Adaptation to Climate Change

I ran across this fascinating paper by Richard Sutch on the the relationship between the Dust Bowl and hybrid corn adoption.  The discussion is interesting in light of current discussions bout how and whether farmers will be able to adapt to climate change and whether technology development can help mitigate some adverse effects.

Here's a passage from Sutch.

“The suggestion that I make in this chapter is that the severe drought of 1936 revealed an advantage of hybrid corn not previously recognized— its drought tolerance. This ecological resilience motivated some farmers to adopt hybrids despite their commercial unattractiveness in normal years. But that response to climate change had a tipping effect. The increase in sales of hybrid seed in 1937 and 1938 financed research at private seed companies that led to new varieties with significantly improved yields in normal years. This development provided the economic incentive for late adopters to follow suit. Because post- 1936 hybrid varieties conferred advantages beyond improved drought resistance, the negative ecological impact of the devastating 1936 drought had the surprising, but beneficial, consequence of moving more farmers to superior corn seed selection sooner than they might otherwise.”

This long quote is from the conclusions and is well worth reading.

“The sociologists Bryce Ryan and Neal Gross, writing in 1950, studied the diffusion of hybrid corn in two communities located in Greene County, Iowa (Ryan and Gross 1950). In their view, late adopters were farmers bound by tradition. They were irrational, backward, and “rural.” The early adopters by contrast were flexible, calculating, receptive, and “urbanized.” “Certainly,” they summarized, “farmers refusing to accept hybrid corn even for trial until after 1937 or 1938 were conservative beyond all demands of reasonable business methods”. They drew a policy implication: “The interest of a technically progressive agriculture may not be well served by social policies designed to preserve or revivify the traditional rural- folk community”. In part, this view was based on Ryan and Gross’s (incorrect) belief that hybrid corn was profitable in the early 1930s. I have suggested that this was not the case. Figure 7.11 should also give pause to the view that rural laggards delayed the adoption of hybrid corn. It would be hard to argue that the farmers in Iowa Crop Reporting District 6 were predominantly forward-thinking leaders, attentive, and flexible, while those in Indiana and Ohio were predominately backward rustics trapped by inflexible folk tradition.

I think an implication of this study is that farmers (even those of rural America in the 1930s) are remarkably resilient and adaptive. Sudden and dramatic climate change induced a prompt and prudent response. An unexpected consequence was that an otherwise more gradual process of technological development and adoption was given a kick start by the drought and the farmers’ response. That pushed the technology beyond a tipping point and propelled the major Corn Belt states to the universal adoption of hybrid corn by 1943. The country as a whole reached universal adoption by 1960.”

The paper has a number of interesting discussions about the role of the USDA, federal research, and strong personalities that pushed along the development of hybrid corn.  For more on the history of the development of hybrid corn, see this previous post.

Food Demand Survey (FooDS) - June 2016

The results from the June 2016 edition of the Food Demand Survey (FooDS) are now in.  

In terms of the monthly tracking portion of the survey, willingness-to-pay (WTP) decreased for all food products in June compared to May. This is the third month in a row that WTP has fallen for steak, chicken breast, and chicken wing, and the fourth month in a row that WTP has fallen for pork chops and deli ham. 

There was a sizable increased in awareness of GMOs in the news this month, as was also the case for battery cages and beta-agonists.  The largest percent increase in concern was for bird flu and farm animal welfare. The largest percent decrease in concern was for cancer and meat consumption, antibiotics, and E. coli. 

Several new ad hoc questions were added this month.

First, I followed up on some questions I'd previously asked in response to some research conducted by Marc Bellemare at University of Minnesota on food safety and farmers markets. In particular, participants were asked: “Have you or anyone in your household bought and eaten food from a farmers market in the past two weeks?”

Approximately 67% of participants stated they have not purchased food from a farmer’s market in the past two weeks. Less than one third of participants stated they have purchased food from a farmer’s market in the past two weeks. 2.31% of participants stated they did not know if they have purchased food from a farmer’s market in the past two weeks.

Here comes the interesting part.  The people who shopped or ate at farmers markets were much more likely (20% vs. 2.5%) to say they had food poisoning in the past two weeks than people who did not eat or buy food at a farmers market. I'm surprised the difference is so large, but the results are perfectly in line with Marc's research.  

There are other demographic differences as well.  People who shopped or ate at farmers markets were more likely to be male (55.6% vs. 26%), to be on SNAP - aka food stamps - (24.1% vs. 14.5%), not be from the Midwest (90% vs. 80%), to have higher incomes ($91,167 vs.
$67,607), be younger (39 vs. 20 years of age), and be more liberal (3.4 vs. 2.9 on a 1 to 5 scale) on average than are people who did not shop at farmers markets. 

