The great food swindle

10 April 2012

Imagine going for a slap-up dinner in the most lavish restaurant you can think of, eating yourself to a standstill, and getting a bill that would look about right for a kebab from the local take-away. What a bargain, you'd tell yourself. You'd be delighted.

Unless, that is, you had to pay the waiter a tip the size of your salary. And if that wasn't maddening enough, think how angry you'd be if the service charge wasn't added to your bill, but lifted from your pocket on your way out, without you even knowing. You'd be furious. Which is what you should feel every time you leave a supermarket - because that is what's happening to you.

On the face of it, the average grocery bill has shrunk dramatically over the past 50 years. This is a well-known fact, and such good news that most of us are happy to stomach the other brand of supermarket statistic we are fed regularly: the record profits for the stores themselves. Leading retailer Tesco made over £1 billion pounds profit last year. One billion pounds. But prices in the shops are still falling, making us feel like we're paying less - so everyone, it might seem, is a winner.

But you don't need to be an economist to see that the sums just don't add up. If apples from New Zealand are cheaper to buy in London than apples grown in Kent, the maths clearly cannot be right.

The food industry has managed to deceive us so well about the price of our groceries because, environmentalists argue, the true costs are so complex and well hidden. They don't appear on your bill at the checkout, but are concealed in everything from your water bill to your tax return. They are notoriously difficult to quantify, but an Essex university professor has recently calculated the approximate annual cost, and the figures are startling: 'We are paying for our food three times over,' says Jules Pretty. 'First, over the counter; second, through our taxes being used for farm subsidies; and third, to clean up the huge mess modern farming is making.'

Next time you go to the supermarket, these are some of the ways in which you are paying for what you buy. The first section you walk through in a store is usually the fresh produce aisle. Fruit and vegetables are cheaper nowadays because the farmers growing them rely on fertilisers and pesticides to increase productivity. Once used on the land these chemicals don't just disappear - they must be cleaned out of the water and sewage systems, at a cost of more than £200 million a year. The government pays for some of it - meaning you do, through your taxes - and the water companies pick up the bill for the rest. Only they pass on the cost to their customers. So the saving you make on a pound of carrots ends up being cancelled out by an increase in the size of your water bill.

After fresh produce, you come to the meat section. To date, over 50 people in this country have paid for cheap meat with their lives. The bill for caring for the victims of new variant CJD isn't met by the people who sold them cheap pies filled with disease-ridden mechanically recovered meat, but by the NHS, and ultimately our taxes. CJD aside, there are 90,000 cases of food poisoning in this country annually, costing the taxpayer an estimated £150 million a year. The chief culprit is a product we like to think of as the healthy option - chicken.

We all remember the salmonella-in-eggs scare, but you may not know that the bacteria responsible can infect not only the eggs but the chickens themselves. Another pathogenic bacteria, campylobacter, is a major cause of food poisoning, and it is found extensively in factory-farmed poultry. A study in the US found over 80 per cent of intensively reared broiler chickens contained dangerously high levels.

The true cost of cheap food isn't only hidden in your shopping - it's wrapped around it as well. An old-fashioned butcher would have weighed a joint out before your eyes, and sold it wrapped in paper. Now, cuts come in pre-packaged polystyrene containers covered in clingfilm, which are then transferred into plastic carrier bags at the checkout. By the time you've unpacked all your shopping at home, you are faced with a small mountain of packaging on your kitchen floor. In Britain we produce around 25 million tonnes of waste each year, and a third of that is packaging materials. We throw it all away, without giving it a second thought, but when all that plastic is finally dumped in landfill sites, it isn't the supermarket that pays for the disposal costs, but once again you, the taxpayer.

Out-of-town superstores seem wonderfully convenient as you drive away from your weekly shopping trip. On the other six days of the week, though, when you're sitting in traffic trying to get home, you should consider how much road congestion is caused by everyone else having to drive miles from their homes to pick up their groceries. While the cost of the time you spend stuck in shopping traffic is difficult to calculate, the price you and everybody else pays in terms of your health - breathing in the pollution caused by traffic - is becoming much better understood.

