For me, this is a complicated question. In some ways, it gets to the heart of whether we believe that a piece of paper can ensure healthy and sustainable farming practices. The question is also related to the 3 elements of sustainability (economic, social and environmental). If a farm can't make a living for the farmer, the other elements of sustainability (social and environmental) begin to fall apart. While local doesn't necessarily ensure sustainable practices, the fact that local farms are an open book to their customers goes a long way in this regard (at least in my mind).
Wendell Berry writes "But the real products of any year's work are the farmer's mind and the cropland itself. If he raises a good crop at the cost of belittling himself and diminishing the ground, he has gained nothing. He will have to be begin over again the next spring, worse off than before."
I take this to mean that good farming gives the farmer peace of mind (which includes profitability) and leaves the land in better shape for his (or her) having farmed it. I think these results are more likely to occur when a farm is focused on selling it's production to neighbors - in other words, when the veil of anonymity is removed between the farm and it's customers. I'm inherently suspicious of any regulation or program (including the National Organic Program) that is designed to maintain this anonymity.