Why is healthy food so expensive?

You’re saying food in India is less expensive than in US ? And how is it if you compare it to average salary ? Generally markets follow similar % cost of GDP or Avg Salary when it comes to non-tradable goods – it is easy to export wheat but not as cost effective to move vegetables across the world. You can look at any service, i.e. hairdresser – it will vary between markets, it will vary even between cities, but if you compare this cost to avg salary earned in given location, it will look similar as % ratio.

Food is a product as any other. To produce it you need :
1) land
2) time
3) labor OR capital.

Land, time and labor cost more in US (in absolute terms) which means food should be more expensive (again, in absolute terms). Capital cost is always the same as you can export it easily, thus food production in US has moved from labor-intensive toward capital-intensive, utilizing advancements offered by technology, which helps to produce food cheaper:

1) higher intensity due to GMO/fertilizers etc – less land but also less space used i.e. when “producing” chickens
2) faster (again, GMO, fertilizers – but also hormones and antibiotics in animal feeding)
3) using less labor (cheaper) – machinery, production lines, technology, scale economy

All of the above are making food production cheaper AND less healthy. So why healthy food in US is more expensive ? Because US is a rich country and all non-tradable goods will be more expensive than in poor countries – in absolute terms. Because healthy means fresh and you can’t have fresh moved across the world without adding significant cost – or you need to produce it locally which means all the cost drivers mentioned above.




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