Today’s show is the book of the month. On the first day of each month we review a new book. In order to be considered for book of the month, the book needs to meet a very simple criteria. It needs to be impactful enough that it can change your life, or your perspective on the world.
The book this month definitely meets the criteria for book of the month. It is called “The End of Food” by Paul Roberts. The book breaks down how our food system works. It chronicles the history and the evolution from the most basic agrarian economy to the thousands of new convenience products introduced each year that now line the supermarket shelves.
Paul Roberts’ work is extremely well researched and frankly is a riveting book to read. I simply could not put it down. Every page had some new insight. I don’t think I will ever see the contents of the supermarket shelf the same way again.
Our current system of food supply is not at all related to consumer demand. It’s being driven by the need for the major food suppliers to grow their revenues and their earnings. As margins have fallen in various parts of the supply chain, the response has been to introduce innovations that restore the margins. But in order to get a return on those incremental investments, a higher volume of sales is required to recoup the investment.
Imagine that a farmer is being squeezed on price for, say, wheat. The buyer tells them that if they go out and spend $400,000 on a new combine, they can reduce their cost per bushel. But in order to recover the $400,000 investment, they have to plant more wheat which brings more supply into the market. That increase in supply, selling into relatively unchanged demand has the effect of lowering the price at market. So the business case for fancy new piece of farm equipment is in fact somewhat flawed.
Back in the late 1940’s fishermen in the Hudson River North of New York found that the fish kept getting bigger and bigger. Fishermen are rarely ones to complain about that. It turns out that upriver there is a pharmaceutical factory owned by Lederle that manufactured tetracycline, an antibiotic. At first the company thought it was the Vitamin B12 that was a byproduct of the fermentation process. But in the end it turns out that these micro-doses of antibiotics were enabling the fish to expend less energy fighting bacteria in their gut and allowing more energy to go into growth of muscles and bones.
It wasn’t long after that the food industry discovered the same effect in chickens, pigs, and cattle. Mixing antibiotics into the feed meant that the growth rate of baby chickens was increased by 25%. It increased the growth in turkeys, pigs and calves by almost 50%. Of course, now we face a situation where antibiotic resistant bacteria are increasingly infecting entire herds of farm animals.
Fast forward to today. Major food companies like Nestle are struggling to achieve major growth in the mature markets in the US and Europe. The emerging markets in Asia and Africa represent an opportunity for growth. But they require customization of products to local tastes. Nestle’s new R&D center near Shanghai has divided the country into regions based on flavour preference.
The relentless focus on price has resulted in food that is of lesser quality and nutritional value; a food culture that is increasingly defined by value pricing and portion size; and a global production system so lean and just-in-time that it is simultaneously more likely to be disrupted and less able to absorb the impact of a disruption, as we have seen in recent weeks.