The ugly (economic) truth about our food industry

The ugly (economic) truth about our food industry

When we walk into a major supermarket, some of us expect to fill our trolleys with nutritious food for the week ahead, but nowadays what we’re presented with is a plethora of products. Disregarding perhaps the periphery of the supermarket where the organic fruits and vegetables are, we’re presented with shelves upon shelves of pre-packaged products that no longer resemble food at all. There are aluminium cans of soft drink, fruit juice boxes that have undergone aseptic processing, foil chip packets filled with oxygen, and in the meat aisle we have identical cuts of bacon in vacuum-sealed plastic. Everything has been processed, packaged and with the help of marketing, made to look enticing and palatable. Sadly, a tomato is no longer a tomato – the marriage of economics, science and technology carries it from seed to plate in the most economically efficient manner. Many ‘food products’ today are mass-produced by large multinational corporations who prioritise efficiency, profits and turnover over the health of arguably their most important asset, their consumers.

Since the 1950s, the food industry has evolved enormously, utilising science and technology to make food production ‘bigger, faster, badder and cheaper’ [1]. The emergence of fast food culture came with it a new industrial way of agriculture. Traditional agricultural practices, seemingly inefficient in its means of producing commodity crops ‘broke through the swinging doors’ and today operate on the single virtue of efficiency [2]. With the help of herbicides, pesticides and the science of chemical engineering of not only plants but also animals such as the chickens themselves, the global food industry has evolved into a factory. Those who have seen controversial food documentaries such as ‘Food Inc’ and ‘Hungry for Change’ are no strangers to the unwavering monopolistic power of large multinational fast food corporations. Claims made by Food Inc estimate that 80% of the meat produced in the United States is controlled by the ‘4 quasi-monopolist meatpacking corporations’ [1]. From an economic perspective, this is a classic example of market failure. According to microeconomic theory the absence of competition allows these firms to artificially inflate prices, disregard the quality of its product and neglect consumer sovereignty. The meat industry holds contracts with these multinationals, which control how chicken and cattle are to be farmed and raised, as well as how much is sold and to who. By wielding this power and changing the entire outlook of food industry, there is no longer consolation in buying a supermarket beef patty and a beef burger from McDonalds. The two have been produced in the same factory, in a seemingly similar manner of cost cutting efficiency. Since the emergence of fast food, multinationals emphasise the need to make fast food not only taste good, but produce it using the lowest cost method which primarily involves the use of ‘extreme non food ingredients’, often to the detriment of the health of the consumer [1]. These corporations have since found the consumer’s weakness for high sugar, high fat foods, continuing to capitalise on our demand for foods that arguably fuel the global obesity crisis so prevalent in first world nations.

In the past 30 years, along with the help of the government, the success of the McDonalds fast food chain has completely transformed the way food is produced. The corn industry has become a primary agricultural crop, present in many manufactured foods today. As a result, the multinational fast food chains were able to grow with the help of government subsidies for the production of corn harvests. Today it is estimated that corn or soy derivatives are contained in 90% of all packaged foods, in the form of the recent innovations such as high fructose corn syrup, xanthium gum and maltodextrin to name only a few. Some industrial uses of corn also include plastic fillers, adhesives, insulating materials and solvents. From an economic standpoint, we can view the low cost and high versatility of corn as what makes it an economically efficient input, right? Not quite. Upon the government’s discovery that corn was a miraculously versatile crop in the 1950s, it decided to heavily subsidise the commodity in favour of the multinational corporations. Heavy subsidies from the government illustrate yet another form of market failure. Resulting from this government intervention, we see corn-based products become artificially cheap, resulting in the 20th century food system skewing itself towards bad calories in sugary and fatty foods and away from the good nutrients found in whole, unprocessed food from Mother Nature herself [1]. Due to the agricultural processes of today, commodity crops such as wheat, soybeans and corn undergo a process of scientific engineering and modification that is being subsidised by the government with our very own tax dollars. The ironic truth is that the government supports these practices, which also happen to be the biggest predictor of the health crisis. As a consequence, we as taxpayers are fuelling the obesity crisis by ensuring that the cheapest and most convenient food also happens to be the unhealthiest, and pay for it again through the health care system.

Another conundrum that the US government faces in this food crisis is the fact that subsidisation of corn crops has resulted in an oversupply of genetically modified maize in modern America. Due this excess supply of corn for which there is no demand or use, the US ships thousands of tonnes of GM maize to third world countries such as Africa under the premise of providing food aid. Arguably, the USA has utilised its provision of food aid to resemble that of a business venture, rather than an act of internationalism and goodwill. This has caused much controversy in recent times, with the EU and other starving African states such as Zimbabwe rejecting USA shipments of GM maize. USA’s food aid policy is just simple economics; they are killing not two, but three birds with one stone – finding a way of ridding the oversupply of maize, supporting local businesses back at home who are responsible for the shipment of food aid, and receiving political kudos in return for the provision of food aid to countries in need. Back in 2002, the African government of Zambia rejected USA’s shipments of GM maize, citing the health concerns about genetically modified foods. With Zambia leading the movement against USA’s genetically modified crops, its neighbouring states Angola and Sudan have followed suit, announcing restrictions on GM food aid in 2004. This begs one of many questions – what direction is the food industry going in exactly when African nations supposedly reeling from famine and severe drought can afford to reject mass quantities of food aid from one the richest countries in the world? Even nations suffering from severe food shortages can afford to say ‘thanks but no thanks’ to US shipments of genetically modified foods sent to alleviate the crisis, proving that beggars can in fact be choosers in both economic theory and life [3].

As a result, the food industry is losing accountability and integrity. What is interesting from an economic point of view is that although the food industry resembles a farce today, it is constantly evolving to fit in with consumer tastes. Walmart in the US and Woolworths here in Australia recently entered the organic food market, in efforts to cater to more health conscious consumers. However, this step towards what is more environmentally sustainable and beneficial for the health of the consumer was not ‘moral enlightenment,’ it was economics [1]. The consumer holds much of the power in where and how our food is produced. It is only when significant demand exists for a product that it will become economically efficient and profitable to produce. Right now, what is cheapest, profitable and most highly demanded are the processed products on the supermarket shelves. In the words of Food Inc, ‘each time we buy something from the supermarket we are casting our vote,’ highlighting the power of consumer sovereignty. The food industry is ruled by economic principles of demand and supply, but we as consumers have the capacity to change what is most profitable.



[1] Food Inc, directed by Robert Kenner (Los Angeles, CA: Magnolia Home Entertainment, 2009), DVD

[2] Hungry for change, directed by Laurentine Ten Bosch (Australia, QLD: Permacology Productions, 2012), DVD

[3] IRIN: GMO food aid to Zambia