How much should food cost?

Colin Tudge suggests that it’s impossible to decide on a price for food that is sensible and just, as long as incomes remain so unequal and governments are in thrall to the market

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 – and the apparent acquiescence in this of all in power, including the NFU. 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, and if we really do need to make it cheaper then, right now, our leaders are going the wrong way about it. Cool analysis and possibly radical action are needed and what we have instead, I am inclined to say “as always”, is a knee-jerk response to the problems created by the status quo.

For starters, governments (and industry and the NFU 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 has it 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 also, 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. Eighty per cent finances the rest of the food chain. 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 (government, industry, the NFU, and their attendant intellectuals) 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 the policy-makers continue to insist that farmers can increase their income only by increasing production, and most farmers seem to accept this. Curiouser and curiouser.

As Simon Fairlie recently pointed out too in The Land (everyone should read The Land) the average Brit in the 1950s (my parents’ generation) spent about 30% of their income on food, and just 11% on housing (rent or mortgage). 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 ‘50s 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. I can’t help thinking that a government that was truly on the side of the people and which actually thought its job was to govern would do something to correct this. But present-day governments like ours favour the economic status quo. Money is GDP is “growth”, and growth is the measure of all.

In fact, a little top-of-the head analysis shows that most of what we spend in general, on all things, finishes up in the hands of bankers and other kinds of financiers. Thus for some decades we have been living – and encouraged to live – in a “debt economy”. When I was a lad we were told not to get into debt. Our elders and betters advised us to “pay your way”.  Hire purchase seemed to catch on big-time in circles like mine in the motor-bike craze of the 1950s, while young couples were encouraged to invest their hard-won earnings on three-piece suites. But HP – the never-never — was not felt to be quite respectable.

Borrowing for constructive purposes isn’t all bad, or course. If gratification is delayed for too long then we may be dead before we are gratified at all, and all businesses need to borrow money to get started. But borrowing can be taken much too far and in the build-up to the great crash of 2008 people at large and indeed entire nations were encouraged to borrow as much as we, and they, could afford, and more. The banks fell over themselves to oblige, with the blessing of governments like ours. The size of our debts did not matter, we were all told, so long as we could pay the interest. It was only after the 2008 crash that politicians of all parties rediscovered the principles of good housekeeping, and pretended that the erstwhile profligacy was all our fault.

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; and 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, 80%, are net debtors; and the interest we pay all 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. I don’t understand why Margrit Kennedy’s work is not more widely appreciated (her books are listed on Google).

(It occurs to me in passing too that if at least some of the banks were owned by the nation or by communities then all the money paid on interest on loans would feed into the exchequer, and would in effect become a form of tax. This should reduce the tax-burden on the non-borrowers while also enabling more public spending, on schools and social care and that kind of thing, which should appeal to all political persuasions. But British governments of the modern kind, Labour and Tory, have subscribed to the neoliberal dogma which says that money is best handled by private companies that are driven exclusively by profit. That, apparently, is more efficient. Whether or not this is the case (where’s the evidence in this evidence-obsessed age?) it creates a caste of super-rich who do their best not to pay taxes at all. Hmm).

Specifically, 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, and also paid for on tick. At the source of the food chain is the modern, “progressive” farmer who, with his 250 HP combines and/ or his 1000 Holsteins with all the technological trimmings, is likely to owe the better part of a £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 grass-fed butter from our local, friendly Tesco goes straight to bankers, hardly touching the sides? I can’t work it out in detail myself but I would guess that at least 50% of what most people spend on food goes more or less directly to the bankers, and probably nearer 80%. But those in positions of influence seek to reduce the price of food by sacking even more farmers and wringing even more milk out of cows.

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. Yet 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 industrialized system depends on the price of oil which of course is made apparent through the market but behind the scenes emerges from the machinations and fluctuating fortunes of the oil-producing countries and particularly the Saudis. 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 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 1000 times more than others (Britons’ incomes range from around £5000 p.a. to £5 million-plus) it is impossible to judge what’s reasonable. The average Brits 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). Thus are the deckchairs re-arranged on the foundering Titanic.

Yet 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. In the history of humankind the spectrum of attitudes towards land has ranged from the idea common among indigenous people that all land is sacred, and at best we may borrow it from Nature or from God; through the pragmatic Feudal notion that all land belongs to the monarch, who may choose to grant the use of it to the rest of us (a system that can work well if the people involved acknowledge the principle of noblesse oblige); through many forms of community ownership; to the modern, neoliberal idea, now the norm in countries like Britain, which says in effect that land is a commodity like everything else and unless otherwise stated is or indeed must be on sale to the highest bidder.

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 lieu of a pension, assuming house prices remain high, which governments are anxious to ensure they do even though this means that many people can’t afford a house at all. 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 quick, 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, so the last Secretary of State assured us, but, she said, its future lies not with growing good food but with flogging biotech.

Neither have I mentioned the biosphere, the living world, tendentiously known as “the environment”, which merely means “surroundings”, ie scenery, aka real estate. But every ecologist knows that the industrial farming that is supposed to bring down the price of food and in practice siphons wealth from the many to the few is the main cause, in Britain and worldwide, of the mass extinction in which we now find ourselves, and is a prime cause of global warming.

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 circa 1980, hotfoot from the University of Chicago. 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 common humanity and common sense.

All in all it is absurd to keep adjusting farming – and life in general! — to fit the economic status quo when it is obvious that it’s the economic status quo is grotesquely off beam. Yet those with 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.

I would be especially pleased to receive comments on this piece to help me to polish the arguments and make the whole thesis more scholarly (which, emphatically, does not mean more academic!). Then it can be transferred to our new website for the College for Real Farming and Food Culture . The college website is designed truly to get truly to the bottom of things and so (to put the matter portentously) to provide the intellectual and moral underpinning of the Agrarian Renaissance, without which we will all have had our chips. Please do click in!

One thought on “How much should food cost?

  1. So heartening to see some commonsense real thinking going on. Debt (and its partner the dependence on subsidy) is presumably the soft power enforcing the status quo.

    If the economics of the supply chain is as skewed as you say, then surely digitised local cooperative networks supplying local shops could spring up to supplant supermarkets?

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