Will global food prices keep us healthy?

Nothing makes a geeky food policy student like me more excited than seeing the NYTimes writing about cross-price elasticities of demand, except that they didn't actually use the technical term for it. The cross price elasticity of demand, or the change in demand for one food when the price of another changes, is a formula for calculating the response consumers will have to changing food prices. For example, suppose the price of corn syrup goes up 1 percent, so people buy less corn syrup and more of other stuff-- the cross-price elasticity for fruit would show the percentage increase in fruit spending in response to the higher corn syrup price.

In light of the recent surge in global prices of food, especially grains and meat, Wednesday's NYTimes article is about the light that some healthy and local food advocates see at the end of the global food "crisis" tunnel. So their theory goes: If the price of products produced with large quantities of corn, like corn syrup and grain-fed meat increase drastically--which is already beginning to happen--then people will switch to eating more fruits and vegetables and more locally grown food that doesn't require as much fossil fuel to transport it to the grocery store.

While this phenomenon may be true for some, it may take more than rising prices for consumers to change their behavior. One of the factors affecting this response is the degree to which food A, fruit for example--is a complement or a substitute for food B, corn syrup in this example. One can use cross elasticities to show how much the price of corn syrup would have to go up in order for consumers to "demand" more fruit.

Of course the response also depends on how much prices continue to rise, whether fruit and vegetable prices continue to rise less than those of other foods, and if farmers change their production decisions for the coming year. But I wonder if substitution to healthier or more sustainable foods will actually happen on a large scale, or if we, and our food companies, will just figure out shortcuts to our favorite processed flavors. We also should remember what a small percentage the price of corn represents in the price of corn flakes- in other words, most of the cost of processed foods is for value-added in production, marketing and distribution, not the raw ingredients themselves.