farm to fork greenwashing

I read a (sadly) funny article by the consulting firm L.E.K.: “Fresh-Food Nation: The Economic Promise of the ‘Farm-to-Form’ Strategy.” This is a strategy for increasing profits of food stores through using the farm to fork concept, even though, as they say right off the bat “Farm-to-fork principles do not fit naturally within major food companies…” and that attention to their suppliers usually focuses on keeping costs down and maintaining a certain level of quality. The consulting firm suggests that additional profits can be earned by identifying natural ingredients, and finding “new ways and occasions for consumers to enjoy them.”

The primary example of farm to fork is Ocean Spray’s cooperative of cranberry growers, which has been around since the 1930s. The report discusses the success of the craisin and the juice blends available in food stores. Another example is the acquisition of Bolthouse Farms, one of the two leading carrot companies in the US,  by Campbell’s Soup (I missed that purchase). When I think of farm-to-fork, these ventures are not what I imagine.

They conclude by asking which farm-to-fork opportunities are available for exploitation.

The consulting firm completely misrepresents what consumers are looking for in a farm-to-fork product. Amazing.

tradeoffs in ecological packaging

I haven’t thought much about food packaging, except in the sense that it creates garbage (and that I feel a twinge of guilt when I buy a product with packaging).  I recently read an article “Our Food: Packaging and Public Health,” by L. Claudio.  She directly states that while chemicals from food packaging can migrate to our bodies, the health effects are unknown.

While the link between plastic packaging and food seems obvious to me (after all, plastics are made from toxic chemicals), she mentions other less obvious sources that present potential human health risks.  For example, I  hadn’t considered that the products used to seal the lid onto glass bottles are a source of chemical contamination (makes sense, though).

Food recalls for packaging defects are not common but do happen: Kellogg had a recall for a liner with problems and lead in glass jars. The article lists plenty of other examples.

Apparently recycled paper products present a health hazard: printing inks, used in the paper’s previous life, can become trapped in the recycled product. This can be problematic when the paper is used for food packaging: a true unintended consequence of trying to reduce waste. This struck me – after all, we think of recycled packaging and products as superior, but recycling can create new problems even as it tries to solve others.  Again, this makes sense.

The answer to all of this, of course, it to avoid packaged food. Doing so solves multiple environmental and health problems.

 

weighing in on the NOSB, USDA, and the National List

I know this is a late follow up, but I have been pondering the motivation of the NOP in changing the process of placing/removing products on the National List. I suspect my thoughts may not be popular with some.

Here are my first two thoughts:

  1. Kathleen Merrigan masterminded the set up of the NOSB, as a way to ensure the integrity of the NOP as part of USDA.
  2. Miles McEvoy was hand picked by Kathleen Merrigan (when she was Deputy Secretary)  to take over as the head of the NOP.  He was an organic inspector for the Washington State Dept of Agriculture.  He had 20 years of experience before arriving at the NOP. So he was an organic insider, in my view, selected by Dr Merrigan, also a long time organic insider.

So, I find it hard to believe that this is a corporate takeover of organic agriculture (but maybe I am wrong, and Miles has transformed in 5 years, or Kathleen is not as pro-organic as I think).

What other explanations can there be? The only one that comes to my mind follows:

  1. There are a lot of products on the National List. The NOSB is comprised of volunteers.  Reviewing the products is very time consuming. This has to be a burden.
  2. Maybe it is more efficient to keep products on the list, and if they are controversial, it should be (sort of) simple to garner enough votes to bring an ingredient up for review.

There is a serious downside to this approach.  In principle, the need for good, organic ingredients/substances should spur innovation to replace controversial products. However, with the elimination of the sunset clause, the need for new products becomes less urgent.

For the record, I do not agree with the change to the National List procedures. And I certainly don’t think this is the correct process for undoing an act of Congress.  I think the board might need more members (maybe a proportional increase), or the process might need to be adjusted.

And, of course, I was not at the last NOSB meeting, so perhaps I completely missed the mark here.

Here is another potentially unpopular thought: if packaged, heavily processed products were no longer called food, this problem would go away (along with a lot of other problems!).

plant the plate!

That is a catchy phrase, isn’t it? The Union of Concerned Scientists has a clever infographic showing how the typical American diet compares to the dietary guidelines, nicely portrayed by the government in the myplate suggestions.

They make the point that the planted farmland does not match the dietary suggestions, along with some ties to policy.

But I really like the plate comparisons.

I have been reading about diets and human health, and came across a great blog post on an ideal diet. The authors are proponents of the paleo diet, which I have no comment on. But they do have an excellent phrase that caught my eye: “What are the causes of ill health? We believe there are three fundamental causes: malnutrition, toxins, and infectious pathogens.”  The first, malnutrition, is clearly tied to diet quality. The second is something I am tying to food packaging and processing (I am not sure if this is too large of a leap). The third – food borne illness.

I am putting my spin on what the authors are discussing, but this view ties the disadvantages of processed food clearly to poor health. (I admit the link is weaker for the infectious pathogen concept).

