Gestation Crates and Unfunded Mandates

The New York Times had a nice piece ​on the challenges faced by hog farmers converting from gestation crate systems to open pen systems.  For background, the Human Society of the United States (HSUS) has won successful ballot initiatives in states such as California, Florida, and elsewhere banning gestation crates, and in recent months several large restaurant chains have said they will (at some future date) no longer source pork from farms that use gestation crates.

I strongly disagree with the ​farmer in the piece who says,

What I don’t like is some big restaurant chain in Chicago that knows nothing about raising animals is telling us how to raise pigs.

It is the consumer, after all, who wins the day.  Nobody who makes a living selling what they produce to others has the final say so (at least as long as they want to stay in business).

Despite that quibble, the article does a nice job characterizing the trade-offs ​entailed in phasing out gestation crates and documenting the reasons why farmers adopted these systems in the first place (something we also tried to do in our book on the subject).

The end of the piece has a quote from my friend and collaborator, Glynn Tonsor at Kansas State University, ​who gets at the crux of the problem faced by many pork and egg producers.  The issue is that when consumers show up in the voting booth, they enthusiastically vote to ban practices such as gestation crates in pork production and battery cages in egg production.  Yet, when those same people visit the grocery store, they aren't willing to pay the extra amount for meat and eggs produced in alternative systems.  

In essence, we have consumers requiring farmers to adopt practices, which the consumers (according to their own behavior) aren't fully willing to pay for.  Farmers, then, face something very much like an unfunded mandate (a phrase I believe I heard Glynn first use in this context).  Unfunded mandates normally come about when the government requires the adoption of a costly practice or service without providing the funding to accomplish the outcome.  In a similar manner, consumers and restaurant chains are requiring farmers to adopt practices without being willing to pay for what they say they want.

​The ultimate result will be lower profits for hog farmers (well, at least US hog farmers).  It should be noted that hog farmers are already predicted to suffer record losses over the next year because of rising feed costs.  

While we may have to live with a less profitable hog sector, I at least implore voters to count the costs in the voting booth in the same way they do in the grocery store.​  Some hog farmers, who have transitioned away from gestation crates, have found niche markets of consumers who are willing to pay the higher prices.  Here's hoping the niche grows mainstream so that funding will follow the mandate.

Will Restricing Soda Access in School Cause Children to Lose Weight?

The answer is "no" according to this study just published in the journal ICAN: Infant, Child, & Adolescent Nutrition:​  Here is the abstract:

Background. School policies limiting the availability of sweetened beverages are often considered to be effective interventions for improving children’s diet and weight-related health. This study was designed to examine the effectiveness of the Rhode Island Healthier Beverage Policy in reducing consumption of unhealthy beverages and in producing changes in children’s weight status. Method. Students in 2 public middle schools in Rhode Island completed self-reported measures of dietary intake and were measured for height and weight prior to and 1 year following the implementation of a state-mandated healthier beverage policy. An inventory of beverages available in vending machines after the beverage policy was implemented provided a measure of adherence with the statewide policy. Results. Both surveyed schools demonstrated compliance with the beverage policy (ie, greater than 70% of available beverages complied). Self-reported consumption of sweetened beverages did not change significantly following policy implementation. Neither average BMI percentile for age and gender nor frequency of children in each weight category changed significantly 1 year after the policy was implemented. Conclusions. Although the healthier beverage policy was effectively implemented, it did not result in changes in self-reported sweetened beverage consumption or weight status 1 year later. Additional school policy and individual-level changes appear to be necessary to effect change in weight and dietary outcomes for children.

As I've indicated before​, changes in schools can alter kid's behavior in ways unintended by the policy makers.  And, even when more healthy foods are offered, kids don't have to eat them.

Why are there more foodies today?

Wise words from Steven Levitt:​

 I think all of this movement towards doing our own labor, and pickling, and fancy food stuff that you do at home, I think that is really a sign of how spoiled we have all become, that our basic needs are so well taken care of that we need to seek out some sort of hardship to feel whole.

Yet, despite the faux hardship , Levitt reminds us that it results from something very good: 

What could be better than having all of your basic needs met?

What are Voters Willing to Pay for Food Labels?

Several months ago, I published a study in the journal Food Policy entitled The Political Ideology of Food.  The results, which suggested most people want more food regulation, were picked up in a variety of outlets such as the Food Navigator and Reason.com.

