How Much Should Food Cost?

Nothing illustrates the weirdness, injustice, and unpleasantness of the present economy more clearly than the misdirected attempts of government to reduce the price of food. All seem to accept that to reduce food prices is good and necessary, and that it represents ‘progress’. Certainly it is necessary to ensure that everyone can afford good food, but this does not necessarily mean that we should seek to make it cheaper.

For starters, governments (and industry and the National Farmers Union and the various scientists and other intellectuals who travel in their wake) are obsessed with “efficiency” – which, like everything else in the present world, is measured entirely in terms of money. On many farms worldwide the biggest single expenditure is on labour, so the mantra is that above all, the efficiency of labour must be increased. This is achieved by sacking people, and getting more work out of those that are left. Workers are replaced by bigger and smarter machines and by industrial chemistry. But, as the numbers of unemployed increases and they become more desperate, more and more are re-employed for less money, in casual gangs. That must bring the price of food down, mustn’t it?

Yet all is not so simple. Many a statistic shows that of all the money spent on food in British supermarkets, only about 20% goes to the farmer. The rest of the food chain is financed by the remaining 80%. This means that even if a farmer spends half the farm income on labour, only 10% of the entire food bill goes to the workers. Yet the makers of agricultural policy focus on the 10%, and seem to accept the 80% as a given.

It is obvious, too, as Ed Hamer has analysed in The Land, that with other systems of retail the farmer could receive from 35% to well-nigh 100% of the retail price – a huge increase in income without increasing output. Yet policy-makers continue to insist that farmers can increase their income only by increasing production, and most farmers seem to accept this.

As Simon Fairlie recently pointed out too in The Land, the average Brit in the 1950s spent about 30% of their income on food, and just 11% on housing. Now it’s the other way around: 11% on food and 30% on housing. The difference is that much of the 30% spent on food in the 1950s went to farmers and their workers who actually produce things that are worth having, while most of the 30% spent on today’s housing goes to various kinds of financier, including speculators and bankers, who merely shuffle other people’s money. But present-day governments like ours favour the economic status quo. Money is GDP is ‘growth’, and growth is the measure of all.

For some decades we have been living – and encouraged to live – in a “debt economy”. The architect-turned-economist Margrit Kennedy pointed out some years ago that in the debt economy, we are all paying interest on loans even though we ourselves may not feel that we are in debt. All the people we buy from, and all the people that they buy from, all the way along the chain, are in debt; and all of them must pass on the charges on their own debts to their customers. In the end, all the interest paid on the great chain of debts finishes up in the hands of banks and other financiers. In a society like ours about 10% are net lenders, and they pocket the interest from other people’s debts. Another 10% also receive a fair income from interest on money that they have lent but they are also in debt, so their position remains roughly neutral. But most of us – some 80% – are net debtors, and the interest we all pay on our own and other people’s debts makes its way back to the 10% who are net lenders. Thus in the debt economy, so carefully managed and protected by governments like ours, the rich grow steadily and inexorably richer and the poor grow poorer, as has been demonstrably the case over the past few decades, since the present neoliberal economy became the norm. This alone is enough to explain the widening gap between rich and poor. It would be very good to work out how much of what most of us spend on food is simply siphoned off to pay bankers, as interest on the debts of all the people along the food chain. The supermarkets, which drive the whole chain these days, have a great deal tied up in real estate, with commensurate mortgages and huge fleets of trucks, depreciating by the day. At the source of the food chain is the modern ‘progressive’ farmer who, with his 250 horsepower combines and his 1,000 Holsteins with all the technological trimmings, is likely to owe the better part of £1 million, with unpaid debts rising by compound interest, all wending its way to the financier. In the end, the consumers must pay all the debts all the way along the food chain. What proportion of the spend on frozen pizzas or butter from grass-fed cows from our local, friendly Tesco goes straight to bankers?

There is much talk too, in high places, about the virtues of the ‘free’ market. It is hard to see why an economic system that overrides all other virtues – such as compassion, honesty, and common sense – should be considered virtuous, but that is the way things are. Of course the food market is not free, and cannot be. British and US farmers rely on subsidies, paid by taxpayers, with the rich getting the lion’s share. Everything, in an industrialised system, depends on the price of oil which is made apparent through the market. The idea that the free market flourishes by meeting general needs and wants, is an obvious fiction albeit a convenient one for those who are doing well out of it.

In the end, the price of food is not determined by free-floating economic forces with a net benefit for all, as we are supposed to believe, but becomes a matter of policy – what those in power decide people will put up with. But when some people earn 1,000 times more than others – Britons’ incomes range from around £5,000 p.a. to £5 million-plus – it is impossible to judge what’s reasonable. The average Brit may spend 11% of their income on food, but some can hardly afford food at all – certainly not fresh, even if they had somewhere to cook it. For the very rich, the ordinary food that most people eat would be too cheap to register. Yet there is much pious talk in high places of the need to keep food prices down for the sake of the poor (while slipping in a puff for GM and other such wizardry which is supposed in the long run to save us all money).

So far I haven’t even mentioned the cost of land, which again, is key in all spheres and obviously has a huge effect on the cost and the price of food. The neoliberal approach has caused land prices to rise into a fantasy world of finance that may cripple ordinary citizens who dare to enter into it – although we are all encouraged to pretend that we are financiers too and to treat our homes and farms as assets that can eventually be cashed in, in lieu of a pension, assuming house prices remain high, which governments are anxious to ensure. As for food: it is obvious now from all points of view except those of short-term profit, that Britain desperately needs more farmers, and that they need to be young. But young farmers cannot even get started because financiers, albeit based in Asia or the Middle East or the US or Russia or wherever, hold the whip hand and they find it more profitable to hang on to what they have got, while successive governments have looked the other way. Britain’s agriculture is flourishing, or so the last Secretary of State assured us, but its future lies not with growing good food but with flogging biotech.

Of course, there are those who would write all this off as the rantings of a loonie leftie, but you don’t have to be a paid-up socialist to see the idiocy and the barely concealed wickedness of the present economy. The fault lies not with capitalism in general, the mechanisms of which can be used for good purposes, but with the modern extrapolation of it known as neoliberalism. Harold Macmillan, businessman and archetypal Tory, railed against neoliberalism as vehemently as the Labour front bench when Thatcher and her advisers introduced it to Britain. For old-fashioned business, of the kind espoused by old-fashioned Tories, had a moral as well as a commercial agenda. Noblesse continued to oblige. In practice, for all his impeccable commercial and Tory credentials, Macmillan was considerably to the left of Blair or Brown. The plea for a more rational and humane economy is not a matter of ideology but of humanity and common sense.

All in all it is absurd to keep adjusting farming to fit the economic status quo when it is obvious that this is grotesquely off beam. Yet those with the most power in agriculture, including the NFU, seem to think it is realistic” to try to squeeze our lives into this economy and unrealistic to try to break out of it. It is all very sad, and very strange.

Sustainable Food Trust