From Feed-In Tariff to Feeding Tariff: Part 1

Chris Blake looks at the origin and true cost of the cheap food we consume in the UK.

This is the first of two articles examining food production in the UK and why reforming efforts should look at the energy market. Part two can be read here.

The food we buy in the UK is too cheap.

The true cost is not paid at the checkout but can be measured in farm closures and an unfolding environmental catastrophe.  Policy makers have always been reluctant to raise food prices and especially now at a time of growing inequality and demand for foodbanks. 

But I will argue that we can learn the lessons of the last decade’s transformation of the electricity sector to bring about a systematic change to food and farming sector.

I have been a volunteer at Felin Talgarth Mill for over a decade. As well as being a tourist destination and hosting an award-winning café, it is also a working water mill.   The wheat we mill for our bread flour is grown just 7 miles away.

We sell directly to visitors, food hubs, local retailers, and more widely across Wales through wholesalers. But as I write, a UK supermarket is selling wholemeal bread flour at 67p / kg.  At Talgarth Mill the cost of just 1kg of wheat (and the packaging) is 62p.

This flour will retail at £2.45, enough to ensure the social enterprise can meet its costs.  The mill runs on volunteer labour.  The refurbishment of the mill was paid for by the National Lottery. How can local, small-scale producers compete with the economies of scale and the buying power of the large retailers?

Will the call to “buy local” only be answered by the middle-classes with disposable income for lifestyle food choices?  How do we balance the need for cheap food with sustainable farm incomes and the urgent repair of ecosystems?

Triumph 

Walk around any supermarket in the developed world and marvel at an extraordinary human achievement.  Thousands of products, each with its own intricate, globe-spanning supply chain competing for the consumers’ attention. A vast range of picture-book-perfect fruit and vegetables is on display, year-round.

“Carbon intensity has risen to the point where up to 10 calories of oil can be needed to produce 1 calorie of food.”

The essentials, the known-value-items (KVIs), are on the shelves at prices which no corner shop can match – bread, milk, eggs, potatoes.  The food we need for survival has never been more affordable relative to average disposable income. 

Look at the labelling, the country of origin.  Pause to consider the care taken by the farmer in cultivation and harvesting, the sorting and handling, the road and international transport, the local packaging and final distribution. Then look at the price. 

But on the shelf alongside the KVIs are the added-value products, the hyper-processed foods.  The spreads, the ready-meals, the snacks, the peeled king-prawns, the out of season vegetables.  The foods that have become the staples of the 21st century diet. 

Today’s supermarket doesn’t earn shareholder dividends by supplying cheap milk or bread.  It is dependent on the high profit margins that can be achieved adding “value”. In reality this means adding sugar, salt, or palm oil.  Or by using cheap labour, cheap energy, and a sprinkle of marketeers’ dreams to the basic ingredients. 

The supermarket is the pinnacle of an extraordinarily complex global system.  A system that both delivers on our desire for cheap basic foods, but prospers because it offers, to those who can afford to pay, the convenience of year-round availability and the branded, hyper-processed products we desire.  No need to plan, clean, prepare, or even cook our food. Oven ready, table ready, disaster ready.

Disaster

But the real price we pay for this global food system is immense.  The logic of capitalism has concentrated production where the land and labour are cheap. 

In countries like the UK where both are relatively expensive, the challenge of high volumes and low production cost drives an increase in the carbon, chemical, and capital intensity of food production.  

Carbon intensity has risen to the point where up to 10 calories of oil can be needed to produce 1 calorie of food. Chemical intensity through the widespread application of herbicides and pesticides.  And capital intensity through the mechanisation of farm labour, the consolidation of holdings, and the infrastructure cost of intensive animal farming. 

Global grain output doubled, and yields more than doubled, in between 1950 and 1980.

The global food system has consolidated power across all sectors of the food supply chain – the agrochemical industry, wholesaling, processing, distribution, consumer brands, and retailing. Each sector is dominated by a handful of global corporations operating at a scale that is able to maximise the extraction of profit. 

Corporations that don’t just play the game they are also able to change the rules of the game – lobbying governments for tariff-free trade, minimising environmental protections and resisting food labelling. 

Exposed to prices set in the global market and faced with the power of consolidated buyers, individual farm incomes are kept low.  UK farmers are receiving just 5-6% of the gross value added in the food chain and the State has to subsidise farm incomes.

The consequences of all this are not always immediately apparent.  The city dweller can’t see the habitat destruction, the loss of biodiversity, deforestation, the destruction of soils, the degradation of water courses, the precipitous fall in insect populations.

Even in rural areas the changes take decades to become apparent especially as we are less rooted to place or to landscape than we were a generation ago. The changes have happened slowly, or somewhere else.  

Innovative. Informed. Independent.
Your support can help us Make Wales Better.

Cheap food – the policy imperative

Through the nineteenth and twentieth centuries the ruling classes started to fear Malthus’s prediction of society’s collapse if the growing urban population could not be fed.  A green revolution was needed to prevent a red revolution. The Rockefeller Foundation was explicit in its 1951 report on the World Food Problem, “Communism makes attractive promises to underfed peoples”

The Green Revolution can be judged a success from some perspectives. Global grain output doubled, and yields more than doubled, in between 1950 and 1980.  The political commitment to making food cheap has worked as food prices declined by 3% a year between 1952 and 1972.

For the global north the proportion of the household budget that is spent on food has continued to fall.  The richest decile in the UK now spend just 7.4% of household spending on food and non-alcoholic beverages.  But for the poorest decile this rises to 14%.  Cheap food is one of the drivers depressing the minimum wage. 

“Raising of food prices to include the externalised costs is politically challenging and a catastrophe for the rising numbers in food poverty.”

No government has the political will to increase food prices and the ability of any government to make a systemic change is limited. Food policy is also constrained by both the global market and trade agreements.

The consequence is that many of policy proscriptions are merely behavioural nudges (for example, new dietary guidelines, promoting local provenance, additional advice for farmers) – calls for the affluent and the well informed to modify their choices.  There is little policy thinking that confronts how food prices can be raised to protect livelihoods and the environment in a global market.  

One exception is the move to make payments to farmers for ecosystem services (and the corollary – fines for pollution and environmental damage). I am in favour of farmers receiving financial support for enhancing the commons – capturing carbon, improving habitats, reducing flood risk. But it doesn’t address any of the fundamental issues about the global food market.

The pressures to increase production or lower costs to compete with the global market are still present.  The options of increased carbon, chemical and capital intensity are still promoted as the way forward. Farmers could end up being paid as environmental stewards but still not being paid a fair price for their horticulture and husbandry. 

Food is too cheap.  Raising of food prices to include the externalised costs is politically challenging and a catastrophe for the rising numbers in food poverty. But neither can we continue to disregard the impact on climate and biodiversity.

How can we resolve this conflict?  The answer, surprisingly, may come from the electricity market as I explore in part 2 tomorrow.

All articles published on the welsh agenda are subject to IWA’s disclaimer.

Chris Blake is a community and climate activist living in Powys. He is a founding director of The Green Valleys CIC.

Also within Politics and Policy