The case for high food prices

When consumers pay more, writes EVAN FRASER, farmers get more. It’s volatility that does the real damage.

published in the Ottawa Citizen,  26 March 2012

It was the volatility in prices, combined with the moral outrage that merchants were able to profit from the situation, that presaged worldwide riots in 2008, the fall of President Hosni Mubarak and the Arab Spring, food riots in New York in 1917 and the French Revolution.

When consumers pay more, farmers get more. It’s volatility that hurts, argues Evan Fraser, According to a recent United Nations report, food prices are rising again. Since 2008, the world has been treated to a roller-coaster of commodity price rises and crashes. While we Westerners are somewhat buffered from these changes — only a small amount of our grocery bill is actually spent on commodities whereas the majority of our money goes to packaging, processing and retail — this may still spell bad news for people all over the world. In 2008, food price rises triggered riots in dozens of cities. In 2010, they were the opening act in the drama of the Arab Spring.

JITENDRA PRAKASH, REUTERS A farmer carries cucumbers from his field to sell in the markets in the northern Indian city of Allahabad on March 22.But seeing rising food prices as a harbinger of the apocalypse is the wrong way to look at the situation. In fact, higher prices may actually be a godsend. Low prices, by contrast, are a real problem.

Since at least the 1970s, the drive to reduce grocery bills has led to a system in North America in which taxpayer subsidies have helped create a flood of cheap junk food and an obesity epidemic. Not only do our cheap diets cost our health, experts are convinced that one reason that food is cheap is because the cost of producing food on the environment, and the workers, is not fully calculated in the bill we pay for our daily bread.

So, rising food prices could help address some of the health and sustainability problems that plague our modern food system.

But if food prices rise to a more natural level, will the poor go hungry? And isn’t that how revolutions start and kingdoms fall?

Not necessarily. For one thing, most of the world’s poor are farmers. If we consumers pay more for our food, then it stands to reason that their incomes will grow. Also, there are many countries in the world where people pay a higher percentage of their income on food than we do in North America, where less than 10 per cent of our wages goes into food. Life in many of these countries (e.g. the Scandinavian nations) isn’t worse than it is here. There are also families who chose to spend a significant proportion of their leisure time gardening, preserving and cooking. Such families have made the choice to devote more of their collective resources to food. Sure, this isn’t for everyone. But most of our grandparents would have been more familiar with pickle, jam, and sauce recipes than the current generation. And they would have been better able to deal with grocery stores charging more.

Volatility in food prices, though, is cause for real alarm. It was the volatility in prices, combined with the moral outrage that merchants were able to profit from the situation, that presaged worldwide riots in 2008, the fall of President Hosni Mubarak and the Arab Spring, food riots in New York in 1917 and the French Revolution. As global markets become more integrated, and climate change affects harvests, food speculators will become more powerful. This will, in turn, exacerbate volatility. If this happens, our worst nightmares about food prices might end up coming true.

In conclusion, consider the everyday salad. How much does it really cost to buy one? The actual grocery bill is misleading in that it doesn’t take into account the impact an industrial-scale lettuce farm has on the soil, the cost of the pesticides draining into the rivers, and the loss of water in massive irrigation projects.

If you have a good job, say, as a lawyer or technician, an hour’s work would earn you enough money to buy a great many salads. Now consider the price of a salad produced in a community or urban garden. It might cost you dozens of hours to produce a head of lettuce, a few tomatoes, and an onion. Seen in this light, the homegrown salad seems extremely expensive. But is it really? Certainly, urban farmers have less time for golf or video games. But, because they’re investing their time in food production, it doesn’t mean they have a lower quality of life. They reap a sense of community, as well as the evening’s bok choy.

But more than that, these people are a wave of the future. Because, like it or not, higher prices are probably going to be with us to stay.

Evan Fraser holds the Canada Research Chair in global human security at the University of Guelph.

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