Abhijit V. Banerjee and Esther Duflo published an interesting excerpt from their research titled, "More Than 1 Billion People Are Hungry in the World: But what if the experts are wrong?" in the May/June 2011 issue of Foreign Policy.
"Our research on this question has taken us to rural villages and teeming urban slums around the world, collecting data and speaking with poor people about what they eat and what else they buy, from Morocco to Kenya, Indonesia to India. We've also tapped into a wealth of insights from our academic colleagues. What we've found is that the story of hunger, and of poverty more broadly, is far more complex than any one statistic or grand theory; it is a world where those without enough to eat may save up to buy a TV instead, where more money doesn't necessarily translate into more food, and where making rice cheaper can sometimes even lead people to buy less rice.
"But unfortunately, this is not always the world as the experts view it. All too many of them still promote sweeping, ideological solutions to problems that defy one-size-fits-all answers, arguing over foreign aid, for example, while the facts on the ground bear little resemblance to the fierce policy battles they wage."
Have you ever had a tomato that looked perfect but tasted like nothing? You wouldn't be alone: 217,000 webpages complain about tasteless tomatoes and another 66,000 write on flavorless tomatoes. In an era of consumer sovereignty, this seems a little odd. Why do we spend $4 billion [USDA] on tomatoes if we don't like their flavor?
Maybe it's all in our minds? Reggie Brown of the Florida Tomato Committee says, "Everybody has an emotional attachment with a tomato they've grown and the memory of that taste," Brown says. "If you hold me to the standard of the tomato that you're emotionally attached to, I'll never meet that standard. You can't beat a memory." [USA Today] Mr. Brown puts a clever spin on the question, but I'd bet most people could identify a good tomato in a blind taste test.
We usually don't buy produce via a blind tasting. Instead, we use appearance to judge quality. Is the tomato rotten? Is it soft and wrinkled? How's the color? Are there bad spots? Was it smashed in shipping? If it's bad, we don't buy.
Producers respond by providing us with tomatoes that are unblemished, shiny, round, and uniformly red. Flavor? Flavor literally comes last. It isn't observable until after we buy and then it's too late. The firms' incentives are to produce perfect-looking tomatoes that ship well.
Growers typically harvest tomatoes while they are green and hard, since green tomatoes are more durable than tender vine-ripened fruit. Ethylene gas can turn green tomatoes red, but their taste and texture usually doesn't match a ripe tomato. The result: hundreds of thousands of unsatisfied customers.
Could a firm produce good-tasting tomatoes and profit from this market failure? Maybe. There's certainly a business opportunity there. But they can only be successful if consumers are able to identify the tasty tomatoes. So the question becomes, how can growers signal that they have a better tomato?
Branding is common way to differentiate consumer products, but it's generally difficult to brand vegetables in a meaningful way. One big Florida producer came up with an interesting solution-- grow better tasting tomatoes that look different from the usual tomato. Ordinary commercial tomatoes look perfect, so in order to differentiate, they market the UglyRipe tomato. UglyRipe is a beefsteak tomato with lumps and bumps that visually distinguish it from the typical supermarket tomato. The Florida Tomato Committee (a Depression-era institution that controls the winter tomato market) suppressed the UglyRipe for several years until a 2007 USDA ruling allowed it to be shipped out of state. [CBS]
It's not really the ugliness that makes this tomato tastier. The same tomato, picked hard green, would be flavorless. Ripe is the key in UglyRipe. The lumpiness is simply a marker for the investment in flavor quality that this producer made. They aren't alone. Selling tomatoes on the vine is another visually distinctive method of identifying an invisible attribute. The vine itself doesn't contribute to the flavor.
It's late summer in the southern hemisphere, so I'm able to get ripe local tomatoes at the Farmers' markets in Uruguay, but next year when I'm back in Kalamazoo I'll be looking for branded tomatoes. If you get a chance to try them sooner, let me know.
You probably know the story of Peter Miniut buying Manhattan in 1626 for $24 worth of beads and you may be familiar with the compound interest calculation that shows $24, invested for nearly four hundred years, grows enough to buy back the entire island at current real-estate prices, but what's less well-known is why the Dutch gave Manhattan to the British.
The answer, surprisingly, is nutmeg.
In 1667, the Dutch traded Manhattan for the island of Run, described by David Quammen as "the world’s most inconspicuous yet eloquent symbol of changing commodity values and myopic diplomacy." Run, a British colonial foothold in the Spice Islands, provided a competitive alternative to the Dutch monopoly on nutmeg.
