse, enabling them to better compete with the big conventional names without selling out.

Organic to Go, a Seattle-based fast-food and catering company, is rapidly expanding along the West Coast of the United States. The company's revenue rose 56 percent in the second quarter, to $6 million, and pretax profit rose 77 percent, to $3.6 million.

Local sourcing and distribution is a welcome development for prospective investors who have earlier been disappointed when promising companies were consumed by conglomerates or compromised their standards by competing with mass market producers and retailers on economies of scale.

Green Mountain Coffee Roasters roasts organic and single-source coffees and sells them throughout North America, including to McDonald's. It also markets Newman's Own organic coffee, part of the actor Paul Newman's philanthropic food empire. The company tries to compensate for its carbon footprint with a robust social and environmental mission.

Green Mountain offsets 100 percent of its greenhouse gas emissions from operations and transportation and donates 5 percent of its pretax profits to social and environmental causes, notably in the coffee-growing communities in which it does business.

A pound of Green Mountain coffee ranges in price from about $7.70 for single-origin Kenyan to $36 for Jamaican Blue Mountain. Green Mountain has generated 21 consecutive quarters of double digit growth. The stock is trading at around $37 a share, or 50 times earnings.

Copyright © 2008 The International Herald Tribune