Costs of convenience

While demand for frozen food booms, processing plants head to China and Mexico

Posted by Tom Philpott at 2:09 PM on 11 Aug 2006

Read more about: food | China | Mexico

Farmers markets may be fashionable, but the U.S. appetite for convenience food remains insatiable. "Retail sales of frozen foods in the U.S. in 2005 reached a record $29 billion, up from nearly $26 billion in 2001," declares a news report.

Meanwhile, the U.S. food-processing giants are shuttering domestic plants and heading to Mexico and China, where labor and produce costs are cheaper than California's central coast, once the U.S. frozen food capital.

In an age of broad energy and climate uncertainty, market forces are conspiring to make our food system ever more energy intensive. How can this be? How can it make economic sense to not only haul food from China and Mexico, but to keep its temperature below the freezing point throughout the process?

While the American propensity to snatch dinner from the freezer and pop it into the microwave may be deplorable, it also makes perfect sense. Who has time to cook? People need to work ever more hours to maintain standards of living.

According to Robert Pollin's Contours of Descent: The Economic Consequences of Clinton, Bush and Greenspan, real hourly wages peaked at $15.73 in 1973 and by 2000 stood at $14.15 (2001 dollars). And that was after a rare three-year growth spurt provoked by the stock-market bubble; since 2000, wage stagnation has returned.

Why? Largely because the great economic story over the last 30 years has been the opening of labor markets in Southeast Asia, China, Mexico, and Central America. As U.S. corporations have been free to set up factories in those areas, the bargaining position of U.S. labor has eroded. Workers choose between stagnant wages and no wages at all. (For another account of the dismal U.S. wage picture, see Paul Craig Roberts' blistering piece in the July 2006 Counterpunch, unavailable online.)

And that brings us to another market force driving the increasing energy-intensiveness of our food supply: energy costs are way up, but not enough to offset the advantages of exploiting cheap labor in far-flung places. Here is the above-linked Mercury News piece, explaining why a Bird's Eye closed a plant in Watsonville:

Workers at the Birds Eye factory in Watsonville earn $10 to $22 an hour -- roughly 10 times more than in Mexico and Central America.

In a recent post, I wrote that "Food processing enterprises -- from meat-slaughtering to cooling to dairy-bottling facilities -- have consolidated beyond imagination."

Now what's left of our processing infrastructure is fleeing south -- a trend we will likely live to regret.

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1 Comment | Post a Comment

Who could have guessed?

Those who control capital (the wealthy) are using the poorest of the poor to maximize their profit margin (anyone who hires a housekeeper for the lowest possible wage the market will bear is doing the same thing).

The evidence you present suggests that this redistribution of wealth is happening at the expense of low income Americans, flowing to low income workers in other countries and to those who control capital regardless of where they live. Great if you are wealthy or a poor person in another country who gets a job, not so great if you are a blue-collar American. Maybe there is an economist out there that can weigh in on this.

In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world

by biodiversivist at 3:25 PM on 11 Aug 2006

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