Britons are buying 15 per cent less fruit and vegetables than they would if they were sold at marginal cost, says a new research which also states that consumers are currently paying 40 percent more than marginal costs.
According to researchers at the University of Warwick, higher prices lead to consumers buying on average 15 per cent less fruit and vegetables than they would if they were sold at marginal cost, which in turn is leading to a third of the gap between the average amounts consumed and the recommended intake.
Since fruit and vegetables need to be restocked more frequently, fixed costs in the supply chain play a bigger role in fruit and vegetables prices compared to those of other foods, meaning that UK consumers are paying 40 per cent more than marginal costs, states the study.
Researchers suggest subsidising fresh fruit and vegetables by as much as 25 per cent could counteract the price distortion, reduce the costs and increase consumer intake.
In Britain, it’s estimated that supermarkets sold around £10.4 billion of fresh produce in 2017, with researchers estimating that funding a subsidy would cost the government £2.5bn per year.
Professor Thijs van Rens, one of the authors and leader of the Warwick Obesity Network, said that food retail market is very competitive, so “if there weren’t any fixed costs you would expect food to be sold close to marginal cost”.
“A higher price of any product means that people buy less of it.
“There is something wrong with the market, which is that there’s a high fixed cost in the provision of fruits and vegetables. The effect of that is that the prices are too high, and consumption too low.”
He warned that demand was low in areas where the poorest people live.
“So this market failure not only makes us all unhealthier, but it increases health inequality as well,” van Rens added.
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