This balance sheet tells us that the food sector is generates a huge deficit to society.
For a company or firm, a balance sheet is an assessment of its financial stability. It has three components: assets, liabilities and equity (that is, capital and retained earnings from the profit and loss account).
What we’ve done
What we’ve done is hijack a system designed for company accounts and used it for a business sector. We’ve taken ‘assets’ as the UK population spend on food and drink, and ‘liabilities’ as the amount the UK spends on dealing with the consequences of our consumption.
We haven’t taken literal account of the ‘equity’ bit, thinking of it as social capital instead of shareholder capital or retained earnings, asking you (and ourselves) what kinds of capital are invested in the food sector at the moment, and how much of it increases social capital.
Despite this alternative use of a system, we think this ‘balance sheet’ generates interesting questions.
In summary . . .
Although there are different estimates as to the burden of obesity (see notes 13-18), and you could well argue with our guesstimates for dental care and mental health care costs (see notes 19 and 20), this balance sheet shows that society’s food sector ‘liabilities’ well exceed its ‘assets’. It should be remembered, too, that most of the profits of consumer expenditure is made by companies outside Birmingham (and other specific locations across the UK), while most of the liability burden is borne locally — for us here, within the city itself and the West Midlands.
We’d suggest, too, that this balance sheet indicates that the food sector has a net negative impact on our social capital, whether you consider it financially and/or in terms of our health and wellbeing. Do you agree? And what kinds of capital do you think are currently invested in the food sector to their benefit over and above that of society?
Here is it is, with numbered notes below the spreadsheet for links to relevant data/information and explanations. Please let us know if you find anomalies, errors and the like.*
- Every year the Government produces a Food Statistics Pocket Book.
- From the 2018 Pocketbook, you can download the data related to 2017. The total consumer expenditure is garnered from the Living Costs and Food Survey (LCF) and the Retail Sales Index (RSI). I’ve had a chat with the stats guys in Swansea about the discrepancy between the £219M figure here, and that given rows (4) and (5), see below. This total includes RSI stats (i.e. sales stats from food companies) which will include purchases for institutional, non-household purchases; e.g. conference settings, prisons, hospitals and the like. Would all households report on school dinners too? There might be food waste within this stat as well. Plus, of course, variation inherent in collating data from different sources.
- Family Food Annual Report 2016/17. The next series of notes (4-11) are taken from datasets within this Report.
- The Living Costs and Food Survey (LCF) provides data on private household purchases, collected via regular, frequent surveys throughout the year. They have two main categories for household spend, what we buy and eat at home — this number of £148M in 2016/17
- And what we spend on catering/eating out is £47.36M.
- Of this catering/eating out, 34% by value is alcohol purchases.
- Household supplies are 68% of our household spend. The next few items are my analysis of the LCF spreadsheets. (Please let me know if I’ve made any errors in this compilation, I ain’t a stats person!) Of these household supply purchases:
- 18% is alcohol purchases.
- Over 27% is of VAT-rated and other sugary foods in addition to alcohol which also carries VAT. (Re sugary items: VAT, for example, zero-rates cakes and pastries as they couldn’t be manufactured when the VAT pre-cursor (Purchase Tax) was set up in 1940. So I’ve included them here, along with biscuits that are zero-rated (biscuits with coatings, and some others do carry VAT; it’s a minefield of over 70 years of schedules, argument, legal wrangles et al) There’s more about these matters, including a (very) brief history of VAT in this blogpost.
- I’ve put tea and coffee as separate items (though some carry standard-rate VAT), as they contain caffeine; i.e. are a ‘drug food’, a term coined by Sidney Mintz in relation to the ‘tropical drug foods’ of sugar, cocoa, caffeine (and cocaine) first brought to Europe by post-Columbus explorers; see pp 99-100 of his book Sweetness and Power: The place of sugar in modern history. An aside: What I find intriguing about our attitude to tea and coffee is that they are considered adult drinks, unsuitable for children because of caffeine. Yet the amount of caffeine in many a cup of tea or coffee is less than that in, say, a Pepsi, Coca Cola or Red Bull; see this Caffeine Chart from the US Center for Science in the Public Interest website. This webpage begins with this statement Caffeine is the only drug that is present naturally or added to widely consumed foods continuing It is mildly addictive, one possible reason hy makers of soft drinks add it to their products. You can also see from this chart that many diet drinks have higher caffeine than their sugared versions, possibly to compensated for the addictive quality of sugar.
- Only 6.54% of household spend is on takeaways. This begs two questions: First, this part of our household spend is around a quarter our spend on VAT-rated and sugary goods, yet a great deal of concern is expressed, and actions planned against takeaway food outlets, many of them deemed to be a major factor in the rising burden of obesity. But is it, given this stat? And/or are there some communities where there are a disproportionate number of takeaways and, if so, is their presence related to diet-related disease, such as obesity or cancer risk? If so, are other factors are involved that have greater or lesser significance?
