Urban Food Chains

the links between diet and power

Asia Caribbean
FairTrade week
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Yes, this week is FairTrade week, when a growing number of ethically-traded products take centre stage in retail premises up and down the country. To be sure, the FairTrade movement works hard and has achieved a lot for growers all over the world.

Many of the core FairTrade range of products were first grown on plantations, the building blocks of forced labour. British-owned tea plantations in the 19th century responded to the abolition of slavery by ejecting former slaves and bringing in cheap, indentured labour from China and elsewhere in Asia. Slavery by another name, it can be argued.

The much-argued over compensation that was paid out in the years following slavery’s abolition went to the slave-owners, to compensate for their lost profits. At that time, nobody thought to compensate the former slaves or their families for the upheaval and loss caused by the wholesale removal of men and women with working lives ahead of them, who were taken halfway round the world to work on sugar plantations or the like.

The building of today’s FairTrade movement marks a welcome change in how the world views food producers. It would be easy to overlook the origins of so many products before the the widespread recognition of ethical trading as a commercial policy in its own right.

pic: FairTrade

There are more than 10,000 small-scale banana growers around the world, for whom FairTrade premiums earned GBP 31.8 million in 2020. The large-scale plantations of Latin America and elsewhere can still make economies of scale that get them preferential terms for everything from growing costs to shipping and distribution. But their existence is not a direct threat to FairTrade growers on the scale they once were, during a time when the average asking price for bananas in UK supermarkets dropped from 18p to 11p apiece.

There are 1.9 million FairTrade food producers around the world, earning a living growing tea, coffee, cocoa and a wide range of other agricultural products. In 2020, 1,880 producer organisations earned GBP 169 million in FairTrade premiums. The visibility of FairTrade products make it a successful brand with a strong appeal to consumers.

pre-history
What happened at Girsu?
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It is rare for mainstream newspapers to get excited about prehistory, but the Guardian ran a whole page about Girsu the other week (find it here). We’ll take it from the top and explain that what used to be an administrative centre of the Sumerian world in the second and third millennia BCE started life as Girsu. Now called Tello, it is in southern Iraq.

One of the earliest cities known to humanity, Girsu was first excavated by teams of French archaeologists 140 years ago, but the site has experienced significant losses among its artefacts. Since the most persistent artefacts are administrative records, archaeologists have pieced together some first impressions of a civilisation that had a fiscal policy as just one part of an elaborate social structure. To inhabit a site for millennia, as the Sumerians obviously did, can only happen with a balanced and extensive environmental skill set. So no flushing toilets in Girsu, then, but something altogether better adapted to a densely-populated seat of power.

pre-history weights and measures
Weighty measures
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To get a proper grip on the workings of the food industry, it is vital to understand the units that are used to organise and quantify production. Since this website sets out to cover historical aspects of food production, it is only fair to offer a brief outline of the systems in place during the formative years. We live in a metric world and should not imagine that any other set of measures is going to return to re-establish the status quo ante. But we need to have a clear idea of how we started.

The starting point for present purposes is the 1824 Weights and Measures Act, for reasons which will be made clear to subscribers in a fuller treatment of the topic. It will come with a basic tool kit for managing the practical aspects of modern metrology. For seekers of the arcane, visit Wikipedia’s excellent listing of the many post Sumerian systems and notations for weights, here. (https://en.wikipedia.org/wiki/Ancient_Mesopotamian_units_of_measurement)

food production
Seasonality
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It might seem odd to a modern observer that 1925 the UK’s ministry of labour classed the following foods as seasonal: fish, milk, butter eggs and potatoes. The fact that prices and availability might change quite widely across the seasons is the argument advanced for ignoring such basic foods when calculating a retail price index, putting the cart before the horse.

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retail UK
Pricing experts?
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Ask any economist and they will tell you that economics is a science, founded on mathematics and using none but the most reputable methodologies known to  data science. The acid test of any scientific discipline is to be able to replicate previous experiments and repeat the results to within an acceptable margin.