Next, a couple questions were added on food waste.  Participants were asked “Of all the food you buy at grocery stores and supermarkets, what percentage would you estimate is thrown away uneaten?” 

About 80% of respondents said they throw away some portion of food that has been uneaten. Only about 20% said they threw away no food. About 60% of the sample said they throw away 10% of the food they buy or less. Only about 10% of respondents said they threw away 50% or more of the food they purchased. Across all respondents, the average percentage of food purchased that was eventually thrown away was estimated at about 17%. 

Finally, there's been a lot of hand wringing on the possible effects of different sell-by, use-by, and expiration dates on food waste (e.g., witness this report from The Harvard Food Law and Policy Clinic (FLPC) and the Natural Resources Defense Council (NRDC).

To explore this issue, respondents were randomly split into four groups and asked: “Supposed you found a package of food in your kitchen that had the following label <<label>>.  What would you do?"  Participants responded on a 5 point scale: 1 = I’d definitely eat it, 2 = I’d probably eat it, 3 = I’m not sure whether I’d eat it or throw it away, 4 = I’d probably throw it away, or 5 = I’d definitely throw it away.

Respondents randomly saw one of the following four labels:

• "Expiration Date June 9"; 
• “Sell by June 9”; 
• “Best if Used by June 9”; or 
• “Use by June 9”.

Note that the survey was purposefully fielded on June 10, one day after the date used in the question.

The most common answer across all categories was “I’d probably eat it”. The percent saying they’d definitely or probably eat the food was 60%, 73%, 68%, and 64% for the expiration date, sell by, best if used by, and use by labels. Less than 10% of respondents answered “I’d definitely throw it away” for all labels. The sell by label generated the least food waste, and it was the only label that generated less waste than the expiration date label. The differences in stated food waste was not particularly large for the four labels considered.

When Bigger Isn't Better

One of my Ph.D. students at Oklahoma State (and soon to be faculty member at Mississippi State University) has been working on an interesting paper on the impacts of changing cattle sizes on the desirability of steaks.  The average beef cow now weights more than 300lbs more than it did a few decades ago.  Generally that's a good thing as we can get more meat from fewer animals (which means less resource use, less land, less greenhouse gas emissions, etc. in addition to lower prices for consumers).  

But, there's a downside:

“As a response to varying muscle sizes such as the ribeye, grocery stores and restaurants are often forced to adjust the thickness to which the steaks are cut in order to meet a target weight. Thus, a ribeye steak from a carcass with a large [loin] will likely be cut thinner than a ribeye steak from a carcass with a smaller [loin]. This has led to the introduction of “thin cut” steaks in some grocery stores. Compounding the issue of altering larger steaks are the historically strong beef prices. Some retailers utilize target prices for packages of steaks. Therefore, consumers are not only facing high beef prices, but also an increase in total package price due to the larger dimensions of the steak. This has caused retailers to reduce thickness to meet a target package price. ”

The key question, then, is whether people prefer thicker steaks with smaller surface areas (like those that existed 20 years ago) or thinner steaks with larger surface areas (like those that sell today)?  To address this question, a survey was taken by a representative sample of over 1,000 steak consumers.  We gave consumers choices like the one below, and asked which steak they'd choose.  Consumers answered a number of these questions where the steak thickness, area, and price, systematically varied across choices.  

So, what did we find?  For most consumers, there is a trade off between thickness and size.  Moreover, it seems changes in thickness are more important than changes in size.  As a result, most consumers are less happy with the steaks they see today in the grocery store (holding prices constant).  That is, consumers prefer a thicker, smaller area steak to a thinner, larger area steak.  We use the estimates to do a little thought experiment.  How much additional money would have to be to give to today's consumers to make their steak choices as satisfying as they were 40 years ago (in terms of thickness and area, holding prices constant)?   

“Table 6 reports the estimated welfare changes by moving from a scenario where the choice set include small area and thick steaks (40 years ago scenario) to a scenario where the choice set includes large area and thin steaks (today scenario). Estimated welfare changes were
calculated for the conditional logit model as well as the two classes from the latent class model
which had statistically significant estimates for price per package. The welfare change estimate
from the conditional logit model implies that moving from the scenario representing 40 years ago to today’s scenario decreased welfare by $5.37 per choice, an amount that is statistically
significant at the five percent level. When multiplied by the number of steak purchases in the U.S. each year, estimates from latent classes one and two suggest decreases in total welfare of
$5.8 billion and $2.8 billion respectively, by moving toward a choice set with large area and
thin steaks, though the estimate for class one is not statistically significant at the 5 percent level.”

Now, it should be noted that consumers might be, overall, better off from changing cattle sizes because they now have more ground beef available and because prices are lower than they'd otherwise be.

Josh's paper was accepted for presentation in one of the new lightening sessions at the AAEA meetings this year in Boston.  These are short sessions where authors have only seven minutes to present their work.  Here's Josh presenting this paper in lighting session format.

