Prop 2's Eventual Effect on California Egg Prices

I've seen a number of stories in recent weeks about the effects of Prop 2 on California egg prices (e.g., see here or here). To recap, in 2008 California voters passed Prop 2 which essentially outlawed the use of "battery" cages in egg production in the state.  California producers, fearful they would be put out of business by cheaper eggs from out of state, then secured passage of a state law in 2010 that also banned grocery stores from selling eggs that didn't meet the new California standard.  Several state attorney generals challenged the law, on the grounds that it violated the interstate commerce clause, but their initial attempt was unsuccessful.  

In any event, all this finally went down on January 1, 2015.  It seems California consumers are noticing higher prices (Note: it seems egg prices were already rising throughout the country before this).

One of my students, from California, passed along this picture one of his friends recently took at a California grocery store.

Food Demand Survey (FooDS) - January 2015

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

We saw falls in consumer willingness-to-pay (WTP) for beef and pork products this month, and a slight uptick in WTP for chicken.  Expected prices and spending patterns remained similar to last month.

Concern for all food issues rose, notably for bird flu and swine flu.  Consumers noticed fewer stories about GMOs in the news this month compared to last.

We also added three new ad hoc questions this month.  

The first question asked: “Do you support or oppose the following government policies?”
86.5% of respondents support mandatory country of origin labels for meat. A large majority (82%) support mandatory labels on GMOs, but curiously about the same amount (80%) also support mandatory labels on foods containing DNA. The least popular policies were bans on transfats, bans on sales of marijuana, and a tax on sugared sodas. Only about 39% of respondents supported a sugared soda tax. 

Secondly, participants were asked “Did you read any books about food and agriculture in the past year?”   Just over 16% of participants stated that they had read a book related to food and agriculture in the past year.  About 81% answered “No”, and 3% answered “I don’t know”.

Those who answered “Yes” were asked: “What is the title of the most recent book you read about food and agriculture?” The vast majority of responses were of the form “I don’t remember” or “cannot recall”. Fast Food Nation, Food Inc., and Omnivore’s Dilemma were each mentioned about three times. The Farmer’s Almanac and Skinny Bitch were mentioned twice. One respondent mentioned the bible. 

Addendum:  Given the interest in this survey, I've added a subsequent post with more detail and discussion.

Crop Insurance in the WSJ

Somehow I missed this editorial by two agricultural economists, Bruce Babcock and Vincent Smith, that appeared in the Wall Street Journal on Christmas Eve.  They write:

“Farmers have a sweet deal with crop insurance: Taxpayers currently cover all the administrative costs associated with marketing and managing the program and fund more than 60% of the premiums to cover anticipated crop-insurance payouts, according to annual data from the Agriculture Department’s Risk Management Agency. Farmers pay only about one-third of the real costs of their crop-insurance coverage. From 2003 to 2012, crop-insurance subsidies cost U.S. taxpayers $55.4 billion—66% of the cost of the program.”

and

“Bipartisan congressional support should go to programs that spend federal dollars to serve the public’s interest and cannot be provided by the private sector. Subsidies that induce farmers to buy gold-plated harvest-price-option crop insurance fail on both counts. Eliminating these costly subsidies would save taxpayers $40 billion over 10 years while posing no threat to the nation’s food supply. Come January, the new Congress should do just that.”

Not surprisingly, various commodity groups and the insurance industry didn't care for the editorial (and had a number of responses unpublished by the WSJ).

Animal Welfare Conditions for Hens Making Eggs for Whole Foods

I ran across this story in the New York Times via a Facebook link from Marc Bellemare to a blog post by James McWilliams.  

The story is interesting for a number of reasons.  First, an animal advocacy group uses the same sorts of undercover video tactics to expose animal welfare problems, but this time does so for a cage free, organic egg producer that sells to Whole Foods among others.  Second - and this is the issue that bothered McWilliams - the New York Times story was relatively dismissive of the video and gave the egg producer's side of the story a "fair hearing" (something presumably they wouldn't have done had this not been a cage free, organic producer).  

I think it's actually a good lesson on both counts.  Cage free or organic does not necessarily guarantee high animal welfare.  There are many variables related to management and monitoring, among others, that are important. But, secondly not all undercover videos are what they seem.  As the 3rd sentence in the NYT story begins:

“The hens in the video belong to Petaluma Farms, whose owners assert that the group is distorting and exaggerating the conditions under which its organic and conventional eggs are raised . . . ”

That may be true or it may not; we simply don't know based on the evidence presented.  The video does appear to show some disturbing images but it also doesn't provide much context.  Clearly, this was in the dead of night, when presumably the birds are less mobile perhaps not due to living conditions but because they're sleeping.  And, yes the video shows many chickens in manure, which seems disgusting.  But, I've been on small family farms that have chickens that are as free-range and un-industrial as it gets - and where do those hens like to hunt for food?  In the dung piles next to the cattle pens.  And, even in these "natural" contexts that have any sizable group of birds, one or two will likely be missing a good deal of feathers.  I'm not necessarily defending the farm in this video or the conditions shown , but what I am saying is that without more information and context it's hard to know what to make of it, though it would seem to warrant some further scrutiny.  

Sometimes its stories like this that don't quite fit the prevailing narratives that can get us to think more deeply about an issue, regardless of our initial biases.  

2015 Summer School on Experimental Auctions

Applications are now being accepted for a summer school on Experimental Auctions that I've co-taught with Rudy Nayga and Andreas Drichoutis for 3 years.  In the past we've had the summer school near Bologna Italy organized by Maurizio Carnavari, but this year we're venturing out to Crete, Greece.  The course is from July 7 to July 14, 2015 at the Mediterranean Agronomic Institute of Chania.

Experimental auctions are a technique used to measure consumer willingness-to-pay for new food products, which in turn is used to project demand, market share, and benefits/costs of public policies.  We've had a fantastic time in the past and I'm looking forward to this fourth offering, which is approved for credit hours through the University of Bologna.  The content is mainly targeted toward graduate students or early career professionals (or marketing researchers interested in learning about a new technique).  You can find out more and register here.

For a little enticement, here a picture of the venue.