Column #116

The law of supply-demand states that shortages coupled with rising demand causes higher prices and vice versa. But it doesn’t always apply on a permanent basis. That’s because increasing prices can inspire an increasing supply which results in lower prices.

Unless commodity producers significantly increase their volume versus fixed costs, more demand for their commodity doesn’t mean earnings increase. Because of a fast response time for changing crops, farmers and ranchers gain little or nothing as people change their food preferences. It’s also why agricultural producers can’t afford to fund aggressive long-term marketing programs. There’s simply no money in it.

To illustrate why there’s no incentive for farmers to advertise foods people should eat as recommended by nutritional and biological scientists, let’s compare agricultural commodity producers with healthcare.

Insurance and government subsidies give everyone access (unlimited demand) to healthcare without any consequences for their personal behavior. Therefore demand grows for an inelastic supply. Compounding the demand is the decades-long upward trend of increasing incidences of chronic disease.

The money earned by healthcare providers, services, and pharmaceuticals is astronomical. Entry is restricted by education, huge capital requirements, and government regulations. The wealth effect is so motivating there’s no way providers are willing to recommend healthcare solutions that would reduce their gravy train.

For decades studies have shown that nutritionally deficient foods cause chronic diseases. There have been thousands of studies involving many different diseases. Therefore it’s safe to say that virtually every chronic disease reflects a nutritional deficiency. Thankfully some people pay attention to science and, by adjusting their diet, suppress or stop their chronic disease symptoms. But their successful message is silenced by laws prohibiting people from saying proper foods “cure” chronic diseases. The medical community supports those laws and tells everyone chronic diseases can’t be cured or suppressed except through drugs and operations.

The media won’t promote foods that are low glycemic, nutrient dense, with properly balanced essential fatty acids while warning about the counterparts. The media earns generous advertising revenues from the healthcare industry, food retailers, and restaurants who are unwilling to advertise nutritional science and risk the status quo. To boost the effectiveness of those ads the media publishes recipes and food suggestions that are loaded with sugars, carbs, and health food nonsense.

So why don’t farmers, who grow the best health foods, jump on the bandwagon and spend a lot of money advertising and lobbying politicians to get the message out about what people should eat for better health? If more people eat the food those farmers raise won’t that benefit the farmers’ earnings?

No. The price of individual foods farmers raise won’t permanently change even when demand increases.

Farmers and ranchers own or lease land in very diverse environments and infrastructures. Some land can only be grazed. In the better environments, though, the options for what can be grown is very diverse. So, if demand for spinach increases versus oats, some farmers will switch from growing oats to spinach. As that happens, supply very quickly meets demand bringing the price down and the first farmer who did all the promoting earns not a nickle more.

Even the grocery stores can’t make more money when people cut out oatmeal and eat more spinach. So who’s left to fund the diet change information required for a healthier America? So far the promotion comes mostly from outfits promoting supplements and processed products that offer little if any actual change in the food chemistry of the average American’s diet. Most of the promotion comes from the healthcare system, restaurants, processed food producers, and the media they support.

To your health.

Ted Slanker

Ted Slanker has been reporting on the fundamentals of nutritional research in publications, television and radio appearances, and at conferences since 1999. He condenses complex studies into the basics required for health and well-being. His eBook, The Real Diet of Man, is available online.

For additional reading:

Economics Basics: Supply and Demand by Adam Hayes, CFA

Supply and Demand from Wikipedia

Are We What We Eat? By Ted Slanker