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Changes in Meat Consumption

There's been a lot of discussion lately about changes in meat consumption over the last year or two.  Much of it seems to have been generated by a Rabobank report (based on USDA's data and projections).  For example here's a representative tweet.

There were headlines like: "America Cannot Kick Its Meat Habit".  Yesterday there was a story at Vox.com (in which I am quoted) that summarizes now dated cheers by animal advocates that meat consumption was falling.  This new news seems to contradict those claims.  

So what's going on with meat consumption?  I think it's useful to take a step back and take a longer view.  Here's USDA quarterly data on per-capita meat consumption (it's technically a measure of "disappearance" not consumption) going back to 1980.  Note: these are the same underlying data driving all the headlines.

Over this long time period, there has been a general decline in beef consumption, falling or steady pork consumption, and the big story is rising chicken consumption.  "Yes" it appears over the past few quarters or so there has been increasing total meat consumption, but that's mainly a result of eating more chicken.  Moreover the total consumption levels in 2016 are lower than they were in 2002-2006.

What caused the total meat consumption decline from roughly 2006 to early 2015?  Most journalists seem to want to focus on demand-side factors.  The typical story was that consumers were more concerned about health, environment, animal welfare, etc.  These might have played some role, but the much bigger driver is likely supply-side issues.  I noted these issues back in 2014 (see here and here for longer discussions).  In short, consumption was down because prices were high.  Prices were high because of supply-side issues like drought, high feed prices, a disease issue in pork, etc.  

Why is consumption starting to tick back up?  The answer is same as it was before: prices.  Here are changes in relative meat prices over the same time period as the previous graph.

Here's what I wrote back in July 2014 near the price peaks

“Ultimately, the old adage is likely to hold: the cure for high prices is high prices. The high meat prices we’re seeing today will eventually encourage larger beef and pork supplies, which eventually will put downward pressure on prices. When will that day come? ”

Looks like the answer is "now."  

The long term price trends shown above also help explain the rise in chicken consumption over time.  While all meats are today more expensive than in 1980s (some of this is due to inflation - the prices changes above haven't been adjusted for inflation), today chicken is "only" about 200% more expensive than it was in January 1980 whereas beef and pork are both about 264% more expensive than in January 1980.  

Here's a graph of the price changes just since 2010 (January 2010 = 100).  These graph show relative changes, but if you look at actual price levels, it's also apparent why chicken consumption is up.  In July 2016, the USDA reported prices for beef, pork, and chicken were $6.09/lb, $3.78/lb, and $1.44/lb.  

The main message here is that we don't need to grapple for complex, convoluted stories to explain  recent changes in meat consumption.  The prices of meat have fallen (because feed is less expensive and because there are larger inventories), and lower prices encourage consumers to buy more.  It's just basic economics at work.  

Food Demand Survey (FooDS) - August 2016

The August 2016 edition of the Food Demand Survey (FooDS) is now out.

A few if the items from the regular tracking portion of the survey:

  • After a spike up last month, willingness-to-pay (WTP) for steak fell 12%.  WTP for other meat products remained relatively steady compared to last month.
  • Awareness in the news of all items we track (but one) increased in August compared to July, and the largest percent increases in concern were cloning and hormones.
  • Consumers anticipate lower prices for beef and indicate they plan to eat more beef and chicken this month compared to last.
  • Consumer are spending slightly more at home and less away from home on food this month compared to last.

Three new ad hoc questions were added this month.

I was recently made aware of some programs being pursued by food and agricultural organizations to add labels to food advertising, for lack of a better phrase, social causes.  So, I was curious what consumers thought of these sorts of programs.

First, participants were asked: “Imagine seeing a label on a food product that pledges a portion of the proceeds from the sale of the food go to a particular social cause or group.  Which of the following social causes or groups would be most appealing to you?  Participants were asked to rank each of the outcomes on a scale of 5 to 1 where 5=most appealing and 1=least appealing. 

On average, participants ranked a label pledging a “portion of the proceeds go to a local food bank to help the hungry” as the most appealing.  Participants ranked a label pledging a “portion of the proceeds go to a campaign to promote healthy eating and exercise” as the least appealing.   The following figure shows the percent of respondents who ranked each issues as most appealing: More than half the participants ranked "Portion of the proceeds go to a local food bank to help the hungry" as most appealing.  

Second, participants were asked “Which of the following characteristics would be most important to you when shopping for eggs? Please allocate 100 points to the following characteristics in terms of the importance in deciding whether and which egg option to buy (total points must sum to 100).”

Six different characteristics were shown in random order. 

On average, “Price: low vs. high price” was most important when shopping for eggs, with 26 out of 100 points allocated to this issue on average across participants. The brand of eggs was rated as least important with less than half the points allocated to brand than price.  Size was, on average rated slightly more important than cage vs. cage free, whereas color was slightly less important than this issue.  

