Saturday, March 22, 2008

Can You Still Afford to Eat?

Is your family going hungry yet? Are you clipping coupons again? Have you had to pass up the ribeye and buy a can of Alpo instead?

If you read recent newspaper stories like this, this and this, you may well start to worry.

Who's to blame? Corn, of course. Increased ethanol production has driven corn prices up, and as well all know by now, everything we eat today is actually made of corn, so now all food is more expensive.

But how dire is it really?

If you read the stories all the way to the end, you'll find buried toward the last paragraphs a few notes to the effect that, over the past century, food prices have dropped dramatically, at least in comparison to our incomes. In 1901, the average American family spent 43% of its income on food; in 2004, it was only 14%.

But that's just relative to household income. Does this mean food has actually gotten cheaper over the last century or just that nobody had any money in 1901? And who cares whether your great-grandfather could afford steak or not. What about us? Maybe things got better and better up until about the _________ Administration (fill in your least favorite recent president here), then it all went to crap.

In hot pursuit of facts, I spent some quality time recently reading the latest magnum opus from the U.S. Department of Agriculture's Economic Research Service with the riveting title Price Trends Are Similar for Fruits, Vegetables, and Snack Foods. It's only 23 pages, but it seems much, much longer. It does have pictures, though, and that helps.

Here's the good news. Junk food just keeps getting cheaper. If, like The Wife, you think cookies and Diet Coke constitute a meal (she likes to call it "breakfast"), then you're in luck:

And, what's better, potato chips prices are absolutely plummetting:

This, of course, is the big bugaboo for most nutritionists: sure, some foods are cheap, but it's the healthy ones that aren't, hence the obesity epidemic. Who can doubt that, assuming prices were equal, the average Joe would naturally select a big bowl of steamed broccoli over a bag of Cool Ranch Doritos. What else but price could possibly be responsible for the fact that Americans eat so many chips? If only vegetables were cheaper . . .

But wait! There's more to the story. The researchers at the USDA found that the prices of fresh fruits and vegetables have indeed risen considerably over the past 25 years (heading up some 49%, when adjusted for inflation). But they attribute this rise not to actual price increases but also the introduction of a whole range of "value-add" fruit and vegetable products like bagged lettuce and "baby" carrots where there's a lot of labor involved in preparation beyond just the picking.

And the rise of these "ready-to-eat" products has been remakable. Washed and bagged spinach didn't exist on the market before the 1990s. By 2003, 65% of all fresh spinach purchased was for the ready-bagged stuff. A full 69% of all carrots bought in 2003 were peeled and trimmed, shredded, or otherwise prepped.

This is great news for the lazy. (Or, as The Wife likes to call them, "people who have far better things to do with their lives than spending all freaking day in the kitchen peeling carrots." We don't always see eye to eye on gastronomical matters.) But it does obscure the issue of whether fruit and vegetable prices are going up. You have to compare apples to apples. Literally.

The same basic trend holds for almost all of the varieties of non-prepared fruits and vegetables that were available in 1980, including bananas, lettuce, dry beans, carrots, cabbage, celery, cucumbers, and sweet peppers. As with any commodity, the prices go up and down month by month, but the general trendline over the years in unrelentingly downward:

Fresh fruit and vegetable prices may not be falling at quite the brisk pace as, say, potato chips (how ARE those things getting so cheap?), but they are falling nonetheless. We may have seen some big spikes recently in the price of butter and cheese, but overall the food-cost increases are pretty moderate: an estimated 4% overall increase this year, which is a few ticks ahead of inflation but not exactly a rocketship.

I'm about to head out for my weekend grocery shopping. I will not be taking any coupons with me.

(Note: scary photo aside, Richard Nixon really has nothing to do with this post, but when you start talking about food prices and inflation it's always good to remember back to the good old days with Tricky Dick, which was the last time our country was in a panic over rising food prices.)

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