Food for thought?? (lol)

market power and prices

Economists have long studied the notion of market power on the part of food retailers or manufacturers, vis-à-vis consumers or farmers. Often people will simply examine the structure of the food system, and argue that manufacturers and other intermediaries possess market power that they exert over farmers and consumers (in fact, I often say this in class). I am currently reading articles on this topic: Gardner (1975) and Matsa (2011).

The diagram below, by Martinez, 2007, is a great example of the relative number of firms and individuals in the different stages of the food system.

food system

 

 

 

 

 

 

There are several reasons why as assessment of market power can’t be made strictly on an evaluation of the number of firms in a given stage of the food supply chain.  By market power, I mean a firm’s ability to raise consumer prices above the competitive level or to pay suppliers prices below the competitive level.

I have a few thoughts:

  1. Firms (intermediaries and retailers) need a constant and continuous supply of inputs.  The quality must be uniform.  Thus rather than bargaining over price,  firms bargain over other attributes such as quality and quantity.  Most retailers and handlers say that quality matters more than price.
  2. Supermarkets usually have a “type,” meaning one may cast itself as a low price market (Walmart, eg). Another supermarket’s signature is high quality produce (My Organic Market in MD). Others specialize in prepared foods (Wegmans). Others might claim the natural products space (Whole Foods). In any case, once a store has a reputation to uphold, its supplier contracts work to preserve that reputation. Thus, Walmart wants low prices from its suppliers, while My Organic Market wants high quality, organic produce.
  3. The need for large quantities – for example, manufacturing broilers – plays a critical role in how transactions between firms are organized. Large processing facilities are more efficient (can produce at a lower cost) only when they are processing large quantities.  Food processors often have oligopoly power, just because they are few in number and they buy from many farmers. While the processor could use this power to bargain very low prices, it has to consider the costs of driving its suppliers out of business (either through low profits or because of frustration).  In the end, the most important aspect is getting their needed inputs. So the contracts the processors offer balance the need for product with the desire to have low cost inputs.
  4. Food costs comprise a small part of a final product’s price, particularly for manufactured products.
  5. The declining farm share of the retail dollar is likely due to increased supply of farm products or increased demand for food (or both), rather than market power.

new study on broiler production

A recently published report by Jim MacDonald focuses on broiler production in the US. The broiler industry is fascinating for several reasons: (1) all broilers are produced under contract, (2) there is controversy about the fairness of the contracts, and (3) growers continue to sign contracts, despite the controversy.

Some of the interesting findings:

  1. The chickens produced in 2011 were heavier than those produced in 2006, with the average weight about 5.9 pounds in 2011. In 1995, the average bird weighed 4.66 pounds. The greater weight is to meet consumer demand for processed chicken products.
  2. The top four processors handled 57 percent of US broiler production (on a weekly basis);  a back of the envelope calculation of table 1 yields this number.  The rough estimate suggests that the broiler industry has oligopsony power nationwide; the report indicates that broiler processors almost complete market power (ie, monopsony power) in some areas of the country.
  3. Processing plants handle chickens of the same weight at one time, and their equipment can be adjusted to process batches of larger or smaller chickens.
  4. Chicken manure (aka litter) is used for fertilizer; 1/3 of chicken litter was sold in 2011.  This proper disposal of chicken manure is critical, since the manure of industrial animal farms can cause serious environmental problems.
  5. Contract growers operate small farms, and these farms are usually specialized.
  6. The average contract grower has slightly more than 4 chicken houses, with 120K birds raised in a house in one year.
  7. The average contract broiler farmer was 55 years old, male, and white. About half were HS grads (with no college) and 40 percent had attended school beyond HS (no mention of degrees).
  8. Contracts with new growers tend to be (relatively) longer term, exceeding 5 years, while contracts with long term growers tend to be less than 1 year. This finding is independent of the number of integrators serving a particular market.
  9. Net farm income for a farm with 5-6 houses was approximately $76K a year.
  10. Average household income for contract broiler growers was $86K, while median income was $68K. These levels are higher than the entire US population, which has mean income of $73 and median of $50, in 2011.

On an aggregate basis, the analysis suggests that contract broiler growers are doing well. However, zn important factor influencing a person’s economic well-being are his/her alternative possibilities. Thus, I would like to see the statistics broken down by level of education and region, just to see how farm income varies.  I would also like to see how processor market power relates to farm income.

importing organic feed & agricultural cycles

Once upon a time, our diets were dictated by seasons and by food availability. With globalization of agricultural markets and highly coordinated supply chains within the US, we have largely been immune to fluctuations in supply. Periodically, there are notices in food stores saying  something like: produce prices are higher than usual, due to drought/floods/weather in California. But, in general, the globalization of agricultural markets eliminates widespread shortages (at least in the developed nations). This is true for organic markets as well, despite the popular notion that local/domestic products are superior to imported foods.

Federal regulations require that organic livestock eat organic feed: usually corn and/or soybeans, along with pasture. Domestic farmers have never (to my knowledge, that is ) produced enough organic feed.  Plenty of media reports confirm this notion (two examples: WSJ, NPR).

