Does cheap food come at a cost?

In Australia and New Zealand, the average proportion of personal income spent on food has been dropping markedly over the past few decades. Cheap food is viewed as a right and we are trained to shop around for the lowest prices, even though food is probably the best investment you can make in your own health. While some people are forced by budget constraints to steer away from higher-quality food such as organic and free-range, often ethical food is placed too far down the list of spending priorities, or shoppers simply feel compelled to score bargains.

In the modern globalised economy, low prices are likely to mean that food is being grown or manufactured in an overseas country. When buying the cheapest food, you can assume that somewhere a farmer is losing out. Its real price is the economic “externalities” — the environmental and social problems it creates, which are costs to be borne by someone else via their taxes. The solution is to be more holistic and look at how these costs can be minimised or incorporated within the purchase price.

In addition to long-distance transport, cheap industrialised food often tends to be associated with:

  • Export-oriented agricultural subsidies in its country of origin
  • Mechanisation and economies of scale
  • A higher level of chemical use, including pesticides
  • Land degradation and soil erosion
  • Ingredients often being more environmentally destructive, one example being palm oil rather than canola oil
  • Fossil fuel subsidies


Supermarket shortcomings

Both Australia and New Zealand are notable for their highly concentrated supermarket sectors. In Australia, Woolworths and Wesfarmers (Coles) together share more than 70 per cent of the market. Across the Tasman, New Zealand has a duopoly involving the Foodstuffs co-operative (Four Square, New World, and Pak ‘n Save), and Progressive (Countdown and SupaValue), which is owned by the Australian Woolworths.

One drawback of chain-store shopping is the leakage of money away from the local economy. The British economics think-tank NEF has concluded that, while about 20 per cent of money spent in a chain stays in the local area, for a local food retailer this can be up to 80 per cent. Australia’s National Independent Retailers Association claims that chain stores circulate 13 per cent of their income into the local economy, as opposed to 45 per cent for independents.

As a rule, a grower supplying a supermarket can expect to receive somewhere between 5 and 20 per cent of the retail price. Amid accusations of bullying by Australian supermarkets, a picture has emerged of Australian and New Zealand supermarket growers often operating on minimal margins. If domestic farmers were to shut their doors out of economic necessity, it would undermine national food security.

Alleged economic exploitation of Australian growers came into sharper focus in January 2011, when Coles launched a supermarket price war via its $1-a-litre own-brand milk, forcing Woolworths to follow suit. A strategy formulated by three British executives who had been hired by Coles the previous year, this later extended to eggs, chicken, cereals, fruit, vegetables and beer, which would serve as “loss leaders” to attract customers. In response, growers’ groups have expressed fears about their long-term survival and small independent retailers are struggling to compete.

In early 2012, the Australian Competition and Consumer Commission (ACCC) began an investigation of unfair conduct towards growers by the big two. Despite offering anonymity to farmers and Grocery suppliers, nobody was prepared to come forward and give evidence that could be used in a prosecution, presumably because they were concerned about their livelihoods. While a supermarket ombudsman is being set up in the UK, there are no similar plans in either Australia or New Zealand.

In both countries, supermarket chains have been relatively passive compared to their European counterparts when it comes to taking a proactive stance on a range of ethical issues such as GM foods and palm oil deforestation, relying instead on the “It’s still legal” justification. However, ALDI has taken some unilateral stances in Australia, including removing all artificial colours and planning to make its laundry detergents phosphate-free.

Many Australians are unaware that both Woolworths and Coles are heavily involved in the poker machine industry, and Woolworths in particular is the largest owner and operator of pokies in Australia. These machines have come under special criticism for the 40 per cent share of their takings that comes from gambling addicts and the damage this inflicts on the fabric of society.

Supermarkets are also responsible for large amounts of fruit and vegetable wastage, invisible to the public, through fussiness about consistent size and shape and lack of blemishes. They are also liable to waste further food at the downstream end because it has passed its “Use by” or “Best before” dates while still edible. Supermarkets’ long supply chains make it difficult for them to them to stock food that is locally grown, thereby increasing food miles.

Fortunately, there are some more positive alternatives for sourcing your food.

Grow your own

In recent years, increasing numbers of people have been relearning the skill of growing their own food, whether this involves starting a plot in the back garden or cultivating in pots on a unit balcony. Food is also being grown in community gardens and city farms, and by planting trees on waste ground and lobbying councils to plant fruit trees along the streets.

For people without access to land, Landshare is an ideal solution. This links up interested food growers with people who have a spare unused plot they are prepared to share, often in exchange for a percentage of the produce. Originating in the UK, it has since spread to Australia, where there are now about 1800 members.

Around the world, communities are preparing for a future where food might be less widely available in shops due to factors such as fuel scarcity or the vagaries of a globalised food economy. Local food security is one of the primary goals of the Transition Towns movement, established in 2005 as a grassroots response to the twin challenges of oil depletion and climate change. Today, it has more than 400 participating communities in many different countries.

