Are high food prices bad?
Parke at US Food Policy poses the bold question: "Are high food prices unambiguously bad?"
The obvious problem with high food prices is that they mean that people on the edge eat less, and often poorer quality food. Food is one of the most flexible part of the budget for most people — in the short term, you can’t reduce your rent, but you can skip a few meals, or see if the local food pantry can help you out. There’s a study that shows that poor families eat less in cold winters, when utility bills are especially high.
So what’s good about high food prices? Let’s start by thinking about the parallel question for gas. I don’t think that high gas prices are unambiguously bad. While I worry about the effect on low-income folks, especially in rural areas, I think high gas prices generally send the right economic signals: buy more fuel-efficient cars, use more carpools and mass transit, think about the costs of commuting when you decide where to live. I’d like to see more of the cost of gas going into funding things like better mass transit, and less going to enrich oil companies and OPEC, but that’s a different issue.
So, is there something parallel for food? Well, a big part of why food in the US is so cheap is that energy has been cheap. When Michael Pollen says that the US food economy runs on corn, he could just as easily say it runs on oil — in the form of fuel for tractors and combines, in the form of fertilizer (which is largely made from petroleum), in the form of the fuel for the trucks that move the corn from farm to processing plant to grocery store. So, it’s hard to imagine how food prices could stay as low as they’ve been in a world of higher energy prices.
It’s also likely that the relative costs of different kinds of food will change. Bananas may be more expensive compared to apples, free range chicken may only cost twice as much as factory farmed chicken, rather than five times as much. Some things that have been unsustainably cheap will be more expensive, and that might be a good thing.
But, none of this makes the basic problem of low-income people not being able to afford food go away. The Center on Budget and Policy Priorities has been doing a lot of thinking about how to make sure that low-income households are protected in the context of climate change legislation that will increase energy costs — basically, the idea is that if the government auctions off all carbon permits, rather than assuming that companies are entitled to permits at the left that they currently pollute, it generates enough money to provide generous refunds to low and moderate income households. I’m not sure what the food equivalent of that is.