Blog

How Big Food Responds to Big Government

People who advocate for bans on large sodas, taxes on sugar and fat, and  mandatory calorie labels in restaurants often forget that food companies don't just sit idly by and follow the intentions of the policy makers.  Rather, firms (and even consumers) strategically respond to a new food environment - often in unanticipated ways.  

On that note, here is a paper that just appeared in the European Review of Agricultural Economics by four French researchers.   

They argue that:

. . . it is important to take into account the fact that food consumption decisions involve many dimensions related to price, taste, product convenience, health issues, etc. A consumer has to manage a trade-off between several product characteristics. Similarly, the firms have to deal with these multiple dimensions of food consumption in order to compete on a market in which the nutritional quality is just one of many criteria considered by consumers. The analysis of the economic effects of nutritional regulation must not neglect all of these dimensions as changes in the other (nonnutritional) product characteristics may be a response to nutritional policies which affects the welfare and the economic efficiency of nutritional regulation.

and

our results show that nutritional regulations may induce changes in consumers’ decisions and the product quality choices by firms, but they may also affect the competitive game. In an imperfect competition setting, firms react not only by adjusting price and product quality, but also by modifying the product variety available on the market and hence the level of substitutability between food products. This situation can lead to adverse effects from a public health perspective. Indeed, we show that if the tax rate is not well adjusted according to the quality threshold imposed to avoid taxation, it is possible to observe economic distortions that are not compensated by increased health benefits.

The Presidental Election and Food Policy

Over at Reason.com, Balyen Linnekin wrote a column last week where he shared his perspectives on the

ten important federal food-policy issues the presidential candidates should be discussing but have ignored until now.

Yesterday, he put up another post: 

my goal for this week's follow-up column would be to go beyond my own ideas by presenting one idea each from 10 leading food scholars, attorneys, authors, advocates, and others about important food-policy issues they'd  like to see discussed in the presidential campaign and implemented in the future.

Here were my thoughts, which Balyen included in his post (I'm number 6).

The government-funded school lunch program is a bureaucratic nightmare that attempts to do too much: prop up agricultural prices, provide calories to poor under-nourished children, slim the waistlines of the obese, and it forces schools to follow complex rules subject to annual audit. The government subsidizes the price of foods sold from selected distributors and it re-reimburses schools for certain types of students. Why not take these same funds and provide block-grants to schools and let local school boards make their own decisions outside the complex government formula system? We allow charter schools. Why not charter lunchrooms?

Number 7 was also on school lunches.  Check out the other 8 ideas.

Why should you care about California's Prop 37?

That's the title of my my latest article on foxnews.com.  Some of the key paragraphs:

Proposition 37, if passed on November 6th, will require mandatory labeling of certain foods containing genetically engineered ingredients.  Because California is such a large consumer of agricultural products grown in the rest of the US and because food manufacturers work across state lines, the implications (and costs) of Proposition 37 could expand far beyond the Golden State.  

and

Everyone wants to know what’s in their food.  That issue is not at stake.  The real question is how much consumers are willing to pay to know what’s in their food, and whether it makes sense to force companies to provide information.  If consumers really value information about the biotech content of their food, there are plenty of opportunities for enterprising farmers and food manufacturers to provide the feedstuffs consumers want.  And, indeed they have.  

and

Yet, every major scientific authority on the subject – from the American Medical Association to the National Academies of Science to the American Dietetic Association to the World Health Organization – has confirmed the safety of eating currently approved foods made with biotechnology.  
Consumers in a free society have the right to disagree.  But, the rest of us shouldn’t be asked to pay the costs of their skepticism.    

The only thing I'd add is that American Association for the Advancement of Science (AAAS), the publisher of the most prestigious academic journal, Science, yesterday released a statement in support of genetically modified food.

Prop 37 Appears to Be Losing Support

A new poll reported in the LA Times suggests support for Prop 37 has fallen substantially since the poll we conducted about a month ago.  Our study showed weakness in support - with people reacting much more to negative than positive ads, but I am surprised support has fallen this far.  We also found acceptance was sensitive to the anticipated costs of the mandatory label.  

Here is the summary from the LA Times:

After a barrage of negative television advertisements financed by a $41-million opposition war chest, a USC Dornsife / Los Angeles Times poll released Thursday showed 44% of surveyed voters backing the initiative and 42% opposing it. A substantial slice of the electorate, 14%, remains undecided or unwilling to take a position.

The critical drumbeat of television advertising is having a big effect, voters said. The anti-Proposition 37 spots "made me start looking more into" the issue of genetically engineered plants, said Josie Prendez, 63, a retired school employee in Fresno. She said she concluded that farmers should not be hit with more regulations.

​and

The opposition advertising is paying off, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC and former Republican political strategist. "The challenge for the opposition is to convince voters there are economic consequences involved here. It appears they are in the process of doing that."

​