Economics

On the horsemeat scandal

5202328378_026317008a_nThe horsemeat scandal has now been with us for over a month. It has morphed from a localised concern about adulteration of one processed meat product at one supermarket chain into a Europe-wide exposé of industrialised food production and lengthy supply chains that are ripe for abuse.

Many people are outraged. But what sort of a scandal is it? That’s harder to pin down. There is rightly much concern about the mislabelling of food products. You’d expect that when you buy food it is accurately described. That is the foundation of a food production system which relies, in theory at least, on informed consumer choice. And behind that concern for mislabelling someone is being swindled when cheaper horsemeat is being passed off as more expensive beef.

But it is hard to think that people not realising exactly what they are eating can, in itself, account for the degree of popular concern we’re experiencing.

If you look at the ingredients in most processed foods they often includes a long list of complex chemicals. Most consumers – we can plausibly hypothesize – have no notion of what those chemicals are, what they do, or whether they are dangerous. But rarely is that a source of complaint. Maybe it should be, but it isn’t.

If we were talking about adulterating meat with something that was intrinsically dangerous or inedible then outrage would be fully justified. But horsemeat isn’t dangerous. There is the concern about contamination with bute. Yet I’ve not seen one scientifically-informed opinion that suggests the levels of bute that have entered the human food chain are dangerous. A scientist commenting in one of the broadsheets earlier in the week put the issue into perspective when he said that by the time you’d eaten enough contaminated horsemeat for bute to pose a meaningful risk to health you’d have done your health serious damage as a result of all the salt and fat you’d have eaten along the way.

There is the more focused concern that some forms of cross-contamination in meat would be particularly problematic for people of certain religions. But, again, that isn’t the driver behind much of the concern.

The fact that it is horsemeat involved in the scandal would partly explain why it generates outrage in Britain, where, for no particularly logical reason, horses are no longer eaten. The concern about mislabelling is magnified by transgressing a cultural norm. But that doesn’t explain why exposure of adulteration generates a similar concern elsewhere in Europe.

Last week Peter E provided a thought-provoking post offering the theory that in part what the scandal is doing is reconnecting the food on your plate with its source – forcing people to become conscious of what they are eating. When it comes to pigs, lambs and cows many people have successfully managed to dissociate animals and food. But not for horses. And this reconnection makes people uncomfortable. The arbitrary distinction between animals that are eaten and animals that are not eaten is thrown into sharp relief, as it would be if a visit overseas resulted in the experience of eating dogs, snakes or insects.

The political debate is focused as much on culpability as it is on consumer detriment. Is it the retailers, the suppliers, the regulators, the government or the consumers who are to blame? Thursday’s Question Time pantomime brought some very different views on the situation into conflict. George Galloway was characteristically vociferous in the view that the Government was to blame: budget cuts have resulted in 700 fewer food inspectors. Maria Miller, for the Government, was resolute in refusing to engage with the idea that the Government might have anything to do with it. She argued instead that the focus should be on the retailers – they have a responsibility to ensure that what they are selling is what it claims to be. There was also some attempt to shift blame to the previous Labour government for moving to a lighter touch regulatory approach, in line with developing EU practice. Susan Kramer was very exercised by the length of the supply chains making it difficult to ensure that the content of processed food was what it claimed to be.

The discussion, as is to be expected with Question Time, shed absolutely no light on the matter whatsoever.

But the scandal raises important issues about how markets function, how they can be regulated, and how that regulation can be enforced.

The Government view that the retailers need to take ownership of the problem is, in one sense, correct. And given the incidence of horsemeat among cheap processed meat products it looks like it runs counter to quite a bit of prevailing practice. It would appear that many retailers and first tier suppliers are not in the habit of routinely checking the composition of the products they sell. Unless, that is, someone wishes to argue that they were actively complicit in misleading the consumer. I’m not aware that anyone is arguing that.

It’s not as if they couldn’t check, because they are all now frantically checking their products. It’s just that it would appear that up until this point they have not felt the need to.

I would be interested to know what their legal liability might be in this situation. I’ve no idea. Clearly whatever sanctions they were in line for, if found to be selling mislabelled processed meat products, were not sufficient to persuade them to ensure that they weren’t.

That highlights a weakness in the Government’s argument. If regulatory inspection is not the key to exposing any problems, then quality regulation would have to be driven by consumer complaints and legal action under consumer law. Yet, there is clearly a profound information asymmetry at the heart of the market. It is unlikely that consumers are going to be able to use visual inspection to distinguish minced horsemeat from minced beef in amongst the microwaved gloop. Especially as few would, almost by definition, be able to recognise horse meat by sight or taste. It is implausible to suggest that consumers are going to be chemically testing meat products to establish their composition. So it’s implausible to argue that the consumer is a credible regulatory mechanism.

In fact, the whole system rests on precisely the opposite premise. Consumers are willing to participate in the market because they assume that what they are buying is being checked by someone else and is therefore safe to consume. That covers the absence of horsemeat in food labelled as beef as much as it covers the safety of an additive such as – to pick one at random – E124. The market, like all markets, relies at base on trust. The violation of that trust contributes to the outrage.

