Can You Afford Organic and Local Produce?

I recently came across a blog where the blogger had a local/organic/sustainability challenge going. It looked like a family of 4 has (only!) $588 a month budgeted to buy all food, and most (all?) had to be locally grown, sustainable and/or organic. Reading all of the comments, it's easy to see how some of her readers are frustrated. Not that many people these days have $588 a month to spend on food.

We are a family of 3, plus I'm helping to feed my mother in law in exchange for letting Hubby live there during the week. VHTS (Tween) and I can't have wheat, Tween can't have corn, nuts or soybeans, and I am working on losing weight/getting healthy. We have at most $300 a month to do this. I try to come way way WAY under that (not always successfully). How?

• We're still eating winter squashes we grew last year. They've survived the winter down in the basement. I think we have 2 acorn, 1 butternut, 2 spaghetti, 4 mexican x-top cushaw, and 4 pumpkins left. We also have sunflowers; we still need to brush the seeds off and roast them. We also have black turtle beans left - I think enough for 2 family meals. We still have a string of very dry jalapeno peppers hanging in the kitchen.
• Also from our garden, and now resting comfortably in our freezer are: 12 packages of various types of tomatoes, 5 baggies of string beans, 4 baggies of soy beans, 20 clamshells of raspberries. We already finished off the corn, okra, strawberries, and peppers.
• In 2007, I had started to stockpile dried fruits and veggies, and last year (2008) stocked up on canned foods. We dig into these regularly.
• I try to get to King Soopers (Krogers/City Market) early on Tuesday mornings, where I can usually find "orange stickers" (prices reduced by at least half) on dairy, produce and meat items. Sometimes I can get a little 1-pound log of ground beef for $.99! Yogurt can sometimes be found for .26, and milk often for $1.00 a gallon. I've discovered I can freeze the yogurt. Right now, I have 5 little 1-pound logs of ground beef from the last time I found them on sale (I grab as many as I have money and room for).
• When I see a sale for gluten-free ketchup, beans, smart balance butter, or other items we used very regularly, I buy multiples.
• Every other week I go to Sam's and get big bags of apples and pears. It seems like the other fruit goes bad before we get to it all, so for a while, it's bananas, apples and pears. Not local, I'm sure, but necessary for our health.
• Wal-Mart usually has good prices for avocados, sometimes for $.50 each. I buy 10 at a time and refrigerate them to make them last longer. I'm working on a way to preserve them long-term, without causing brown spots or sacrificing taste. Any suggestions would be appreciated!
• We supplement/bulk-up meals with white and sweet potatoes bought on sale, and rice and beans bought in bulk. This summer we will eat mainly from our garden (carrots, onions, greens, strawberries, beans, tomatoes, etc.).

VHTS and I need to gluten-free bread, and it's really hard to make all nice and soft, so I spend about $15 a week for 3 loaves of bread. Tween eats most of it... growing kid, bottomless pit, hollow leg, etc.

I can't do local and organic, and still get within our budget. I'd like to, but can't. The organic section of the supermarkets are getting bigger, and the prices ARE coming down, but they are still a little too high for me. Unless it has an orange sale sticker on it or is notably on sale, we just can't do it.

Farmer's markets aren't open yet, and given the weird Winter we've had, who knows what the local produce will be like or when it will be ready.

QUESTION:
Who can afford to, realistically, buy only locally-grown, organic and sustainable produce for their family? How much do you spend? What do you get? Do you have enough variety in your diet?