Free Markets and Food Markets: The Bad

Unsurprisingly, free marketeers and locavores will not agree on the answers to any of the thorny issues surrounding the trade in foodstuffs.

One article in Saturday’s New York Times, Environmental Cost of Shipping Groceries Around the World, examines another aspect of the above: the carbon dioxide that shipping and flying food all over the world causes.

Increasingly efficient global transport networks make it practical to bring food before it spoils from distant places where labor costs are lower. And the penetration of mega-markets in nations from China to Mexico with supply and distribution chains that gird the globe — like Wal-Mart, Carrefour and Tesco — has accelerated the trend.

But the movable feast comes at a cost: pollution — especially carbon dioxide, the main global warming gas — from transporting the food. Under longstanding trade agreements, fuel for international freight carried by sea and air is not taxed. Now, many economists, environmental advocates and politicians say it is time to make shippers and shoppers pay for the pollution, through taxes or other measures. [emphasis added]

I find it rather startling not only that fuel for air and sea freight isn’t shipped, while rail and truck freight is, but that air and sea freight are lumped together like that. Sea freight is actually very efficient, because so many shipping containers can be loaded onto a single ship, so each container requires relatively little fuel to move it. In contrast, airplanes burn a lot of fuel and carry much smaller loads, so the fuel per unit cost is much higher.

Europe is poised to change that. This year the European Commission in Brussels announced that all freight-carrying flights into and out of the European Union would be included in the trading bloc’s emissions-trading program by 2012, meaning permits will have to be purchased for the pollution they generate. Proponents say ending these breaks could help ensure that producers and consumers pay the environmental cost of increasingly well-traveled food.

This is a pretty good example of an attempt to quantify an externality than had previously gone unaccounted-for, and build its cost into the price of doing business. But why is so much of Europe’s produce imported by air, anyway?

Reason one: Efficiencies of cost

“If there’s an opportunity for cheaper production in terms of logistics or supply it will be taken,” said Ed Moorehouse, a consultant to the food industry in London, adding that some of these shifts also create valuable jobs in the developing world. The economics are compelling. For example, Norwegian cod costs a manufacturer $1.36 a pound to process in Europe, but only 23 cents a pound in Asia.

Reason two: Climate restrictions

Britain, with its short growing season and powerful supermarket chains, imports 95 percent of its fruit and more than half of its vegetables. Food accounts for 25 percent of truck shipments in Britain, according to the British environmental agency, DEFRA.

Reason three: Customer preference

Mr. Datson of Tesco acknowledged that there were environmental consequences to the increased distances food travels, but he said his company was merely responding to consumer appetites. “The offer and range has been growing because our customers want things like snap peas year round,” Mr. Datson said. “We don’t see our job as consumer choice editing.

Some of these reasons for shipping lots of food all around the world are malleable, and some aren’t. People can stop expecting to be able to buy fresh strawberries in January. You could have domestic fish-processing plants, provided you were willing to raise prices and could find local workers. You can’t make bananas grow in England.

Right now, people are only beginning to think about all of the hidden externalities of wanting fresh strawberries in January or the cheapest cod. If the carbon used by transporting food thousands of miles shows up in its price, at least customers will have a more accurate barometer of what foods really cost.

For further reading, Dartmouth professor Susanne Friedberg’s book French Beans and Food Scares is an interesting case study of the dynamics of the vegetable trade between Europe and Africa. In particular, she provides a detailed and fascinating analysis of the trade in green beans between Burkina Faso and France.

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