The Great Bacon Freak Out of 2017

By now, you've probably all seed the headlines: Now It’s Getting Serious: 2017 Could See a Bacon Shortage, Nation's bacon reserves hit 50-year low, and The Looming Disaster Of A US Bacon Shortage. 

As quickly as those headlines hit came another round of headlines proclaiming the original stories "fake news".  From the New York Times:  Bacon Shortage? Calm Down. It’s Fake News and USA Today: Bacon lovers, rest easy. You do not need to fear a shortage (coincidental, USA today also ran one of the initial stories hyping the issue before subsequently telling readers to "rest easy").  

Like so many issues, the truth is somewhere in the middle.  No, we're not going to run out of bacon.  However, it is true that bacon stocks (the amount of frozen bacon in storage) hit a 50 year low.  All the focus on storage is misplaced in my opinion.  What you really want to look at are prices.  Prices reflect scarcity relative to demand.  If bacon were really scarce, we'd expect bacon prices to rise because people would bid up the price to get their hands on the fewer supplies that remain.

Let's take a look at USDA data on wholesale pork prices (these are the so-called primal cutout values).  Below, I've plotted daily prices (cents per lb) for pork belly, and for comparison sake, the ratio of belly prices to pork loin prices from the first of 2014 to January 30, 2017.  

There has, indeed, been a dramatic increase in pork belly prices.  Prices increased from about $0.98/lb in November 2016 to now about $1.64/lb (a 67% increase).  However, as the graph also shows, this price point for bellies isn't unusual even in recent history.  Belly prices were at the same point or higher in the spring and then summer of 2014 and again in the summer of 2015.  The price swing in April and May of 2015 was much more dramatic than what we're currently seeing.  

Pork belly prices may rise and fall not because of scarcity of bellies per se but rather because of increases or decreases in overall pork supply.  As such, it is also useful to look at price ratios (i.e., are bellies in more demand than loins).  On this measure (the red dashed line in the above graph), bellies prices are higher than they've been in the past couple years: today pork belly prices are about 2.1 times higher than pork loin prices; back in late August, early September of 2015, the ratio was also high but only reached 2.07.

But, there is no fear that we'll run out of bacon in the short term. The pork industry is actually on pace to produce more pigs over the next year than it did last year.  Still, a hog can't be produced overnight.  So, how do we allocate a fixed supply of bacon in the short run?  That's the magic of the market.  Prices will adjust to ration out the supply that exists.  As such, the entire question that made he headlines was silly.  We shouldn't ask: will we run out?   But, rather: how high will prices go?  

Journal Articles and Journal Reviewing

Readers might recall my AAEA president's column from a couple weeks ago, where I highlighted some potentially worrying trends in the academic publishing world associated with agricultural economics.  Since then, I've run across at least two other papers that touch on related themes and problems.  

The first is a paper in the Journal of Economic Perspectives by Jonathan Berk, Campbell Harvey and David Hirshleifer.  The main purpose of the article is to provide some advice to academics on how to referee journal articles.  Their main message, with which I completely agree, is that referees often pay too much attention to minor technical issues and too little attention to the importance of the problem.  Their advice:

“Do not dismiss papers that attack larger issues merely because flaws can be found. The important question that you need to assess is whether the flaws actually invalidate the contribution. If the flaws do not rise to this level and you judge the contribution to be important enough to warrant publication, then you should recommend publication. All papers have flaws, and no amount of revision removes all uncertainties. There is always need for further research to provide deeper perspectives. Try to ask yourself the following question: Flaws and all, would I have been pleased to have written such a paper? If yes, that gives a strong hint that it should be strongly considered for publication, flaws and all. ”

At the beginning, the authors highlight what they see as the main problem:

“The review process for academic journals in economics has grown vastly more extensive over time. Journals demand more revisions, and papers have become bloated with numerous robustness checks and extensions . . . Even if the extra resulting revisions do on average lead to improved papers—a claim that is debatable—the cost is enormous. We argue that much of the time involved in these revisions is a waste of research effort.”

It seems that my colleague, Wade Brorsen, agrees (at lest with some of these points).  Wade's Western Agricultural Economics Association presidential address was recently published. After documenting the increase in paper and complexity, in his usual frank fashion, Brorsen has the following to say:

“One thing that stands out in table 1 is the increase in the length of manuscripts. The increased length is not all bad—since it can sometimes mean more robustness checks and more detail that will help a few readers—but the increased length can also be costly. Not necessarily to authors; as the saying attributed to Blaise Pascal goes: “I didn’t have time to write a short letter so I wrote a long one instead.” The cost is on the reader because it takes more time to read the paper. The cost can also be on the science since the paper may not be read if it is too long. I advocate twenty manuscript pages of text as a target. I select this length because it is roughly my own attention span. Anything much longer and I am not going to read it.”

Brorsen also takes issues with the use of impact factors, the pursuit of the interesting over the important, the use of certain statistical techniques, the lack of simplicity, and more.  He ends as follows:

“I have suggested several changes that our profession needs to make, such as reducing the length of manuscripts and reducing complexity. I am not the first to make such suggestions. The reviewers and editors are us. If we want to change what we value, we can.”

TASTE TRUMPS HEALTH AND SAFETY: INCORPORATING CONSUMER PERCEPTIONS INTO A DISCRETE CHOICE EXPERIMENT FOR MEAT

That is the title of a paper I just published with Trey Malone in the Journal of Agricultural and Applied Economics.  

