The butcher, the baker, the local cake maker..............met a pieman.

Unfortunately, these types of nursery rhymes have outlasted the tradition of the local food producers that until recently have existed for centuries and were an essential part of local culture and community.

However, it is no coincidence that our food labeling laws under which remaining food producers must operate make as much sense as these nursery rhymes.

Australia must be the hardest place in the world to be a food consumer.  Why?  Because that’s the way the rules have been designed thanks to the lobbying of those that have everything to gain by confusing us.

This is known as arbitrage; when one party to a transaction, knowingly takes advantage of the fact that the other person entering the transaction does not have all the information they need, to have a full understanding and knowledge of the transaction they are entering into.

What does this have to do with food labeling in Australia?

Way back in 1970, a Nobel Prize winning Professor of Economics by the name of George Akerlof came up with a theory about what happens to a market when consumers have an information disadvantage.  The idea is that if consumers have no way of being able to confirm what is good quality and what is bad quality, they will only be prepared to pay a lower price. 

Consequently, if information is confusing or lacking, the consumer is trained to focus on price. 

Quality uncertainty means that poorer products are eventually able to drive good products out of the market.  This is known as market break-down.

How does this work in the food game?  By gradually introducing cheaper alternatives and then gradually presenting them in a way that makes it harder to tell the difference in quality at face value i.e. packaging all looks the same but information is hard to find.

In the end, only the lower quality products are sold because they are cheaper to produce and have a higher margin.  The consumer has been arbitraged.  The seller knows more about the product than the buyer.

Sound familiar?  Remember the early ‘home-brand’ products?  Look at them now.

Akerlof’s theory suggests that what consumers actually want is clear information about the products they are buying.  Unfortunately, some have much to gain by not making information simple for food consumers.

I strongly believe that if local food packaging was made simpler, consumers would pay more and we would have a better chance of saving what’s left of our local food processing industry.