Local Foods are Subsidized

Given some of the things I've written about local foods, people often get the impression I'm against the movement.  But, as I like to remind people: I'm not against local foods - I'm against bad arguments for buying local foods.  And I am in no way convinced we should subsidize local foods.  When I say that people often retort that local foods aren't subsidized.  That's baloney.  Aside from the various calls for additional subsidies, this news release reminds us that local foods are indeed subsidized.  

“Agriculture Secretary Tom Vilsack Tuesday announced more than $5 million in grants for 82 projects spanning 42 states and the U.S. Virgin Islands that support the U.S. Department of Agriculture’s (USDA) efforts to connect school cafeterias with local farmers and ranchers through its Farm to School Program. The program helps schools purchase more food from local farmers and ranchers in their communities, expanding access to healthy local food for school children and supporting local economies.”

If the goal is to help schools expand access to healthy food, why not give them money to do that?  Why add the extra restriction that it needs to be local?  You can get more healthy food for a lower cost without the constraint that it must be local.  If the goal is to enrich certain farmers, why not simply give the money to them? Why add the further restriction that it needs to go to schools?  If the goal is rural development, why not let rural communities decide what is the highest value use of additional grant dollars rather than tying it to a particular cause?  The idea that local foods are "good for the economy" is one that has been thoroughly debunked in chapters in my Food Police book and in Norwood's soon-to-be released Agricultural and Food Controversies book.  For more general critiques see The Locavore's Dilemma: In Praise of the 10,000-mile Diet by Pierre Desrochers  and Hiroko Shimizu or Just Food:  Where Locavores Get It Wrong and How We Can Truly Eat Responsibly by James McWilliams.

In praising the latest announcement, U.S. Senator Debbie Stabenow, Chairwoman of the Committee on Agriculture said, somehow without the slightest hint of irony:

“As I visit schools with local farm to table programs, I continue to be impressed to see students enjoying broccoli and pineapple from salad bars”

Unless you happen to live in Hawaii, I doubt the program is supporting local pineapple.  And, unless you live in California or Arizona, there isn't a sufficient amount of broccoli grown to support local schools either.  All of which goes to show, if you really want kids to eat a diverse, nutritious diet, it pays to look a little further away from home.  

In the grand scheme of things, this isn't all that big a deal.  An extra $5 million on local food grants isn't going to be the thing that breaks the bank.  And, there are likely much more distortion policies that could be picked on.  But, I think what bothers me the most about this one is that so many people buy into really poor economic arguments for promoting local foods.  It makes me think we haven't done a very good job as economists educating our students and the public.

Effects of Plant Variety Protection

New varieties of "self pollinated" crops have, in the past, been released by the public sector.  Self pollinated crops refer to those where farmers can save the seed after harvest, replant next year, and expect to have a new crop that is the same as the previous year (i.e., the "kids" are the same as the "parents").  Wheat is a staple crop that his both "self pollinated" and "inbred."

A lot of the research on wheat breeding has occurred in the public sector because of the belief that it would be difficult for private companies to recoup their investments when farmers can save their seed.  As a result, it is thought that private investment in wheat breeding would be "sub optimal" from a social welfare standpoint.

However, in recent years, a variety of changes have led to public and private companies being able to license new varieties and capture some of the benefits of the improvements in genetics.  Most controversial is the specter of GMO wheat, in which new varieties may have genes protected by intellectual property laws.  Unsurprisingly, some farmers and industry organizations don't like variety protection because it raises the cost of seed.  A cost that was previously borne by all taxpayers is now borne by the smaller group of farmers, millers, and bread consumers.  

A new paper in the American Journal of Agricultural Economics by Russell Thomson studies the effect of the introduction of new plant variety protection laws in Australia that allowed breeders to capture royalties on their new varieties. Thomson argues that the protection laws in Australia are "stronger" than in the US - giving breeders greater potential returns to their investments.

I have to admit that the findings are not what I would have expected.  Thomson writes: 

“The results indicate that varieties released by royalty-funded breeders are less valuable than those released by breeders operating under the alternative, prereform regime. The data provide no evidence that the transition to royalty-funded breeding is associated with an increase in the rate of variety release. Taken together, these findings suggest that the reform led to a fall in breeder output relative to what would have otherwise been the case. This statistical analysis is supplemented with a series of semistructured interviews with senior scientists, who were employed at Australian breeding programs over the period of reform. This qualitative evidence suggests that the fall in breeder output was caused by a combination of fewer research spillovers, lower release standards, and a possible fall in total investment in breeding. Analysis presented in this article suggests that plant variety protection alone does not ensure socially optimal breeding outcomes in the case of open-pollinated varieties.”

It is a little unclear whether this paper (which compares outcomes before and after a reform) is picking up the effect of the change in the law or some other secular trend.  Could it be the case that breeder output was falling everywhere even outside Australia (perhaps all the low hanging fruit had already been picked)?  The paper also doesn't tell us much (beyond anecdote) about whether total investment (public and private) in wheat breeding was steady or falling in real terms over this time period.  We also aren't told whether there were changes in how breeders who remained in the public sector were compensated after the law change.  Nonetheless, this is an interesting paper that should provoke more research in the area.  

Applying behavioral economics to politics

This is an interesting review paper on Behavioral Political Economy by Jan Schnellenbach and Christian Schubert.

