By Tim Costello
CEO World Vision Australia
Last week Coles announced that it plans to cut the price of fruit and vegetables by up to 50 per cent. Its major competitor, Woolworths soon followed. The price war sounds like great news for Australian consumers. But while it may provide relief to hip-pockets around the country in the short-term, questions are now being asked about the true impact of bargain basement pricing.
For most Australians, grocery shopping is a chore we have to squeeze into our busy lives. We rush up and down the aisles, tossing products into our trolley while we mentally juggle the household budget and keep the kids entertained. With all that in mind, it’s not surprising that we embrace bargains, specials and sales with enthusiasm.
But how often do we stop to consider the impact our shopping habits have on the wider community? The truth is that someone always bears the cost of cheap produce, whether it be small retailer, distributor or farmer. It may be beneficial to our hip pocket today, but tomorrow that sale price may have untold social or environmental costs.
For development NGOs such as World Vision Australia, the darker side of “cheap” food has become increasingly clear from decades of working in the developing world. A stark example was the food price crisis of 2007-2008. Years of abundant supplies of subsidised food from developed countries in the northern hemisphere lulled many low income countries into a false sense of food security.
Governments cut back on investment in agricultural research and development, and many local farmers found they were unable to compete. When world food prices started to rise sharply in 2007, farmers in the developing world struggled to increase production, and millions of the world’s most vulnerable people were forced into extreme poverty and hunger.
Or consider the case of the world’s 4-5 million small-holder cocoa farmers, based largely in West Africa. The global cocoa market exerts constant pressure on these farmers. They have little bargaining power and are often in an extremely weak position when confronted by powerful intermediaries, multinational cocoa processors and chocolate companies.
As a result, they are not paid a true or fair price for their produce. While others in the supply chain are rewarded handsomely and we, the consumers, are provided with an abundant supply of cheap chocolate, many cocoa farmers remain trapped in poverty.
The social cost of this arrangement can be devastating. Poverty in cocoa farming communities can fuel labour exploitation as well as other social repercussions. Young children are often forced into labour, and in some cases, child slaves are even trafficked across borders from poor neighbouring countries to work in the cocoa fields.
There are approximately 500 million farms in the world of two hectares or less. Half of the world’s undernourished and 75 percent of Africa’s malnourished children live on these farms.
Support for these farmers comes in many guises; wise consumer choices, community development and technical assistance. World Vision programs assist farmers to access markets and coops that achieve fair prices, and in doing so empower them to sustainable livelihoods.
Of course, there are other forces also playing a part in farmer poverty – factors such as poor harvests, climate, tariffs, and over-supply. But the principle still stands. When produce is sold below its true cost, someone pays the price.
If it’s not you, it might be an Australian farmer struggling under the weight of debt, or it may be a farmer in West Africa struggling to feed their family. And if that price is less than the cost of production it cannot be sustained: today’s bargain will be replaced with higher prices down the track.
So as consumers, we need to think beyond just price, and consider for a moment what might be behind that enticing bargain. One way is to look for ethically produced and certified foods. In some cases these are more expensive than non-certified foods. But this is because you, the consumer, are actually paying the true cost of the product, and helping to ensure that producers get a return that will help keep them producing in the future.
This current debate is a chance for us all to reflect on our consumer choices. I have always been impressed by the compassion and generosity of Australians.
As a nation, we believe in a fair go for everyone and as result, we are amongst the most generous givers in the world.
But we should not forget that there are small decisions we can make in our everyday lives that impact on the wider community, be it our state, country or the world. Our buying power drives market demand which in turn, affects the livelihoods of both domestic and international producers.