These statistics can provide a crude estimate of willingness-to-pap (WTP).  Presuming respondents perceive that the gap between low vs. high prices is a $1/dozen difference, then for every dollar change, mean rating falls by 26 points.  By contrast, going from small to large eggs increases the mean rating by about 20 points.  It follows that people would give up 20/26=$0.77/dozen to have large instead of small eggs.  Using similar logic, WTP for cage free vs. cage is $0.67/dozen, brown vs. white is $0.48/dozen, proceeds to preferred social cause vs. none is $0.46/dozen, and least to most preferred brand is $0.46/dozen. 

Presuming respondents perceive that the gap between low vs. high prices is a $2/dozen difference, then for every dollar change, mean rating falls by 26/2 = 13 points. And, in this scenario, WTP for large vs. small eggs is 20/13 = $1.55/dozen.  WTP for the other attributes also double under these assumptions.

Lastly, I added the question, "Are you a member of the AmeriCorps program?"  This question was added in response to a suggestion I received at the end of my AAEA presidential address.  As I discussed a few days ago, one of the points of discussion in my talk related to predicting vegetarian status.  I mentioned how vegetarians/vegans tend to be young, female, liberal, and paradoxically somewhat high income and on food stamps.  After my talk a young women approached me and asked whether I knew if my participants were a part of the AmeriCorps program.  I said "no" - why?  She remarked that the characteristics I just described fit the people she knew who were AmeriCorp members.  I honestly don't know much about the program, but according to my questioner many of the members are young, recent college grads who tend to be liberal and who are often from relatively well-off families but who are encouraged by people in the program to sign up for SNAP (aka "food stamps").  

What did I find in this most recent survey?  Overall, 7.65% of the respondents said they were members of AmeriCorps.  And, overall, 5.6% of respondents said they were vegetarian or vegan.  So, how did my young questioner's hypothesis hold up?  Amazingly well!  Of the people who said they were a member of AmeriCorps, a whopping 40% said they were vegetarian or vegan!  By contrast, only 2.7% of non-AmeriCorps members said they were vegetarian or vegan.  Stated differently, of all the vegetarian/vegans in our sample, over 55% of them were a member of AmeriCorps.  

When Bigger Isn't Better

One of my Ph.D. students at Oklahoma State (and soon to be faculty member at Mississippi State University) has been working on an interesting paper on the impacts of changing cattle sizes on the desirability of steaks.  The average beef cow now weights more than 300lbs more than it did a few decades ago.  Generally that's a good thing as we can get more meat from fewer animals (which means less resource use, less land, less greenhouse gas emissions, etc. in addition to lower prices for consumers).  

But, there's a downside:

“As a response to varying muscle sizes such as the ribeye, grocery stores and restaurants are often forced to adjust the thickness to which the steaks are cut in order to meet a target weight. Thus, a ribeye steak from a carcass with a large [loin] will likely be cut thinner than a ribeye steak from a carcass with a smaller [loin]. This has led to the introduction of “thin cut” steaks in some grocery stores. Compounding the issue of altering larger steaks are the historically strong beef prices. Some retailers utilize target prices for packages of steaks. Therefore, consumers are not only facing high beef prices, but also an increase in total package price due to the larger dimensions of the steak. This has caused retailers to reduce thickness to meet a target package price. ”

The key question, then, is whether people prefer thicker steaks with smaller surface areas (like those that existed 20 years ago) or thinner steaks with larger surface areas (like those that sell today)?  To address this question, a survey was taken by a representative sample of over 1,000 steak consumers.  We gave consumers choices like the one below, and asked which steak they'd choose.  Consumers answered a number of these questions where the steak thickness, area, and price, systematically varied across choices.  

So, what did we find?  For most consumers, there is a trade off between thickness and size.  Moreover, it seems changes in thickness are more important than changes in size.  As a result, most consumers are less happy with the steaks they see today in the grocery store (holding prices constant).  That is, consumers prefer a thicker, smaller area steak to a thinner, larger area steak.  We use the estimates to do a little thought experiment.  How much additional money would have to be to give to today's consumers to make their steak choices as satisfying as they were 40 years ago (in terms of thickness and area, holding prices constant)?   

“Table 6 reports the estimated welfare changes by moving from a scenario where the choice set include small area and thick steaks (40 years ago scenario) to a scenario where the choice set includes large area and thin steaks (today scenario). Estimated welfare changes were
calculated for the conditional logit model as well as the two classes from the latent class model
which had statistically significant estimates for price per package. The welfare change estimate
from the conditional logit model implies that moving from the scenario representing 40 years ago to today’s scenario decreased welfare by $5.37 per choice, an amount that is statistically
significant at the five percent level. When multiplied by the number of steak purchases in the U.S. each year, estimates from latent classes one and two suggest decreases in total welfare of
$5.8 billion and $2.8 billion respectively, by moving toward a choice set with large area and
thin steaks, though the estimate for class one is not statistically significant at the 5 percent level.”

