Cheap food is bad for the economy and our health. Why we should pay more.
Suppose you were in the market for a car, and you heard about a company selling new cars for $10,000. Would you buy one? It sounds like a good deal, but you'd probably want to know a thing or two first, like its size, fuel economy, safety record and equipment options. You might even choose a more expensive car with exactly the features you want.
That makes sense. There's no correct price for a car but rather a range of prices that depends on what you're looking for. When it comes to shopping for our four-wheeled friends, most of us have realized that “you get what you pay for.”
There are other areas of our lives, however, where we're not so discerning. Take food. From direct marketing at big-box grocery stores to discount meals at fast-food outlets, price is king. I believe that the commoditization of food and our inclination to buy it based on price alone has clouded how we think about what we eat. Instead of focusing on the quality of what we consume, we often focus - too much I think - on its price.
The reality is that the cost of food, in North America at least, has dropped drastically over the past 50 years. In the middle of the last century, we spent about 20 percent of our disposable incomes on food. Today we spend only 10 percent. While this is not necessarily a bad thing, the nutritional value of food has declined along with its price. The irony is that the people who should benefit the most - those with lower incomes - can afford to buy more food, but it is likely to be less healthy. These factors help explain the reports of growing obesity rates in North America, which now cost the Canadian economy alone an estimated $4.3-billion a year, including direct health costs as well as secondary costs due to lost productivity from illness. Or think of it this way: We'll lay down a chunk of money on, say, hockey tickets, nice clothes or a day at the spa, but when we're wandering the aisles of the grocery store, we often choose cheap food over good food.
When you consider nutrition, paying more for our food sometimes makes sense. Grass-fed beef is a good example. It has higher levels of good omega-3 fatty acids and lower levels of bad saturated fat than beef from corn-fed cows. But if you didn't know that nutritional fact, why would you pay more for grass-fed beef? Once you do know, however, why wouldn't you? Then there's organic food. Compared with non-organic food, organic food generally has little pesticide residue and, according to recent studies, higher levels of nutrients like ascorbic acid and heart-healthy polyphenols. That's not to say that it's uniformly better than non-organic food, but it does have potential benefits that I think justify paying more. Knowing this, the discerning consumer might choose organically grown food, even though it's often more expensive. (Michael Pollan's bestselling book The Omnivore's Dilemma includes excellent discussions on organic food and grass-fed beef.)
I have another problem with cheap food: Many small farmers are going bankrupt growing it. That's why the number of farms in Canada has shrunk from 711,000 in 1921 to fewer than 250,000 today. This means that more agriculture is produced on massive single-crop farms - the average farm in Canada has grown from 237 acres to 675 acres between 1941 and 2001 - and these larger farms tend to use more aggressive agricultural practices, including heavier use of fertilizers, herbicides and pesticides. This also means that more of our farmland is being diverted to other uses, like sprawling housing developments and big-box stores. In turn, we import much more of our food from other countries than we did 50 years ago, with significant environmental costs.
While many small farmers are being driven out of business, others are finding new ways to survive. For example, the organic agriculture niche frequently pays farmers a premium for their extra labour, which has tended to give an advantage to the smaller farmers. Organic Meadow, Canada's biggest organic dairy company goes one step further. In addition to receiving a premium for their organic milk, its farmers effectively own a majority interest in the company through the OntarBio Farmers' Co-operative. Rowe Farm Meats in Guelph, Ontario, has found a niche for antibiotic- and hormone-free meat. (Full disclosure: My private equity investment firm, Investeco Capital Corp., invests in these and other environmentally smart companies.) But these are just two of many new food companies whose products, in my opinion, are worth paying more for.
That's why it's easy for me to imagine all the benefits we'd see - in our health, economy and environment - if more of our food came from these kinds of companies. We'd have less pollution (from pesticides and fertilizers), lower greenhouse gas emissions (from less intensive agriculture and food transportation), healthier rural economies (because more small farms could afford to stay in business) and better-protected agricultural environments. Not to mention the potential health benefits - and a more pleasurable dining experience - of eating fresh local products instead of highly processed and overpackaged food.
To get there, we need to accept that not all food is created equal and that just like with cars, when it comes to buying food, price is not the only thing that counts.