One of the points they make is that researchers have not fully integrated the insights of behavioral economics into analyses of how politicians and bureaucrats behave.
 

A quote

“The case of Libertarian Paternalism therefore illustrates the difference between BPE [behavioral political economy] and behavioral welfare economics, which is very akin to the old conflict between Political Economy and traditional welfare economics. Behavioral welfare economists are currently at risk of repeating the mistake of neglecting the real-world political process with its many intricacies. Under these conditions, policy advice addressed to an imaginary social planner may not only be useless, but even dangerous, if it helps to promote policies that have unintended, negative consequences under real-world conditions. ”

A new book: Agricultural and Food Controversies

Over at Huffington Post, I put up some thoughts on the new book by my colleague Bailey Norwood, Agricultural and Food Controversies.   Here's what I had to say there:

“And so it goes, comparing the carbon footprint of local to free range, asking waiters whether there’s a GMO in our soup, all while speculating whether the Farm Bill is the cause of obesity.

Where is one to turn to adjudicate the conflicting messages we hear about food and agriculture? Large agribusinesses have a lot to say on these issues, but their predictable messages about feeding the world easy to dismiss. Journalists and non-profits with earnest, academic sounding names might appear a bit more credible, but their constant drum roll of fear and paranoia, undoubtedly appealing to a certain donor and book-buying base, also makes it hard to take their pronouncements at face value. With strong emotions and vested interests on all sides, it is no wonder food and agricultural issues have become so political. And controversial.”

and

“a multidisciplinary team of agricultural scientists, led by my friend and sometimes co-author, Bailey Norwood at Oklahoma State University has entered the fray with a new book, Agricultural and Food Controversies published by Oxford University Press in their accessible, easy to read What Everyone Needs to Know series (officially released on December 5th). Rather than striking a defensive or muckraking tone, as so often is the case in this genre of writing, Norwood and colleagues embrace the controversies, interpreting them as a sign of a healthy democracy struggling to deal with pressing challenges.

They reveal what the best science has to say on topics ranging from food pesticides and GMOs to the carbon footprint of beef production and the well-being of farm animals. They weigh in on synthetic fertilizers, local foods, and farm policy. Theirs is a respectful discussion of the positions taken up by different advocacy groups, but there is no hesitation in drawing conclusions where logic and science warrant. The book is an indispensable guide for understanding how the government regulates pesticides and GMOs and for seeing how competing interests can seem to have their own sets of seemingly conflicting “facts” on both sides of an issue.

While perhaps not coming right out and saying it, the authors show that many of our fears about modern agricultural technologies are overblown. Much of what has come to be accepted as the received wisdom about food and agriculture just ain’t so. As the authors ironically note, however, it is precisely our fears and worries that have led to improvements in food safety, quality, and affordability. They also recognize that debates about food pesticides, GMOs, and carbon footprints are often surrogates for deeper, often unacknowledged conflicts over competing values and worldviews. As such, one shouldn’t expect the controversies surrounding modern food and agriculture to quell anytime soon. But, at least we can begin to acknowledge what the debate is really about.”

You can get a copy from Amazon, among others.

Is McDonald's Pro-Cancer?

Earlier this month, the USDA approved a new GMO potato produced by the Idaho-based company Simplot.

Unlike the herbicide, insect, or virus resistant varieties today on the market, this GMO offers two tangible consumer benefits: the potatoes are less susceptible to bruising (and thus are more visually appealing and are likely to cut down on food waste) and perhaps more importantly, produces 50 to 75% less acrylamide when fried (acrylamide is a chemical suspected of causing cancer).  

I've found discussion of this story interesting for at least two reasons.  First, it isn't all that clear that this product should fall under the "GMO" umbrella.  Genes from other species are not introduced into the potato, but rather my understanding is that the new traits are created by deactivating genes already present in the potato.  In any event, it just goes to show that a GMO isn't a single thing; it is many, many possible things.  And, it points to the dander of making blanket statements like "GMOs are harmful" or "GMOs are safe".  One has to look at each GMO in question and see what the science says about that particular modification, and to the extent one thinks a harm is involved, articulate how the modification in question causes the particular harm claimed.  

Second, news sources have suggested that McDonald's has no plans to adopt the potato, which many anti-GMO activists have interpreted as indicating that McDonald's has rejected the potato and won't use it.  However, as Val Giddings points out in a post at the Innovation Files, such interpretations may be misplaced.   He writes:

“given that it would take Simplot at least several years to build seed stocks up to where they could even contemplate meeting an order from McDonald’s, who on earth would expect McDonald’s to say anything different?

This “story” of rejection is both completely manufactured and entirely unsurprising. Let’s see what McDonald’s says when they actually have a realistic opportunity to buy the potato. For anybody who thinks they will not avail themselves of a chance to improve their margins with less waste, and gain potential health claims as well, here’s a public service announcement – stay clear of the tables in Vegas.”

That brings me to the title of this post: Is McDonald's pro-cancer?.  These sorts of consumer oriented biotechnology innovations are a potential game changer because they shift the terms of the debate.  What possible reason could McDonald's give for continuing to use a potato known to have higher cancer risk?  Some vague, scientifically unsupported concerns voiced by a small (but vocal) set of activists against GMOs?  My hunch is that this is a PR battle that biotech may finally win.