The Economist on the Future of Agriculture

The Economist magazine seems to have taken a page out of Unnaturally Delicious.  Their quarterly technology issue focuses on agricultural innovations.

A few excerpts: 

“MICROBES, though they have a bad press as agents of disease, also play a beneficial role in agriculture. For example, they fix nitrogen from the air into soluble nitrates that act as natural fertiliser. Understanding and exploiting such organisms for farming is a rapidly developing part of agricultural biotechnology. . . .The big prize, however, would be to persuade the roots of crops such as wheat to form partnerships with nitrogen-fixing soil bacteria. These would be similar to the natural partnerships formed with nitrogen-fixing bacteria by legumes such as soyabeans. In legumes, the plants’ roots grow special nodules that become homes for the bacteria in question. If wheat rhizomes could be persuaded, by genomic breeding or genome editing, to behave likewise, everyone except fertiliser companies would reap enormous benefits.”

More robots may hit the farm.

“A truly automated, factory-like farm, however, would have to cut people out of the loop altogether. That means introducing robots on the ground as well as in the air, and there are plenty of hopeful agricultural-robot makers trying to do so.

At the University of Sydney, the Australian Centre for Field Robotics has developed RIPPA (Robot for Intelligent Perception and Precision Application), a four-wheeled, solar-powered device that identifies weeds in fields of vegetables and zaps them individually. At the moment it does this with precise, and precisely aimed, doses of herbicide. But it, or something similar, could instead use a beam of microwaves, or even a laser. That would allow the crops concerned to be recognised as “organic” by customers who disapprove of chemical treatments.

For the less fussy, Rowbot Systems of Minneapolis is developing a bot that can travel between rows of partly grown maize plants, allowing it to apply supplementary side dressings of fertiliser to the plants without crushing them. Indeed, it might be possible in future to match the dose to the plant in farms where individual plants’ needs have been assessed by airborne multispectral cameras.”

There is a lot of other interesting discussion in the piece about CRISPR, indoor farming, drones, soil sensors, precision agriculture, improved photosynthesis, fish farming, animal welfare, lab grown meat, and more.  

Zhen et al. on Soda Taxes

Yesterday, I was browsing recent back issues of the American Journal of Agricultural Economics looking for papers on consumer demand (somebody has an AAEA presidential address to write).  

I came across two papers by Chen Zhen and co-authors published in 2014 on effects of sugared sweetened beverage taxes (or "soda taxes") that I'd previously read but not blogged on before.  I thought I'd mention them here given the ongoing policy discussions surrounding the issue (Philadelphia politicians are currently considering a soda tax; Oakland has a ballot measure planned on the issue; and there is much debate about the potential effects of the soda tax already passed in Mexico).

In the first paper, Zhen and colleagues show that the way most of these taxes are designed, on a per ounce of soda basis, is not nearly as effective as would be a tax on a per calorie basis.  The authors write:

“For every 3,500 beverage calories reduced, the estimated consumer surplus loss due to a calorie-based tax is $1.40 lower than the loss induced by an ounce-based tax. A 0.04 cent per kcal SSB tax is predicted to reduce beverage energy from ScanTrack supermarkets by 9.3%, compared with 8.6% from a half-cent per ounce tax. Applying this percentage change to beverages obtained from all sources, we calculated that a 0.04 cent per kcal tax on SSBs will reduce total beverage energy by about 5,800 kcal per capita per year.14 Compared with an ounce-based SSB tax that also achieves a 5,800 kcal reduction in beverage energy, the 0.04 cent per kcal SSB tax is estimated to save $2.35 per capita or $736 million for the U.S. population in consumer surplus per year.”

The "lost consumer surplus" means consumers are worse off with either tax.  This is an issue I've raised several times before: there have been few serious attempts to carefully articulate how a soda tax improves consumer welfare given that consumers don't like paying higher prices (e.g., see here or here).

In the second paper, the authors show how a sugar-sweetened beverage tax might have unintended consequences. 

“The preferred demand specification predicts that almost half of the reduction in SSB calories caused by an increase in SSB prices is compensated for by an increase in calories from other foods. We further found potential unintended consequences of an SSB price increase on sodium and fat intake. Because energy intake is just one of many dimensions of nutrition, the results on sodium and fat highlight the complexity of using targeted food and beverage taxes to improve nutrition outcomes.”

They predict that one half-cent per ounce tax on such beverages would reduce body weight by "0.37 and 0.16 kg/person in 1 year and 0.70 and 0.31 kg/person in 10 years for low- and high-income adults, respectively."

They also write:

“The welfare loss for low-income households is about $5 per household per year more than high-income households because low-income households reported higher SSB purchases in Homescan. This difference in welfare loss between low- and high-income households reinforces the regressive nature of an SSB tax”