The cost of a happy country is so high why Australian food is higher than Europe and the United States
According to the 2014 Global Cost of Living Survey by the Economist Intelligence Unit (EIU), Sydney is the fifth most expensive city in the world, after Singapore, Paris, Oslo and Zurich. Regarding food prices, if calculated by the price of a basket of food (bread, butter, apples, tomatoes, eggs, mince, fresh chicken, cheese, spaghetti and milk), EIU’s data finds that Sydney’s prices are higher than those of London, New York and Hong Kong. All are high. According to data from the Numbeo website, department store prices in the US are 24.85% lower than Australia, 18.52% lower in Singapore, 12.25% lower in the UK, 9.67% lower in France, and 9.47% lower in Japan.
Most people believe that "market forces" determine food prices, but Brigit Busicchia, who specializes in food politics at Macquarie University, believes that this is not the whole story. She said that Australians usually think that Australian prices are high because they have higher wages, but this cannot explain why prices in other high-wage countries such as France are cheaper. She said: "It has nothing to do with wages or price support. It has to do with what society supports and what politicians think voters will ask for." Busicchia believes that customers are influenced by programs such as MasterChef or My Kitchen Rules, causing them to inadvertently accept high prices.
Senior economist John Ferguson agrees that Australians have accepted high food prices for years, partly because of Australia's strong economy. At the beginning of this decade, wages increased by 4% to 5% per year, which Ferguson said meant that all price increases were absorbed. According to OECD data, the minimum wage in Australia in 2013 was 2.1475 yuan, France was 2.0588 million yuan, the United Kingdom was 1.7437 yuan, and the United States was 1.5748 million yuan.
In recent years, extreme weather such as droughts and floods has also pushed up the prices of some foods. For example, the floods in Kunzhou in 2010-11 caused banana prices to soar. Ferguson said it is difficult to tell whether prices have fully recovered after the disaster. As climate change leads to more and more extreme weather phenomena, this problem will continue to exist.
Australia's smaller population than Europe is one of the biggest factors. With a population of 4 million, Europe has been positioned as a manufacturing market for the past 20 years. This means that companies have to meet more people in many different countries, so the production cost of each product is low. A company can have multiple factories, and each factory can focus on one technology or product production line. In contrast, Australia and New Zealand are also regarded as one market, and the population may be 10 times smaller.
Australia’s food regulation is more extreme than overseas countries, which means that the import of cheap products from other countries will be strictly restricted. For example, in Europe, food with less than 0.9% genetically modified ingredients can be labeled "GMO-free", but in Australia, it must be 2% genetically modified to be labeled. Therefore, if a company wants to use imported flour and other ingredients, it may face two expensive choices: either produce a certain product in Europe in accordance with Australian regulatory standards, or produce it in Australia.