Quammen explains:
Early spice cargoes were sold in Amsterdam at as much as 32,000 percent markup, and so the Dutch burghers who had financed those expeditions moved quickly to corner the trade. To eliminate competition among themselves, they united in 1602 as the Dutch East India Company. To eliminate international competition, they began nudging aside the Portuguese, who had reached the Moluccas first; the Spanish, who had gained a regional foothold in the Philippines ; and the British, who had established an East India Company of their own. The Dutch focused on the Bandas, where the other colonial powers had no prior commanding presence, and in 1611 they built a fort on the slope above Bandaneira. Meanwhile the British had established a more modest trading post on Run, just a few miles eastward. The British, if Muller’s book can be trusted, offered better prices for nutmeg than the Dutch. And the Dutch company made itself still more unpopular with the Bandanese people by demanding a monopoly concession. This led to rebellion, murder, reprisal, and war—between the Dutch and the Bandanese, between the Dutch and the British. At one early stage, the Dutch tortured and beheaded eighteen (or eight, depending on which source you believe) British subjects for conspiring to subvert Dutch colonial authority. That caused a stink back in England, but the Bandanese fared even worse.
The Dutch company officials were truculent, firm, and purblind, as imperialists of all flags usually are. Beginning in 1621, under a fierce governor-general named Jan Pieterszoon Coen, they began killing off the Bandanese population. Another measure was equally barbaric, though less bloody: They also killed nutmeg trees. They did their best to extirpate M. fragrans from most of its range—everywhere but on those few islands where Dutch hegemony was absolute, namely Ambon and the larger Bandas.
...
For almost two centuries, people everywhere bought nutmeg from the Dutch East India Company or not at all. And when the supply threatened to sate the demand, the company willfully destroyed tons of its own nutmeg in order to reinflate prices.
If you read my post on Coke you might be interested in this San Diego Union-Tribune story on
Is Mexican Coke the real thing?
Carvallo says his store goes through 10 to 15 cases of Mexican Coke a week – his entire stock – while he's barely able to push five cases of the domestic version.
"Sometimes I have it left over," he said of the domestic Coke he orders. "Sometimes a case, case and a half. So it's a lot of difference."
Taste is the main reason why his discriminating shoppers buy Mexican Coke – they say the cane sugar sweetener used in Mexican Coke has a sweeter, cleaner flavor than the high-fructose corn syrup in the American version. Many are willing to pay $1.10 per 12-ounce bottle for the imports, even with cans of American Coke sitting nearby for 49 cents each.
With a niche market for Mexican Coke taking root in the United States, The Coca-Cola Co. and its bottlers are quietly looking to block its passage across the border.
"The Coke tastes better here," said my stepson, while he was visiting us in Uruguay. Was this just a side-effect of being on vacation? Maybe... but I doubt it. The Coke he was drinking really was different from the Coke he usually drinks in the U.S. I'm not referring to the infamous "New Coke,"or the original Coca Cola patent medicine formula with cocaine, but in South America, Coke is still made with real sugar. The Coke in the US tastes different because it's made with corn sweeteners. Why can't the world's richest country buy the world's best-tasting Coke?
The answer, it turns out, has to do with a series of unintended consequences. Sugar policy in the US was designed to increase income for farmers by increasing the price of sugar. The US government set quotas on the amount of sugar that could be imported from other countries. Restricting the supply of imported sugar boosted its price, and achieved the goal of higher incomes for US sugar producers, at least temporarily.
Sugar cane is a tropical plant and by blocking imports from the Caribbean, Central America, and South America, this policy gave most of the U.S. market to cane plantations in Florida, Louisiana, and Hawaii. But other US farmers saw an opportunity. The high price of sugar made it profitable to produce sugar from beets. States like Montana, North Dakota, Minnesota, and Michigan became major sugar producers. Beets have surpassed cane; 54% of US production now comes from sugar beets [USDA].
Even with expanded domestic production, sugar prices in the US are still much higher than the free-market price. U.S. consumers pay over twice the world price. In total, sugar policy costs the American public over $1 billion annually. And it's not just households. Companies are also major purchasers of sugar and while high prices may help farmers, they hurt business buyers. Lifesaver candies used to be made in Holland, Michigan (about an hour from Kalamazoo) but because of the high price of sugar in the US, the factory closed and moved to Canada.
This brings us back to Coca Cola. For generations, Coke was sweetened with cane sugar, but eventually high US sugar prices forced the company to consider substitutes. Since sugar-- either from cane or from beets-- was so expensive, Coke, and other soft drink manufacturers, switched to a cheaper sweetener, corn syrup, in the 1980s. US production of high fructose corn syrup has grown by over 400% since that time [USDA].
In the new millennium, some consumers have doubts about drinking high fructose corn syrup in their soft drinks. Jones Soda, and other small bottlers, are switching their recipes to use only sugar.
Is Coke with sugar better? You can find out for yourself. Each year, Coca-Cola produces a limited amount of Coke that is kosher for Passover that doesn't use corn sweetener. Look for Coke bottle with yellow caps and marked "KP" in early Spring
