The biggest challenge that faces traders of all descriptions in arriving at a reliable price structure is the speed at which food products can change. Some animal products undergo a series of changes from farmgate to end user, others barely change at all. Some foods deteriorate very fast, while others are stable; add to this processes such as grading and the scope for differentiation can spiral out of control. For a comparison to be usable, the items need a number of similarities, bearing in mind that not all users will have the same interests. At the risk of keeping alive a business myth, there were some retailers who chose to take a cut in their margins rather than push up prices. Some individual members of of the Linlithgow committee would have been very well informed about specific markets and sector, but less inclined perhaps to share.
The stability and predictability of sectors such as cereal crops, milling and baking followed a pattern of incremental development. The step from wholesale trade to retailing, however, marks a sea change, reflecting the finer detail in retail distribution and home delivery costs. Investing in automotive resources ran deep in the bedrock of the economy of the day and was not going to be neither quick nor cheap.
The constant chivvying for market data was neither focussed for the most part nor available in the sort of unambiguous form that would have helped lay readers to learn more about the free market edifice. For instance, try explaining day-to-day shifts in retail pricing, arising from wholesale price changes that operate on a different basis. Even the denominations of coinage had an impact in the pricing of the retail world.
The ministry dug its heels in and refused to make a rod for its own back. The public should not be left to be baboozled by the high power antics of economists. How could such experts in their individual fields be left to explain the rise in mutton prices was a consequence of higher wool prices? After all, sheep are not killed for their wool.
The arrival of Vickers machine guns in the second Boer war changed military expectations of what would become possible in years to come.
Starting with the Boer war at the turn of the twentieth century, the impact of heavy machine guns was devastating on industrial battlefields, where thousands of horses were culled. The effect on the British economy was immense and immediate owing to the huge numbers of working animals needed to move equipment such as artillery from one site to the next. Such basic tasks became lethal interludes, as enemy machine gunners could take out the lead pair in a team of six or eight, immobilising the equipment, the surviving horses and the hapless soldiers who had to sort out the situation and salvage what was recoverable.
Horses and other pack animals were valued more highly by the British general staff than the rank and file soldiers of the day. The loss of thousands of horses was a problem for manufacturers everywhere, especially those who needed to provide local delivery services for their customers.
You can reckon that horses would have been expected to carry up to twenty percent of their body weight. Their harnesses may not have been taken into account, but would have been a significant proportion of the loaded animals’ burden. Establishing the loaded weight of a pack horse allows us to make some very rough and ready comparisons between the horses lost to the war effort and the rising numbers of two and three ton commercial vehicles that started to appear on British roads in 1914.
The power output of the early lorries used in opening years was fairly low for the most part, around 10 horsepower. You could say that every lorry did work that would have taken a team of six or a team of eight horses. In doing so, it is important to establish more than one set of parameters to make the comparison useable. It is fair to add that the power output from commercial motors increased rapidly from the late 1920s, this can readily checked by consulting contemporary advertisements. Despite its years of international power and influence, Britain was a net importer of horses between around 1860 and the 1930s. This not only stressed the economy, it makes valid comparisons between machinery and horses hard to establish.
It is quite likely that vehicle purchases made by the British government throughout the war years contributed to greater volumes of lorry traffic on British roads attributable to registered vehicles. Even if a high proportion of military vehicles are not registered through civilian agencies, what matters is that the total pool of vehicle tonnage was boosted in the process. Wartime government purchases of 20,000 vehicles will have added about ten million pounds to the postwar development iterations of the next generation of commercial motors..
The Departmental Committee on the Distribution and Prices of Agricultural Produce, generally referred to as the Linlithgow Committee, was proactive in its assessments and investigations of agricultural prices. Its remit covered the empire. The committee took its name from Victor Hope, 2nd Marquess of Linlithgow. He went on to chair a Royal Commission on food in India in 1928. Linlithgow, as the media called him, became the last viceroy of India: his 7-year tenure of office ended in 1943, amid scenes of chaos and civil unrest.
