Wizards and Prophets

I've been reading Charles Mann's latest book Wizards and Prophets, which was released earlier this year.  Overall, I've enjoyed the book.  The subtitle, "Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow's World" is an apt description for much of the content, which describes food, agricultural, and environmental problems through the lens of Norman Borlaug and William Vogt.  The history is informative, and Mann gives a fair comparison of the underlying philosophical differences, which he attributes to Borlaug and Vogt, driving much of the debate today around food, agriculture, and the environment. 

I am very much in the "Borlaug-wizard camp" (which advocates for innovation, science, research to solve food security and environmental problems) but I came away with a better appreciation for the Vogt-ian, prophet point of view (focused on resource constraints, ecological limits, need to reduce consumption, etc).  

While I thought the book was well done and well worth reading, Mann gets one aspect of this debate wrong.  Because I've seen other writers make the same mistaken point, it's worth delving into a bit.

Throughout the book, Mann refers to the Borlaug way of thinking as "top down" and the "hard way," and he contrasts this with Vogt's approach which he depicts as "bottom up", "localized", etc.  This is exactly backward. 

Mann aptly describes a core belief among the prophets: that there are finite resources on earth and just like any other species, we will grow exponentially until we exhaust our resources, and then our population and civilization will collapse. The analogy is a jar filled with few fruit flies given a fixed amount of food.  Initially, the flies have ample resources and they multiple rapidly.  However, at some point the population becomes too large for the fixed food supply, and the population collapses.  The fruit fly population follows something like an S-shaped curve over time.

Moving from flies to people, the issue is typically described in a Malthusian manner.  As the graph below shows, as we add more labor to a fixed amount of land, diminishing marginal returns kick in and the amount of food available per worker eventually falls.


If this resource-constrained view is a core belief, how do you solve the problem?  Adherents to this point of view typically urge folks to consume less or use less resource-intensive systems/products or to constrain population in some way.  But, most individuals don't want less.  Particularly folks in the developing world - they want to have and consume the things those us in the developed world enjoy, whether it be meat, air conditioning, ipads, or MRIs.  Yes, persuasion may result in a few people cutting back, but not on a scale that matches the magnitude of the problem.  Thus, the only fully effective way for the prophets to accomplish their goal (preventing catastrophic collapse) is to force or constrain the population to adopt outcomes few individuals would choose on their own.  Thus, the call for policies to mandate a cap on the number of children one can have (as occurred in China), restrictions of resource use, taxes, bans, etc. In other words, top-down planning is required to constrain growth and population, which is often manifested in "one size fits all" or highly non-localized policies.  Just recall of all the clamoring by Vogt-type adherents when Trump decided to pull out of the Paris accord that had global (i.e., non-local) prescriptions to fight climate change [note: I'm not advocating for or against the Paris accord, only noting that it is non-local and more-or-less top-down).  

The wizardly Borlaug view, by contrast, operates via entrepreneurial innovation and individual decisions of whether to adopt or not.  When Borlaug worked for the Rockefeller foundation, he/they had no "power" to force individual farms to adopt their new seeds and production practices, rather as Mann himself reveals, the early Mexican adopters took on the new seeds precisely because they saw for themselves via Borlaug's demonstration plots that they could achieve higher yields.  Yes, the types of seeds and production practices developed by Borlaug et al. spread far and wide, but it is was largely because they "worked" not because it was mandated from on high.  And, the adoption was much more adapted to local conditions than Mann lets on.  Producers in different locations ultimately used different varieties, different irrigation and fertilization techniques, etc.  As time has gone on, precision agriculture has led to even more localization of management decisions.  

The promise and hope of the Wizard is that innovation can get us off the curve shown in the graph above and move us to a new, higher outcome, as shown below. 


This isn't a denial of resource constraints, it is a recognition that innovation allows us to get more with the same or fewer or even different resources.  But, for those innovations to be adopted, they must pass the market test.  Real life-farmers and consumers need to choose to adopt them (or not). This is precisely the opposite of top-down.

Here's what I wrote a while back when Nassim Taleb referred to GMOs as a "top down" technology. 

Taleb makes reference to the Hayek bottom-up vs. top-down planning. He says GMOs are the top-down sort. I’m not so sure. Real life farmers and people have to be willing to buy varieties that have the GMO traits. No one is forcing that outcome. It is true that competition will limit - to some extent - the diversity of plants and genetics that are observed because some plants aren’t tasty or aren’t high enough yielding. But most plant breeders keep all kinds of “ancient” varieties precisely for the purpose of trying to breed in new traits to today’s varieties (and folks working on synthetic biology are creating their own, new strands of DNA, creating new diversity). Geography also increases diversity. Iowa grows a lot of corn, Oklahoma doesn’t because it isn’t our comparative advantage. I see little reason to believe that a single GMO variety will perform well in all locations. So, yes individual companies are planning and creating new varieties, but it is all our local knowledge of what works in our places and conditions that determine whether particular genetics offered by a particular company are used. We do not have a seed czar or a DNA czar.

