Do retailers respond to consumer concerns?

I often run across arguments and stories that seem to suggest that consumers have no choice (or very little choice).  Their "environment" is a function it seems, solely, of what food retailers choose to offer.  Representative of this sort of view is a tweet I noticed yesterday.

Does the food industry influence you and your kids?  Probably, to some extent.  I suspect they wouldn't spend millions on advertising if it didn't have some effect.

But, here is the question I want to ask: Do you influence the food industry?  The answer, is "yes"!  Food companies can't just offer anything they want.  Somebody has to buy it.  

Our choices are shaped by the environment in which we live and by the offerings of food companies. But, we have to realize that our food environment is also shaped by our cumulative choices. To stay in business, food companies must respond to our desires.

Just a few examples from stories I've seen in just the past couple weeks:

• Food companies stopped using dyes and lean-fine-textured beef in response to social media and buying patterns.
• A study shows that food and beverage retailers have voluntarily cut calories sold by more than 6.4 trillion calories  per year since 2007 (a reduction of 78/calorie/person/day) 
• Cheerios say they no longer will use GMO ingredient

Of course, this just scratches the surface.  How many more "gluten free" products do you see today than even one year ago?  How many milk jugs advertise to be "rBST free" today vs. 10 years ago?  

I'm not at all claiming that each of these represent a rational response by consumers to the actual objective level of risk (or, rather the actual lack of risk) present in such products.  

However, anyone who thinks food retailers aren't responding to consumer desires simply isn't paying attention.

Assorted Links

Having spent a sabbatical in Paris, I found this story on the France quite interesting and consistent with our experiences

Scott Irwin responds to the NYT piece about him

Some coverage of my talk from the American Farm Bureau Conference (here, here, here, and here among others)

My radio interview with the John Batchelor show

What is sustainable beef?

From James Marsden at Meatingplace

Last week, McDonald’s Corporation announced that it will begin using “sustainable beef” in its burgers beginning in 2016. The announcement raises questions about how sustainable beef will be defined and who will determine what’s sustainable and what’s not.

FDA Won't Define "Natural" Anytime Soon

Given some of my previous commentary on "natural" food claims and the surrounding litigation, I found this post by  Michael J. O’Flaherty interesting:

FDA once again has “respectfully declined” to define the term “natural” when used in food labeling.  In a January 6, 2014, letter from Leslie Kux, Assistant Commissioner for Policy, to three federal judges handling civil litigation brought against manufacturers over “natural”-type claims made for foods containing bioengineered ingredients, FDA denied their requests essentially to define “natural” formally.  The relevant cases are:

• Cox v. Gruma Corporation (California Northern District Court, Case Number 4:2012cv06502, filed December 21, 2012);
• Barnes v. Campbell Soup Co. (California Northern District Court, Case Number 3:2012cv05185, filed October 5, 2012); and
• In re General Mills, Inc. Kix Cereal Litigation (No. 12-249, administratively terminated by U.S. Dist. Ct., D.N.J., order entered November 1, 2013).

Ms. Kux’s letter offers several explanations for FDA’s reticence:

1. First, FDA believes it would not be appropriate for the agency to define “natural” except through a public process that would allow stakeholders the opportunity to express their views: “[W]e would likely embark on a public process, such as issuing a regulation or formal guidance … we would not do so in the context of litigation between private parties.”
2. FDA says it cannot define “natural” without coordinating with USDA: “[D]efining the term ‘natural’ on food labeling necessarily involves interests of Federal agencies other than FDA, including the United States Department of Agriculture …”
3. Any attempt to define “natural” would have to consider far more than the narrow question posed by the courts (i.e., whether genetically engineered foods are “natural”), and FDA simply does not have the resources for such a major undertaking at this time.  FDA notes that it would need to consider the relevant science, consumer perceptions, the First Amendment, and all of the many other technologies used in food production and processing today.  “At present, priority public health and safety matters are largely occupying the limited resources that FDA has to address food matters.”

Food Prices and Food Security

 I often hear claims to the effect that: food production is not the problem - we need more equitable distribution (e.g., see here, here, or here for just a few examples). The implication of this claim is that farmers should stop with all the technological innovation, fertilizers, and pesticides; let's just figure out better policies to get the food we already have to the people who need it.

There is an element of this claim that is based in fact.  In an accounting sense, it is true that global production of food calories exceeds the daily requirement of calories from humans.  But, it is a stretch to leap from that fact to the claim that the problem of food production is "solved". The problem with that thinking, in short, is that it mistakes an accounting problem for an economic one.  

The REASON we have the number of calories we do now is (at least partially) a result of the incentives inherent in our current market system.  If one removes those incentives and replaces them with, say, tariffs, export bans/subsidies, or some sort of forced food redistribution, then we wouldn't have any reason to expect the same volume of food production that we now enjoy.  Moreover, we need to look beyond the accounting identity today and think about volume of production will be required to meet future food demand from a more populated world (indeed, we may have a hard time increasing crop yields according to some sources). 

If one seriously believes the claim that "we have enough food production", we wouldn't expect much relationship between food prices and hunger (or food insecurity).  Yet, from an economic standpoint, rising food prices will typically reflect scarcity (i.e., insufficient supply to meet current quantity demanded).  I recently ran across this article published in Applied Economic Perspectives and Policy by Christian Gregory and Alisha Coleman-Jensen of the Economic Research Service at the USDA.  Here is a portion of the abstract:

While research establishing the link between high food prices and increased food insecurity in developing countries is robust, similar research about the United States has been lacking. This has been due in part to a lack of suitable price data, but it has also been due to the assumption that prices matter less in the United States, where households spend a relatively small fraction of their income on food. In this article we examine the role that local food prices play in determining food insecurity in the United States by using newly-developed price data. We examine whether low-income households participating in the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) are more likely to be food insecure in areas where food prices are higher. We find that the average effect of food prices on the probability of food insecurity is positive and significant: a one-standard deviation increase in food prices is associated with increases of 2.7, 2.6, and 3.1 percentage points in household, adult, and child food insecurity, respectively. These marginal effects amount to 5.0%, 5.1%, and 12.4% increases in the prevalence of food insecurity for SNAP households, adults, and children, respectively. 

In short: when we don't produce enough food, food prices rise.  When food prices rise, there are more hungry people - even in a rich country like the US.  Those statements would seem rather obvious were it not for claims like: 

scarcity is clearly not the cause of hunger