On December 11 1924, the second day of the 1925 Royal Commission, a senior MAF (Ministry of Agriculture and Fisheries) civil servant gave the government response to a raft of administrative measures recommended by the Linlithgow committee. Like a rabbit caught in car headlights, the MAF defence was more a limp lettuce than a fig leaf.
First up was a recommendation to standardise financial reporting for large companies such as United Dairies. MAF headed off further discussion, explaining that the government had “considered” introducing a bill, before playing its trump card: “The matter is now in the hands of the Board of Trade.” Next up, a suggestion that co-operative dairy schools should be revived is fended off with the assertion that a circular on the subject has been issued to all local authorities and “…steps are taken as opportunity offers.” Try getting that back out of the long grass.
The proposition that standing milk advisory committees should be set up to consider and discuss dairy industry issues as the need arose got short shrift. One of these bodies would cover Scotland, another would speak for the dairy industry in England and Wales: the topic prised about a dozen words from MAF: “Separate committees have been set up for England and Wales and for Scotland.” To finish the dairy section of the Linlithgow agenda, the committee urged the government to set and enforce minimum fat contents for whole milk cheese, cream and milk powder, which should apply both to imports and UK production. Sensing an imminent change of subject, the civil servant was more forthcoming. The health minister had made regulations that had come into force during May 1924. Meanwhile, the ministry of agriculture was: “…conducting investigations with a view to determining what standards, if any, may be adopted in respect of whole milk, cheese, and single and double cream.” Nothing gets past a pen pusher.
The Linlithgow committee and its extensive social network existed to promote the interests of landowner members. Its purpose was to develop a consensus around what constituted good practice, modern management and new routes to market. A fair proportion of these families would have benefitted from the compensation lavished on former slave owners: it never occurred to anyone that former slaves had a stronger case for reparations.
The Linlithgow committee (Lc) makes further recommendations, some of which I will list here, with MAF responses where relevant, including paras 258; 260; 302 and 303.
Para 258
Lc urges colleges and local authorities to train students in dairy production, as well as the prevention of spoilage. MAF agrees that this is worthy plan, even if some sites have needed assistance to reinstate standards.
para 260
Lc warns that whey is an ongoing problem, with little prospect of being profitable. MAF reports that a pilot plant has been transferred to Reading university, where development work is in hand.
The topic turns to commercial sharp practice: paras 209, 302 and 303. Since MAF replies to all these items in a single paragraph, I will add MAF’s response at the end of this post.
Lc is concerned that the practice of “averaging returns” is illegal and “not infrequent”. Growers should be checking all the entries on their invoices, the committee warned. Growers were not impressed. Another scam on similar lines started to rear its ugly head. By logging into the sales system under multiple identities, traders could cover their tracks and extract money from linked systems without being caught out.
Faced with significant numbers of food traders routinely breaking laws that may or may not have been enforceable in the first place, MAF resolutely turned its back and looked the other way:
“Efforts are being made to secure voluntary agreement between both sides of the industry on the points raised in their recommendations. If these efforts do not meet with success, it will be necessary to consider the introduction of legislation to deal with the points at issue.”
It would be reasonable to assume that it is the task of government to enforce existing laws and to review legislation that fails to meet the changing needs of the country. Accepting the status quo and asking both sides to play nicely in future resolves nothing. The problems will not go away without appropriate action; on the contrary, they will degenerate into crises.
For discussion of this theme in a more recent context, go to the contents page for France Loses Out and follow the links to individual topics.
More follows later: a series of related charts and some of the original text will be available in the near future.
In 1916, the UK was growing a scant 20% of its total wheat needs. Bearing in mind that most people eat bread, it made the imported 80% of the ingredients for the nation’s bakery goods vulnerable to attacks from early German submarines. The rapid deployment of U-boats left the British vision of the Blue Water policy in tatters, as policymakers relinquished their once unshakeable belief in the Royal Navy’s invincibility. The country’s agriculture was trailing behind the Netherlands and Denmark, leaving unmet demand for cereals to be patched with shiploads of imports. There was no lack of demand among the hungry cities – British consumers were spending some four hundred million pounds a year on food, a figure bandied about by Christopher Turnor, no less.
