I believe there is a false dichotomy here. You are making my point.
My point was that, for this case, markets _could_ solve it. Remember, the first option was: buy locally.
What I wanted to say was that markets do work, but some times you don't want the people to get exactly what they ask for, or what they pay for, you want to force them to choose the Right Thing (TM).
If you leave it to the markets, people will buy stuff with shit if it's cheaper, that is their choice, so they will force retailers to sell it. Traceability is possible, you can put an RFID in a living cow, and trace their whole lives, until they are BBQed, but markets won't pay for that. People will buy the cheapest, no matter what. I see that as markets working to give people what they want.