The current food system is costing us a fortune, in part, because so much power lies in the hands of so few.Josh Funk/The Associated Press
Gisèle Yasmeen is a senior fellow at the School of Public Policy and Global Affairs at the University of British Columbia.
According to experts across the ideological spectrum, the costs of the current global food system vastly outstrip the value produced. No, we’re not talking about the operating costs incurred by businesses. It’s the costs that they impose upon others.
We often don’t think about such costs. But they matter to the global economy. They include the negative environmental consequences of industrial food production, processing and distribution, and the food insecurity that results when a handful of big players dominate the market at the expense of small businesses.
Economists call these costs externalities, and one estimate puts them at US$19.8-trillion this year, more than double that of the value of the food produced by the industry.
These costs have been exacerbated by recent events. According to the latest The State of Food Security and Nutrition in the World report from the UN, “the increase in global hunger in 2021 reflects exacerbated inequalities across and within countries due to an unequal pattern of economic recovery among countries and unrecovered income losses among those most affected by the COVID-19 pandemic.” Add to that, staggering statistics on food insecurity and poor nutrition – including in wealthy Canada – and gobsmacking figures on food-system-generated greenhouse gases, food loss and waste, and the portrait looks daunting to say the least. This needs to change.
With the world burning up due to climate change, the reality of COVID-19 and other pandemics, and an increasingly volatile geopolitical context affecting global supply chains, never has the case been stronger to reinvent our dominant global food system.
One of the ways the current globalized food sector has often been described is as an hourglass shape, with many small-scale producers and processors at the top, a large swath of consumers on bottom, and in the middle, a small number of large-scale processors, traders, wholesalers and retailers. And in the middle is where all the power lies. Capital and global supply chains in food – like other sectors – are dominated by a handful of very big players.
While in theory size results in efficiency and economics of scale for these big players, letting them sell their products more cheaply, there are also diseconomies of scale. Recall that for more than a decade, Canadian grocers used their concentration of power to fix bread prices.
Meanwhile, the foods on the shelves that appear cheap – which, for many, are all they can afford – are often highly processed and low on nutrients. And across the world the production of highly processed food has negative environmental impacts.
To counter this, we need to do a better job supporting small-scale food enterprises from farm (and waterways) to fork. While often thought of as a pattern found primarily in low- and middle-income countries, even in Canada, nearly 98 per cent of businesses are small with more than 55 per cent of these being microenterprises with one to four employees. This pattern also applies to the food sector with many mom-and-pop operations such as corner stores, restaurants, catering businesses and – before the pandemic – resurgence in street foods.
Agriculture and Agri-Food Canada recently announced modest co-funding to support a trade certification program for micro- and small-food enterprises to “meet key industry and regulatory requirements and learn essential information about trade and export.” That is a good first step but not enough. Investments like these need to be complemented by a multi-jurisdictional strategy to support food micro, small and medium enterprises in building and becoming part of alternative supply chains.
The current food system is costing us a fortune, in part, because so much power lies in the hands of so few. Addressing power asymmetry in the value chain by supporting the inclusion of small food enterprises to reach local consumers with healthy, minimally processed and ecologically produced food can alleviate the “true costs” of the system. Ultimately, this will move us toward a more inclusive and resilient economy.