Felicity Lawrence: How austerity’s “relentless drive to deregulate” impacts the food on our plate
By rob hopkins 20th November 2013
Felicity Lawrence is a food writer and Guardian investigative journalist. When it comes to understanding the dark side of how the food industry works, she is the place to turn (unfortunately, the Skype connection was too bad to allow a usable podcast). What I wanted to explore was how austerity measures are affecting what ends up on our plate. It was a conversation that inevitably started with the recent horsemeat scandal:
Felicity, you’re just about to publish an updated version of your book ‘Not On the Label: What Really Goes into the Food on Your Plate’. One of the things that it has that differentiates it from the previous one is a new special chapter all about the horsemeat scandal. What does the horsemeat scandal tell us about the state of our food industry today, do you think?
I think it’s a kind of warning of systems failure really, because what you’ve got is a system that’s set up with these very, very long and complex supply chains where everybody’s trying to add a bit of profit as the stuff moves around. But it was a system built on cheap oil in a period when energy was cheap and it made some sort of sense, economically at least, to do that, if not environmentally. Of course, that’s no longer true.
Many environmentalists were predicting, as the price of energy went up, that inevitably there would be fantastic strain in that system, and I think that’s what you’re seeing here. You’re seeing a period where wages are stagnating, consumers are feeling real pressure because the cost of their fuel bills is going up so much, the cost of food is going up so much. Costs for the industry have gone up enormously, so whether you’re a meat processor, your energy costs have gone through the roof, the cost of beef has gone up enormously as its demand globally has increased and as climate change takes its toll.
If you’re a supermarket, your energy costs have gone up enormously, you’re transporting food round and round in these great big loops, and you’ve got enormous refrigeration costs because you’ve got these extenuated supply chains. But you can’t put your prices up to reflect that overall, because people on the lowest incomes simply can’t afford to pay any more for their food, so if you put the prices up, they just buy less. The supermarkets are locked into this model where everything must be continuous growth. Even in a deep recession, the shareholders demand continuous growth, and their executives are rewarded on the basis of continuous growth, but they can’t achieve it. So the system is broken.
What you’ve ended up with is contracts for cheap processed meats such as burgers being re-negotiated every 12 weeks, and prices being proffered by supermarkets that were just too low, so the processer wasn’t able to make a proper margin on them. Then they’re putting a great squeeze on the people supplying them. Then some point down the line, someone was committing fraud.
The whole issue of austerity that’s being imposed, which you described in one thing I read recently as being used to “dismantle the state”, how has it impacted on the food sector?
You’ve seen this relentless drive to deregulate, which preceded austerity and the recession. It’s been the neoliberal trend here for decades. It certainly happened under the last government, not just this one, but it’s accelerated with the recession and austerity. You’ve seen enormous cuts in public services that might have kept alive our capacity to regulate industry. There’s a trend for industry only to be inspected on what’s a so-called ‘risk basis’, because any inspection was regarded as a burden and so there are less inspections in factories. You’ve got certain types of cutting plants that no longer have a daily inspection service.
You’ve see a dramatic fall in inspectors and a huge slashing of trading standards budgets, and the main regulating standards agency has been eviscerated: that was one of the first things that the coalition government did when it came to power as part of its ‘Bonfire of Quangos’, these pesky agencies that were regarded as a nuisance, added to industry costs, got in the way. So it had a lot of its powers taken away, and you can see in relation to this huge, huge fraud, one of the biggest food frauds for centuries, that they simply don’t have the powers or the capacity to actually work out who’s done what and hold anyone to account.
Is that something which is just an unfortunate by-product of the need to save money, or is that an intentional gutting of those institutions, do you think?
I think there’s been an ideological drive which precedes this government but has accelerated under it, the sense that the state should be removed and that business and industry can regulate itself. Here we’ve got a spectacular failure. Industry cannot regulate itself. Its interests are going to be very different to the interests of the public, that’s precisely why there is a role for the state.
One of the other things that has been deregulated along with the other things has been stuff around, although there’s been less ability to police, has been the issue about gang masters and slavery and food and everything.
The re-emergence of slavery in the last couple of decades is one of the most shocking aspects, for me, of the current food system. It’s become an enormous problem. It’s happened because methods of production have changed, and that’s changed the relationship between labour and capital.
What you get with these ‘just in time’ ordering systems, that are very sophisticated but for the supermarkets, it enables them to eliminate all risk and waste from their end of the chain, so they only ever order once you’ve already bought something, and the barcode on your product has been scanned. That then triggers an order that cascades down to a supplier down the line who might find out in the evening that he needs to double his delivery to the supermarket the next morning.