- We’re now looking at the ‘liabilities’. I’ve started with one where it’s comparatively easy to make a calculation; that of the burden of alcohol harm. PHE published The Public Health Burden of Alcohol and the effectiveness and cost-effectiveness of alcohol control policies in 2016. The stat I’ve given here is extrapolated for the whole of the UK from the stats PHE gave for England alone; i.e. I’ve assumed, possibly wrongly, that the burden is similar across all four nations.
- It’s much more complicated to provide a figure for the burden of obesity and over-weight. They vary depending on what’s been taken into account, and how the assessment is made. What I’ve done here is to provide stats from six sources and, where necessary, extrapolated what the figure is for the whole of the UK.
Notice, though, that the figures come from different years; they’re not all conveniently made in 2016/2017; some are forecasts so the comparison with 2016/17 asset figures can’t be made without account being taken of likely increased consumer expenditure.
The first obesity burden figure is from Diabetes UK (2014) The cost of diabetes.
- The second is from PHE (2017) Health matters: obesity and the food environment, again with a figure extrapolated for the whole of the UK.
- The McKinsey report: Overcoming obesity: an initial economic analysis. Here I’ve taken global stats and extraopolated a figure for the UK.
- The NHS Forecast to 2050 is from the PHE (2017) Health matters: obesity and the food environment (see note 14 above). I’ve included it here to illustrate the doubling of projected costs.
- I’ve generated this composite figure, based on the Organisation for Economic Co-operation and Development (OECD) Obesity Update, the PHE figure above (note 14) and the Diabetes UK figure above (note 13), to take account of different aspects of the economic burden.
- In Birmingham’s 2013 Fit for the Future: Birmingham’s Childhood Obesity Strategy, there is the statement that the financial cost of obesity to our City amounts to £2.6 billion per year including costs to the NHS, social care and the wider costs to the economy. In later documents, this figure is given as a projection to 2030 which is what it should be. What I have done here is to extrapolate a figure for the UK — which is likely to be a tad on the high side as a UK figure as (a) Birmingham is a young city demographically and (b) we have a higher than average number of obese and overweight people.
- I’ve taken an arbitrary figure of 75% of UK dental care costs to be due to poor diet. On reflection, this is likely to be an overestimate as smoking, not cleaning your teeth, and not having regular dental health checkups among other factors can lead to dental and oral disease.
- I suspect, though, that the (again arbitrary) figure of 5% of mental care care costs is an underestimate. (This Mental Health Foundation 2017 Food for thought: Mental health and nutrition briefing indicates a strong relationship between a nutritious diet and some kinds of mental ill-health, but doesn’t provide any costs.)
- This row the figure (£67.12bn) for the burden of alcohol and dental care and mental health.
- This row is the figure of the row above, plus the different figures from various sources for the burden of obesity. When you make the comparisons with ‘asset’; i.e. consumer expenditure, remember what I mentioned in note 13 above.
- It’s impossible to come up with indirect costs of malnutrition. Evidence for the examples given: House of Commons Health and Social Care Committee First 1000 days of life (Feb 2019); British Dietetic Association (BDA) Food Fact Sheet (2017) Diet, behaviour and learning in children; David Benton (207) in Neuroscience & Biobehaviour Reviews The impact of diet on anti-social, violent and criminal behaviours.
- The figure of 100M+ Coca Cola cans for Birmingham is an extrapolation from Coca Cola’s GB production figures found here. Interestingly, the company used to put figures under their FAQs for all drinks, both cans and bottles. Alas, I haven’t got a record of the link. Today, they appear to publish figures for cans only; this may be because of the recent furore about their non-recyclable plastic bottles.
- It’s rarely recognised that the production of drug-foods/VAT-rated ‘food’ and drink products uses a substantial proportion of our increasingly stretched natural resources.
- The figure of PepsiCo using 6% of the UK spud production for Walkers crisp production alone comes from the putting together of two sources of info: AHDB figures regarding UK potato production and the Food and Drink Federation (2019) PepsiCo case study.
- Coca Cola’s water consumption in 2012: see Bartow J Elmore’s book Citizen Coke: The making of Coca Cola capitalism (2015), Chapter 1 Tap Water: Packaging public water for private profit, p18, footnote 1.
a) All the links above go to information, reports et al retrieved on 12th or 13th July 2019.
b) Revisions: The format of balance sheet on 12th August, an edit of the featured image and the addition of this link to our Briefing Note: The food sector deficit on 18th August 2019.