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USDA has just issued a revision to its food dollar series—its graphic explanation of how the U.S. food dollar gets spent.
This tells us that 15.8 cents out of every food dollar goes to the producer; the rest goes for marketing.
Oddly, the USDA does not provide an updated illustration of the marketing components from its previous version in 2006:
What this tells us is that 80% of the cost of food is accounted for by marketing.
Don’t farmers deserve more?
A question from a reader:
Q. I was wondering if you could comment on the recent article in the New York Times which questions the link between food deserts and obesity.
A. Sure. Happy to. The article talks about two recent studies finding no relationship between the types of foods children eat, what they weight, and the kinds of foods available within a mile and a half of their homes.
These finding seem counter-intuitive in light of current efforts to improve access to healthier foods in low-income communities.
Obesity is more common among the poor than among those who are better off. Poor people must be eating more calories than they expend in physical activity.
Eating more calories means eating more of foods high in calories, especially fast food, snacks, and sodas. Kids who are heavier have been found to eat more of those foods than those who are not.
I can think of several reasons why this might be the case:
I can think of ways we might try to improve any of these factors, but I’m guessing that cost is the critical factor for people with limited means. The Department of Commerce reports that the indexed price of fresh fruits and vegetables has increased by 40% since 1980, whereas the indexed price of sodas has declined by about 30%.
Fast food, snacks, and sodas are cheap. Fruits and vegetables are not.
Without access to healthful foods, people cannot eat healthfully. But access alone cannot reverse obesity.
The real issue is poverty. Unless we do something to reduce income inequality, and to make healthier foods more affordable, fixing the access problem is unlikely to produce measurable results on its own.
Posted from the World Public Health Association annual meeting, World Nutrition 2012, in Rio.
The U.S. Public Interest Group (USPIRG) has a new report out on the effects of farm subsidies on obesity: Apples to Twinkies: Comparing Federal Subsidies of Fresh Produce and Junk Food. If you want people to eat more fruits and vegetables and less junk food, fixing the subsidy patterns might be a good place to begin.
New England Complex Systems Institute (whatever that might be) has an interesting explanation of the recent rise in world food prices: The Food Crises: A Quantitative Model of Food Prices Including Speculators and Ethanol Conversion.
The authors’ explanation: commodity speculation and growing corn for ethanol fully account for the rise in prices. The remedy seems obvious, no?
The Robert Wood Johnson Foundation has just funded a report on the soft drink industry from the National Policy & Legal Analysis Network to Prevent Childhood Obesity (NPLAN), a project of Public Health Law & Policy (PHLP): Breaking Down the Chain: A Guide to the Soft Drink Industry. This is about the industry itself, but also what it is doing to market its products here, there, and everywhere. This is required reading for anyone interested in public health measures to reduce consumption of sugary drinks.
I got several calls this week about a new study from the University of Washington arguing that because of the way foods are subsidized, it will cost everyone nearly $400 a year to follow the recommendations of the government’s MyPlate food guide.
The Seattle group calculates the cost of food per calorie. By this measure, the price of fruits and vegetables is exceedingly high compared to the cost of junk food. Fruits and vegetables do not have many calories for their weight.
The Commerce department tracks the indexed price of foods. Its data show that the indexed price of fresh produce increased by 40% ince 1980 whereas the price of sodas and processed foods has declined by 10-30%. (The easiest place to see their charts is in New York Times articles from a couple of years ago. Click here and also here).
USDA economists have produced a similar chart:
Other USDA economists, however, argue that price trends for fruits, vegetables, and junk foods are really no different, and that the data shown in the figure overstate the apparent difference.
Nevertheless, the Seattle paper got a lot of attention, and rightly so. One of my calls was from David Freeman of CBS News who said he was hearing lots of complaints that the study promoted a “nanny state” because it blamed bad eating habits on the government. My quotes:
“It’s a common misconception that food choices are solely a matter of personal responsibility,” Dr. Marion Nestle, professor of nutrition, food studies, and public health at New York University and an outspoken critic of the fast food industry, told CBS News. “People are hugely influenced by the price of food. If you don’t have any money and go into the store to buy some fresh fruits, you might decide that it’s cheaper to have a couple of fast food hamburgers.”
And those who can afford healthy food may lack the time or the necessary food-preparation skills, Dr. Nestle said.
Government-sponsored cooking classes and kitchen equipment may not be in the offing. But Dr. Monsivais and Dr. Nestle agreed that federal agriculture policies could do more to encourage healthy eating. For example, some of the federal farm subsidies now directed to producers of corn, soybeans, and other crops used to make fast and processed foods could be redirected to growers of fruits and vegetables.
“What’s the matter with that?” Dr. Nestle said. “I can’t think of a thing.”