How to Feed the World

That's the title of a new book edited by Jessica Eise and Ken Foster that was just released last week.  The book is a collection of essays primarily from my colleagues in the Department of Agricultural Economics here at Purdue, but it includes contributions from Purdue faculty in other academic disciplines as well.  I had the privilege of writing the afterward.  

Here is the table of contents:

Chapter 1. Inhabitants of Earth- Brigitte S Walforf
Chapter 2. The Green, Blue, and Gray Water Rainbow- Laura C Bowling and Keith A Cherkauer
Chapter 3. The Land that Shapes and Sustains Us- Otto Doering and Ann Sorensen
Chapter 4. Our Changing Climate- Jeff Dukes and Thomas W Hertel
Chapter 5. The Technology Ticket- Uris Baldos
Chapter 6. Systems- Michael Gunderson, Ariana Torres, Michael Boehlje, and Rhonda Phillips
Chapter 7. Tangled Trade- Thomas W Hertel
Chapter 8. Spoiled, Rotten, and Left Behind- Ken Foster
Chapter 9. Tipping the Scales on Health- Steven Y Wu
Chapter 10. Social License to Operate- Nicole J Olynk Widmar
Chapter 11. The Information Hinge- Jessica Eise
Chapter 12. Achieving Equal Access- Gerald Shively


Disruptive Trends in Food and Agriculture

In the past couple weeks, I've had several opportunities to engage with some forward looking farmers and agribusiness executives, and a common theme seems to have emerged around many of the conversations: what are the issues or food and agricultural technologies on the horizon that could be potentially disruptive for the current incumbents?  

1) Block chain technology.  This isn't bitcoin, but rather the underlying technology that facilitates bitcoin trades, which could be applied to many other industries.  This Reuters article from earlier in the week, for example, indicates, "A cargo of U.S. soybeans shipped to China has become the first fully-fledged agricultural trade conducted using blockchain."  The thought is that blockchain technology might prove to be a mechanism that can more rapidly disseminate many types of information about trades (the Reuters article mentions the "sales contract, letter of credit and certificates") more widely and rapidly.  Big players like Walmart and IBM are also talking about using blockchain to improve traceability and food safety.

2) Plant-based and cellular-based protein.  This is a topic I've written about many times in the past (e.g., here or here).  What's changed is the high level of investment flowing into this space, including by companies like Tyson and Cargill.  Moreover, there are now products from companies like Impossible Foods, Beyond Meat, JUST, and others that are actually in the market.  If sales ramp up, what are the impacts on producers of current animal feeds (primarily corn and soy)?  What are the new agricultural inputs for these plant-based meat/egg/dairy alternatives? 

3) CRISPR.  Again, the basic science isn't necessarily new,  but there are new applications coming on board (non-browning apples, hornless Holsteins, etc.) and potential changes in the regulatory landscape that could accelerate (or decelerate) adoption and consumer acceptance.

4) Agricultural analytics.  This includes precision agriculture, sensing, big data, drones, modeling, etc.  Yes, these have been around for a while and there have been many discussions about data ownership and rights, but there is a sense that the data and technology have moved to a point where some adopters may be able to start gaining a competitive advantage. 

5) Online food buying.  Will Amazon do to the food supply chain what they've done in other industries?  Walmart is also making big moves into this space.  What are the implications for traceability, tracking, and vertical market coordination?

6) Trade.  Agricultural trade has a big impact on US agriculture, and it appears there may be changes in trade policy on the horizon. 

What have I missed?

Are Steaks Too Big?

Then answer, according to a paper just published in the journal Food Policy by Josh Maples, Derrell Peel, and me is "yes" - at least for most consumers.  

The issue is that improved genetics and feeding technologies, along with various economic incentives, have led to much larger cattle.  To provide some perspective, USDA data indicate that the average weights of commercially slaughtered cattle hovered around 1,000 lbs from the 1950s and the mid 1970s.  Since that time, however, there has been a fairly steady increase in the size of cattle.  Since 1975, finished cattle weights have increased about 9 lbs/year on average.  In 2016, the average weight was 1,363 lbs.  That's a whopping 366 lbs higher in 2016 than in 1975!

Larger cows mean larger steaks.  On the surface, that seems like a good thing for consumers as it means we have more steaks.  However, most people don't want to eat a 32oz steak.  In fact, most restaurants and grocery stores offer relatively fixed serving sizes for steaks like 12oz or 16oz, for examples.  So, what happens if cattle carcasses have gotten much bigger, and along with it, the muscles that are cut into steaks, but consumers still only want a 16oz steak?  The consequence is that today, steaks are cut thinner.  Thus, the core question is: for a fixed weight, do consumers prefer "traditional" thicker steaks that take up a smaller area or "newer" thinner steaks that take up a larger area?  

To answer this question, we surveyed over 1,000 US consumers and presented them with a series of choices like the following that varied the type of steak, the thickness or the steak, the area of the steak, and price.  Note that one you know the thickness and the area of a steak, the weight is pre-determined.  



The findings?

Our results imply that consumers are heterogeneous in preferences for steak size but are generally in unison in their dislike for the thinnest cuts of steaks

About half the consumers preferred steaks with the largest area, but about half preferred steaks with a medium-sized area.  Overall, the results suggest that the roughly 50% of consumers who prefer steaks with larger areas is way more than offset by the near universal dislike of steaks becoming much thinner.   

