Saturday, March 17, 2007

Price ceilings on healthy foods suggested

The Gulf News reports:
Healthy foods such as fruits and vegetables may soon be cheaper due to government efforts to control rising obesity in the society, experts said.

In the UAE, modifications to the Diet and Physical Activity Strategy (DIPAS) for Gulf countries include selling fruits and vegetables and other health foods at lower prices, and involving various government agencies and ministries.

Dr Huda Al Suwaidi, consultant in family medicine at the Health Ministry, told Gulf News that the initiative was important as unhealthy diet and lifestyle gave rise to many health problems in the region, including diabetes and cardiovascular disease.

She said the government would first seek voluntary participation from supermarkets.

"We might even get the Ministry of Finance to come up with legislation that would control the prices of vegetables and fruits, because it will be a way of getting people to eat more healthy food," she said.

She said the Health Ministry would lend its name in promoting supermarkets and cooperatives that take up the initiative voluntarily, as an incentive.
Introducing a price ceiling to lower the price of healthy foods would give consumers the incentive to seek to consume more healthy food, but it will also give suppliers less incentive to provide healthy foods. Consumers will end up consuming less, not more healthy food -- exactly the opposite of the good intentions of the Health Ministry.

If the ministry wants to spur consumption of healthy food it needs to either convince consumers to buy more at given prices, or subsidize healthy food in the marketplace.

The Gulf News article continues:
A Diet and Physical Activity Strategy also calls on the UAE to conduct a survey on social, demographical, economic and psychological factors influencing health in the UAE, which will be part of a global WHO and UN survey.

The survey could begin by the end of the year and will collect information on all age groups in the population, including their body mass index, blood sugar levels and cholesterol levels, as well as lifestyle.

About 70 per cent of men above 30 in the UAE are overweight and 30 per cent obese, while 78 per cent of women in the same age group are overweight and 50 per cent obese, according to 2005 WHO statistics. More than 20 per cent of schoolchildren aged 12 to 16 in the UAE are overweight, while 12 per cent are already obese.
Let's be honest and say what the article does not say directly. The population described here is not the UAE population, but the 20 percent who are nationals. A commenter at UAE community blog has marshalled the statistics and made this point very well. See also this excellent comment.

Because the government also provides health care to nationals it may well be that the government will save money by subsidizing health foods. Except of course that it would subsidizing healthy foods for the entire population of the UAE. Perhaps the government should stop subsidizing bad health habits -- which is what free health care does. Turn the savings over to nationals as a lump sum and let them decide what is in their best interest. It may be that it is in their best interest to take care of themselves.

The timing of the Dr Al Suwaidi's remarks are ironic given the recent announcement of an expansion in our unhealthy eating options in the UAE. On Thursday we learned a Krispy Kreme outlet opens tomorrow :
US doughnut and coffee chain Krispy Kreme will open its first UAE outlet in the Deira City Centre shopping mall tomorrow, the first of seven stores planned for the country this year. The North-Carolina-based food company, which is listed on the New York Stock Exchange, aims to roll out 100 stores throughout the Middle East in the next five years.
Unfamiliar with Krispy Kreme? -- here's some background. Nothing works like the profit motive.

The 52g original Krispy Kreme donut provides 10g of sugar and 200 calories (100 from fat). (For more on nutrition go here.)

Mmmm, donuts. If there is a Donuts Anonymous, I need to join.

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3 Comments:

Blogger Fahad Al Mahmood said...

It's very addictive ... I'm talking about Krispy Kreme ... I lived in the United States for 10 years and me among most of my friends just can't have enough of those greasy doughnuts.

Krispy Kreme is definitely not helping in bringing the UAE high rate of obesity down ...

10:18 PM  
Blogger Gabriel Mihalache said...

Well, I agree with you, but to nitpick... supply disincentives are very sensitive to market conditions, i.e. the presence and size of "pure rents".

For a definite judgment you need to look at entry and exit conditions, number of suppliers, whether any of them is at an increasing returns stage in their business' development, etc.

In the end, you're 99.999% right, but we can imagine market conditions where a cap on prices would not disturb, with any serious magnitude, the quantity provided.

Another worry must be the black market which springs up any time a price is fixed. People have strong incentives to trade at other prices, in most situations... and they simply do it. How does that figure in this "master plan"?

As for subsidies... how would you finance them? It matters a lot.

10:16 PM  
Anonymous EGCG Green Tea Health Benefits said...

In our country healthy foods' prices gets very expensive. Even I can't afford to buy. :D

1:46 PM  

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