Food Fight

I was excited to see that my colleague, Richard Sexton, a Distinguished Professor at UC Davis, has a new book hitting the shelves next month: Food Fight: Misguided Policies, Supply Challenges, and the Impending Struggle to Feed a Hungry World. Richard is one of the most respected agricultural economists in the world, and has consistently produced some of the most interesting and impactful work in the area of agricultural market structure and market power. His new book is well worth a read, and even where you disagree with is assessment on certain food policies, you’ll benefit from engaging with is arguments. Here is the publisher’s description:

“Society’s most basic challenge is arguably to produce and distribute enough food for its citizens. In 2023, 733 million people faced hunger and 2.3 billion were moderately or severely food insecure. Feeding a growing world population is becoming more difficult in the face of climate change, pest resistance to traditional treatments, and misguided government policies that limit how much food ends up on our plates. Policies to support biofuels, organic agriculture, local foods, and small farms and to oppose genetically modified foods all reduce food production on existing land. This leads to higher food prices, increased carbon emissions, and less natural habitat as cropland expands. Food Fight documents the challenges to adequately feeding the world in the twenty-first century and illustrates the ways in which contemporary food policies in the United States, Europe, and beyond imperil food security. Richard J. Sexton provides a window into the world of modern agriculture and food supply chains. He separates the wheat from the chaff to distinguish policies that will limit, or expand, the global food supply, and he explains how we can construct a food system that forestalls future hunger and environmental degradation..”

Innovation in Gene Editing and Plant Breeding

Yesterday I had the privilege of moderating a panel discussion focused on gene editing hosted by the Farm Foundation. The main speakers included:

• Allen Van Deynze, Ph. D., Director, Seed Biotechnology Center and Associate Director, Plant Breeding Center, University of California, Davis

• Richard Lawrence, Ph.D., Head of Genome Editing, Yield, Disease, and Quality Research, Bayer Crop Science

• Fan-Li Chou, Ph. D., Senior Vice President, Scientific Affairs and Policy, American Seed Trade Association

• Alison Van Eenennaam, Ph.D., Professor of Cooperative Extension in Animal Biotechnology and Genomics, University of California, Davis

You can watch the presentations and discussion here or at the video link below.

Slump in Sales of Meat Alternatives

A few days ago, Beyond Meat released their quarterly earnings report and indicated lower than expected profits and sales, leading to a tumble in the firm’s stock price. On Twitter, Julian Melletin noted the firm lost $1.25 for every $1 sold, and he showed some interesting data on the history of sales over the past few years.

Beyond Meat is just one company, and it would a mistake to take these headlines and draw broad conclusions about the market trends surrounding plant-based meat alternatives. After all, Beyond Meat might be losing sales because of new entrants and competition to this space.

There isn’t good public data available on sales of meat alternatives, but IRI (a purveyor of grocery store scanner data) has released a series of interesting dashboards showing aggregate trends in a variety of grocery categories, including meat and meat alternatives. Here is what their data imply about total sales meats and meat alternatives.

Derived from IRI data at https://indices.iriworldwide.com/covid19/?i=0

The figure above suggest the downward trend in meat alternative sales extends beyond Beyond Meat. For example, in the week ending October 31, 2021, sales of alternative meats were down 7% relative to the same week last year in 2020. By contrast, sales of beef are up 5%, chicken up 6%, pork up 8%, and turkey up a whopping 38%.

In addition to reporting sales, IRI also reports changes in prices.

Derived from IRI data at https://indices.iriworldwide.com/covid19/?i=0

Whereas prices of traditional meat items are all up 10% or more relative to the same time last year, the same isn’t true of meat alternatives. Indeed, despite all the headlines about overall food price inflation, the price of meat alternatives is actually lower now than it was a year prior.

The two figures above indicate: 1) prices of meat alternatives is down and 2) sales of meat alternatives are down. Taken together, these two facts are strong evidence that demand (i.e., consumers’ willingness-to-pay) for meat alternatives has fallen.

Why is demand for meat alternatives down relative to the same time last year? It isn’t entirely clear. However, note the data above relate only to grocery store sales. It is possible demand is up in the restaurant sector; however, at least in the grocery store, demand for meat alternatives is down. Moreover, the phenomenon can’t be explained by an overall reduction in grocery sales because sales of other meat items is, in fact, now higher than was the case at the same time last year.

Consumer Preferences for Beef Alternatives

The journal Food Policy just published a paper I co-authored with Ellen Van Loo and Vincenzina Caputo entitled, “Consumer preferences for farm-raised meat, lab-grown meat, and plant-based meat alternatives: Does information or brand matter?” I blogged about the working version of this paper this past fall when we finished the first draft, so I won’t re-iterate all the main findings (I should also note the paper at Food Policy is open access, and as such the results are freely available).

