There’s one impression I’ve had about food in America all through my adulthood:
It’s cheap.
I probably would have come to that conclusion regardless of my career choice, just by buying food for myself and contrasting that with what I remember of my parents’ situation. But covering this industry reinforced that viewpoint, as well as letting me in on some of the reasons for it: bigness, concentration and vertical integration, all of which lead to greater efficiency.
Except when they don’t. A lot of that efficiency comes from paying extremely low prices for labor and for animals used for meat. The labor situation is changing, with workers making demands for more pay and having them stick. The low prices for animals come from major processors contracting with chicken- and hog-raisers under terms that have been criticized as grossly unfair.
If this situation changes, with workers and farmers getting more compensation, it has the potential to do more than just cost some C-suite types their bonuses. It could uproot the whole system of cheap food as we know it.
A former CEO of Sainsbury’s, a major British grocery chain, alluded to this when he told The Independent that the “golden era” of cheap food is over, and consumers will just have to get used to paying more of their household budgets for sustenance.
"We spend a much less as a proportion, on average, of our household budgets on food than at almost any period in history. That's been a long, gentle decline,” Justin King said. “I suspect what we will, see is a higher proportion across the piece spent on food for the longer term. It will require adjustments in how we prioritize our budgets.”
It would be wrong, I think, to dismiss this as an industry bigwig making excuses. If worker wages go up across the board, and if the market power of some of the big companies gets broken up through antitrust actions or other means, it could very well spell the end of cheap food.
If that has to happen, it has to. A system that’s built in large part on underpaying those who grow and process the food is not a sustainable system. But weaning ourselves from it is going to be a shock. One can only hope that the incline in prices will be as long and gentle as the decline.
Pan Demetrakakes is a Senior Editor for Food Processing and has been a business journalist since 1992, mostly covering various aspects of the food production and supply chain, including processing, packaging, distribution and retailing. Learn more about him or contact him