To be sure, if you take the same data and crunch the numbers using the same calculations, you will get the same results as the previous economist. But economists are a diverse bunch, not to mention the smørgesbord of economic policy recommendations to be shared as the opportunity arises.

If this sounds less than serious in its tone or intent, it may be that it is not written by A Proper Economist (always spelt out in full, never abbreviated).  A Proper Economist can be relied upon to analyse market data and forecast the likely price trends within a given sector. If, on the other hand, you wanted to know the retail price of a grocery line for the coming year, that would be a closely-guarded secret between a supermarket buyer and her (or his) supplier.

With the digitisation of the retail checkouts in the early 1990s came a tidal wave of sales data that  probably paid for itself in months, if not weeks. For the first time in recorded history the multiples knew exactly how many units of which lines they were selling; where they had multiple suppliers of own-label products, the multiples could start to make direct comparisons between suppliers and the margins they were generating. Individual suppliers knew what volumes each was shipping to retail customers, but only the category managers had the whole picture.

The supermarket buyers’ secret weapon of choice in those days was a miniature tape recorder and microcassettes, to which verbal contracts worth millions of pounds were recorded. If any hard copies were ever made, these would have been kept in a safe. Supermarket buyers and category managers are overlapping roles. They were always instantly recognisable at trade fairs, leaving suppliers’ stands with their tape recorder pressed to their ear, playing back the small print as it was wrung out of the supplier. There was no question of suppliers passing  on price increases arising from higher prices on the international markets: the standard response in those days was: “find cost savings in your business…”

Not that buyers ever applied that principle to their own dealings with suppliers. Food manufacturers presenting new ranges and products to multiple retailers would face requests for a listing fee and, often as not, a request for special offer stock. Listing fees were also referred to as hello money or  shelf money, among other names. They used to start around £5000 per SKU for listings in an agreed number of outlets. Shelf money was never refunded if a product was delisted, but would be requested for years to come during the life of the listing.

Special offers were not what they might have appeared to be, either. The retailer charges the consumer for the special offer part of the price. But does the multiple give away the offer component of the price? Hell no! They recovered that from the suppliers, who systematically funded the offers, providing free stock directly or having the equivalent money withheld from invoices for other products. Either way, the retailer banked the full price on special offers. From the retailer’s point of view, it is having your cake and eating it. Even though the Grocery Code Adjudicator’s office has cleaned up the retailers’ act, the industry is still haunted by the ghosts of past sales targets.

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Europe UK
The value of money
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Before we roll up our sleeves and dig into the serious business of food pricing, we need a way of converting LSD to pounds to two decimal places, among other things. Here is an inline WordPress calculator courtesy of the Calculated Fields wonder plugin. My first idea was to provide a digital scratchpad with which to convert one-off figures.

[CP_CALCULATED_FIELDS id=”7″]

As part of the process, I also wrote a spreadsheet to do more heavy lifting, which is now available to logged-in users using the download link in the housekeeping menu box.

However, we need to do more than calculate the face value of old prices, we also need to translate the value of the currency of the day. The problems arising from trying to apply a one-dimensional measurement to a multidimensional world range from the practical to the arcane and I quite understand that not everyone will be keen to engage with them. One of the first is to decide which parameters are relevant and whether any of them are of universal application, regardless of whether or not such parameters are measurable.

What the official data looks like

Western currencies recorded centuries of relative stability until the latter years of the twentieth century. The 1944 Bretton Woods agreement maintained an appearance of exchange rate stability in the postwar period. But the Vietnam war and US foreign policy made the gold standard unsustainable and by 1976 the Bretton Woods agreement had been dismantled and (most of) the world’s currencies were floated on open markets . Labelling the result as inflation is only half the story: there has to be something else in the mix to explain the steepening gradient on the graphs.

Ian Watson, who developed the website Official Data [dot] org, has assembled government data from western economies in a bid to quantify the huge losses in their currencies’ historic spending power from the 1970s on. Working from national government data, Watson plots the value of 100 pounds from 1925 to the present day and found the 1925 hundred pounds to be worth around 7,700 pounds in today’s money. He found a similar pattern in the US, Australian and other major industrial economies. The graph for the UK is dramatic: clicking it will take you to the relevant page on Watson’s website.

customs clearance haulage lorry ship UK
Food pricing 100 years ago
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The 1925 Royal Commission on Food Prices was tasked with investigating food industry prices. Urban Food Chains is running a series of analytical case studies for subscribing members, drawing on the detailed statistical evidence that was heard by the commission during its deliberations.