In responding to media inquiries about the study, I consistently told reporters something along the lines of the following: I’ve done lots of surveys like this over the years and one of the things I routinely find is that people appear much more favorable of regulation and labels in hypothetical surveys as compared to when real money is in the line.  In fact, I indicated at the end of the paper:

One important factor that our survey did not address is whether public support for
food and agricultural policies will remain high when people are made more aware of the specific costs of government action in this area. Many economists, including myself, have been critical of many of the policies this sample of consumers found so favorable, in part because it does not appear the benefits outweigh the costs. Only time will tell whether economic analysis on these matters will have any influence on the public’s ideologies with respect to food.

This insight is particularly relevant to the study we released earlier this week on Californian’s desire for mandatory labeling of genetically engineered foods.   In that study, we found a whopping 76.8% of likely voters said they intended to vote in favor of Prop 37 and the mandatory labeling policy.  Yet, when we followed up and asked people if they would still be in favor if food prices increased as a result of the policy, a different story emerged. 

Below is a graph of the percentage of the percentage of Californians projected to vote yes as the costs of the policy increase.  Citizen’s support for regulation is indeed price sensitive.  As the graph shows, at a food price increase of more than 11.9%, in fact, Prop 37 looses majority support.

Our research has been covered in a varied of blogs and media outlets (e.g.,here, here, and here).  And a few stories, such as the one over at Take Part, argue that the actual cost of Prop 37 will be far less than the 11.9% “break even” point.  As a result the author posits that:

But perhaps the most important detail—one that the survey didn't discuss and likely many voters don't know—is that the cost of food prices will be much smaller than 25 percent, much closer to a number which is almost negligible. 

Could be.  But it is it is important not to confuse cost with demand.  We were not measuring the costs of Prop 37.  We were measuring the price point at which people would be indifferent.  Those are two different things.  Though, the author is correct to say that if you analyze the demand for Prop 37 at the low price they assume (about 0.1%), then yes you’d still project strong support.  The costs have be highly debated and it isn’t particularly constructive to rehash those arguments here.

One thing I will point out in relation to the survey results is that economic research on how people respond to surveys suggests that the tend to over-estimate how much they are willing to pay for policies.  One widely cited review study, for example, showed that the amount people said they were willing to pay in hypothetical surveys was about three times what they were actually willing to pay when money was on the line.  Applying that insight to our analysis reveals that the “true” break-even price is probably something closer to 11.9%/3 = 3.97%. 

That said, we also have to remember that people don’t actually have to pay the price of the policies they support at the poll like they do when they’re shopping.  The result is that the costs of policies often get overlooked when people vote.

A Vegetarian on the Board of Tyson Foods?

I read this story with some amusement (here is the version from HSUS).  According to the article, the CEO of the Humane Society of the United States (perhaps the largest animal advocacy organization in the US), Wayne Pacelle has bought shares in and is seeking a seat on the board of directors of Tyson Foods.  Tyson Foods, by the way, is the largest producer of chicken and the second largest producer of beef and pork in the US. 

My initial reaction was that a vegetarian on the board of a major meat packer just seems wrong.  Yet, upon further reflection, I have to give it to Pacelle.  I'm having a hard time finding anything wrong with his move from the perspective of liberty and freedom of choice. 

I like to eat a good steak.  But, I'm not entitled to it.  If, hypothetically, Tyson decided its money would be better invested in another venture and decided to shut down its beef, pork, and poultry operations, how can I blame them?  I'd be sad, but Tyson doesn't owe me hamburgers. 

To garner sufficient influence in the election of Tyson's business, Pacelle and colleagues had to fork over major dough.  And, he'll have to convince other shareholders to give their support.  If Pacelle gets on the board and advocates for decisions that ruin Tyson's profitability, Pacelle looses financially as do other shareholders who support him.  That's the price he and others are willing to pay to change animal living conditions. 

Again, I'd be sad to pay higher beef prices or perhaps even sad if there was no beef from Tyson to buy.  But, I can't (and shouldn't) have the right to tell Pacelle and others how to spend their own money. 

If you don't like Pacelle's attempt to buy board membership in Tyson Foods, I have one piece of advice.  Put you money where your mouth is.  Buy shares in Tyson Foods.