The Food Network's attempt at bringing to light the issue of food waste falls far short at addressing its economic causes and solutions. by Bill Gee
(centrist)
Tuesday, January 10, 2012
As a long-time fan of the Food Network, I couldn’t believe my delight at the premier of a show that highlighted the problem of food waste in America. In the show, celebrity chefs Bobby Flay, Michael Symon, Anne Burrell and Alex Guarnaschelli are given the task to feed 100 people using nothing but food products that were either already in the trash or on their way to the trash.
Finally! The network that made “foodies” out of thousands of Americans was finally going to tackle this very serious issue, especially with thousands of people in this country at the verge of starvation and malnutrition.
While the show did a good job at showing how hundreds of tons of perfectly edible food ends up in landfills and compost heaps, the show fell far short in addressing the causes and possible solutions to the problem.
While the show provided people an incentive to go “dumpster diving” on the streets of New York, it failed to address the economic causes of food waste in this country. Thankfully, this problem also has an economic solution that doesn’t involve fighting rats over a day-old loaf of soda bread.
Purely Competitive Markets
Agriculture represents one of the last purely competitive markets in the economic paradigm. Its characteristics include 1) Multiple Participants, 2) Non-Differentiated Products, 3) Easy Entry and Exit, and 4) Price Takers. It assumes that an apple is an apple is an apple, and that it doesn’t matter who grew it or where it came from or what farming methods were used to produce it. It further assumes that the consumer will base their purchase decision solely on price.
That model may have worked in the 1950’s when agricultural products were non-differentiated and distribution channels were relatively short, but in today’s market that is no longer the case.
1) With the advent of “big ag”, the number of participants in the agriculture business is smaller than it has ever been in our nation’s history. The “family farm” is a relic of the past and has been replaced with farms that produce standardized product at very high rates. We are seeing family farms trying to break into “niche” markets by producing “organic”, or “grass-fed” foods, but government regulation and lawsuits from factory farms makes this process difficult.
2) Food has become highly differentiated as both consumers and restaurants have grown to demand certain agriculture products. For example, in the 1950’s there were approximately 20 different varieties of apple, and today there are hundreds. There are differences in Organic verses non-organic products, free-range verses factory, etc. In addition, the appearance of food has become a factor in purchase decisions. Slightly blemished vegetables are often thrown in the garbage. Therefore, any illusion that an apple is an apple is an apple went away with “flower power”.
3) The government has made easy entry and exit into the agriculture business a thing of the past. Yes, all it takes is a bit of land and some hard work to grow crops or raise livestock, but if a farmer wants to move on to the next step and actually bring their goods to market, there are many legal hoops to jump through in order to get there, each one adding to the overall cost borne by the farmer. Many of these regulations are designed to protect the consumer from unsafe products, but a great many regulations, including seed patents, licensing fees, and “sanitation” quality certifications involving harsh chemicals such as bleach and nitrous oxide are designed to protect the large factory farms from competition.
4) The Chicago Mercantile exchange as turned the farmer from the “price taker” into the “price maker” where the factory farms have the clear advantage over the small family farm. Through Futures trading, the factory farm establishes an artificial price floor for their product, which all other producers have to accept. The Futures Market was originally designed to protect the family farm against unforeseen drops in prices, but when factory farms can keep prices low and still turn a profit through economies of scale, the family farm has little hope for survival.
Waste By Design
Enormous food waste is the result of the old way of thinking about the agricultural economic model.
When food prices fall below expectations or are driven lower by “Big Ag”, small farmers see themselves as having no choice but to waste tons of perfectly good food because the cost of bringing that food to market would generate an economic loss.
As seen on "The Big Waste", grocery stores routinely throw away tons of perfectly good produce and meats due to small imperfections in appearance. Some store chains such as Whole Foods takes some of this excess product and gives it to local food pantries, but most of it ends up in landfills and compost heaps.
Many distributors of food products routinely waste hundreds of tons of food product as a means of price control and profit protection. When these distributors find themselves with excess product with a low shelf life, they would prefer to throw it in the garbage than to sell it at a discount in order to protect the original price of the product.
When you consider that one in five children in this country faces malnutrition on a daily basis and that the only food option for some communities is McDonald’s, it breaks your heart to see so much high-quality food go to waste.
A Better Model
The first thing we need to do in order to address this problem is to change our attitudes and our thinking about the agricultural economic model, which hasn’t been updated since the 19th Century. Advancements in production, preservation and distribution has increased crop yields to historic levels, but producers are still stuck in the old paradigm of producing product in what they perceive to be a purely competitive market. Nor can we abandon the market model altogether in favor of centralized agricultural planning or Collectivism because it’s been tried and was a dismal failure in the Soviet Union.
Step 1: Honest Money
Take the control of the money supply away from the Fed and the banks, and back it with something tangible, and the prices of agricultural products and every other product on the market will become more stable. Farmers and producers will be able to better plan for the future in terms of production and cost allocation, which would then eliminate the tendency to overproduce.
Step 2: End Regulation that Favors “Big Ag”
Patent laws for agricultural products, chemical “sanitation” rules for livestock processing, rules that allow single crops to be planted on thousands of acres of land, and zoning laws that prevent small farmers from producing what they want to should all be abolished. If large agricultural companies want to produce a specific product, they should be able to franchise that product to willing farmers – not force them into compliance with cease-and-desist orders just because their farms happen to be downwind from them.
In addition, zoning laws that inhibit local producers from entering the market should also be abolished. If food distributors feel that it is economically unfeasible to place a grocery chain into poor neighborhoods, they need to give local residents the opportunity to produce the food themselves through community gardens and urban greenhouses.
Step 3: Better Organize the Secondary Market
High-end consumers are still going to demand high-end product but that does not mean that any product that fails to make the cut should be thrown into the garbage. At-risk populations such as the elderly, the terminally sick or those with mental disorders should not have to choose between healthy food and heat for their home. Therefore, better organized distribution options, both private and public are needed to get perfectly healthy food destined for the trash to those who need it the most.
The same can be accomplished for farms and other food producers. If they find themselves with excess product due to overproduction or better-than-anticipated weather conditions, there should be a communication tool they can use to alert secondary distribution networks who would be willing and able to remove their excess product and distribute it to those who need it at little or no cost to the producer. There should also be a mechanism in place that will protect the producer from sudden dips in price due to “dumping” product into the secondary market, but since the tendency to overproduce will already be under control due to Step #1 above, that should be less of a concern.
Waste is Unacceptable
In the 21st Century, we have absolutely no excuse why we should be throwing away thousands of tons of healthy food each year when our own people are suffering from malnutrition, obesity and starvation. We have the technology to not only produce food that is healthy and chemical-free, but to distribute that food to every person who needs it. We do not need to eliminate the free market in order to make that happen because we already know that can never work. Instead, we can make simple changes to our economic paradigm and distribution networks, and we can make this problem a thing of the past.
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