Commodity price increases - whatever the cause - are having effects all over the food industry.
Kraft, one of America's biggest food firms, is struggling with the soaring prices of its ingredients. The cost of these jumped by 9% or $1.3 billion last year, taking a bite out of profits. The Illinois-based company says it is working hard to defray the extra expense by saving money elsewhere. But it believes its best defence against rising costs is to go on the attack, with products and marketing that are better suited to leaner times. For example, the company has changed the recipe and packaging of Miracle Whip, a salad dressing and sandwich spread that is advertised as having the taste of mayonnaise with half the fat. It now comes in a plastic jar instead of a glass one, and has a wider opening that allows buyers to scrape out the very last glob. It now contains less soya oil, which is both fattening and expensive, and more water, which is slimming and cheap. [More]Yum! More pronounced are the shock waves rippling through the restaurant sector. McDonald's is doing well, "dollar" menus are now de rigeur, and folks are thinking a little harder before restaurant splurging.
This cost squeeze will test the nascent organic industry. The job cuts announced yesterday at places like Citicorp probably have more potential high-end food buyers than the typical plant closing. At least investors think so.
This could spell trouble for this growing sub-sector of agriculture. Key to the future of the agrarian farm future is the ability to command enough of a premium to justify the extra labor and handling costs of "hyphenated" products (free-range, grass-fed, etc.). Those dollars were most forthcoming from well-heeled consumers, for whom food represented far less than the fabled "10%" of disposable income. Meanwhile, the majority of Americans who pay more than 10% have their choices narrowed even more.
The move to better diets is also being re-examined for children. We forget there is a reason why milk is full of butterfat and rich in calories. Infants and small kids, unlike, say, 60 year old farmers, need lots of dense nutrition to grow. I think the mistake currently being made albeit for the best of motives is to equate small children as tiny adults.
'We expected the study to show nurseries were serving children food that was too high in calories, fat, saturated fat and salt, and low in vegetables and fruit. Instead, we found that the majority of nurseries had gone to the other extreme and appeared to be providing food that was too low in calories, fat and saturated fat and too high in fruit and vegetables.' This situation was putting children at the risk of developing nutritional deficiencies, she said.Eating habits in America leave much to be desired, I agree. But our emphasis on claories per dollar has left too many factors out of the value equation. We still choose like we might starve to death tomorrow.
The research also found that four out of five nurseries were giving children portions that were too small and only three in 10 provided them with meals containing enough calories. According to Almond, the under-five age group has different and specific nutritional requirements to those children of school age: pre-school children have a high energy and nutrient requirement. Because they have a small stomach and a relatively under-developed gut, they cannot consume large quantities of food at a time but need frequent small meals and snacks throughout the day.
In addition, too much fibre - such as that absorbed through over-consumption of fruit and vegetables - can result in insufficient intake of other food groups and inhibit the absorption of key minerals. 'Because a significant number of children attend nurseries from 7am until 7pm, the food and nutrition they receive there are key to their health,' said Almond. 'Nurseries are applying requirements of healthy eating for school-age children and adults to the one-to-four age group, who have entirely different requirements.' [More]
It is a shame that difficult economic times, unfortunate immigration policy and free-market subversions are conspiring to make the easy choices the wrong choices.