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In the first part of this post, I have tried to analyse factors, I believed, have influenced the increase of prices of fruits and vegetables through the past 50 years.
Evidently, this interrogation requires a much deeper analysis and won’t have an unique cause.
On second thought, I arrived to a first conclusion: it is more difficult trying to solve the interrogation globally. Given many of the nowadays considered as “developed countries” had to overcome different obstacles and went through different situations to be where they are now. Hence, to tar everyone with the same brush would not be a wise course of action.
Picking for instance Spain, which has suffered a drastic transformation of its economical structure. Going from a strong Agrarian Economy towards an Economy characterised by the strength of the Tertiary Sector and the Building Industry.
Also, trying to reach to a better and more solid explanation, I get to this article through JCD -thanks by the way-.
According to this, I would like to introduce a few aspects, that may somehow contradict some of the hypothesis I exposed in part I of this post.
:: Erratic Consumer Behavior:
Consumer’s behavior is not constant, in fact we could considered it as an ever-changing factor. Preferences fluctuate through time not only be cause of “fashion”, but for other circumstances, such as new discoveries, political and social changes, etc. All that influence our buying decisions. For example, refrigerated meats and poultry products increased their revenue by about 22% from 2003 to 2004, while frozen juice fell 15.4%. Seafood and dry-packaged dinners declined too about 7% during the same time. What allow us to infer that the rate of change will not slow down, conversely may even quicken. Moreover modern lifestyles and increased disposable incomes in the “developed countries” may impose that food products not only come to us fresh, but also processed and packaged in different ways (as happens with fully cooked lasagnas which only need a couple of minutes in the microwave, or ready to eat soups and grilled chicken breasts). What leads me to two ideas: the first is that each time we need to spend less time in the preparation of food. And the second that we are tacking more consciousness of the necessity of having a balanced diet. Besides, we shouldn’t forget that we are referring to something that can be treated either as a final good or as a commodity.
Adding up all this together, it would be perfectly rational to think that on one hand: direct demand for fruits and vegetables may have a decreasing trend. And on the other hand that the intermediate demand (through the food industry) may have triggered prices preventing merchandise to enter into the market, that could be destined straightly to consumers, in other words making demand greater than supply in the “fresh food market”. Indeed jointly with the growth of the “new healthy-processed food market”, big companies performing as a “cartel” may push producers to reduce price of fresh food as a commodity good. Which could lead to a translation of this pressure into the price of food as a good.
Another way of understanding the question, given all that has been explained. In the developed world, fresh food has became into a luxury good and as it we are made to pay for it. If we consider that the habit of eating out has become more popular nowadays, and that we as consumers demand each time a wider range of alternatives to choose. What could be contemplated as third actor that contributes to increase the pulse of prices to both the direct and intermediate market.
By Laura M. Gonzalez
Is it price always a sign of higher quality?
Undoubtedly the answer to this question will vary depending on who we are asking to.
Nevertheless, what concerns me more are the cases when the answer fluctuates depending on which generation belongs the person we ask, in particular when fluctuations are not due to regular changes of the consumer’s preferences. This could be the instance for what it is publicly known. For example: which aliments reports more benefits to our wellness.
One could make a first assumption by saying that this relatively has not changed much in the last 50 years.
Therefore, it would be naturally to question why vegetables and fruits are excessive expensive this days in the developed world.
According to the statistics of 5aldía (5aday) organization it would be difficult trying to justify this fact through demand impulse, given consumption of fruits and vegetables has not increased.
Another possible explanation comes from the production side. One possibility could be the introduction of technical improvements and the investment needed to implement them, may lead producers to reverberate the increment on their costs into prices. What, on the other hand, would be paradoxical given those improvements are supposed to boost productivity therefore to diminish costs of production and prices. And indeed, from an accountant point of view, amortization of patents of technology has nothing to do with the Operating expenses.
Furthermore, one may think that within globalization, a better environment to trade has been settle, what may lead to more competence, and as a result better quality and prices.
Unfortunately this has not been the case. Because this process does not appear to have its reflection in the World Trade Organization rounds, where the reduction of Tariff and Non-tariff barriers are discussed with discreet outcomes.
Once and again the trade-off between developed and non-developed country takes place. And as usually consumers are the victims.
Then I wonder: Why do we have to pay more for goods which are supposed to be more healthy or to have better quality?.
This post will be continued.
By Laura M. Gonzalez
