Who sets prices for food?
Photo: BananaStock/Thinkstock
Why does eating healthy food usually mean shelling out more money? How can raw fruits and vegetables that come right out of the ground or off the vine cost more than processed junk food that's spent a few days in a factory? Daphne Oz goes looking for answers.
Over the past couple months, I've found it hard to ignore how difficult it has become to eat healthily. Since graduating college and moving out on my own, I've had to learn how to navigate the treacherous terrain of managing a budget. Of all the new expenditures that come along with life outside the nest—utilities, cable, gym—I was most shocked by how expensive the food I wanted to buy was. And I wasn't looking to buy beluga caviar—I'm talking about organic cottage cheese versus conventional; fresh-squeezed orange juice versus from concentrate.

As I began to look over my receipts and peruse the aisles of my local grocery and health food stores, I noticed an obvious (and disturbing) trend. The more heavily processed and artificial a food, the less expensive it was. How is it that something that you eat exactly the way it looks when it comes out of the ground or off a tree can cost more than something that went through a day and a half of mechanical digestion by heavy machinery? Doesn't it strike you as a bit odd that our supermarkets are crammed with 99-cent bags of chips, but apples can cost $1.25 or more? Or that a hamburger at a fast food restaurant might run just less than $4 compared to a large salad, which can cost twice that.

Look at the example of a hamburger. First you have the beef (which involves raising livestock, slaughtering them, processing the meat, potentially freezing it and shipping it to the point of sale). Then you have the bun (which is processed flour, meaning all the wheat had to be grown, harvested, ground, mixed, baked and then shipped). Now add whatever other vegetables and spreads might be included. You get all this for $4. But what if you want to eat a head of lettuce and some dressing? It's going to cost you twice the amount? How can this be?

Back in the early 1900s, the U.S. government invested in an agriculture policy that aimed to promote production of those foods that could be easily stored or shipped to soldiers fighting in World War I, like corn and wheat. To make sure we had plenty of these grains, we decided to pay farmers to grow more of the crops we needed most—and consequently stop growing most other grains, vegetables or fruits. This practice is what we now know as subsidizing.

Because government money could be used to cover some of the costs of production, the price the consumer had to pay for these items fell. Of course, with this lower price came higher consumption. As demand grew, so did our production levels.

Today, 30 percent of our land base is being planted with corn. Even out of wartime, we have continued to subsidize corn and wheat production, adding canola and soybeans to the list, largely because beef, pork and chicken growers demand these crops be constantly available at the lowest possible price—which means meat producers can also be counted as recipients of subsidies.

As we produced more and more grain, our supplies eventually surpassed the demand. To help get rid of some of this overstock, we commissioned farmers and scientists to find new things to do with these stores. While farmers began feeding corn and wheat to animals that had never eaten these plants before—like cows and fish—scientists ingeniously found ways to convert these crops into a variety of different forms. Some experts estimate that corn derivative products exist in nearly 90 percent of all processed foods.

It might not look like corn on the outside, but many of the processed food items available to you, whether we're talking crackers, candy bars or soda, are made from corn in the form of high fructose corn syrup. In addition, many of those obscure terms you might not recognize on the ingredient label—maltodextrin, xanthan gum, saccharin, di-glycerides—are corn derivatives. Corn is also the main feed for most meat and poultry animals, so there's corn in that grilled chicken sandwich too. One striking example: Farmed fish are now being taught to eat corn for the first time ever! So not even your sushi is corn-free.

Today, we spend nearly $25 billion in subsidies to fund farmers of corn, wheat, soybean, canola, beef, pork, chicken and dairy. The result is that farmers can charge the consumer much less than the price it costs to produce these foods and make up the difference through government funding. This might sound like a good deal for us at first—we get something for cheaper than we should—but the reality is that it has completely distorted the position and predominance of these foods in our eating hierarchy because they are so much cheaper.

In fact, you actually do pay more for these foods than what the grocery store receipt says. Those subsidies are your tax dollars, after all. And the true cost of industrial agriculture is almost impossible to calculate because we have no enforceable way of quantifying how much producers should pay to offset the pollution their operations create or the long-term damage to human health from overconsumption of certain foods and exposure to chemicals, hormones and antibiotics used in some cases.

Since we aren't being made to bear the full cost burden of our eating habits, of course we eat more than we would normally. It's hard to say exactly how much a pound of beef would cost if we took into account all the factors involved in getting it nice and neatly packed into a patty on your plate (feeding, housing and medicating the cattle, slaughtering and processing the meat, treating the meat for bacteria, pressing it into patties, shipping and storing it, plus the costs in environmental pollution from animal refuse and processing fuel, just to a name a few). If it were $20, how often would you indulge? I've heard figures as high as $90! Imagine how different your eating habits would be if you had to pay this every time you wanted a steak.

The point is, subsidized foods cost way less than they should and have a much larger presence in our lives as a result, and not because they're any easier to produce than regular old carrots. In fact, farmers of subsidized crops are charged with producing such a huge amount of food that their operations generally become much more complex, involving lots of machinery, medicines and chemical compounds to compensate for that fact that there is no possible way for them to manage their operations simply through human labor.

The worst of it is that American consumers are deliberately being kept in the dark when it comes to where, and how, and by whom their food is produced. Agricultural giants own the seeds, the fertilizer and pesticides, even the farms in some cases, and are well-equipped to limit how much can be said and how much can be done about their business practices. They spend money to divert your attention away from their operations—to make it difficult for you as a conscious consumer to discover what is going on, or to say anything about it if you do—because they're worried that, once you find out the truth, you might not want to buy their products anymore. And you know what? They're probably right.

Subsidies lay the groundwork for what's happening in our food system. What can you do about it? As a consumer, vote with your pocketbook. Create a market for affordable, accessible, healthy food by making sure that you opt for organic, local and humanely produced items whenever possible.

If you demand it and are willing to pay more for it, producers will supply it. Moreover, it may influence our government to actually start supporting family farmers who can produce the diverse array of food we need to be healthy, rather than funneling all of our collective tax dollar food subsidies into a few industrial producers.

While the pie-in-the-sky vision of a country teeming with a vast network of family-owned farms is still years away, there are ways to work within the current system to make foods healthier and safer for us all. A March 2010 Wall Street Journal article documented how some of the biggest players in the food business—such as Kraft Foods, ConAgra and PepsiCo.—are now taking high fructose corn syrup out of many of their products—such as Wheat Thins, Hunt's Ketchup and Gatorade, respectively. Why? Because their consumers asked them to put sugar back.

It's more expensive for producers to use sugar because corn subsidies make corn syrup a cheaper sweetener, but they're switching over anyway. This just goes to show: In America, the consumer is king, and what we want is what we'll get. So how are you going to wield your power?

Share your ideas on consumer power below!

Daphne Oz is the author of the national best-seller The Dorm Room Dietwhich will be expanded and re-published in July 2010—and The Dorm Room Diet Planner and creator of the Dorm Room Diet Workout DVD.

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The hidden costs of a $1 cheeseburger
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