My monthly Food Matters column for the San Francisco Chronicle:
Q: I pay a lot for food, and more each day, but then people like you say our food is cheap because its real costs are “externalized.” Huh? What’s that supposed to mean?
A: Food prices are indeed going up, and I can hardly keep track of the possible causes: natural disasters, crop failures, commodity speculation, corn used for biofuels, lack of research in agriculture, the declining value of the U.S. dollar and just plain greed.
But we Americans still pay relatively less for food than anywhere else because so many of the costs of industrialized food production are “externalized.” We pay for them, but not at the grocery store.
I was reminded of externalized food costs when reading about the remarkable efforts of a Salinas teacher to educate children of itinerant farmworkers. The kids are trying to learn under disrupted, impoverished, crowded living conditions. If their parents were paid and housed better, we would pay more for food.
Last summer I visited fish canneries at the far end of the Alaskan peninsula. The fish packers were women from the Philippines, working round the clock for months to send money home to their children and families.
The canneries used to hire Alaskan high school students at wages high enough to put them through college. But to keep prices competitive, the companies reduced wages and imported labor. That money disappeared from the community.
The CEO of a large U.S. meat company told me that if he raised wages by $3, he could hire locals and not have to deal with immigrant labor. But then he would have to raise the price of his meat by 3 cents per pound (I’m not kidding). That amount, he claimed, would price him out of competitiveness.
Twenty billion dollars of our tax money goes to subsidies for industrial food production every year. Additional tax money is required to clean up the mess created by that system – polluted drinking water, infertile soil, ocean dead zones and overall misery in the surrounding areas.
While driving to give a talk at a college in rural Minnesota last year, I passed within a mile or so of an industrial pig farm. The overpowering smell – an externalized cost – was still on my clothes hours later.
Food safety is one casualty of a food system devoted to low cost. Companies save money by cutting corners on oversight and overlooking safety violations. The Centers for Disease Control and Prevention (CDC) says food pathogens cause 48 million illnesses, 128,000 hospitalizations and 3,000 deaths each year.
Some experts say unsafe food costs Americans $152 billion annually – $1,850 for each case in health care and lost wages. Severe illnesses from E. coli O157:H7 can generate more than $1 million in health care costs alone, and ruin lives forever.
To these amounts must be added the costs to food producers of product recalls, continued loss of sales, lawsuits and ruined reputations. Sales of spinach, for example, are only now returning to levels reported before the huge E. coli outbreak in 2006.
Here again, the cost of prevention is minimal for large companies producing large volumes of food. Officials of one vegetable-packing company told me that the impressively comprehensive food safety system they instituted in the wake of recalls raised the cost of their products by only one penny a case (I’m not kidding about this, either).
Despite ample evidence from surveys that consumers are willing to pay more to guarantee safe food, large food producers perceive those few pennies as competitive barriers.
Health care costs
Let’s count obesity as another externalized result of a cheap food system. The cheapest foods are high in calories and low in nutritional value – “junk” foods. When food is cheap, people eat more of it.
Abundant cheap food leads companies to aggressively market their products to be eaten any time, any place and in very large amounts – all of which promote biologically irresistible overeating.
Current estimates of the costs of obesity and its consequent illnesses in health care and lost productivity approach $147 billion annually, almost the same as the cost of unsafe food.
Accurate or not, such numbers provide ample evidence for the need to bring agricultural policy in line with health policy.
To pick just one example: Dietary guidelines say to eat more fruits and vegetables, and cut down on sodas. But the indexed cost of fruits and vegetables has increased by about 40 percent since the early 1980s, whereas that of sodas has decreased by about 20 percent.
The high externalized cost of our present food system is a good reason to reconsider current policies when the Farm Bill comes up for renewal in 2012. Now is the time to start working toward food system policies that will better promote health, safety and human welfare.
Marion Nestle is the author of “Food Politics,” “Safe Food,” “What to Eat” and “Pet Food Politics,” and is a professor in the nutrition, food studies and public health department at New York University. E-mail her at email@example.com, and read her previous columns at www.sfgate.com/food.
This article appeared on page H – 4 of the San Francisco Chronicle
In an effort to avoid having to raise prices and lose competitive advantage, the makers of processed foods are putting less food—and more air—in the packages. The New York Times calls this “stealthy downsizing.”
In every economic downturn in the last few decades, companies have reduced the size of some products, disguising price increases and avoiding comparisons on same-size packages, before and after an increase. Each time, the marketing campaigns are coy; this time, the smaller versions are “greener” (packages good for the environment) or more “portable” (little carry bags for the takeout lifestyle) or “healthier” (fewer calories)….Most companies reduce products quietly, hoping consumers are not reading labels too closely.
I’d call it “healthy downsizing!” A great way to cut calories!