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11 Responses to “The Crisis and the Economics of Horse Meat”
We had a discussion in house about whether the horse meat controversy could be linked to our debt-based monetary system. Kevin said there must be some link. I said it was to big a stretch because even under our proposed system suppliers would still look to source cheaper meat products.
However, it seems Kevin is as insightful as the Financial Times and I will eat my humble beef pie.
The article discusses the rise in unaffordable horses as the recession has loomed on, which is of course a direct consequence of our monetary system.
“As Claudio Borio of the Bank for International Settlements puts it in a recent paper, “The financial cycle and macroeconomics: what have we learnt?”, “deposits are not endowments that precede loan formation; it is loans that create deposits”. ”
Unfortunately I don’t have time for a good go at this, but the thought arises that when people argue that Sovereigns should be subject to the discipline of the markets, these are the very markets that will bring you horseburgers.
Dead Animals ‘Go Interrailing’: Horsemeat Scandal Is a Europe-Wide Problem
By Carsten Volkery in London
This week the scandal over horsemeat in hamburgers and lasagne has spread beyond Britain, revealing cracks in the Continent’s food supply chain. Authorities are now trying to trace the meat’s circuitous path across Europe to prevent future problems.
“No artificial flavors or colors,” the packaging of the frozen Spaghetti Bolognese prepared meal at British supermarket chain Tesco’s promises. The additional ingredient causing such a furor right now, however, isn’t even artificial. The misslabelling was even worse: Instead of the beef advertised, the product, which was sold under the chain’s own Everyday Value label, contained a huge amount of horsemeat — at least 60 percent. And all natural.
Horsemeat scam is a European problem
13 February 2013 NRC Handelsblad Amsterdam
The horsemeat scandal has taken on European proportions. While European countries seek to blame each other, they are ignoring the underlying problem, which is that the economic crisis has meant that low income families are increasingly dependent on cheap meat.
“This problem encompasses all of Europe”, warned Alan Reilly of the Irish Food Services Authority last Friday. Yesterday, the British Minister of Agriculture, Owen Paterson, spoke of “an international criminal conspiracy”.
There is not anything inherently unhealthy about horse meat. However, the reason for the uproar in the horse-loving countries is not only because, as Reilly pointed out last month, “it is not in our culture to eat horsemeat”.
To further pursue the dodgy analogy between the horseburger crisis and the debt crisis; just as there are three possible solutiions for over-indebtedness, there are three possible solutions for horseburgers:
1. Destroy all the horseburgers and the firms that created them (debt default)
2. Invent something that converts horsemeat into beef in specially constructed laboraties employing thousands of workers (solve the problem via economic growth).
3. Write a law that says horsemeat is beef. (money-printing / inflation).
With the honorable exceptions of DOCM and MH, I’m guessing most of the casual commentators on this blog would be content with option 3. Which IMHO is still the option that we are most likely going to get.
Neat idea that of designating ‘horse’ as ‘beef’ in certain circumstances; just as in medieval times monks decided birds were really fish, in order to get around the prohibition on eating meat on Fridays, from which the expression ‘neither fish nor fowl’ is said to originate. In our times I guess it’s ‘neither horse nor beef’?
Seriously though, there’s something very badly wrong with our food industry. Has the EU faddishness for banning certain cheaper cuts from the humble cow as meat ingredients ‘fit for human consumption’, as one British scientist suggested on radio during the week, driven local producers to seek alternative cheap meat additives in order to maintain the low-cost product demanded by major retail outlets? Indeed, is there a connection between the emergence of these transnational retail giants and their hegemonic control over suppliers’ price and production profit margins and what has occured? To what extent is the ‘free movement of goods’ within the EU a contributory factor? Has the trend towards commodification of food products by the markets anything to do with it? Thus, is its resolution really a matter of regulation, or are governments and food authorities attempting to regulate a system that was ill-conceived in the first place?
For the citizen, all those nice smiling pictures of ‘Farmer Bill’ who lovingly raised the cows that became the beef that was added to god knows what to produce the ready meal packet in the fridge beneath aren’t worth what the photographer was paid for taking them. Good news for the ’support your local butcher’ campaign though.
Food is said to be relatively cheap these days relative to income for most EU citizens. It was not always so.
Most food is retailed in supermarkets. Most of these are low margin high volume commodity merchandising operations comparable to e.g. the auto industry. Their suppliers are selected mainly on price subject to regulatory compliance. Many suppliers are under enormous pressure to sweat their human and capital assets 6 x 24 hrs/week in order to make margin. Their manufacturing operations are something to behold. Ingredients are simple and low cost. Manufacturing is semi-automated and safe, given the unengaged and harried mindset of the oepratives involved and their managers. Formulation of new foods is carried out in labs remote from factories and is dominated by value engineering and chasing taste trends. The packaging with happy smiling animals and bucolic rural scenes bears little relationship to the production process.
Standing back, what we have is mindless industrial food production, constituting much of the diet of most of our populations. The ‘machine’ does what the machine is programmed to do, and it will assimilate low cost meat proteins if either the regulatory climate or its enforcement permit this. The horsemeat issue to Irelands credit was picked up by our national inspection regime. But more generically low cost nutrition implies high volume manufactured food.