Supporting the local economy

Many opportunities to buy local food exist and are worth spending a little extra effort in tracking down. An obvious choice is the local farmers’ market. Since first appearing in Australia and New Zealand in the 1990s, their numbers have multiplied and today there are 152 markets in Australia and more than 50 in New Zealand. Food miles are minimal, the food is fresher, it is usually cheaper than at the nearest supermarket and is less packaged. If you have any questions, you can talk directly to the grower.

Perhaps even more importantly, stallholders at farmers’ markets generally keep somewhere between 40 and 80 per cent of their takings. For farmers on smaller acreages, this is a crucial opportunity for making their activities economically viable.

Another possibility is Community Supported Agriculture (CSA), which creates a direct link between farm and consumer via weekly box deliveries of in-season produce that is often certified organic and better suited to a family than to a single person.

Elsewhere, it is worth buying locally grown from independent retailers where possible, despite a shortage of third party certification programs. Other worthwhile options include roadside stall honesty boxes and pick-your-own farms.

As its name suggests, a herd share involves a group of people who take on shared ownership of one or more cows. In addition to providing cheap milk, in Australia ownership offers the only legal avenue to drink it in raw, unpasteurised form with all its nutrients intact, while in New Zealand a limited quantity of unpasteurised milk is permitted to be sold from the farm gate.

Local eating reached a far greater audience with the 100-Mile Diet, dreamed up in 2005 by Canadian couple Alisa Smith and James McKinnon. For one year, they resolved to buy food that had been produced within a 100-mile (160-kilometre) radius of their Vancouver home. This movement spread rapidly around the world and resulted in the coining of the word “locavore”.

A final, and worrying, consideration for local food is “income management”. This controversial and paternalistic practice traces back to the 2007 Northern Territory intervention in Aboriginal communities, and five ongoing trials in the eastern states indicate a Federal Government interest in rolling it out nationally. People who receive government benefits and are deemed to be in an “at risk” group are required to spend at least 50–70 per cent of their incomes on essentials such as rent, food and bills.

This system restricts participants’ choices by effectively forcing them to shop at supermarkets such as Coles, Woolworths and IGA while prohibiting them from patronising food markets, independent retailers, healthfood stores, suppliers of specialised food such as gluten-free, and ethnic food stores. Such a restriction could be viewed as anti-competitive and will certainly damage local economies to some degree.

Food security — a top priority

The modern food system has grown so as to be dependent on oil and gas, all the way from running tractors to the production of fertilisers and pesticides and to packaging and distribution. Oil production currently sits on a plateau and could peak within the next few years.

With biofuels competing with humans for arable land, they are not the solution, and unless a new source of energy is discovered, it looks inevitable that the future will see a shift away from international trade, crop monocultures and industrialised animal farming towards a far more decentralised and localised system.

In Australia and New Zealand, food security is still not viewed as a priority issue, but more recently an accumulated edifice of complacency has been steadily eroded and heads have been pulled out of the sand. Within the political arena there is an increasing awareness that leaving the market to its own devices is not sufficient to look out for the national interest.

Australian and New Zealand food companies continue to be sold to overseas buyers. In one notable example, the Australian Wheat Board lost its role as a national monopoly in 2008 and its trading arm has since been sold to the US grain giant, Cargill. Lacking a sense of national loyalty, foreign-owned food companies are more likely than their domestically owned counterparts to relocate their operations to other countries.

In Australia, there has also been an acceleration in the rate at which farmland is being bought up, frequently by the Chinese for mining purposes. Under current rules, there are no restrictions on such transactions below AU $244 million, an amount greater than the market price of Australia’s most valuable farm. The Coalition advocates lowering this threshold to AU $10–20 million. While the Greens, Barnaby Joyce (leader of National Party in the Senate), Bob Katter (leader of the Australia Party) and entrepreneur Dick Smith have been critical of the sell-off of our farmland, for the government it is still business as usual.

A similar trend exists in New Zealand, where the Dubai Government and China have both expressed an interest in purchasing land. While the Dubai deal fell apart, the Chinese are still keen to buy 16 Crafar Family dairy farms in the North Island. In February 2012, the New Zealand High Court forced the government to reconsider its approval decision. The major political opposition to foreign sell-offs of land has been from the Green Party.

Other issues impacting on food security worldwide include population growth, climate change, food commodity speculation, the growing power of grain traders, the conversion of corn into biofuels, a shift towards a meat-based diet in China and India, and coal-seam gas mining. Collectively, all these point to a scenario where, the closer to home we grow our food, the more likely it is that we will all be fed into the future.

Ethical food solutions

  • Grow what you can.
  • Buy from the producer when you can or choose locally grown.
  • Avoid buying low-nutrient-density processed food.
  • Pay more for top-quality unprocessed food (organic, biodynamic and free-range).
  • When buying from supermarkets, at least buy Fairtrade where no domestically grown equivalent is available. Go out of your way to avoid items subject to price-war discounts.
  • Offset higher prices by minimising food wastage.


Martin Oliver is a writer and researcher based in Lismore, northern NSW.

Martin Oliver

Martin Oliver

Martin Oliver writes for several Australian holistic publications including WellBeing on a range of topics, including environmental issues. He believes that the world is going through a major transition and he is keen to help birth a peaceful, cooperative and sustainable reality.

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