Now, it should be noted that consumers might be, overall, better off from changing cattle sizes because they now have more ground beef available and because prices are lower than they'd otherwise be.

Josh's paper was accepted for presentation in one of the new lightening sessions at the AAEA meetings this year in Boston.  These are short sessions where authors have only seven minutes to present their work.  Here's Josh presenting this paper in lighting session format.

Lab grown meat

Quartz.com just ran a piece taken from one of the chapters of Unnaturally Delicious on lab grown meat.  Here's the start:

“On Aug. 5, 2013, Mark Post went out to grab a hamburger. This was no drive-through Big Mac. Rather, Post bit into his $325,000 burger in front of an invitation-only crowd of journalists, chefs, and food enthusiasts in the heart of London.

The strangest part wasn’t the cost or the crowd but the meat. Post, a professor of vascular physiology at Maastricht University in the Netherlands, grew the burger himself. Not from a cow on his farm, mind you, but from a bovine stem-cell in a petri dish in his lab. Post’s research, partially funded by Sergey Brin, one of Google’s co-founders, has the potential to upend conventional wisdom on the environmental, animal welfare, and health impacts of meat eating.

Ironically enough, I first met Post at a meeting of some of the world’s largest hog producers. ”

The Quartz editors left out what I think is one of the most important points made in the chapter about relative inefficiencies of meat eating.  So, for sake of completeness, here's the segment they left out (long time readers will recognize that I've touch one this theme in previous blog posts).

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More broadly, this line of argument – that meat production (inside the lab or out) is “wasteful” because it requires feed inputs that humans might use – is misplaced.  To see this, it is useful to consider a thought experiment – an imaginary story that might help us get to the bottom of things. 

Imagine a biologist on an excursion to the Amazon looking for new plant species.  She comes across a new grass she’s never before seen, and brings it back home to her lab.  She finds that the grass grows exceedingly well in greenhouses with the right fertilizer and soil, and she immediately moves to field trials.  She also notices that the grass produces a seed that is durable, storable, and extraordinarily calorie dense.  The scientist immediately recognizes the potential for the newly discovered plant to meet the dietary demands of a growing world population.

But, there is a problem.  Lab analysis reveals that the seeds are, alas, toxic to humans.  Despite the set-back, the scientist doesn’t give up.  She toils away year after year until she creates a machine that can convert the seeds into a food that is not only safe for humans to consume but that is incredibly delicious to eat.  There are a few downsides.  For every five calories that go into the machine, only one comes out.  Plus, the machine uses water, runs on electricity, burns fossil fuels, and creates carbon emissions. 

Should the scientist be condemned for her work?  Or, hailed as an ingenious hero for finding a plant that can inexpensively produce calories, and then creating a machine that can turn those calories into something people really want to eat?  Maybe another way to think about it is to ask whether the scientist’s new food can - despite its inefficiencies (which will make the price higher than it otherwise would be) - compete against other foods in the marketplace?  Are consumers willing to pay the higher price for this new food? 

Now, let’s call the new grass corn and the new machine cow. 

            This thought experiment is useful in thinking about the argument that corn is “wasted” in the process of feeding animals (or growing lab grown meat).  Yet, the idea that animal food is “wasted” is a common view.  For example, one set of authors in the journal Science wrote,

“Although crops used for animal feed ultimately produce human food in the form of meat and dairy products, they do so with a substantial loss of caloric efficiency. If current crop production used for animal feed and other nonfood uses (including biofuels) were targeted for direct consumption, ~70% more calories would become available, potentially providing enough calories to meet the basic needs of an additional 4 billion people. The human-edible crop calories that do not end up in the food system are referred to as the ‘diet gap.’”

The argument isn’t as convincing as it might first appear.  Few people really want to eat the calories that directly come from corn or other common animal feeds like soybeans.  Unlike my hypothetical example, corn is not toxic to humans (although some of the grasses cows eat really are inedible to humans), but most people don’t want to field corn.    

So if we don’t want to directly eat the stuff, why do we grow so much corn and soy?  They are incredibly efficient producers of calories and protein.  Stated differently, these crops (or grasses if you will) allow us to produce an inexpensive, bountiful supply of calories in a form that is storable and easily transported. 

The assumption seems to either be that the “diet gap” will be solved by convincing people to eat the calories in corn and soy directly, or that there are other tasty crops that can be widely grown instead of corn and soy which can produce calories as efficiently as corn and soy.  Aside from maybe rice or wheat (which also require some processing to become edible), the second assumption is almost certainly false.  Looking at current consumption patterns, we should also be skeptical that large swaths of people will want to voluntarily consume substantial calories directly from corn or soy.

