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.

7 Responses to “Are high food prices bad?”

  1. dave.s. Says:

    The Brits have never been healthier than during the grim days after the War, when they were eating rationed food, little meat, and a LOT of cabbage. Much of what we spend our food dollars on is crap. Take a look at the Schwarz review of David Kynaston Austerity Britain from June Atlantic http://www.theatlantic.com/doc/200806/editors-choice
    “For instance, whereas the period’s grubbiness and what Elizabeth David called its “unspeakably dismal meals” are all but palpable in his narrative, Kynaston also signals that the implications of austerity and rationing were very different for different classes. Again and again he reminds readers that the working class, which made up 75 percent of the country, had never had it so good: its standard of living was 10 percent higher in 1948 than a decade earlier, even as that of the middle class declined by 20 percent. And for unskilled workers and the unemployed, the mandated fairness of rationing ensured adequate food. Moreover, the drab but calculat­edly nutritious rationed diet gave Britain the healthiest people in its history. In fact children ate more healthfully under rationing than they did in the 1990s—a fact “to gladden any puritan’s heart: a shortage of money and of choice was positively beneficial.”

  2. Jennifer Says:

    If gas prices are high, then we generally are able to find a substitute to driving our cars, from biking to taking public transit. If gas prices are high, then, theoretically, more people will use those alternative forms of transit & they’ll become more efficient & reliable. The transition might be hard but it’s a transition.
    The only alternative source of food, on the other hand, is a private garden. Wikipedia says that during the wars, Victory Gardens supplied 40% of all produce consumed nationally, but it’s hard to imagine that happening again. Who has the land?
    … I suppose if you subsidized small farms (the kind that grow food, not just corn) or u-pick operations, that would help. I’d love to be able to take a bus to a u-pick place — the nearest one to my house is almost 100 miles away.

  3. Christine Says:

    I think that anyone struggling to stay above the poverty line is not benefitting from the ideas to bicycle to work and use mass transit. Mass transit increases fares when oil prices go up and I would agree food is the only place where people can cut back. The sad thing is that in somne big cities like NYC the outerboroughs are getting pricey to live because people can walk or bike to work and alot of low income people are getting squeezed out of these neighborhoods. I think it is going to take a full generation for green living to be affordable for low income people. It is still a lifestyle option in my state. There may be really great incentives for homeowners to use solar panels and buy a hybrid vehicle, but unless apartment owners of low income rental buildings are forced to go green, I don’t see how these cost reduction incentives will benefit people that need it the most.

  4. Elizabeth Says:

    Eating less meat would probably improve the American diet on average, but it’s hard for me to imagine costs shifting enough for high fructose corn syrup to become unaffordable. So, I don’t really see price increases making a substantial improvement in the healthiness of our diets.
    Low-income people actually bicycle to work a fair amount, at least in urban areas — vis the Hispanic men I see riding in work clothes (and without helmets) all over the place in my neighborhood. The people who are really screwed by the high gas prices are people in rural areas, where the only thing they had going for them was the low cost of living. I think if gas prices stay high, there are large chunks of the country that will be more or less abandoned over time.

  5. dave.s. Says:

    Elizabeth, you may not read the libertarian blog Mungowitz’ End / Kids Prefer Cheese but I snorted coffee over the keyboard couple months ago reading Angus’ report of his Madagascar visit: “Most of the people we spoke to had little conception of the US or our lifestyles (and these obviously were people who had exposure to tourists). We were asked things like, “what is your staple food in the US?” (I would answer “high fructose corn syrup”), and when we asked a person who said he’d like to visit the USA where he’d like to go he said “the wetlands and the drylands”.” (http://mungowitzend.blogspot.com/2008_06_01_archive.html)
    I am, however, Back From The Future. We took the kids to Switzerland for two weeks (breathtaking views, breathtaking prices) and I can report on different price levels. Gas $8/gallon (CHF 2.02/liter, the Swiss Franc is about 98 cents US right now), I paid $50 for a .72kg piece of salmon for a barbecue, the popsicles the kids were clamoring for were $1.80-$3 apiece in kiosks. $3 for a 5-minute ride on the electric bumper cars, $18 for a meal of fried fish and french fries at a cheap place. Here is somebody else’s list (http://swisslandstories.blogspot.com/2007/06/shopping.html)of what he spent in a supermarket: 1. Milk – 2L x 2 : 4.20
    2. Multifruit Juice 2L x 2: 3.80
    3. Apple Juice 2L x 2: 3.80
    4. Yogurt 400g x 2 : 2.70
    5. Pasta (maggi style – white sauce) x 1 : 2.80
    6. Pasta with mushroom x 1: 2.60
    7. Mayonnaise 265g x 2: 2.80
    8. Onion 1kg: 2.60
    9. Tomato: 3.85
    10. Bread x 2 : 2.80
    11. Cheese slices x 2: 5.00
    12. Cottage Cheese x 1: 3.90
    13. Mozarella cheese x 1: 3.20
    14. Chicken burger patties 1kg: 14.00
    15. Some other chicken stuff – Poulet Cordon Bleu 1kg: 12.50
    16. Corn flakes : 2.10
    17. Fish Fingers x1: 3.45
    18. Indian shop – Maggi x 4: 4.00
    19. Indian shop – Parathas x 5: 15.00
    20. Calling cards x 2: 20.00
    And, facing Swiss prices for meat, I did shift more towards vedge than I do here. I think others do too. Minimum wage paid there is about $4000 a month for working in grocery stores, wages are upwards from there for more skilled work, average wage seems to be around $90000 a year. So, when you buy groceries, the hands that touched them were paid more than here (Giant pays around $2500 a month to cashiers without much seniority, My Organic Market in Alexandria just advertised for $9/hr cashiers, which would be $1500/mo). Many people in Switzerland buy and drive little tiny cars with manual shift. Rich people drive big cars fast wherever they want. Concrete form lumber gets reused much more than here. There are lots of little villages in the countryside which are not abandoned, and which are served by hourly buses. It’s different, but not unrecognizeable.

  6. Elizabeth Says:

    Are those Swiss prices, other than meat, so expensive? Rounding off one swiss franc as one dollar, and a liter as about half a gallon, you’d pay more than $4.20 for two half-gallons of milk in most of the US. Frozen grape juice concentrate is $1.99, and full jugs of juice are more than $2. The onion appears to be expensive, and I can’t tell the unit size for lots of the stuff. And prepared foods are always more expensive than raw ingredients.

  7. morgo Says:

    Anything that causes more humans to die and thus allow wildlife to flourish is unambiguously good. I look forward to the day that mankind succumbs to it’s own stupidity. I can only pray and vote for Oprabama in the meantime.

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