Which will more likely bring us food that’s good for people and the planet?

The sustainability initiatives of global giants like Wal-Mart, McDonald’s and Monsanto, all of whom say they want to feed more people in ways that are better for the environment?

Or  locally-owned food co-ops, farmer’s markets, family farmers, ranchers and fishermen and restaurants like the almost-famous White Dog Cafe in Philadelphia, pictured here?

A new, book-length study called Community Food Enterprise: Local Success in a  Global Marketplace argues that locally-owned food companies are poised to grow and compete, not just in their neighborhoods, but around the world. The report was produced by the Wallace Center at Winrock International and the Business Alliance for Local Living Economies (BALLE), and it was supported by the W.K. Kellogg Foundation and the Bill & Melinda Gates Foundation.

Community food enterprises or CFEs–we’ll simply call then local food businesses–are better for the economic growth of communities, better for the environment and better for people’s health and well-being, says Michael Shuman, the research director at BALLE and lead author of the study.

Michael and I recently met for lunch (sushi, presumably not local) here  in Washington to talk about the report. He’s a smart guy, the author of a provocative book called The Small Mart Revolution and he knows about as much as anyone else about the local-is-beautiful movement.

He’s not a purist. (For a more doctrinaire approach to local food, check out Rob Marqusee who dined for a month only on things grown less 100 miles away. Fortunately, he lives in Iowa.) Shuman  describes his philosophy as “local first” –meaning, buy as much as possible from locally owned businesses  and sell as much as possible to local customers.

“We are transporting too many goods over too long distances and we have not employed a sufficient percentage of our workforce to produce the things we need locally,” he told me.

But he’s not opposed to trade or even to shipping goods over some distances. One local businesses profiled in the study is Zingerman’s, a deli in Ann Arbor, Michigan, so beloved that songs have been written about it. Zingerman’s has grown into $27 million enterprise, not by franchising itself, but by creating a array of local businesses: catering and events, a bakery, a consulting firm , a full-service restaurant, a coffee roasting operation and a mail-order business that ships breads, cheeses, olive oil, vinegar and other delicacies to anywhere in America.

Integral to Zingerman’s vision, the report says, is

a meaningful workplace–a place with dignity, a sense of community, and opportunities for ownership. Says (founder) Paul Saginaw: ‘We are at the top of this industry in terms of specialty or fair food, but we’re not accumulating a lot of wealth. We can’t give our workers high six-figure salaries. But we can give them ownership in a really great brand.

This, Shuman says, is the big reason why he’d prefer that people buy local–because the economic value created stays in the community.  “I think the jury has come back, pretty unambiguously, to say that local businesses greatly increase the multiplier effect through more jobs, wealth, charitable contributions and taxes that are collected by the local government.”

Locally-owned businesses can compete with the big guys, he argues, by keeping their distribution costs low and by building brand loyalty.  As an example, he cites the Oklahoma Food Cooperative, a collection of producers and consumers, most within 150 miles of Oklahoma City. It relies mostly on volunteers and generates about $1 million in sales to local farmers who otherwise would be selling to middlemen. “From Our Family Farms To Your Family Table,” says its website, a tool for matching buyers and sellers.

Farmers like direct sales, as Shuman explains it, because the typically receive only  about 7 to 10% of the retail price of food sold in a supermarket. Shipping, packaging, refrigeration consume more. “Even where large-scale production is cheap, large-scale distribution is becoming very expensive,” he says.

By selling direct, farmers can invest more in their product, make more money and give customers a better deal. Local food chains also promote fairness, accountability and safer food, he says. “When the owners live in town, you have the ability through peer pressure to keep them honest,” he says. “You can buy food from people you know and trust.”

There’s lots, lots more in the report, which does a nice job telling the stories of 24 local food businesses. Half are in the U.S., the other half in other countries, including a restaurant and resort group called Cabbages and Condoms in Thailand (yes, it sells curries and promotes condom use), a organic farm school in Paraguay, a fair-trade sugar cane company in Malawi and cocoa production and sales cooperative in Ghana. Even better, Shuman hopes to turn the report into a web-based tool — he’s dubbed it Locopedia — to share best practices among these businesses.

“I’d like to create a free open-source repository of good business designs that work at the local level,” he says.

It sounds great, but I remain skeptical about the limits of a locally-driven strategy. To pick one example: No local purveyor can do as much as Wal-Mart has done to promote sustainable fishing by promising to buy all of its wild-caught fresh and frozen fish for the U.S. from Marine Stewardship Council-certified fisheries by 2011. (I wrote about the initiative here. Wal-Mart stills buys vast quantities of farmed fish, which is problematic.) Nor can a local coffee house have the impact of Starbucks, which rewards coffee farmers who meet environmental and social standards. And I won’t even get into the importance of Whole Foods in promoting organics.

Still, we’d be worse off if our only choices were chains like Wal-Mart, Starbucks and Whole Foods. So I hope this report gets a wide readership, that dozens of enterpreneurs are inspired by Zingerman’s or the White Dog and that Locopedia is a big success. That’s loco as in local, not crazy.