The country’s disproportionately extensive grassland was not supporting beef production on a comparable scale to continental Europe. Could it be true, as some hardliners argued, that the fabric of British agriculture had been weakened by years of indifference of, among others, policymakers, but also by a shadowy network of traders, fixers and miscellaneous n’er-do-wells? While British livestock accounted for some 60% of meat consumed by the nation, no less than 80% of the UK’s foreign meat imports shipped from a single port in Argentina, by a single firm based in Chicago, oddly enough.
Unlike any other science, economics is prone to give away the plot before the curtain rises. Behind the scenes, everyone is committed to turn out a happy ending, almost regardless. There is ambivalence towards change, even though the job description is built around identifying and predicting the future without fear or favour.
In the summer of 1914, the Ministry of Labour started collecting the food data for the Cost Of Living Index Number. Straight out of the gate, there is no way in which vegetables other than potatoes can be included in a year-round constant economic indicator. Potatoes can be stored all round the year and can be shipped from growers all over the world, whatever the season. We have already listed the foodstuffs that were monitored and index-weighted against other products or sectors. Having seen what the Ministry of Labour brought to the table, it is time to look at how the price points for these goods were settled. The researchers searched out prices displayed by over 5,000 retailers, even though there was a lot of repetition in the mix. In some areas, shopkeepers voluntarily maintained the same prices for known value items (KVI), a practice that would be unthinkable in the twenty-first century.
In the initial layout stages, some prices would be queried: if the point is to gather live data, it should be taken as found, warts and all. Modern food manufacturers refer to a group of products that are “liquid with identifible lumps” and I would apply the “identifiable lumps” analogy to raw price data. The lumps are the very point of the work in hand, giving both insight and substance. The process moves up a gear, averaging the product families and applying percentage shifts to some big and bulky calculations. Statistics at this level is not for the faint-hearted. The table below, taken from November 1924, is an example of the genre. Readers will notice that in this table, farthings are counted as 0.25, but this will change in the not-too-distant future to an integer, pure and simple.
The consumer panel was first used by the Board of Trade in 1904, when 1,944 urban working households were recruited. A footnote on page nine of the evidence volume reads:
The validity of using the budgets of 1904 was confirmed by the Working Classes Cost of Living Committee of 1918, under the Chairmanship of Lord Sumner, who reported that it was fairly certain that “Between 1904 and 1914…..no considerable changes took place in the mode or standard of living.”
The household data was calculated on the basis of the weight of food purchased, making comparisons between years more reliable, the civil servants argued. It is a moot point that a shop price in pounds, shillings and pence should resolve into a comparable pounds and ounces value at the table. To start with, the purchasing power of cash can and does change. The world in which we live is moving away from meaningful comparisons with previous eras, which need to be taken with a pinch of salt.
The impact of Government policy to improve the national diet comes with proportionally higher costs for poor households. This would apply to any government, of any stripe and any motivation. Structural change in food policy throws differences in earnings into sharp relief. When the Food Standards Agency published the Eatwell Guide in 2016, a headline price rise of £38 a week would mean a doubling in food bills for poor households, compared to increases of just over a third for affluent consumers. Using Eatwell data on a national scale, the Food, Farming and Countryside Commission (FFCC) researchers calculate that legislating for a healthy, sustainable national diet would come with a £57 billion price tag. This is not unreasonable, indeed it is good value, given that the direct cost of healthcare arising from diet-related illness is running at £91 billion, lost productivity is costing the economy an estimated £116 billion a year and the human cost a further 60 billion a year. The numbers basically accuse the food industry of being more interested in making money than feeding people. However, the scale and scope of the money extracted from UK health authorities by pharmaceutical corporations is several orders of magnitude greater and no less reprehensible.