And all arguments that seek to place blame on consumers for demanding cheap food have a strong whiff of victim blaming about them. With the real value of benefits and wages eroding for most people I’m not sure what we might expect to happen other than an increase in demand for cheap food. We’ve also, over many years, created a culture in which real food is, for many people, a televisual spectacle rather than a culinary experience. Long working hours and lack of culinary confidence, coupled with powerful advertising campaigns by multinational corporations, lead almost inevitably to reliance on convenience foods. I’m far from a fan of Michael Gove, but it seems both timely and valuable that he is about to make cookery lessons compulsory.

The point about the length of supply chains making the situation complex seems to me to obscure the core problem. A longer supply chain involving more companies making contracts across transnational borders increases the opportunities for fraudulent activity. And it makes it harder to work out exactly where any such fraudulent activity occurred. But it doesn’t make it more difficult to tell whether the output of the supply chain – the burgers sitting in the supermarket freezer – contains horsemeat or not. The answer to that question would be the same if the supply chain contained one link or ten.

Several reports on the scandal allude to the involvement on criminal gangs and intentional profiteering from food adulteration. Presumably at some level this is part of the story, but it is an argument that helps shift attention from a broader critique of industrialised and oligopolistic food production. The problem is infiltration by a criminal element, not a system that is sick.

We could, in contrast, argue that retailers are culpable in a less direct way. Supermarkets control a large proportion of the market. Structuring the whole grocery market on the basis of price competition and cheap food of obscure provenance, the supermarkets have exerted downward pressure on suppliers. There are limits to genuine improvements in technical efficiency in the short term. So the only way to reduce prices further is to adulterate the food with cheaper ingredients. That logically leads to the hypothesis that even if retailers didn’t know some of the packets contained something other than what it said on the outside they might have suspected something. In that case the situation may be better characterised as turning a blind eye rather than active connivance. But, again, we have yet to see any evidence to substantiate that hypothesis.

Broadening the debate out to critical reflection on the way processed foods are produced and whether this is healthy would be welcome. But the structure of the industry is not the sole justification for food regulation. It isn’t simply globalised capitalism that did it. That would be to ignore the characteristics of the goods being exchanged in food markets. After all, we’ve had legislation regulating the production of food and drink for three quarters of a millennium precisely because of the temptations for producers to take advantage of consumers’ income constraints and informational disadvantage.

The calls to ensure more effective regulatory enforcement should be treated seriously. But putting the fear of regulatory enforcement into producers is never as effective as changing the culture of an industry so that it doesn’t infringe so frequently in the first place. And that assumes that regulators see themselves on the side of the consumer. Questions have asked about whether the Food Standards Agency is fit for purpose. In particular, Joanna Blythman launches a scathing attack on the FSA in yesterday’s Guardian. She argues that throughout its existence it has acted as an advocate for industrialised food production rather than a critic. Even if processed meat products are declared meat free, they are still profoundly unhealthy. So if we thought more effective regulation was the answer, there would be question marks over whether the regulatory structures in place could deliver it.

You get the sense that there is plenty more to come on the horsemeat scandal. If it is the springboard to revaluate some of the parameters of food policy then that would be hugely valuable. But we shouldn’t underestimate that real change will require a significant reorientation of our food culture. But better food costs – money, time or both. And with many of those most acutely affected facing the consequences of grinding austerity the conditions for such a rethinking are less than ideal.

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Images: (i) nathanmac87 (ii) hamad M via flickr.com under creative commons

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2 replies »

  1. I usually agree with your blog but not this time.
    The health hazard given what has happened is to do with the fact that horses were not raised to provide meat in the first place, and the way they were raised did not take into account this would happen. It is only by chance that horse meat is probably safe. It could easily not have been, and in any case horse meat is the only example we currently know about. What other meat has entered into the food chain yet to be revealed. The answer might be none, but we don’t know. People committing fraud like this are not going to make it easy for us to find our about it.
    The problem with the regulators are 2 fold. Currently they are on the receiving end of cut backs so they can’t do their job properly, and in addition they have been subject under successive governments of the “revolving door”. Private sector interests who lobby for light touch regulation are often brought in to provide that light touch regulation. No wonder they are not very good at it.
    So what we need is well funded politically neutral regulators. Is that a panacea? No it isn’t. Regulation is tough to enforce and incentivising regulators to do their job properly is also tough. We will never have the perfect solution. But that is no excuse for trying to get this right as there is a high price to pay for when things go wrong.

    • @Geoffrey – thanks for your comment. I have to admit that I’m not entirely sure where we are disagreeing. Or, at least, there is nothing in your comment that I disagree with.

      I wasn’t arguing against reviewing and strengthening regulation, but was making the point that there are doubts about whether the FSA is in a position to deliver – at least in part for the reasons you state. My point relating to regulation is that regulation can never be as effective as changing the culture of an industry because regulators cannot be present all the time. And what happens when they are not there is governed by the culture of the organisation/industry. If I wouldn’t dream of adulterating the meat I sold because I would consider it dishonest and unethical then the presence or absence of a regulator is not crucial. In one sense the point is trivially true.

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