What we typically do is take our relatively un-tasty corn and soy, and plug them into our machine (the cow or pig or chicken, or in Post’s case the Petri dish) to get a form of food we want to eat.  Yes, it seems inefficient on the surface of it, but the key is to realize that the original calories from corn and soy were not in a form most humans find desirable.  As far as the human pallet is concerned, not all calories are created equal; we care a great deal about the form in which the calories are delivered to us.

The grass-machine analogy also helps make clear that it is probably a mistake to compare the calorie and carbon footprint of corn directly with the cow.  Only a small fraction of the world’s caloric consumption comes from directly consuming the raw corn or soybean seeds.  It takes energy to convert these seeds into an edible form – either through food processing or through animal feeding.  So, what we want to compare is beef with other processed foods.  Otherwise we’re comparing apples and oranges (or in this case, corn and beef).

 The more relevant question in this case is whether lab grown meat uses more or less corn, and creates more or less environmental problems, than does animal grown meat.  

How bad, really, is meat eating?

Last week, Scientific American published a piece on how to get people to eat less meat.  Apparently, the science is settled and we now only need to come up  with the right "messages." 

There are an awful lot of apocalyptic pronouncements about the adverse effects of meat eating on the environment.  In a widely viewed TED talk, Mark Bittman likens meat production to a nuclear explosion and says it is leading to a "holocaust of a different kind," pointing directly to impacts on climate change.  As another example, Bill Maher, comedian and host of an HBO talk show, has written, “But when it comes to bad for the environment, nothing—literally—compares with eating meat. . . . If you care about the planet, it’s actually better to eat a salad in a Hummer than a cheeseburger in a Prius.”   I could, quite literally, provide dozens of these sorts of quotes from well known journals, writers, actors, etc, but I think you get the point.  The overall message is pretty clear: we should become increasingly more vegetarian.  

Let's take a look at one of the outcomes people are most worried about and where externality is relatively clear: climate change.   I went to the EPA's calculations, and surmise the following carbon equivalent impacts for the US attributable to beef cattle, swine, and poultry production during the year 2014 (MMT is million metric tons):

  • beef cattle: 116.7 MMT C02 (from digestion) + 4 MMT C02 (from waste management) = 119.7 MMT C02;
  • swine: 1 MMT C02 (from digestion) + 22.4 MMT C02 (from waste management) = 23.4 MMT C02; and
  • poultry: 0 MMT C02 (from digestion) + 3.2 MMT C02 (from waste management) = 3.2 MMT C02.

Elsewhere, the EPA suggests using using a social cost of carbon of $36/metric ton of C02 (assuming a discount rate of 3%) for cost benefit analysis and rule making.  Multiplying the C02 impacts above by the price tag of $36 implies the following total carbon costs in 2014.

  • beef cattle: $4.3 billion;
  • swine: $842 million; and
  • poultry: $115 million.

That seem like a lot, but keep in mind that we also eat a lot of meat.  Data from the USDA suggests that in 2014, farmers/ranchers in the US produced 24.32 billion pounds of beef, 22.86 billion lbs of pork, and 44.98 billion lbs of poultry.  Putting the carbon costs on a per-pound basis (i.e., dividing total carbon cost by pounds produced), suggests the following.

  • beef: $0.177/lb;
  • pork: $0.037/lb; and
  • poultry: $0.002/lb.

I don't know about you, but those don't seem like enormous costs.  Let's think about it a different way.  Suppose you wanted to "internalize" the the impacts you're having on climate change by altering how much beef, pork, and poultry you buy.  To do this, take the price you see at the grocery store and add about $0.18/lb to the price of beef, $0.04/lb to the price of pork, and less than a penny to the price of poultry, and act as if these were the prices actually being charged.  Would you change your behavior much based on such price increase?  If not, we'd could say the climate impacts are relatively small.

I saw the following from the economist Bob Lawson on twitter this weekend.

The key isn't to have zero greenhouse gas impacts, but rather to to make sure you're taking into account the cost of those impacts.  For the case of beef, that means acting as if the price were about $0.17/lb higher.  Do that and you can shop away, guilt free (well, at least the guilt of carbon impacts).

P.S.  USDA data suggests the retail price of beef in 2014 was around $5.60/lb.  An $0.18/lb price increase would represent about a 3% increase in the price of beef.  Assuming the own-price elasticity of demand is, say, -0.6, this price increase would lead to a 1.9% reduction in the quantity of beef demanded. So, to internalize the carbon impacts of beef eating, Americans would reduce beef consumption by 1.9%.   It's not zero but its a far cry from vegetarianism.