The Hidden Economics of Food - Part 5: The Hidden Costs of Cheap

The Journey of a Prawn

A prawn in your supermarket might have traveled something like this:

1. Caught in the sea off Thailand by a fishing boat crewed by migrant workers

2. Frozen and shipped to a processing plant where more migrant workers peel and devein

3. Transported to a factory in China or Vietnam for further processing

4. Shipped again to a distribution center in Europe or North America

5. Trucked to a regional warehouse

6. Delivered to a grocery store

7. Purchased by you

This journey might cover 15,000 miles and involve dozens of companies. You paid $8 per pound. How is that possible?

The Economics of Distance

Global supply chains exist because of cost differentials:

• Labor costs less in Thailand than in the US

• Environmental regulations are weaker in some countries

• Workers’ rights are less protected

• Shipping is absurdly cheap (a container from China to the US costs less than trucking within the US)

Companies arbitrage these differences. They locate production wherever costs are lowest, regardless of distance.

The result is efficient in the narrow economic sense: goods are produced at minimum monetary cost.

But the monetary cost isn’t the real cost. Much of the real cost is externalized—shifted onto people and ecosystems that don’t appear in the price.

The Labor Behind Cheap Seafood

Investigations into Southeast Asian seafood supply chains have repeatedly found:

Forced Labor

Migrant workers—often from Myanmar or Cambodia—are recruited with promises of good wages. Once on boats, they’re trapped:

• Passports are confiscated

• Debts are manufactured (for “recruitment fees,” “equipment,” “food”)

• They can’t leave the boat for months or years

• Violence and threats are common

This isn’t anomalous. It’s structural. The economics of cheap seafood require labor costs near zero. Actual slaves are the logical endpoint.

Dangerous Conditions

Even “legitimate” seafood processing jobs are dangerous:

• Peeling prawns for 16 hours in cold conditions

• Chemical exposure without protection

• Repetitive stress injuries

• No sick leave or compensation for injuries

Workers accept these conditions because the alternatives—unemployment, return to poverty—are worse. This “choice” is what economists call “voluntary.”

Invisibility

Supply chains separate the consumer from the producer by thousands of miles and dozens of intermediaries. You can’t know how your prawns were caught. You can’t meet the workers who peeled them.

This invisibility is a feature, not a bug. If you saw the conditions, you might not buy the prawns. Distance protects the system.

The Environmental Costs

Cheap seafood also externalizes environmental costs.

Mangrove Destruction

Prawns are increasingly farmed rather than wild-caught. Prawn farms often replace mangrove forests.

Mangroves are extraordinary ecosystems:

• They protect coastlines from storms

• They are nurseries for fish species

• They sequester carbon at high rates

• They filter water

Destroying them for prawn farms trades irreplaceable ecosystems for a few years of production before the farm becomes too polluted to continue.

Overfishing

Wild prawns are caught by trawling—dragging nets across the ocean floor. This catches everything, not just prawns.

“Bycatch” can be 10 times the weight of the target catch. Most of it is thrown back dead. Entire ecosystems are scraped clean.

Feed Chains

Farmed prawns eat fish. It takes multiple pounds of fish (ground into fishmeal) to produce one pound of prawn. The fish caught for fishmeal are often caught by the same exploited labor forces.

Carbon Footprint

Transportation—refrigerated trucks, container ships, cargo planes—emits carbon. A prawn that travels 15,000 miles has a substantial carbon footprint.

None of these costs appear in the $8/pound price.

Who Benefits?

If workers are exploited and environments are destroyed, someone must be capturing the value. Who?

Retailers

The largest share of value goes to companies closest to the consumer—supermarkets and restaurant chains. They have the power to set prices and squeeze suppliers.

Intermediaries

Trading companies, processors, and logistics firms take cuts at each stage. The more complex the chain, the more intermediaries extract value.

Financiers

Global supply chains require financing—for ships, inventory, facilities. Finance captures returns from this investment.

Consumers

Cheap prawns benefit consumers—in the narrow sense that we pay less than the full cost. But “benefit” is questionable if the full costs include climate change, ocean destruction, and human suffering.

NOT the Workers

At the production end, workers capture minimal value. In the Thai fishing industry, workers might receive $0.10 of that $8/pound prawn. They’re replaceable. They have no bargaining power. And they’re often literally unfree.

The Visibility Problem

Supply chains aren’t designed for visibility. They’re designed for efficiency and cost minimization.

No single company controls a supply chain. The supermarket buys from a distributor who buys from a processor who buys from a trader who buys from a fishing boat. Each transaction is arm’s length. Each company can claim ignorance of the others.

This creates systematic irresponsibility:

• The supermarket says it requires suppliers to meet labor standards

• The distributor passes those requirements to its suppliers

• The processor passes them further down

• Somewhere along the chain, the requirements evaporate

Auditing is theater. Companies announce audits; contractors hide violations; auditors check boxes. The system continues.

Reform Attempts

Various efforts have tried to make supply chains more responsible:

Certification Schemes

Organizations like the Marine Stewardship Council certify “sustainable” seafood. But certification is expensive, which disadvantages small producers. And the standards are often set by industry participants.

Supply Chain Transparency Laws

Some countries now require companies to report on forced labor in their supply chains. But reporting isn’t the same as eliminating. And enforcement is weak.

Corporate Social Responsibility

Companies publish sustainability reports and ethics commitments. These are primarily marketing. When costs and ethics conflict, costs usually win.

Consumer Pressure

Scandals about forced labor in seafood occasionally break through to consumer awareness. Companies respond with pledges. Then attention moves on.

The Logic of the System

Here’s the uncomfortable truth: supply chain abuses aren’t failures of the system. They’re the system working as designed.

The system is designed to minimize costs. Labor exploitation minimizes labor costs. Environmental destruction externalizes environmental costs. Distance and complexity minimize accountability costs.

Every link in the chain faces the same incentive: reduce costs or lose business to competitors who will. This is a race to the bottom built into the structure.

Individual companies choosing to be more ethical face a dilemma: higher costs mean higher prices mean lost market share. Unilateral ethical action is punished by the market.

Only collective action—through regulation, unions, or consumer coordination—can change the incentives.

What Would Real Prices Look Like?

If prawns included their real costs:

• Fair wages for workers would add several dollars per pound

• Environmental restoration (replanting mangroves, fishing sustainably) would add more

• Carbon pricing would add transportation costs

• Occupational safety would increase processing costs

The $8/pound prawn might cost $20 or $30. You’d eat fewer prawns. The demand that justifies the exploitative supply chain would shrink.

This is why the costs are hidden. If they were visible, the system couldn’t continue.

The Prawn on Your Plate

You didn’t create this system. Your individual purchase didn’t cause it. And your individual abstention won’t fix it.

But understanding the system changes how you see it. The cheap prawn isn’t cheap. It’s subsidized by suffering you don’t see and destruction you won’t witness.

This is the logic of global supply chains applied to many products—not just seafood, but clothing, electronics, coffee, chocolate. Distance and complexity hide costs. Consumers get low prices. Someone else pays.