Great bargain, shame about the true cost

Every week, on Tuesday afternoons, a company called Abel & Cole brings to my doorstep a box full of organic local food that changes with the seasons – and my four-year-old daughter gets into a frenzy of excitement. What could possibly be inside?

Once a fortnight, as it happens, the delivery includes an organic free-range chicken. The latest one was vast and cost a whopping £16.28 – as much as eight birds from Tesco, it turns out.

I know this not because I’ve been sneaking off to Tesco but because practically everybody last week was talking about the supermarket’s decision to sell a chicken for £1.99 – just weeks after a big campaign on Channel 4 highlighting the general ghastliness of battery-reared broilers.

Some people muttered that the chicken should cost more, but others argued that in a culture obsessed with price it’s meaningless to describe anything as “too cheap”.

Hugh Fearnley-Whittingstall, one of the chefs who led the television campaign (the other was Jamie Oliver), said Tesco had broken a pledge not to start a chicken price war. His disapproval was echoed by others. Dr Lesley Lambert of Compassion in World Farming said that £1.99 “doesn’t reflect the real price of producing a chicken”.

Tesco responded by saying that Fearnley-Whittingstall was not “whiter than white” because the battery farm he set up specifically for his programme was found on inspection to have failed rules on ventilation, pest control and record-keeping.

A commercially produced free-range bird – not organic – can be bought in most supermarkets for a little over £5. Yet free-range represents less than 3% of all the chicken sold in the UK, compared with 40% in France. Clearly many more among us could afford to buy free-range.

It seems that we divide into two distinct types: “conscious” (or bleeding-heart) consumers, and the rest. Reading the posts on various websites devoted to the cheap chicken campaign, you are struck by how little the two types have in common. “The sooner these animal Auschwitzes are banned the better,” says one blogger. “The entire programme is based on the assumption that chickens have ‘feelings’,” says another.

Ultimately, Fearnley-Whittingstall says: “The way we treat our farm animals is an ethical issue and you can’t budget your way out of it. I have met people at both ends of the economic spectrum who don’t give two hoots about the suffering of chickens. I have also met mums, dads, students and workers from cities, towns and villages all over Britain telling us how tough it is to feed their families on a tight budget – but nonetheless pledging their support for our campaign.”

I went to Tesco to see for myself. I loitered, discreetly watching shoppers as they selected a bird. In every case the decision seemed to take an age, as they struggled to balance their ethics with their bank accounts.

I’m fortunate that I can afford a £16 chicken. Look what I did with it: over the following week I managed to produce 12 individual meals from one bird – roast chicken, chicken soup, chicken sandwiches, chicken curry, for three people each time.

But what if circumstances changed and our household income fell dramatically – would I switch to buying £2 broilers? Do “ethical” consumers stop being ethical in a recession?

Not according to Emma Howard Boyd, who runs the ethical investment division at Jupiter, the asset management firm. She believes consumers behave more ethically the more they are informed about the consequences of their financial behaviour.

Indeed, ethical consumers have increased the value of “conscious spending” by an average of 15% a year since the start of the decade. Ethical food has grown faster than most sectors: British shoppers spend about £2 billion on fair trade, organic and locally sourced products a year, an increase of 62% since 2002. And this is not a niche interest: last year about 80% of UK households made an organic purchase of some kind.

Nor is this only about compassion. It’s also about the quality of the product. Andrew Whitley, of the Village Bakery in Melmerby, Cumbria, says that when it comes to bread: “The evidence is accumulating that changes in wheat varieties, milling methods and baking technology may have made industrial bread less than palatable – possibly even indigestible – for significant numbers of people.”

Why has bread become unpalatable? Why are chickens reared less than comfortably? Because of the pressure on price. Tesco’s prices have fallen by almost 30% in real terms since 1997, the company claims, saving the typical household £4,954 on its shopping bills. Which for many must be a blessing.

Some say prices are now being depressed too much and one way that we are causing this to happen is through using websites such as to compare prices at four different online supermarkets. As you shop, the site checks your trolley to see whether there are similar but cheaper products available and even enables you to switch trolleys to a different supermarket if the price is lower for the same products.

Under pressure like that, nobody can blame supermarkets for pushing prices down and squeezing suppliers. But is the relentless pressure on price really helpful, even to consumers? Not entirely, critics say, because after increasing efficiency and economies of scale, the pressure of bargain hunters leads to the exploitation of producers – from sweatshop workers to battery chickens – and finally a decline in the quality of the goods.

Molly Scott Cato is an economist and the author of the brilliantly provocative book Market, Schmarket. She argues that the economic system elevates profit to the exclusion of all else, including quality.

“There was a time when Marks & Spencer just made good knickers and you could always buy them there. They may have been a little more expensive but the extra was worth paying because the knickers were comfortable and lasted. In the underwear department these are important considerations. But I challenge you to find a decent pair of underwear in today’s high street.” Jeremy Paxman, the Newsnight presenter, said much the same recently in a leaked e-mail to Sir Stuart Rose, chief executive at Marks & Spencer. “I’ve noticed that something very troubling has happened,” Paxman wrote. “[M&S] pants no longer provide adequate support. The other thing is socks. Even among those of us who clip our toenails very rigorously they appear to be wearing out much more quickly on the big toe.”

Neoclassical economics, says Scott Cato, would suggest that there is a market opportunity here for somebody who produced decent underwear: “I would certainly pay a premium price. But instead all suppliers of these items are competing on price, outsourcing production and using only the cheapest materials, so that knickers are see-through and fall apart within months.

“This is the way the best profits are made and the best knickers are no longer of any concern.”

Mercifully some persist in producing high-quality products. One such company is Howies. Browsing idly for underpants on its website last week I was astounded to find a pair selling for £35. That’s right: £35 for a single pair. Rather than pay that much, I wondered initially how hard it might be to make my own. But then I telephoned the company to ask how it could justify the high price.

It turned out that merino wool is very expensive stuff and Howies’s supplier produces it without docking the tails of the sheep – a process regarded by many as cruel. “We don’t make a lot of money on the merino,” a spokeswoman confided, adding that, over its life span, a well made product will have consumed fewer valuable resources than an inferior product that needs to be replaced many times.

I don’t mind paying £16 for a chicken, but £35 for woolly pants? Like the shoppers I had watched at Tesco, I weighed up for some time just how caring I could afford to be.

Then I thought of the poor sheep whose tails are savagely snipped off by other underwear manufacturers, considered with gratitude that I have yet to be hit by the worst of any recession – and handed over my credit card details.