The Food Crisis & Big Box Thinking

by | Oct 6, 2011

There is a crisis in food supply. This critical imbalance of food demand to food supply will peak sometime in the next 30 years leaving large groups of people without enough access to nutritious food.

Only a tiny group of experts in sustainable agriculture and the food industry talk seriously about the looming food crisis. As populations grow, especially in developing countries, and food production is affected by a changing climate, the increasing price of oil, dwindling supplies in fish and other commodity crops, demand for food will outstrip supply in greater and greater margins.

There is an even smaller number of people who talk seriously about solutions and offsets. So, I have an alternative scenario that I think is the only realistic option and which – luckily for us – will not require any big government spending, coordination among nations, or large investments in food manufacturing.

Thinking out of the “Big” Box

I am an optimist and a fervent supporter of capitalism and free markets. It’s not so much a personal philosophy rather than a look at the empirical story of thousands of years of human history. Humans need to eat, humans are creative, and humans are resourceful. So what does a hungry, resourceful, creative human do? S/he grows a crop, eats what s/he needs, sells or barters the rest for another need, and repeats the same process in a continuous loop. Sometimes, a lucky and enterprising person with a bumper crop makes a little extra capital and is able to build a barn or farm an extra field. This is the lesson of human behaviour that will once again come around in the coming decades.

It’s not rocket science, but it’s scary to many consumers because (1) they’re used to eating and buying whatever they want, whenever they want it, and paying very little for it; (2) they don’t like to have limited choices; (3) they don’t like change; and (4) they have been shielded from the true value of food.

But change is coming, like it or not. Companies, especially food companies, will be changing their business models out of necessity. Instead of selling a million units at a very low price, they will be selling half a million at double the price. And consumers, instead of buying large volumes at low prices, will be buying a lot less at higher prices. Over the long run, the amount of the average financial transaction will likely stay fairly stable and in line with normal inflation, but the amount of product that changes hands will be decidedly different.

The true cost of food and waste

If you’ve ever spent time on a farm – an industrial farm or a small farm with people working the fields day in and day out – you get a very clear understanding of the cost of food production. Even if you’ve worked a community garden, your own backyard, or a little pot of tomatoes and herbs in a balcony pot, you have a better understand of the value of a tomato than most people. Imagine that cost multiplied out by all the food being produced worldwide, and perhaps you can start to get your head around the real cost of producing and distributing food.

In 2008, the UK’s Waste & Resources Action Programme (WRAP) did a study and found that as much as 18% – 27% of all food that is bought for the home is thrown away. That number is higher for households in the US and even higher for restaurants. Consider this: Let’s say in five years you buy a loaf of bread. Let’s say it costs $7 (compared to the $2-3 you’d pay today). You and your family eat 2/3 of the loaf in the 3-4 days after purchase (as you do now) and then you’re left with 1/3 of the loaf. In today’s market, at today’s prices, you probably wouldn’t think twice about throwing the rest away. But what if you’d paid $7 for it? What if the next loaf was going to cost you $8 or $10? Wouldn’t you think again about what you could do with that last 1/3? Perhaps dip it in egg and make French toast, or soak it and make a bread pudding. How about freezing half when you buy it and defrost it as you need it? You know that if you were paying $8 or $10 for a regular loaf of bread, you would definitely think a lot differently about throwing that 1/3 away. Not to mention that you would likely be eating less, and perhaps even lose a pound or two in the process. You could simplify this by saying that the cost per calorie will be readjusted upwards — and therefore we may also benefit from the side-effect of eating less calories and thereby addressing some of the worst effects of obesity in the process (but that’s another topic).

A market adjustment

Things that cost more are more valuable to us. We take better care of them. Think about our cars, our homes, or our branded shoes. Food has been subsidized for so long, and we have been shielded from the real cost of food production, that we don’t value it as highly as we should. So, you could call it a market adjustment. In the not so far off future (in some ways it’s already started), food prices will slowly be adjusted to reflect a more realistic cost of production, thereby slowly changing our consumption behavior, thereby slowly reducing the amount we buy (and waste), thereby slowly increasing the amount of supply left in the marketplace, thereby slowly allowing for a greater demand of food around the world. As an optimist, I think that this alone will be an important and influential offset to the food crisis being predicted. I could be wrong, but I certainly don’t want to put all my faith in governments to save us.

Sara Pax is the president of Bluehorse Associates, a developer of environmental sustainability metrics solutions specialized in the food and beverages industry that includes the web-based, lifecycle assessment and product carbon footprinting tool Carbonostics.


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