Discrimination is alive and well against fruits and veggies in the EU.

The European Union (EU) has strict standards (see HERE) when it comes to the sale of certain fruits and vegetables.

In order to be sold in markets they must meet not only quality specifications but "appearance" standards as well.  This results in LOTS of food waste because the "Ugly Fruit and Veggies" never make it to the selves.

This article is about a woman in Portugal who is taking on the problem of "Lookism" in produce section.

Portuguese Food Co-op Fights Back Against EU-Mandated Waste

Baylen Linnekin speaks with Maria Canelhas from Fruta Feia, which has saved literally tons of great food from the garbage.

Seems like this is a way to keep prices high as well.  There is plenty of ugly produce that is perfectly edible and meets all the standards for consumption.

Ugly Produce is a suitable substitute for "Beautiful Produce".  A face palm to the concept of Substitution Bias.

Guess this guy below would not be welcome at a super marche' in Paris.  Looks like he could whoop up on the other veggies in the bins.

I have had this for awhile. I lost track of the source

NOTE: I corrected several spelling errors. Note to self: Press.Spell.Check.  :)

"Food Inflation" is on its way in 2014. But the reason for it is not what you may think it is.

"Food inflation" is likely on its way to the US, and the world for that matter.

When we here the word "inflation" the first thought is usually "too much money chasing too few goods (services)" and look to Monetary policy as the culprit. Maybe...but maybe not.  Sometimes the fundamentals of Supply and Demand in various markets are at play.

Here are data from the USDA ERS site that show the change in prices of the basic food groups for the past couple of years and projections for the remainder of this year.  Does not look encouraging at the checkout line.

If you go to the site they give a nice overview of the why prices in select categories are increasing.

The short story version is there seems to be a perfect storm of variables coming together to conspire to raise prices---weather and disease (plant and animal) working to limit or decrease supply on the Supply-Side. Demand from recovering developed economies (US, Europe) and emerging developing countries (China, India, etc) is putting upward pressure on the constrained food supply chain.

Source: USDA ERS

Here is one interesting point made in the USDA ERS analysis I think is important to understand as well.

Additionally, it appears as if supermarkets are maintaining minimal price inflation on packaged food products, possibly in an effort to keep prices competitive in light of rising cost pressures for most perishable items. Therefore, ERS has revised the forecast for sugar and sweets downward to 1 to 2 percent and for nonalcoholic beverages downward to 1.5 to 2.5 percent for 2014.

Competition serves to minimize, or at least soften, the REAL changes in prices of many goods at the actual point of purchase.

Grocery stores have to consider YOUR whole grocery basket of stuff you purchase when pricing their products AND what other stores are doing at the same time.  They may play a little "rob Peter to pay Paul" with the inventory.  In order to minimize the price increases of the perishable goods you see above, they will likely decrease prices of other non-perishable goods where they may have more pricing discretion.

So, market fundamentals are increasing the prices of many diverse individual food items at the same time, and competition between stores is working to minimize (albeit not stop) those price increases.

That is what I call a reasonable explanation.  Maybe not one that makes us happy, but more reasonable than the one I started out with.

It only took a little more work.   :)

Food prices increasing? It is that #%*^&^& Ethanol policy! See chart here for the damage. Paging Frederic Bastiat!!

Congress has mandated (not asked, not requested) that the nation produce 13.3 Billion gallons of ethanol to be an additive to fuel.  Big Picture Agriculture estimates it takes 4.7 Billion bushels of corn to produce that much ethanol.
 
This number of bushels of corn WILL BE taken out of the market for ethanol production, regardless of the total number of bushels of corn harvested.  Read that again.

If the drought reduces the total harvest below expectations, then there will be less corn for the food/feed market. This will put upward pressure on the price  of everything else that requires corn as an input.

A consequence "unseen" to policymakers, but very "seen" to the "good economist" (go HERE for a short explanation. If you were a student of mine, you already know)...

What Percent of this Year’s U.S. Corn Crop Will be Required to Fulfill the Ethanol Mandate?

Source: Big Picture Agriculture

From HERE: 

''I’ve simplified the answer to the question by ignoring RINS credits and ethanol in storage, cutting to the crux of the issue. And of course, final corn crop production numbers are premature.

To do my calculation, I used the following:

• To produce the 13.2 billion gallons of ethanol mandated this year requires 4.7 billion bushels of corn.
• U.S. corn yields may average 117.6 bushels an acre this year, according to the results of a survey of 1,900 growers by Farm Futures magazine. This would amount to 9.86 billion bushels.

In 2013 the ethanol mandate will rise to 13.8 billion gallons, an increase of 4.5 percent over this year.

I have planted many a golf ball in a corn field but have not planted much corn on a golf course. See here WHY Iowa farmers are doing just that. How do you say "FORE!" in corn lingo??

A nice article in the NYTIMES today about farmers in Iowa  using every bit of land they can to grow crops, even land that previously had been deemed not worthy of cultivation.  This is an excellent example of increasing opportunity costs as it related to the Production Possibilities Frontier:

"Across much of the Midwest the sharp increase in farm earnings has driven the price of farmland to previously unimaginable — and, some say, unsustainable — levels. But in the process, to much less fanfare, the financial rewards have also encouraged farmers to put ever more land into production, including parcels that until recently were too small or too poor in quality to warrant a second glance."     

Most of the land they currently grow crops on could be labeled "low hanging fruit" which means that relatively little, other than the basics to cultivate, plant, maintain, has to be done to harvest the crop.  It is the most suitable land for growing crops.  However, this fertile land is not unlimited and "at the margins" of the acreage land is going to become less suitable, hence more expensive to convert to growing crops. 

The "opportunity cost" (explicit and implicit costs) of converting this land to grow food is too high relative to (1) the price they might receive for any food grown on it, or (2) an alternative use this land might have may be more suitable for the production of some other good:

A splash of green on a solid beige horizon, the golf course at the edge of this tiny town promised residents nine modest holes of refuge from corn country. Decades earlier the spot had been farmed, too, but the rocky soil was so poor, the saying went, that you couldn’t raise hell there with a fifth of whiskey.         

“The rottenest piece of land there is,” said Mick Elbert, a local car dealer who served on the golf association board. “All it is good for is a golf course. That’s why we built it there.” As Crop Prices Soar, Iowa Farms Add Acreage

Now that there appears to be sustained higher prices for various agricultural commodities, farmers and the communities they live in,  are willing and able to spend additional money and resources (equipment, time, etc) to cultivate this less suitable land because the opportunity cost of NOT doing so (foregone profit for farming relative to the profit, or lack there of, for the golf course) is now greater. 

""But this year, over a chorus of objections, the greens and fairways were plowed under. The course had been losing money, and crop prices had been breaking records, so the new owner did the type of quick calculation that is quietly reshaping the region and determined that it was more valuable as farmland. The first harvest took place this fall..."

For extra credit, draw a Production Possibilities Frontier showing the production of only two goods, Food and Golf Courses.  Show on the graph the result of the landowners decision about what to do with his land ("resource").  Explain why you drew your PPF curve the way you did (straight line or bowed). 


Read the whole article below the fold:

Informative Graphic on Rising Food Prices around the World...We need to do better...

Source: World Food Progarmme