I wonder if that equation would shift (or by how much) if negative externalities like pollution from transportation were factored into pricing at mega grocery stores. There are a number of food co-ops in towns around me that seem to offer local produce at lower prices than "organic" offerings at big grocery stores, which makes me wonder how much is just markup?!

Maybe it's just not worth the shelf-space and employee time to develop local supply networks...Who knows, maybe eventually we'll (universal) start to think of over-concentration of food distribution networks as the giant risk that it is and start to price in resilience of supply as well. It will be hard to convince a population -- used to endless supply of everything all the time -- that food is naturally seasonal, and that there may just not be ripe tomatoes from Mexico in January. It could even make growing crops needed in local food-sheds more economically viable than growing whatever is in the most demand at a national/international level.