If the market economy functions as one might have hoped, would this ever have occurred in the first place? Part of the problem with economics is that its practitioners quite cheerfully play “what if?” games as they go along. The problem is not that a variable might be unreliable, but that the outcome can change in so many ways that it is impossible to attribute a given outcome with a single input. Treating the food/health sectors as a series of events, for example, creates a dislocated view of the biosphere, with more gaps than development. Some gaps are inevitable, but you can have too much of a good thing.
Amazingly, there are still folk around Britain who have failed to grasp the meaning of the words”third country”, let alone why it matters. The Centre for Inclusive Trade reports a 16% drop in British food exports to the EU and is calling for concessions that would be unfair to other third countries. There isn’t a cat in hell’s chance of the European Commission doing a special deal for a former member state that opted to become a third country.
If there is so much money at stake, how strong is the case for accusing food manufacturers of Ultra Processed Foods (UPFs) of wilful distortion? The arrival of wall to wall processed foods in British aisles in postwar years has been accompanied by rising numbers of patients needing treatment for heart disease and diabetes. While the nation gorges on sugar, salt and saturated fats, there is a drop in foods that bring whole grains, let alone fruit and vegetables. Processing very finely divided ingredients allows fertilisers and other toxic residues to spread downstream through the food chain. More worrying is the uptake of UFPs in the population. These foods now account for 57% of the adult diet and 66% of adolescent food intake. The health issues in later life are already filling up British hospitals and soak up two thirds of the health budget.
The UK government spends more than GBP 90 billion a year treating chronic food-related illness, according to the Food, Farming & Countryside Commission (FFCC). Researchers estimate that investing half that sum would be enough to make a healthy diet accessible to everyone living in the British Isles. The full extent of the damage caused to the UK economy by a dysfunctional food sector is GBP 268 billion pounds a year, taking lost productivity and early mortality into account, FFCC warns.
The Food, Farming & Countryside Commission is an independent charity, set up in 2017 to inform and extend public involvement in ongoing discussions about food and farming. Using government data as a starting point, FFCC argues that it would be significantly cheaper to produce healthy food in the first place. More to the point, it is not an option to go on footing the bill for damaged public health resulting from the commercial sector’s activities. There is simply not enough money in the kitty and time is running out.
Researchers took into account government estimates of productivity and lost earnings arising from chronic illnesses. These indirect costs are borne by a range of actors in the economy, such as local government departments. Such costs are real expenditure, but the total figure is not recorded as a single aggregate figure. When combined with the initial figures, the result is a more imposing figure and looks like figure S1.
The direct costs (in red) are existing government data; indirect costs (in orange) indicate the economic impact associated with the prevailing levels of unemployment and early mortality. Like the submerged part of an iceberg, we ignore these costs at our peril.
Working with indirect costs opens the door to accusations of misinterpretation, but economists have worked hard to establish methods that can avoid serious pratfalls. Healthcare is supported by a wide range of funding sources, from government down to private individuals. The money is real enough, even when it comes from private individuals. It just becomes harder to count. There are times when budgets for nearby or related units will be skimmed to meet ad hoc requirements. Welcome to the economists’ underworld, where early retirement due to ill health is just another negative variable.
The UK’s high spending foodies have been facing empty shelves, where they would normally find taramsalata. The strike action at a Bakkavar factory in Lincolnshire has successfully kept the salty pink dip out of big name retailers, including Waitrose, Sainsbury and Tesco. These industry heavyweights will get their on back on all those involved in due course — and reduce dependency on Bakkavar by recruiting other suppliers. Here is how the BBC covered the story.
The biggest challenge that faces traders of all descriptions in arriving at a reliable price structure is the speed at which food products can change. Some animal products undergo a series of changes from farmgate to end user, others barely change at all. Some foods deteriorate very fast, while others are stable; add to this processes such as grading and the scope for differentiation can spiral out of control. For a comparison to be usable, the items need a number of similarities, bearing in mind that not all users will have the same interests. At the risk of keeping alive a business myth, there were some retailers who chose to take a cut in their margins rather than push up prices. Some individual members of of the Linlithgow committee would have been very well informed about specific markets and sector, but less inclined perhaps to share.
