Casual Kitchen’s Core Principles: #4: Focus On First Order Foods

This is part four of a six-part series on Casual Kitchen’s core principles. Find the beginning of this series here.

Core Principle #4: Focus On First Order Foods

There’s an important framework I use here at Casual Kitchen to explain why certain foods are much more expensive than others. Before I can explain it, I need to briefly explain two terms that might be unfamiliar to newer readers here: first order foods and second order foods.

First order foods are the basic building blocks of our diets. These foods are generally unprocessed, they’re relatively easy to cook, and consumers purchase them in basic form. Examples of first order foods would be unprocessed fruits, vegetables, grains, commodity staple foods, rice, beans, legumes, and so on.

Second order foods are foods derived or manufactured from first order foods.

A standard example of a second order food would be something like a TV dinner, or packaged cookies or snacks. Even meat can be thought of as a second order food: after all, the meat producer has to feed first order foods (grasses, grain or feed corn) to his cows, chickens, hogs or other animals, and then several steps of processing must occur before that animal becomes meat shrink-wrapped in your grocery store.

Pretty straightforward so far, right?

Whenever you buy any food, there’s a stack of costs baked into that food’s price. Processing, branding, advertising, packaging, transport, ingredients and so on are all components of the purchase price of the foods you buy. What this means, then, is this: first order foods have a small cost stack, and second order foods will almost always have a much larger cost stack.

Okay, one more core concept: In Economics 101 they teach you about “perfect competition”: a theoretical illustration of a market with commodity-like products and little or no difference between producers. Compared to less competitive markets like oligopolies or monopolies, these markets are less profitable--thus they offer much more value to the consumer. In highly competitive markets, the consumer always gets a lot more value per dollar spent.

Which brings us to our conclusion: in the food marketplace, it’s the first order foods that most closely resemble perfect competition! Think about the foods you buy where you don’t really care about branding and where there isn’t much differentiation across producers: fresh produce, staple foods, commodity products like canned tomatoes, beans, pasta, and so on. These foods typically offer consumer lots of value at very attractive prices.

Obviously in the produce section, you’ll find the best values of all by focusing on in-season produce. This concept is already widely known and discussed in the frugal food blogosphere. But with dried or canned or non-perishable commodity foods you can significantly compound the value you receive from your purchases by waiting for a sale and stocking up. (Note: we’ll get into more detail about sales and the rhythm of food and consumer products retailing in core principle #5.)

One last thought: There are clear, extensive and well-known nutritional reasons for avoiding heavily processed foods. Therefore, if you can bias your diet away from second order foods and toward first order foods, you will not only save an astonishing amount of money. You will eat better too.

Which means we’ve stumbled onto yet another win-win situation in the food we eat: simple, first order foods aren’t just less expensive, they’re healthier for you too! Who says there’s no such thing as a free lunch?

The paradigm of first order and second order foods gives us a simple model to explain why some foods cost much more than others. It explains why basic produce and undifferentiated simple food items are almost always far cheaper than processed, branded, heavily advertised and highly differentiated second order foods.

Focus your meals and your diet around first order foods. That’s where all the value is.

1) Stacked Costs and Second Order Foods
2) The Farmer's Kitchen: The Ultimate Guide to Enjoying Your CSA and Farmers' Market Foods by Julia Shanks and Brett Grohsgal. An extremely useful guide on how to cook, store and generally make the most out of in-season produce.

Next up! Core Principle #5: Understand the True Nature of Grocery Store and Consumer Retailing

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1 comment:

chacha1 said...

Not long ago I tried (unsuccessfully; brain switched off from boredom) to read "The Secret Financial Life of Food."

This sort of thing would be a much better basis for that particular title than a history of commodities markets was. :-)