What I thought I’d do here is convey some results from the study that are not in the published paper but that are based on the models described therein.

First, a big unresolved question that often comes up when discussing the introduction and evolution of plant-based or lab-based alternatives is whether the the projected market share for the new alternatives is “stealing” sales from beef or rather drawing new people into the market who wouldn’t bought beef to begin with. Using the models estimated in our paper (in the “control” no information, no brand condition), I project that before any alternatives are introduced about 74% of consumers would buy ground beef on a grocery shopping trip (assuming the price is $5/lb) and 26% would refrain from buying ground beef. After the alternatives are introduced (at an assumed price of $9/lb), it is projected about 12% of shoppers would buy one of the beef alternatives. Thus, of the buyers of the new alternatives, I project about 57% (6.9/12.1) would have instead bought conventional ground beef whereas the remaining 43% (5.2/12.1) wouldn’t have bought beef in the first place.

The paper in Food Policy shows some results related to the relationship between demographic characteristics and projections of which alternatives people would buy. To help make these findings a little more digestible, below is a table that shows the demographics of people predicted to choose conventional beef vs. people predicted to choose one of the beef alternatives (assuming all are the same price). Unsurprisingly, the people who are predicted to choose a beef alternative are way more likely to be vegetarian than are people predicted to choose beef. It is also the case that alt-beef buyers are much more likely to be younger and are somewhat more likely to have a college degree than conventional beef buyers. There are not big gender differences.

The table below shows a similar breakdown but instead of focusing on demographics, I report the importance consumers say they place on 12 different factors when buying food. Predicted beef buyers place greater importance on safety, taste, appearance, and naturalness. By contrast, people projected to buy one of the beef alternatives place more importance on novelty, environment, and animal welfare. (note: in general differences greater than about 0.1 are significantly different than zero at the 0.05 significance level).

Finally, one of the most interesting results of the survey were responses to open-ended questions we asked about people’s perceptions of the competing products. Here are some word clouds Ellen created.

These data were collected about a year and a half ago, and given the novelty of the products, it is possible perspectives have changed, particularly following COVID19. Fortunately I have some follow-up work planned with Glynn Tonsor and Ted Schroeder. Be on the lookout for some of those results hopefully some time this coming fall.

Time to give thanks for affordable and sustainable turkey

That’s the title of an article I just wrote for The Conversation.

Here’s the whole thing:

Americans will eat about 210 million turkeys this year, amounting to over 16 pounds per person. Much of that will be eaten on Thanksgiving Day.

Over time, our Thanksgiving meal has become considerably more affordable. Turkey will probably average about US$1.40 per pound across the country in November 2019, which is less than half the price consumers were paying for turkey in the 1970s in inflation-adjusted terms.

How has turkey become so much more affordable? It turns out there isn’t a single factor, but rather a web of innovations.

The truth about turkey

It’s worth dispelling a few myths about the turkey industry first.

All farm-raised turkeys are supposed to be hormone-free.

For one thing, turkeys aren’t given any added growth hormones – doing so is illegal. It’s also illegal to sell turkey with antibiotic residues.

Also, all turkeys are raised cage-free in large, open barns.

Why aren’t more turkeys raised free-range, which means they are allowed to move outside with some freedom? It might initially sound great for turkeys to live outdoors – unless it’s snowing or raining or above 100 degrees.

It might also be fine unless there are roaming hawks, coyotes, dogs – or even wild birds. In 2015, the turkey industry was devastated by avian influenza that cost producers $225 million. Many experts believe the outbreak was caused by the introduction and spread of the disease by wild birds.

Bringing turkeys indoors allows farmers to protect the animals from weather, predators and disease, and it also enables farmers to more closely monitor their diets and health.

Spending less, eating more

Due to innovations in housing and genetics, it now takes less time and less feed to grow a turkey to market weight than it used to.

In the 1970s, the U.S. raised an average of about 125 million turkeys per year and produced about 1.9 billion pounds of turkey meat each year, meaning each turkey produced a little over 15 pounds of meat. This year, the country is projected to produce almost 25 pounds per bird.

This has led to increased affordability for Thanksgiving meals, but it has also had important implications for sustainability.

Let’s suppose Americans want to enjoy the amount of turkey we will actually consume as a nation this year – about 5.3 billion pounds – but we wanted to do that using 1970s technology. How many more turkeys would we need today had we not innovated to increase the amount of meat per bird from 15 to 25 pounds?

The answer is 132 million more turkeys.

That’s 132 million more turkeys that would have emitted waste, created greenhouse gas emissions and required water and feed. Growing that extra feed would have required more land, fertilizer and pesticides.

We were able to save those extra 132 million turkeys because we were innovative and used scientific developments and trial and error to figure out how to satisfy the wants of a much larger population using fewer of our natural resources.

That’s something to be thankful for.