MJC H1 ECONS CSQ1 Q A

Question 1: Healthy Eating Extract 1: The shifting economics of organic food Anyone who's set foot in a supermarket or farmers’ market in the past decade has noticed that organic food is c onsiderably pricier than c onventional food. But this "organic premium" — the difference between the two — can vary widely from product to product. And in some cases, the gap is actually shrinking quite dramatically. So what's going on here? Start with the fact that any food certified as "organic" has to meet certain standards laid out by the United States Department of Agriculture (USDA). Organic farms are prohibited from using synthetic pesticides, petroleum- based fertilizers, bio solids fertilizer (made from sewage sludge), irradiation, preservatives and genetic engi neering. Processed food has to go through certified organic plants though organic canned process ed food are not required to omit preservatives. In addition, any animal pr oducts labelled organic have to come from animals that were fed organic feed and never given antibiotics or growth hormones. In practice, these rules can encompass a wide variety of farmers and methods. But by and large, the restrictions tend to increase costs and delay production. The difference in price tends to be lowest for things like spinach or apples. Figure 1: Percent above non-organic price of selected organic food Source: USDA, Economic Research Service 2016 Nielsen Homescan data 2010 2011 2012 2013 2014 2015 2016 Percent above non-organic price

The difference in price is higher for proc essed food like organic canned spinach, and highest for animal products. What's really inte resting, though, is how this premium is changing over time. Some organic products are getting cheaper. Others, not so much. For crops like spinach or coffee, the or ganic option typically costs more because farmers have to spend more on weed and pest control. But as a 2012 paper from the National Sustainable Agriculture Informati on Service explains, this situation has changed over time. Early on, organic produc e farmers simply paid more for non- synthetic herbicides and insecticides. More recently, many organic farmers have been switching practices — harnessing techni ques like integrat ed pest management and making better use of insect predators. For milk or eggs to be certified as organic, farmers have to use feed for their animals (like corn and soy) that's grown organicall y. Organic feed has often been in short supply (particularly in recent years, as it's been far more lucrative for farmers to grow conventional feed). Source: Vox, June 2016 Extract 2: Is organic food healthier? Singapore Nutrition and Dietetics Associat ion (SNDA) accredited dietitian Jaclyn Reutens said: "Organic food has become so popular because they claim that no pesticides, hormones and fertilisers are used. It sounds great because nobody would want to consume these chemicals." Mrs Celeste Viviers, a registered diet itian and owner of nutrition and wellness consultancy Nutrilicious, said t hat there is little research to show that the nutritional value of organic food is signif icantly higher than regular f ood. "It is not proven that organic food is more nutritious than conventional food even though there are less pesticides and chemicals," she said. Mrs Viviers believes that the Internet and increase in spending power of Singaporeans are one of the reasons behind the increase in demand for organic food. If organic food is really healthier as retailers and producers claim it to be, does it mean that only the rich in Singapore can afford the healthier lifestyle? Adapted from The Straits Times, February 2016 Extract 3: Subsidies for diabetes screening Ministry of Health, Singapor e (MOH) and Health Promotion Board, Singapore (HPB) earlier announced the launch of the Diabetes Risk Assessment (DRA) tool and the enhanced Screen for Life (SFL) subsidies on 1 September 2017. There is a need for early detection and appropriate intervention to prevent or delay the onset of diabetes and related complications . This would also help Singaporeans to realise the consequences of their diet wh ich is becoming unhealthier over the years mainly due to high sugar content and unhealthy fats. Under the enhanced SFL screening, all eligible Si ngaporeans can go for reco mmended screening such as for

diabetes, and follow up at Community Health Assist Scheme (CHAS) GP clinics. They will pay a small fixed fee of $5 or less fo r their screening test and first post-screening follow up consultation. CHAS cardholders will pay $2, and Pioneers (Singaporeans born before 1950) will not need to pay. HPB w ill be sending out invitation letters progressively, to notify Singaporeans of their eligibility. Source: Ministry of Health, Singapore, 2017 Extract 4: Gearing up for the fight against diabetes Imagine a Singapore where there is drinking water wherever you go - whether it is at a park connector or shopping centre - and you pay a sugar tax on your packaged drinks. That is what might happen as Health Minister Gan Kim Yong ramps up the war against diabetes. He wants to saturate the country with readily available drinking water to wean people off sweetened drinks. About 100 million cans of sweetened soda are sold here every month. Sugar, whether in dr inks or food, raises the risks of obesity, heart disease and type 2 diabetes. From this month, water must be provided at all government and People's Association functions. "In the past, it was always syrup or coffee or tea," he said. "If I ask for water, I get a bottled drink." He wants water to be made freely available in public areas and is working with the National Environment Agency, which oversees hawker centres, and the National Parks Board about providing more drinking points. "Making water widely available is very important in our ef forts. Over time it'll become the norm. And then it becomes a mindset that healthier living is the normal way we live," he said. Also on the cards is a possible sugar tax on packaged drinks, restricting advertising of such drinks, and prominent labelling of sugar or nutritional content, Mr Gan said in an exclusive interview. But these measures hinge on whether there is support for them on the ground. Mr Gan plans to hold public consultations on what more can be done to make Singaporeans adopt healthier lifestyles. For a developed country, Singapore has a ve ry high prevalence of diabetes. The disease costs the country more than $1 billion a year today. This price tag could soar to $2.5 billion a year by 2050 if nothing is done, as a million people here would be struggling with the disease. The “war on diabetes” that Mr Gan declared two years ago has yielded some promising results so far, he said. "Singaporeans are becoming more health-conscious." Source: The Straits Times, June 2018

Questions (a) Using Figure 1, compare the diff erence in price of organic and non- organic eggs with that of milk. [2] Similarity: Both prices of organic eggs and organic milk is higher than the price of its non-organic variant. Difference: The difference in price of organic and non-organic egg is becoming narrower whereas the differ ence in price of organic and non- organic milk is becoming wider. (b) (i) Based on the data availabl e, analyse and comment that changes in the cost of production were the main factor influencing changes in price of organic food. [5] Establishing the hypothesis: Changes in cost of production as cited in the extract were related to use of alternative practices and techniques. This will lead to a fall in unit cost of production, and holding the price of the organic produce constant, a lo wer unit cost of production would result in a higher potential profit. Hence, at