Previous work, conducted with my colleague Lydia Oberholtzer, found that 58 percent of certified organic handlers were unable to locate enough organic feed in 2007.  We ascertained that the bulk of organic feed was imported from China, but never had evidence to support this. Now that imports and exports of select organic products are tracked by the federal government,  we can place a dollar amount on the value of imported organic soybeans: in 2012, $90 million worth of organic soybeans were imported into the US, and 43 percent were from China/Hong Kong. In 2013, $110 million of organic soybeans were imported, with the same share originating in China & Hong Kong.

Just as a point of reference, the dollar value (at farm level) of domestic organic soybean production in 2011 was about $49 million, according to the Organic Production Survey, Table 6. 

A direct comparison of these numbers is not exactly fair. The US production is valued at the farm level. The imported soybeans are valued further along the supply chain, and thus the value includes the farm value and a markup (who knows how much, but it is likely sizable) by intermediaries.  Plus the years are different (such is the problem of data….). Further, the data do not differentiate between organic soybeans used for feed and those used for food.

Caveats aside, the numbers are not so very different (ie, the 2012 import value divided by the 2011 farm value is 2). So it is reasonable to assume that imports are not filling a small gap in the organic soybean market, and could eventually be the dominant source of livestock feed as the organic market grows.

 

 

eat your vegetables!

A recently published article in the American Journal of Agricultural Economics presents an analysis of a pilot study of the effectiveness of incentives on fruit and vegetable consumption, through the Healthy Incentives Pilot.  The program evaluated by the stellar research team differs from the one authorized in the recently passed Farm Act, in that the incentives are used in food stores rather than farmers markets (note:  along with several colleagues, I have evaluated the effectiveness of the farmers market incentives, and stay tuned for a new publication on this topic).  If memory serves me correctly, there is a team at Cornell conducting a similar study of the effect of taxes on food consumption.

One aspect I particularly like about the AJAE paper is their discussion of the income and substitution effects of the incentives.  In this case, the SNAP recipients received a 30% rebate on their EBT card when they purchased allowable fruits and vegetables with their SNAP benefits.  They find a negligible income effect. The authors find, similar to results of other studies, that the consumption response is quite small – .34 cup equivalents.  In fact, this amount is very close to what is predicted by the price elasticity of demand (using the average elasticity of other studies). Whether this very small short run response would persist over time is not clear, and this study did not examine persistence.

However, this study, in conjunction with other studies, suggests (to me at least) that the price of fruits and vegetables is at best a partial explanation for why people don’t consume enough produce.  Maybe we need to think about people’s tastes and preferences for produce and food in general….how are they formed? And how do they influence the decision of what to eat?

about healthy eating

There is a great opinion piece by Mark Bittman in the New York Times, in which he discusses “good” and “bad” foods. I think his main point is a good one (and is one made by others): eating lightly processed food is the best approach for good health. Your weight will stay down, you won’t consume excessive amounts of sugar and fat, and you definitely won’t consume an excessive amount of salt (note: I have recently given up processed foods, 2.5 weeks now, unless my twice daily cappuccino counts as highly processed). Plus, as some people say, it is really hard to overeat your vegetables, whereas eating too many cookies is a pretty easy task to accomplish.

Another related item that has crossed my path is an article on the Healthy Eating Index, which quantifies the dietary guidelines in a way that can be used to assess the healthfulness of a person’s, or a group of people’s, diet.  The index has 12 categories. Some observations:

1. The rule “eat only lightly processed” food is easier for people to follow in terms of dietary advice, in comparison to the 12 category healthy eating index.
2. The Healthy Eating Index is better for measuring and comparing diet quality.
3. How does the category “whole grains” fit into the “lightly processed” rule? Is brown rice fine, but a pilaf of brown rice not suitable?
4. I wonder why “refined grains” are not considered “empty calories” in the healthy eating index? What is emptier than a slice of white bread? Candy? Well, isn’t that only slightly worse? In any case, refined grains can’t be the best fuel for your body.

The scariest aspect is that when the average American diet is measured, it scores just 53/100 on the healthy eating index (2007/08).

Something clearly isn’t working……

the company vegetables keep….

The Economic Research Service published the findings of two research studies that examined weight and diet. The first study, conducted some years ago, found that adults who ate more servings of fruit in a day were more likely to be of a healthy weight. This relationship was not found for vegetables, despite the knowledge that higher vegetable consumption is important for human health.

Researchers at ERS (Biing-Hwan Lin- an ace analyst – and Joanne Guthrie) took up the question some years later, to try to understand why there was no statistical relationship between vegetable consumption and healthy body weight.

Both of these studies used the NHANES dataset, which is a nationally representative dataset that contains food intake data.

They found:

  1. People consumed an inadequate amount of vegetables – 1.5 cups a day (on average).
  2. About half of the vegetables were potatoes and tomatoes.
  3. Just 10 percent of the veggies were  green and orange.
  4. Most of the tomatoes were included in a prepared food, such as pizza or pasta sauce.
  5. People who ate potatoes and tomatoes consumed more calories, because the potatoes and tomatoes were prepared in higher calorie ways.
  6. People also consume an inadequate amount of fiber.

As a society, we need to give up our love of processed foods. They are making us fat!

 

An economist's thoughts about bringing sustainability into the food system