Food, Part 2: The Economics of Food in the US

In the mid-1960s, the federal government developed the poverty threshold based on the “thrifty food plan.” It was a plan based on the knowledge at the time, that the average family of three used 1/3 of their after-tax income on food. If you are a standard US family now, you spend way less than that – about 6%.

We spend less on food than anyone else in the world. In comparison, Kenyans spend almost 1/2 of their incomes on food. And although this is extremely recent historically, we have come expect spending so little of our income on food. Remember the recent “Dairy cliff,” the threat that people might have to spend $8 for a gallon of milk because of the expiring farm bill? Well, it’s the farm bill that we have to thank for low food prices.

Basically, it goes like this. In the 1970s, the government focused on the production of huge amounts of corn, wheat and soy, on large farms, using what was then cheap fossil fuels to aid production. And cheap corn, soy and wheat flooded the food system, which converted all of that into a wide variety of foods, as well as eggs, dairy and meat. In fact, our food system is basically centered around one thing: making as many calories as possible as cheaply as possible.

On its face, given the context of a growing population, that’s not necessarily a bad thing. As a country, you want to make sure that your populace does not starve. But the problem is that the cheapest calories, especially as transformed by the food industrial complex into addictive items for our consumption, are not the best calories for us. I think we’re learning, slowly but surely, that this probably isn’t a good thing.

Because of this legacy, the federal poverty threshold, which has still not been modified from this standard, is extraordinarily low. For a family of one, it is $11,139. This assumes that someone would spend about $300/month on food. And you know that someone making that little would never be able to spend that much on food. The government still uses this threshold to determine eligibility for a variety of programs, and states use this as well. I remember when I was doing epidemiological research almost twenty years ago, 200% of the poverty threshold was generally considered the actual poverty threshold for purposes of understanding the effects of poverty on health outcomes.

The real truth is that food should be more expensive, and everyone should pay a higher percentage of their income for it. Artificially decreasing the price of certain food items through government subsidies distorts the food production system so that it produces food that is not good for us (high fructose corn syrup laden everything, grain-fed animals, food made with refined grains.) And food that is not good for us is, as I think everyone is becoming aware, one of the reasons that the US has the lowest life expectancy of any industrialized country (and I could wax on about how that one statistic shows how crazy this country is.)

There is a very active movement to change the way we grow and eat food, but isn’t really affecting most people in the country. In 1994, there were 1,744 farmer’s markets registered with the USDA. In 2012, there were 7,864, a 4.5 fold increase. Whole Foods, the largest supermarket chain that focuses on organically grown food, had $9 Billion in revenue in 2010. But Walmart had about $100 billion in revenue from food sales, organic food only accounts for 3.7% of the food grown in the US, and people spend the largest percentage (23%) of their grocery dollars on processed food, a lot more than what they spend on fruits and vegetables (14%), and more than they spend even on meat.

Organically grown food, as well as meat, dairy and eggs from organically fed (and in the case of cattle, grass-fed) and humanely-raised animals is far more expensive than food that does not meet that standard. Even though I spend much less than 5% of my grocery bill on processed food, the most expensive items in most people’s grocery cart, because of the choices I make, I still spend more than twice the average percentage of after-tax income on groceries. I am very strict about the meat, eggs and dairy I buy. The health reasons include the fact that animals concentrate toxins fed to them, and most factory-farmed animals eat things that they are not designed to eat, which means that they aren’t very healthy, and that can’t be healthy for me (there are ethical reasons as well that I will explore in my next post.) I often, but don’t always buy organically grown grains, nuts, fruits and vegetables, because sometimes they are simply too expensive. It’s just not possible for anyone who lives in poverty to eat this way.

And, in the future, food will become more expensive: 1) The drought that’s affecting a big swath of the US. (See all those red and brown spots in the countries “breadbasket”?) 2) Increasing price of fossil fuels. 3) Local, small-scale, organic, humane, and/or fair trade food will always be more expensive than its counterparts, even if more people bought their food that way.

I don’t know what changes are in store for the food system. The big players, like Monsanto, have bought the congress lock, stock and barrel. Hopefully, as more and more people realize that what they are eating is doing them more harm than good, and they start making different choices about what they buy or eat, things will begin to shift. But people in poverty may still be left behind.