The end of •cheap' food

"That 10% Americans spend on food? That ride's over.•bCrLf

Those are the words of Randall Pope, President of Westchester Group, a farmland investment company in Illinois. For many years now U.S. consumers have paid only 10% of their disposable income on food. But thanks to a perfect storm of market influences fueled by biofuel, Pope says he expects that number to move closer to levels like those in Europe, where consumers spend 13 to 15% of disposable income on food.

He may be right. And if it happens, who will consumers blame?

True, we do pay the least amount of our disposable income on food than anyone on earth. For years those of us in agriculture called it the •cheap food policy,' as if folks in WashingtonD.C. stood around the water cooler trying to pass laws that would ensure American consumers a joyful trip to the grocery store.

I've always thought cheap food was a double-edged sword for farmers. On one hand we proclaim proudly how our efficient agriculture system helps American consumers pay so little for what is clearly a major necessity. How much income consumers spend for food is a leading barometer of how well off they are. The less money people spend on food, the more money is available for items other than basic necessities.

On the other hand we cuss at low grain prices (this year aside), and perhaps the cruelties of our commodity-based, cyclical farm economy. Eventually we start to believe U.S. farmers don't make enough income because food prices are too low.

In any case, many a politician has stood on the shoulders of producers as they garner votes from grateful housewives who spend less for food, in relative terms, than consumers in any other country.

"We'll see a more prounounced change in food prices than we did when gas went to $3 a gallon gas,•bCrLf predicts Westchester's Randall Pope (left).

Now, four dollar corn shouldn't make much difference when you consider how little of that value goes into a box of corn flakes. Only 20 cents of every retail food dollar goes back to farmers.

But that won't stop food companies from using biofuels and grain prices as an excuse to jack prices.

Elected leaders here know what will happen if and when food prices make a discernible upward move. Consumers got downright hostile after gas hit $3. Will we see an about-face on consumer attitudes toward biofuels? Will we see farmers testifying before Congress, justifying their actions the way Big Oil CEOs were forced to last year?

Affordable vs. cheap Food in this country is more •affordable' than •cheap,' anyway, based on our average household income of $42.,000. We may pay 10% of our disposable income for food while India pays nearly 50%, but the average Indian household makes about $1,000 a year.

In fact, Ricardo Salvador, Associate Professor of Agronomy at IowaStateUniversity, believes our so-called cheap food is nothing to brag about. It's more a factor of our wealth than efficient food production.

"Our agricultural systems are clearly productive, but they are also manifestly inefficient in terms of basic resources because they degrade or deplete soil, water and fossil fuel,•bCrLf says Salvador, chair of ISU's Graduate Program in Sustainable Agriculture. "They say that wealth is having more than enough to meet one's needs, and that there are two ways to be wealthy. One is to have a lot, and the other is to need little. When it comes to food, having an abundance of poor quality food—with all of its attendant costs—may not be nearly as desirable as we commonly think.•bCrLf

In the short run, the biofuels boom will push food prices higher, predicts noted farm policy expert Barry Flinchbaugh. But not much, and not necessarily forever, he adds.

"We doubled the price of corn in corn flakes and it didn't make much difference,•bCrLf says the KansasStateUniversity professor. "I don't disagree that we may be seeing the end of cheap food, but I think it's temporary, because the long run is getting energy from cellulose, not from traditional food sources.•bCrLf

Meanwhile, it might not be a bad idea to tell consumers how farm programs help lower prices in grocery stores. Let's call them food subsidies, not farm subsidies.

"If you look at what you pay for food in the grocery store plus the $20 billion the government puts into it (through farm programs), it's no longer cheap,•bCrLf says Flinchbaugh. "The more the government puts in in subsidies, the cheaper the food.•bCrLf

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