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When is Mayonnaise Mayonnaise?

A lot has been written recently about the lawsuit Unilever has filed against a new upstart Just Mayo made by the company Hampton Creek.

At issue is the fact that the FDA defines mayonnaise as containing egg yolk, and Just Mayo is a vegan alternative that uses yellow pea instead of egg. Unilever claims that Hampton Creek is falsely advertising their product as mayonnaise (even though it only uses the term "mayo"), as the word is defined by the FDA. By the way, you now have a hint as to why Miracle Whip isn't labeled as mayonnaise.

Most of what I've read on the web has been harshly critical of Unilever. This piece in Mother Jones is one example, framing the issue as a David vs. Goliath (or "Big Mayo"), and an NPR piece is titled "Bit Mayo vs. Little Mayo".

I've been interviewed by a couple reporters about the suit (e.g., see this CBC story), and I have to admit to having mixed feelings about the case. I have found it a bit surprising that many of the folks I normally think about as being in favor of consumer protection have been sided with Hampton Creek, I suspect because it is more appealing to take the position against any food giant.

What are the issues?

Going back to some of the concerns over 100 years ago that led to the passage of the Pure Food Act, there have been attempts to regulate the usage of certain terms and labels. The idea is that if you see a food labeled "mayonnaise", for example, that you can be sure it hasn't been adulterated - that food processors haven't watered down the product or used sawdust or some such nefarious substance to reduce cost. These sorts of rules exist for all kinds of food products (here, for example, is a list of approved labeling terms for meat from the USDA).

From Unilever's perspective, they're just following the FDA labeling rules that have ostensibly been created to protect the consumer against fraudulent labeling. Thus, I can see their point of view that Just Mayo is "unfairly" competing by implying they're making a product that does not conform with the FDA guidelines. While this may seem like a silly case, the implications could be much wider; when should a firm be able to use labels with the term "organic" or "free range" or "milk" or "bread"? Should certain standards be met to use these terms so that consumers aren't mislead?

On the other side, these sorts of rules could very well prohibit innovation and competition. I haven't tasted Just Mayo, but supposing it is comparable to "regular" mayonnaise, they've created a process that removes an animal ingredient, which is appealing to a segment of consumers. Moreover, what if a company can create a less expensive, non-egg based mayonnaise that consumers find tasty? Wouldn't the upstart have a hard time entering the marketplace and competing if they are unable to describe their product using word that best fits it? A lot of the labeling rules seem to be just plain bureaucratic overreach, and they seem to do more to line the pockets of lawyers and regulators than protect the consumer.

Ultimately, I have a hard time seeing how these kinds of name or labeling rules make much sense for products like mayonnaise. These are branded products. If a consumer buys Just Mayo and doesn't like the taste as well as conventional mayonnaise, they can go back to their old brand. In econ-speak, these are experienced goods, and firms have reputations that allow consumers to easily search and identify eating satisfaction with different brands. There seems little reason the market couldn't work this out.

Ultimately, I think there are good arguments on both sides of this case, and it isn't obvious what would be the consequences of the unraveling of these sorts of "food purity" laws. Sometimes it's hard to know when consumer protection becomes protectionism.

Farm to Fork: A new course

I'm pleased to announce that staring with the spring semester, my good friend Bailey Norwood is teaching a new online course for Oklahoma State University called Farm to Fork: A Panoramic View of Agriculture.

The course will be full of interesting videos explaining how food is produced and how it gets to our plates.  Anyone is free to enroll in the course regardless of whether they happen to be a current OSU student.  More details on the course, along with information on how to enroll are here.

Here's a little promo to whet your appetite:

Food Demand Survey (FooDS) - November 2014

The latest edition of our Food Demand Survey (FooDS) is now out.

This month, consumer willingness-to-pay (WTP) for all food products (except steak, which was essentially unchanged) was up relative to October.  

Consumers continue to expect higher meat prices in the coming month (but not quite as much as last month).  Planned purchases of chicken were up relative to last month.

Three new ad hoc questions were added to the survey this month. Given the recent WTO ruling on the US mandatory country of origin labeling law (COOL) (see some discussion of the issues here), several questions were added to gauge consumers' knowledge and perceptions of different meat origin labels (thanks to Glynn Tonsor at K-State who provided suggestions on the questions).  

The first question asked: “Which of the following are grocery stores required by law to label for fresh meat products?” Participants were shown seven issues and were asked to select “required”,” not required”, or “I don’t know”, for each issue.  

64% of respondents believe nutritional content information is required to be labeled by law.  Over a third (39%) thought there was mandatory labeling for use of hormones.  For the remaining five issues, the plurality of consumers chose “I don’t know.”  This includes the three issues related to MCOOL.  About 40% of consumers did not know whether grocery stores required to label where an animal was born, raised, or slaughtered.  More consumers than not thought grocery stores were not required to label such origin information.  Only 22% of consumers thought grocery stores were required to label where an animal was born.   

