Archive for September, 2011
I was recently having a discussion with a friend who does not work in agriculture, and asked her the following question: If you could ask one thing of the EU’s upcoming reforms of the Common Agricultural Policy (CAP), what would it be? She replied: “They should make berries cheaper”.
My initial response was to reason that politicians are not there to micro-manage the prices of food products. Then I realised that they can, and they do. The problem is that it is not blueberries or blackberries whose prices are being manipulated downwards, or anything else in the fresh groceries aisle.
Here are some prices sampled from a medium-sized Delhaize supermarket in Brussels: 100g of fresh blackberries at €3.69; 280g of frozen chicken nuggets at €2.25; 100g of pine nuts at €5.49; 200g of coated snack nuts at €1.05. So the chicken nuggets cost 4.5 times less per gram than the blackberries, and the snack nuts 10 times less than the single-ingredient pine nuts. This despite the fact that the two processed items contained a long list of ingredients sourced from far and wide: salt, sugar, corn-based sweeteners, vegetable oils, flavourings, preservatives and so on.
Of course, anything is cheaper if it can be produced and sold in bulk. But not that much cheaper. Perhaps there is nothing we can do, ultimately, to prevent people from making the choice to eat unhealthy food. But there is something we can not do, and that is to not skew agri-food policies in a way that makes junk food artificially cheap, increasing what is already a strong temptation for shoppers.
Obesity epidemic spreading to emerging countries
The poor nutritional profile of highly processed foods, and their impact on health and well-being, are proven and well-documented. But that has not stopped us sleepwalking into an obesity epidemic, and with it a proliferation of potentially avoidable cases of heart disease, cancer and type II diabetes. Obesity rates have tripled in some parts of Europe since the 1980s, starting to rival America’s well-known weight problems. But the real worry now is big emerging countries, where eating habits – along with incomes – are starting to converge with the West. 60% of South African women, and 70% of all Mexicans, are overweight or obese, a problem which runs parallel to continuing malnutrition among other population groups.
This week the UN General Assembly makes a rare foray into the public health domain at a summit aimed at combating these lifestyle-induced diseases. What are the chances for a global commitment to crack down on junk food advertising aimed at children or to tax unhealthy food? Unfortunately, very little.
Given the gravity of the health crisis, a few countries may start to pioneer individual measures; France has recently proposed a soda tax, while the South African government has unveiled plans to limit salt content in processed breads and snacks. But huge financial interests, and a huge lobbying operation, swing into action when the spectre of food regulation creeps onto the horizon. Last year’s attempt to introduce ‘traffic light’ nutritional labelling in the EU, and 2009 plans for a federal soda tax in the US, were abandoned following big industry campaigns.
Realistically, agri-food companies can live with a few labelling requirements and none-too-punitive levies, such as the token sales taxes currently applied to sugary drinks in around 30 US states. But what they really don’t want is a wholesale questioning of why junk food is so cheap and abundant in the first place. This goes back to farm subsidies, and the question of what policies such as the CAP can, can’t, should and shouldn’t do.
The real beneficiary of farm subsidies
In a model applying with notable variations in both Europe and America: most agricultural subsidies make their way into the hands of big farm holdings with a history of high production volumes. By definition, these are mostly farms producing cereal crops and oilseeds. The subsidies provide farmers with an incentive to produce lots of the commodities in question, providing food processors with a convenient glut of their key raw ingredients, which they buy up at prices sometimes barely covering the cost of production. It is the subsidies which allow farmers to stay in business, despite the low prices they accept for their output.
And accept they must: the crucial middlemen in the food supply chain – the processors, distributors and retailers who link farmers to consumers – are few and far-between. One firm, Tyson, accounts for nearly 30% of all US meat and poultry sales. This type of market share may sound normal for the dominant player in other sectors, such as petrol extraction, where massive up-front capital and infrastructural operations are needed to yield the first drop of crude. But this should not be the case for a fresh product, chicken, which can be produced and sold in the same area – in any area – without the need for an industrial-scale operation.
The food supply chain faces an unrivalled David and Goliath effect: the producers are individual farms, and the processors/distributors are huge multinational companies. The farms that survive and prosper are often those which come to mirror the size and scope of the middlemen, aka factory farms, and what they produce and how they produce it becomes a function of what their buyer wants (for more on this see the excellent documentary Food Inc). The buyer not only benefits from the economy of scale of the factory farming operation, but also from the farm subsidies which continue to pour into these farms, allowing them to sell on their produce at low rates. A subsidy to a farmer is an indirect subsidy to a buyer.
The magical combination of cheap, abundant ingredients and long-life trans fats allows processed foods to be mass-produced, distributed and exported at low cost, and sold on cheaply enough that consumers will not think twice about buying them – even, or especially, where incomes are lower in the developing world.
Changing the status quo
Our subsidy schemes are the first building block in a system which churns out a disproportionate amount of unhealthy food at disproportionately low prices. Why this subsidy system was developed in the first place is one matter; why it has been allowed to remain is because it is in someone’s interests. Not farmers, the majority of whom would much rather receive a decent price for their produce than depend on subsidies. Not consumers, for whom the physical and financial burden of lifelong health complications more than cancels out the savings they make at the supermarket checkout. The real beneficiary is the industry that shepherds the passage of food from producer to consumer, an industry which is able to speak with a powerful and unified voice when defending the status quo.
So should junk food be made more expensive, or fresh fruit and veg made cheaper? Shouldn’t supply and demand decide? Perhaps, but only if we remove the distortions on the demand side that derive from subsidy-skewed price signals.
Reforming multi-billion euro agricultural policies is a complex exercise; a whole array of tools can be used to support different products and different production systems. But, whatever the ways and means, a narrowing of the price gap between blackberries and chicken nuggets should be the first symptom of a successful reform!
The opinions expressed in this blog are the personal views of the author
Photo by Valentina Pavarotti