Here are some of the key results:

“Our participants also indicate that they perceive chicken breast to be the healthiest option in our sample. Both beef products would generate substantial changes in WTP by increasing their perceived healthiness to that of chicken. For example, if hamburger had the same average health perceptions as chicken breast, WTP for hamburger would increase by $0.69. Deli ham, however, would experience an $0.83 increase in WTP if consumers were to believe it was as healthy as chicken breast. Even chicken wings would experience a $0.52 increase in WTP through a perception change.”

and

“The nonmeat options are actually perceived as safer than the meat options. As such, if the average participant perceived hamburger to be as safe as beans and rice,WTP would increase $0.34. Of all products, deli ham would benefit the most by an increase in perceived safety to the level of beans and rice. In fact, our sample indicates that pork products are not very highly appreciated. As noted, deli ham is perceived to be the worst tasting, least healthy, and least safe alternative in the choice set. Those negative perceptions are costly. If participants were to perceive deli ham as equal to chicken breast in taste and health, and equal to the perceived
safety of beans and rice, WTP for deli ham would increase by more than $2.”

You can read the whole thing here.

Where do people eat the most meat?

It seems a fairly simple question: In which U.S. states do people eat the most meat?  Yet, there is surprisingly little good, publicly available data on this question.  Yes, there are fun maps like this one at Slate, but they are far from scientific or data driven.  

I thought I'd try to partially fill this void by turning to data from my Food Demand Survey (FooDS) that has been running now for almost four years.  Because I've surveyed over 1,000 people in the U.S. for about 44 months, that means I have responses from over 44,000 people spread all across the country that I can use to help look for geographic differences.  

In FooDS, each person is told "Imagine you are at the grocery store buying the ingredients to prepare a meal for you or your household.  For each of the following nine questions that follow, please indicate which meal you would be most likely to buy."  Then, they are presented with nine questions that look like the one below.  The only differences across the questions are the prices assigned to each item and the order of the items.      

For sake of simplicity, I counted the number of times each person chose steak, how many times they chose chicken breast, etc.  Thus, the maximum possible "score" a person could have for each item is 9 and the lowest is 0.  To be clear, this isn't a measure of consumption, but rather it is an index of demand.  It is a measure of how much people "like" each of the choice options relative to all the other choice options.  For point of reference, across all the people in my sample, the most frequently chosen option was chicken breast (chosen on average 2.43 times out of 9) followed by ground beef/hamburger (chosen on average 1.33 times out of 9).  The least popular meat items were pork chop and ham, chosen on average 0.80 and 0.68 times, respectively, out of 9.

I won't go into all the hairy details here (email if you want to know more), but I then estimated some statistical models to infer how often, on average, consumers in each state chose each of the meat options.  Then, I calculated how different (in percentage terms) each state was from the mean number of choices, and I created maps.

I'll start with one that has a very obvious regional pattern: chicken wings.

Chicken Wing Demand by State

Demand for chicken wings is highest in the southeast US, where people chose this option 15% to 44% more often than in the average person in the US.  Consumers in western states like Oregon, Idaho, and Arizona chose wings 15% to 27% less often than the average consumer nationwide.

For other products, there is less of a regional pattern.  Below is the map for beef steak.  Demand for steak is highest in California, Nevada, Washington, Oklahoma, Minnesota, Illinois, Florida, and New York.  Steak demand is lowest in Idaho, Utah, Missouri,  and the Appalachian regions, Tennessee, Kentucky, and West Virginia.

Beef Steak Demand by State

While we are on beef, here is the map for hamburger/ground beef.  For ground beef, demand is generally highest in the upper midwest and is lower on the coasts.

Demand for Ground Beef by State

A somewhat similar pattern emerges for deli ham (shown below), although the location of heaviest demand moves a bit south and east relative to that for hamburger.  

Deli Ham Demand by State

Below is the map for pork chops.  This map is interesting in the sense that there are several instances where some of the highest demand states are situated adjacent to some of the lowest demand states (e.g., Oregon next to California; Oklahoma next to Texas; etc.)  However, one thing to note in the case of pork chops is the scaling: there isn't much difference across any of the states.  Consumers in Missouri have the highest pork chop demand, but only chose pork chops 2.7% more than the average consumer.  Consumers in California have the lowest pork chop demand, but only chose pork chops 3.3% less than the average consumer nationwide.  

Pork Chop Demand by State

The last individual meat product is chicken breast.  As shown in the map below, chicken breast demand is generally highest in the west and the northeast.  I'm not at all surprised to learn that chicken breast demand is near the lowest in my home state of Oklahoma (at -4.5%), trailing only North Carolina, Missouri, and Mississippi.  

Chicken Breast Demand by State

Finally, to round things out, here is a map associated with overall meat demand.  This figure was calculated by determining how many times a person chose any of the six aforementioned meat products (recall there were nine total options, three of which were non-meat).  On average people chose a meat option 7.03 times out of 9 total choices.  However, as the map below shows, there is some heterogeneity across states.  Overall meat demand is highest in the Midwest: consumers in Illinois, Indiana, and Iowa chose any meat option 1%+ more often than the average consumer.  Lowest overall meat demand was in places like California, Arizona, Maryland, Utah, New Jersey, and Massachusetts, where consumers chose a meat options at least 1% less often than the average consumer.  

Overall Meat Demand by State

AAEA Early Career Professionals Workshop

Are you a relatively new faculty member?  A new government or NGO employee working on the economics of food, agriculture, health, or the environment?  Within 6 years of having received your Ph.D?  Then I have a deal for you!  

On May 31 and June 1, 2017 the Agricultural and Applied Economics Association (AAEA) will be hosting an early career professionals workshop in Vail Colorado.  Come meet fellow early career professionals and hear from some of the luminaries in the profession about how to effectively get grants, publish, teach, and more.

Registration is only $85 and resort room rates are only $129/night.  Stay tuned because we may even  have some opportunities for some travel grants.  

On behalf of the workshop organizers - Norbert Wilson, Cheryl Devuyst, and myself - we'd love to see you there!

For more details and registration, check out the workshop website.