Secondly, (and only after answering the preceding question), participants were asked: “What portion of pork products consumed in the United States is covered by current mandatory country of origin labeling laws?” The plurality, 23.79% of participants, responded saying that 40% to 59% of pork products consumed in the United Sates is covered under mandatory country of origin (COOL) laws.  17% though no pork products were required to be labeled, and about 12% though all pork products were required to be labeled.

he third question pertains to consumer’s willingness-to-pay for a 12oz boneless rib eye beef steak dependent on the country of origin. Respondents were randomly assigned to one of four groups that differed in the label given to the ribeye steak.  On fourth of participants were asked: “ What is the most you would be willing to pay for a 12oz boneless rib eye beef steak that was labelled as: Born, Raised, and Slaughtered in the U.S.?”  Other respondents answered similar questions except the labels were changed to: Born in Canada, Raised and Slaughtered in U.S.; Born and Raised in Canada, Slaughtered in the U.S.; or Product of Canada and the U.S.  Respondents answered by clicking a response category with a range of dollar values such as, $0, $0.01 to $2.99, . . ., $13.00 to $15.99, $16 or more.  Answers were used to estimate the mean WTP for each of the four groups.

Results indicate consumers valued beef that was born or born and raised in Canada $0.89 and $1.05 less, respectively, than beef that was born, raised, and slaughtered in the U.S.  Consumers do not distinguish between beef born in Canada and born and raised in Canada; the difference in WTP for these two labels ($6.11 vs. $5.95) is not statistically different.  Mean WTP for the label “product of Canada and the U.S.”, $6.55,  is higher than the other labels that mentioned Canada and only $0.45 lower than “Born, Raised and Slaughtered in the U.S.”, a difference that is not statistically different.

Local Food Bad News

The New York Post ran a story this weekend on toxic metal content in several community gardens in NYC (HT Jeff Stier).  The article was based on a paper published in Journal of Environmental Pollution.  

Tainted vegetables — some sold in city markets — were found in five of seven plots tested, according to data obtained from the study by The Post through the Freedom of Information Law.

and

A previous soil study by the same researchers found lead levels above federal soil guidelines at 24 of 54 city gardens, or 44 percent of the total, and overall toxic soil at 38 gardens — 70 percent of the total

The findings led to reactions like the following:

Shoppers at a farmers market outside East New York Farms in Brooklyn — where a carrot was tested with nearly three times the safe amount of lead — were stunned by the study.
“I thought it would have been more natural getting it from here than anywhere else,” said one 38-year-old grazer.

Donel Lykes, 68, said he noticed something funny about the veggies there.

“Their vegetables, for whatever reason, are not as tasty as the ones you get in the store,” he said.

This isn't some kind of overall condemnation of local foods, and no doubt such results might be found in non-local food sources.  However, the results do suggest caution in ascribing hype to foods or production practices that aren't firmly based in scientific evidence.

While we we're at it, here's other news on the local food front confirming that we've known for a while (and yet still doesn't seem to be widely acknowledged): fewer food miles do not equate with lower carbon emissions.  

A Bangor University-led project into the social and environmental benefits of food grown locally and overseas has found that no straightforward relationship between the transport distance and the overall environmental impact of the commercial life-cycle of crops exists.

and

The results show that transport or ‘food miles’ was only a very small percentage of the CO2 expenditure related to any crop. “The emerging picture was a highly complex one of inputs and outputs concerning everything from the type of soil on which a crop is grown, to where and how it is stored and packaged for sale to the customer. It’s true to say that the picture is far from complete, with current interest focusing on the CO2 released from different soil types.”

This echos what I've long said: carbon emissions are likely to be lowest when we grow food where it can be most efficiently produced and then shipped to the final consumer.

  

Regulating your food choices vs. retailers' food choices

Suppose the government made it illegal for you to buy sugared soda.  What would be your reaction?  How would you feel?  

Now, suppose instead that the government made it illegal for grocery stores and other vendors to sell sugared soda.  Is your reaction to the second law less visceral than the first?  

I suspect so.  But, here's the key: both laws impose the same restriction on your freedom - the outcomes are precisely the same.

Writing at Forbes, John Goodman notes this dichotomy in the case of California eggs (HT David Henderson)

California has a new law that requires all eggs sold in the state to come from chickens that are housed in roomier cages. Specifically, the hens “must be able to lie down, stand up and fully spread their wings.”

So how many Californians have been arrested for eating the wrong kind of egg? Zero. Not even one? Not one. Actually, the law doesn’t take effect until January, but even then egg eaters will have nothing to fear. The reason: the law doesn’t apply to people who eat eggs. It only applies to people who sell eggs.

When you stop to think about it, that’s not unusual. Almost all government restrictions on our freedom are indirect. They are imposed on us by way of some business. In fact, laws that directly restrict the freedom of the individual are rare and almost always controversial.

After discussing various reasons for the differences in the way we respond to individual vs. business restrictions, Goodman concludes:

Finally, the idea being proposed here seems consistent with history. Over the past two hundred years, we have had a steady migration of people from agriculture to the cities, where they became employees of firms. Over the same period of time we have had a parallel increase in the intrusiveness of government.

Bottom line: if there were no firms, taxes would be much lower, there would be far fewer regulations and government would be a much less important institution in our lives.