Tag Archive | labels

Layers of added value and the cost of ingredients

If organic ingredients are 50% more expensive, then an organic bagel should cost 50% more, right? A moment’s thought should convince you otherwise. The moment you take the components out of the field, off the tree, into the slaughterhouse, the expenditure on “organic” or whatever other method was used to grow the food stops.* After that, you start “adding value” to it: first to get the thing cleaned and packaged, then to process it into a foodstuff. Foodstuffs are combined to produce food, or in the case of more processed food, just ingredients for a later step. This all has to be shipped carefully, be stored, take up shelf space, and be sold. The steps may very well vary, but what remains is that there is a lot of human and machine labor and resources used up for steps beyond the actual growing of food.

With every layer of processing, the cost of ingredients becomes a smaller and smaller proportion of the total cost of food. One instance which I find striking is that of organic products that are sweetened with organic sugar. The “organic evaporated cane juice” I see on ingredient labels is never fair trade. It being so would hardly increase the overall cost.

With this line of reasoning, restaurants should be the first to go organic, local, fair trade, everything. Ingredients there simply do not make up that large a fraction of the eater’s cost. The cost of ingredients in a meal might double, say from $3 to $6, and that would convert a conventional meal of $12 to a local, organic (, etc.) meal of $15. With that sort of marginal difference and with the number of people who would prefer the latter meal, economics suggests there should be more such restaurants than the two or three that exist around here.

*The exception is the cost of additional steps necessary to ensure lack of cross-contamination in processing, including having to run smaller batches.