The only way that those suppliers can then meet that demand is by having a pool of surplus labour. They obviously can’t afford to employ those people directly, so they end up with this outsourcing system where they have the agencies. The only kind of people who are prepared to work those sorts of random shifts as they happen, 12 hours work one minute, no work the next, are generally migrants who’ve got no choice and who are desperate enough to take it. That’s really why this whole system has built up.
Once you’re relying on that kind of casual labour it’s not surprising that abuses creep in, because the gang masters have control over the labour, they have control over people’s lives. They have to be transported around from one factory to another in different parts of the country. They don’t have any accommodation except through the gang master.
You get into this system of control, and there are just repeated abuses which are very shocking. In some cases that I’ve looked at recently, there was one just last year, real proper slavery where people have no freedom of movement, they aren’t aware of where they’re being taken, they’re subject to physical threats and intimidation, have their documents taken away from them, and live in fear. That’s going on in modern Britain. It’s very shocking.
Is that something which is just an unfortunate by-product of the need to save money, or is that an intentional gutting of those institutions, do you think?
I’m not suggesting that everybody who works in it is a willing participant in it. Lots of hard-working farmers increasingly really struggle to survive unless they’re working on an enormous industrial scale, and I think scale matters. When you get to that huge scale, you lose the humanity in it, and that is reflected in what goes wrong.
There are an awful lot of people in the supermarkets who work hard or think they’re doing their best, but I think they’re trapped in a system that actually doesn’t work. It doesn’t work particularly for those on the lowest incomes. What we’re seeing is wages being held down or driven down, what used to be reasonable jobs in the sector being undercut by the system of casual labour, so that people don’t have enough money to buy the sort of food that keeps them healthy and well, and now we’ve got austerity on top of that, you’re seeing people having to make choices between food and fuel.
The argument in favour of the supermarkets is always that they’re much cheaper than all these independent shops and people like them and if they didn’t like them they wouldn’t go there. One of the things I’ve done in the new edition of Not on the Label is actually unpick some of that.
Their profits are very healthy. It’s very hard to say what’s going on with prices, but there has been very substantial food inflation, running considerably ahead of overall inflation, and that’s partly cost and a lot of it is energy cost, which, if we had a different system, that wouldn’t be such an issue. But also when they give you something on special offer with one hand, they can take it back somewhere else. By upping the price of things that we’re less able to compare on, or we’re not certain what they are. We’re seeing an awful lot of this yo-yoing of prices at the moment, which competition experts have described as anti-competitive.
There was an article I read that you wrote recently, I think the one about David Cameron and not knowing the price of a loaf of bread, where you said that ‘deep discounting has driven a race to the bottom’. What does that race to the bottom look like?
As I say, supermarkets remaining profitable despite a deep recession, consumers struggling to pay their bills, prices going up and down in a way that makes it very hard for anyone to know where best value is. The things that are being promoted to encourage us into the stores so that they get all your business and there are not many alternatives left – if you want to go and find a nice greengrocer it’s getting harder and harder – the things that they’re promoting are by and large the things we know we should be eating less of. It’s heavily processed foods, foods higher in fat, salt and sugar, and there are academics who’ve done the work on that and show that’s true.
It’s become increasingly difficult for people on low incomes to actually eat the sort of food they need to be healthy. The corollary of that is that we see these extraordinary inequalities that are widening in terms of health, so that if you’re on a lower income, in a lower socio-economic group, you’re much more likely to suffer a higher rate of diseases that relate to poor diet. You’re much more likely to suffer obesity. You’re much more likely to have low birth weight. All these complex issues. So there’s a real social justice problem there.
Part of that is that tension between people being on lower and lower incomes, so therefore needing to buy cheaper and cheaper food, therefore the argument is that we need supermarkets because they’re the only people that can feed people on those kind of incomes. Is there a way out of that cycle?
I think you have to frame the questions a bit differently. If people can’t eat, can’t afford to eat well enough to be healthy, then they’re not earning enough. We’ve seen this driving down of wages as I said, and we’ve seen the flight of capital with companies paying less tax. It’s not really good enough for them to say “they can’t afford more, let them eat junk, they can’t afford decent beef so let them eat horse”. That’s where we’ve ended up.
Of course, the people who ended up eating the burgers adulterated with horse were those on the lowest incomes. I think that’s one of the reasons it hasn’t had political traction. It’s not affluent people – they don’t eat those kinds of things, the cheapest burgers and processed meats. The people who are buying those are the people who can’t afford anything else.