Board of Trade statistician Mr A W Flux* told the hearing that the UK food economy grew by about two billion pounds (thousand million) in 1907. This comprised goods consumed in the UK , which were valued at between 1,248 and 1,408 million pounds; services between 350 and 400 million pounds and additions to capital of between 320 and 350 million pounds.

2. Of the goods consumed, some passed directly from producer to consumer (e.g. bread), and in some cases the produce was consumed by the producer (e.g. farm and garden produce consumed by the families of the cultivators). A second class of goods, while passing through merchants’ hands, was not the subject of retail trade, while, of the goods that passed though merchants’ and retailers’ hands, it was estimated that the charges of distribution, including cost of transport, amounted to something between one half and two thirds of the value of the goods at the place of production or importation.

The First Report of the Royal Commission on Food Prices, Volume 3, Appendix 1, paragraph 2

*Mr Flux is not a made up name, it is for real.

Follow the links for subscription-only content about the core commodities of the day:

bacon
bread
butter
cheese
eggs
fish
flour
fruit
ham
milk
sugar
tea
vegetables
wheat
food manufacture food production
A good read
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William Sitwell’s book Eggs or Anarchy tells of the logistical struggle to feed the UK during the second world war. Its quality lies in the author’s insight into the interplay of power, politics and military muscle. Verging on understatement, Sitwell’s account of a gargantuan effort to achieve the almost impossible.

Among the illustrations that appear is a map of the world showing the sea routes taken by different wartime food imports, listing the distance travelled by each  commodity. The map once hung in the Minister of Food’s office and carried a stern warning about not wasting food that had travelled so far and was part of the war effort.

A seasoned business man, Frederick Marquis was elevated to the House of Lords, taking the title Lord Woolton. He was appointed food minister by Neville Chamberlain. Retained by Winston Churchill, Woolton worked tirelessly to overcome the ever steeper challenges that he faced in office. His lack of experience in political life was both a hindrance and a blessing in disguise, giving him the freedom to pursue policy targets without compromising political goodwill.

Woolton demonstrates the complexity of real world logistics and how political considerations can deflect attention from operational necessities.

customs clearance haulage key concept
Import VAT
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In today’s economy there is a big difference between the place of production and the place of importation. The place of importation today is the customs post which is clearing goods for onward travel. At the turn of the twentieth century in the days of empire, it is arguable that the UK national frontier included or contained the colony concerned. One can be sure, however, that customs duty would not have been expected on goods leaving a colony and arriving in the UK.

In today’s post-Brexit economy, however, things are a bit different. The place of production determines the rate at which duty is payable (or zero percent, depending on the provenance of the goods). Regardless of duty, however, import VAT is due and can be considered a fiscal rite of passage. A consignment of goods arriving at a UK border post will have a customs value: this is the aggregate of the value of the goods, insurance, shipping and administrative costs (such as phytosanitary checks for plant material).

Zero duty goods will not be charged import VAT on the zero duty, but will be charged VAT on the rest of its customs value, at the applicable UK rate. Since import VAT is an aggregate, it will be levied on each component of the consignment at the applicable rate of VAT, for example haulage from point of origin to the customs post will be charged at 20%; food safety checks at, say, GBP 450 per container will be taxed at 20%, likewise freight insurance and office admin costs. In short, zero-duty goods will escape customs duty but not import VAT. The implementation of Sanitary and PhytoSanitary (SPS) checks in July 2023 will add another administrative layer to food imports as well as increased levels of import VAT when customs values rise.

The increased cost of importing food — or anything else for that matter — will not go unnoticed. The government’s additional tax revenue will take a bit of explaining. There is not a queue of UK politicians waiting to sell this delicate state of affairs to the electorate.