Wednesday, 6 August 2014

The case for cheap food...

The map above (you can view a bigger version here) shows the proportion of household income spent on food and the incidence of malnutrition in those countries. As a visual guide to the politics and economics of food it's pretty telling - simply put, places with the highest proportion of income spent on food are the places with the highest incidence of malnutrition.

The other stand out feature is just how little the UK and USA spend on food - less than 10% of household income (the difference between the UK and Scandinavia, however, can probably be explained by the latter countries taxing food). This is one of the greatest achievements of the past hundred years - from a situation where a third or more of income was spent putting food on the table to one where it costs less than a tenth of income. From a time when the diseases of malnutrition were commonplace to one where they are very rare.

There are two central features to this achievement. The most important is that we are, by every measure, significantly better off. The richest tenth of 100 years ago would be blown away by the wonders that are available to the poorest tenth today - things that we so take for granted we consider them essentials. This is what capitalism and free markets have brought - not just higher incomes but a bewildering variety of goods and services on which to spend those incomes. So when high-income left-wing writers attack neo-liberalism or 'market fundamentalism' they wish that future generations won't see progress and improvement. Worse George Monbiot and his sort would condemn billions living in those purple and brown circles above to a life of poverty with no prospect of escape. The choice for me is simple, you have free markets or you have permanent poverty for the mass of people.

The second feature behind us only spending a tenth of our income on food is the industry that makes and distributes the food. Those same high income left-wing writers will quickly condemn high volume food processing and sophisticated distribution for the terrible sin of bringing cheap food to people with less income. For that is what this industry does and it does it efficiently and effectively. When we look at nations with price fixing, over-regulated food retail and nationalised distribution we see people spending more of their income on food and many there being unable to get enough to stave off malnutrition. Think of India with its high skill industries, its space programme and it nuclear bombs, plus over 40% of its population suffering from malnutrition in some form. While levels of income partly explain this, the sclerotic and over-regulated retail distribution sector also drives up food prices for the poorest.

Perhaps in the UK we can afford food snobbery and the indulgence of expensive food but for much of the world the mass production of protein dense cheap food is essential. And this means a system of free markets and trade. The approach preferred by development organisations (and too many governments) of using subsidy to sustain subsistence farmers just above starvation is morally indefensible. Indeed, Oxfam and other development NGOs should be at the forefront of calling for more open trade, more free markets and less regulation. That these organisations aren't champions of neoliberalism represents a complete failure to meet their mission of alleviating poverty.

We do not get cheap food by digging wells for subsistence farmers, we get it by opening up markets to a sophisticated industry able to grow, process and distribute high quality food at a fraction of the cost the local, controlled and officious systems that dominate the sector across the parts of the world with the highest proportion of income spent on food. If you want less starvation, less poverty and healthier people everywhere then you want cheap food - and cheap food comes from free markets.


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