The past few years have seen a dramatic rise in the numbers of people, particularly children, who are suffering from asthma, and a wide body of opinion suggests the culprit is emissions from traffic. You may not suffer breathing problems yourself, but you're certainly paying for the healthcare of those who do. The problem is only made worse by the pollution from the supermarket giants' arrangements for transporting the produce. Their centralised systems of distribution typically mean that, say, potatoes grown in Yorkshire are driven to Birmingham and then back again before they appear on supermarket shelves in Leeds.

But at least the stores have to pay tax on the cost of road fuel. Aviation fuel isn't subject to tax, which means that in effect you are paying a hidden subsidy for the stores to destroy the ozone layer by flying in foreign produce. Worse than that, you have to pay for it again, when your home insurance premium doubles as a result of more frequent flooding caused by climate changes. The price Professor Pretty has calculated for emissions caused by burning so much fuel is in excess of £1 billion.

Some of the costs hidden in our food are so far removed from the shopping experience that it is easy to miss the connection. For the 276 people who, on average, lose their job every time a new superstore opens, the link is maybe obvious. But the impact of supermarkets stretches out of towns into the countryside. In the past 50 years, the number of farms has decreased from 440,000 to 240,000. At the same time, we are paying £3 billion a year in tax to subsidise agriculture. Much of that amount funds the intensive working practices that have wiped out our traditional farms. By any reckoning, we are clearly not getting our money's worth.

Half a century ago, out of every pound we spent in the shops on food and drink, between 50 and 60 pence made it back to farmers and rural communities. Today, the figure is just nine pence. This is a bewilderingly tiny fraction, but is inevitable if you look at the bizarre economies of agriculture. If a Savoy cabbage costs 13 pence to produce, is sold by the farmer for 11 pence, and retailed to us in the supermarket for 47 pence, traditional smallholdings can't possibly survive.

How can their bankruptcy count as a cost to you? Well, the decline of traditional farming is destroying our countryside, and we are losing our priceless wildlife fast. Cheap food means industrial agribusiness and all that implies. In one three-year period in the Nineties alone, 33,750 miles of hedgerow were lost across England and Wales. New figures show that 43 per cent of the most important bird habitats are being threatened by intensive agriculture, while wild salmon are being driven out of Scottish lochs by the filth caused by fish farms. Flowers, insects, and birds such as the skylark and the lapwing are all disappearing. Professor Pretty has calculated that the annual cost of repairing the damage being done to wildlife and their habitats is in the region of £100 million.

This sum is an estimate of what it would cost to make good the damage already done, yet instead, the countryside is being allowed to wither. Concern for the rural environment isn't just a sentimental lament, but one that ultimately translates into hard currency - for the countryside's natural beauty generates wealth. Every year, day trippers and tourists spend a total of 700 million days in the countryside, bringing in vital revenue for rural communities. Urban dwellers won't continue to spend their hard-earned money there if all they have to look at is mile after mile of industrial farmland run like a factory.

These are the hidden costs of what we are encouraged to think of as our 'bargain' modern groceries - what economists call 'externalities'. Taken together, by Professor Pretty's estimate, they amount to between £1.5 billion and £2 billion a year - altogether less of a bargain. Yet, according to the food industry, there is no problem, and produce that cost more in the shops would therefore be no solution. 'It is facetious to say we can all afford to spend more on food. Cheap food is vital to millions of poor people in Britain,' declared Lord Haskins, the government's new adviser on rural affairs, last month. And Lord Haskins' other job? Chairman of food giant Northern Foods, one of the businessmen who have made millions out of convincing us that we are getting a good deal on our groceries. His appointment, the environmentalist George Monbiot has observed, is like putting Norman Tebbit in charge of race relations.

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