Here's an excerpt from the conclusion:

The decrease in consumer welfare by moving from a choice set containing small area and thick steaks to a choice set that includes large area and thin steaks implies that the changes in carcass size have led to a decrease in consumer utility from today’s steak choices relative to the steak choices of a few decades ago. The aggregate welfare loss from the increase in carcass weight with respect to ribeye and sirloin steaks is $8.6 billion for the two largest classes. Of course, steaks are only one piece of the carcass, and the increase in carcass size may have increased welfare with respect to other beef cuts. The decrease in welfare due to larger steaks can be offset by increased welfare resulting from the increases in quantity produced of other cuts. Ground beef is a prominent example. Because the form of this product remains generally unchanged as carcass size increases, the increased efficiency (i.e. more meat per animal) has likely led to increases in consumer welfare through lower prices (or smaller increases in prices resulting from the decrease in number of cattle slaughtered). However, steaks represent an important portion of the total carcass value and it is possible that the increasing size of other cuts have also created less desirable end products for consumers. Future research should focus on the impact of increased carcass weights on consumer welfare across multiple cuts. Such studies might find that while welfare losses exist for some cuts, the gains in welfare from other cuts lead to a net increase in consumer welfare due to larger cattle.

Do we produce enough food already?

Earlier this week I had the pleasure of giving the George Morris AgriFood Policy lecture at the University of Guelph.  I primarily focused my talk on the benefits of food and agricultural technologies and the importance of productivity growth for solving our future world food problems.  

At the conclusion of my talk, an audience member played devils advocate asked an important question that deserves more widespread discussion.  In short, the question was something along the lines of the following: don't we produce enough food already?  It is a question reflected in many popular writings.  This headline, for example, is "We Don't Need to Double World Food Production by 2050." Here's Mark Bittman writing in the New York Times: "The world has long produced enough calories . . .".  Here's Bittman again under a headline in the same outlet "Don't Ask How to Feed the 9 Billion" because, in his words, "The solution to malnourishment isn’t to produce more food." 

Here are my main main thoughts on this line of thinking:

1) Even if we produce enough calories today to meet today's population, that doesn't mean we produce enough for tomorrow's population.  Productivity growth is gradual and incremental, and if we found ourselves in a situation of needing more food, the new technologies to produce them cannot be created over night.  This is particularly true of our ability to produce in the future is hampered by climate change.

2) There is no binary category of "enough food."  Greater food production leads to lower food prices and lower food insecurity.  I haven't yet met a food consumer who wouldn't prefer paying lower food prices, holding quality constant. 

3) I may be true in an accounting sense that we produce enough calories today to meet total caloric needs.  But accounting isn't economics, and we need to consider the incentives of the system that produces the sufficient calories today relative to an alternative system that is either less productive or involves widespread redistribution.  Massive redistribution of food can destroy the incentives of people to produce the food.  One cannot disentangle the fantastic productivity of our current system with the market forces that led to it's origin.  Stated differently, there is no reason to imagine we'd produce the same number of calories if "the system" were changed to one with massive confiscation/redistribution.  Brady Deaton altered me to this fascinating paper in the Journal of Political Economy showing that 75% of the increase in China's agricultural productivity after 1978 was due to strengthening of individual incentives.

4) It's important to look at productivity through the lens of sustainability.  Higher productivity means getting more (or the same) amount of food output using fewer inputs and resources.  Are people really wanting to argue that they'd prefer systems that require more of our natural resources - more land, more water, more fossil fuels? Since when is lower productivity and inefficiency preferred?  Even if "enough" food is produced today, improved productivity means we can keep producing the same quantity but shrink agricultural's footprint on the land, use less water, fewer pesticides, etc.    

5) If the solution to the food problem is simply shipping food from high productivity countries and sending (or stated more pejoratively "dumping") in lower productivity countries with hungrier citizens, this may harm the livelihoods of producers in low productivity countries and reduce their incentives to adopt efficient forms of agriculture.

6) If places like the US decided to forego new food and agricultural technologies and farmers were forced or incentivized to adopt lower productivity systems, what would happen to patterns of global trade and production.  US farmers compete with farmers all over the world to serve US consumers and consumers worldwide.  Not only would such policies likely reduce US exports, it would make imports relatively more attractive.  Is the solution then import tariffs to prop up our lower productivity system?

7) One can go back to writings from over 100 years ago and find claims that the problem of production and scarcity had essentially been solved, and all that was needed was a heavier handed state to ensure "fair" distribution (e.g., see Edward Bellamy's Looking Backward, published in 1888).  Imagine the world we would live in today if that premise were widely accepted back in 1888 - that the state of production was "good enough" and we could stop worrying about growth and progress.  How much growth would we have lost out on had we stopping innovation in 1888?  We'd still be hand-picking cotton, planting with mules, eating much more salt- and vinegar-cured meats, and more.  What will the food and agriculture future look like in 2088, and what will we give up if we stop working on productivity-enhancing technologies today?