Ed Miliband recently was talking about the idea of freezing the price of energy to make energy more available to people. Is there a case for the government intervening in the pricing of food as well, or basic healthy foods, do you think?
I think it’s very hard to see how governments can intervene in price controls. I think again that’s framing the question the wrong way round. There’s often an assumption that we’ve moved beyond government intervention in supermarkets. The real question is that we’ve got markets that have been captured by a handful of players in the sector, and that’s one of the real problems. There isn’t the alternative for people to be able to go out to a local store or local street market and buy cheap fruit and veg that’s not perfect but half price because it’s not cosmetically perfect. But they could afford it, and eat very well on it. Those alternatives have been swept away, because you’ve got these oligopolies that have emerged.
So rather than saying, do we want socialist, Marxist price control, the question’s upside down. Why have we not got free markets? Because Adam Smith wrote, all those centuries ago, that business tends to monopoly and you have to counter it. But we are in an era when governments either don’t have the political will to ensure that there is better competition, or define competition so narrowly that they don’t really take into account the public interest.
But also these are globalised businesses, and we’ve moved to an era of globalised food industry but without a corresponding globalisation of the institutions that might actually be able to regulate and hold them to account.
What can we learn from previous periods of austerity that is useful now, from the 1930s and so on? Are there any lessons that, as we enter a new period of austerity that we can learn from those times?
I think what we’ve learnt from previous periods of austerity is that you see this huge gap between the top and the bottom, but actually what’s generally associated with that is unrest, whether it’s political unrest or worse than that, war. We ignore that at our peril.
Can it be argued that there is an opportunity inherent in austerity? Is there a silver lining to it? Does it create a space to do things that weren’t possible before?
I think if there’s one thing that does come out of it, it’s that people are reassessing. It’s a time to reassess. The system is creaking. Supermarket directors privately will say, we actually know some of this is unsustainable, but we need help. We do need regulation to say “that sort of thing isn’t going to be possible in the long term”. They talk about this phrase that’s being introduced: ‘choice editing’. We may not be able to have food from all round the world whenever we want at a price we can afford. Actually, some of it may be too unsustainable because there’s not enough water or it requires too much energy for transporting it or growing it in the wrong season. Those things, we may have to stop assuming we can have. We never used to have them, it’s only a recent phenomenon that we are able to have those things.
I think the other thing is the attitude to waste is changing. We’ve had, just in the last couple of weeks, a major supermarket, Tesco, actually being very open about just how much of its bagged salad goes to waste, which was quite ironic for me as I wrote a whole chapter about bagged salad and how dependent on exploitative labour most of it has been. And now we’ve got people saying that a great deal of it is thrown away, and maybe we need to rethink.
So I think austerity, very painfully for those in the bottom half, is opening up these questions at all levels.
In the Portas review it said that 97% of all groceries are sold through just 8,000 supermarkets. We’ve arrived in that situation, and the government is less and less willing to regulate or intervene. What can communities do? What can they do to start to shift that?
I think communities are probably one of the few ways we can actually start to change this. This industry is so powerful. People are running frightened of facing it and changing it. Rebellion always starts with small changes, and it will have to be from the ground up. Interestingly enough, for me when I look at what’s been successful in terms of taking on these huge power bases, it is actually the sort of asymmetric power of people on the ground or small NGOs, who use the same technology that the food industry has used to globalise itself and create this very concentrated system. They’re being disrupted.
I’m thinking, for example, of the Greenpeace campaign against soya being sourced from deforested parts of the Amazon, where Greenpeace activists were able to globalise in the way that the industry has and pop up all over the place attacking, or protesting outside, key companies, factories and offices and embarrass them in a way that nobody else had done before.
I think creating food companies who are dealing directly with producers, all that can happen on a small scale. Something bigger will grow from it, but it will take a long time. That again may be possibly another silver lining of austerity, that people are more receptive to that sort of stuff. They’re having to work harder to think how they can find stuff they can afford. There is this great burgeoning of interest in the producer groups and food co-ops and street markets.
It is, to me, the most appalling indictment of our current political system that we’ve got half a million people in the UK, which is one of the most affluent countries in the world, using Food Banks because they simply can’t afford to eat. At the same time, if you go to developing countries that are some of the biggest food producers, you can find food there is being produced on wages so low that even people in work can’t afford to feed their families. That, to me, says the current system has to be rebuilt.