Thursday, March 15, 2012

The Hidden Cost of Winter Produce

It is a well known fact that production and labor costs differ throughout the world. This is the basis of International Trade. Wine grows best between 30 and 51 degrees North, so regions of France and Niagara produce it and ship it worldwide. The most common rationale for a firm to source products globally is saving money on labor, as it is always a firm's largest expense. In terms of foodstuffs, it is a combination of labor cost and climate.

If you walk into nearly any grocery store in North America, you will find avocados from Mexico, garlic from China and rice from Japan. It is difficult to find perishable food that was grown in Canada, particularly during the winter months. It is cheaper to grow food in less developed countries due to low labour costs and favourable growing conditions. Even with the cost of transporting these goods, it is cheaper than growing them in greenhouses in Canada and the grocery stores pass those savings on to you. Local food is only cheap when it is in season.

From a pure profit point of view, everyone wins. The consumer gets cheaper food and the grocery store makes more money on volume. The issue begins when we look at the environmental impact of transporting all this food- not only the carbon and sulphur emissions from the vehicles, but the carbon impact and electricity needs of all the refrigeration devices used during the process.

The fuel used in large container and bulk cargo ships - the ones that are carrying the grains and produce you see on sale in your grocery store - is referred to as waste oil. It is what is left over after the crude refining process. It is the same as asphalt and is both the cheapest and most pollutant fuel available. Globally, ships go through 7.29 million barrels of it per day. To put that in perspective, there are approximately 760 million cars in the world, which produce 78,599 tonnes of Sulphur Oxides (SOx) yearly. Ships release 20,000,000 tonnes of SOx into the atmosphere during the same year.

According the US Environmental Protection Agency, "SOx can react with other compounds in the atmosphere to form small particles. These particles penetrate deeply into sensitive parts of the lungs and can cause or worsen respiratory disease, such as emphysema and bronchitis, and can aggravate existing heart disease, leading to increased hospital admissions and premature death."

Globally, emissions from sea-going vessels cause about 60,000 deaths. The International Maritime Organization (IMO) has created standards to be enacted by 2020 which would cause SOx emissions to be reduced by 90%. At current levels, this is another 480,000 deaths, so it is disturbing that they are waiting so long. As with many situations in business, rather than spend money, firms and organizations would rather allow people to suffer.

The UK Guardian has a fact sheet on shipping pollution at the following link: Most telling among these facts is that only 15 of the world's largest ships can produce just as much pollution as all the world's cars.

There are solutions to these pollution problems - the IMO has chosen the cheapest one, that of using more refined oil in vessels. Nuclear generated power is another option. Although this comes with pollution and safety issues of its own, you can run a ship for twenty years with a higher engine capacity without refueling. The US Navy operates about 80 nuclear vessels and while capital costs are high, the engines eventually pay for themselves.

We could also adopt a government policy similar to the Carbon Credit initiative. Ocean-going commodities and products could be taxed based on weight or volume and those funds could go towards the same organizations and purposes that the pre-existing Carbon Credit monies go to. This cost would bump up the price of groceries but we would end up standing at the checkout with less blood on our hands.

Alternatively, avoid huge environmental costs altogether by buying locally.

Ted Gerry

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