In praise of quinoa

That's the title of an article in The Economist.  The post cites some nice work by my friend and fellow ag economist, Marc Bellemare.  Here is the bit that cites his work and the closing.

“People who are still underfed are less severely so: their average shortfall in calories fell from 170 a day to 88 by 2016. And between 1990 and 2012 the proportion of their income that poor people worldwide had to spend on food fell from 79% to 54%. As for those quinoa farmers, don’t worry. A study by Marc Bellemare of the University of Minnesota found that Peruvian households became better-off because of the quinoa boom, even if they didn’t grow the stuff, because newly prosperous quinoa farmers bought more goods and services from their neighbours.

Granted, rising prosperity has allowed an increasing number of people to become unhealthily fat. But the solution to that is not to make them poorer, which is what the backlash against globalisation will do if it succeeds. Rather than sniping snootily about Donald Trump’s taste for well-done steaks slathered with ketchup, liberals should worry about the administration’s plans to erect trade barriers and possibly start a trade war. That would make the world poorer and hungrier.”

Sources of Food Waste

Which types of food are responsible for the most food waste?  This was a question I attempted to answer with my monthly Food Demand Survey (FooDS) back in January.  There we found that people stated that they tend to waste the most fresh fruits and vegetables followed by bread and bakery products followed by dairy followed by meat.  

I recently ran across this paper by Heller and Keoleian in the Journal of Industrial Ecology.  Their answer to this question is: it depends how you measure it.  

The following figure is from their paper.  The pie chart in the upper left-hand corner is waste measured per pound of food produced.  This measure matches up quite well with my consumer survey: fruits and vegetables are the highest waste categories representing 19%+14%=33% of all the pounds wasted. By this measure, meat represents a small fraction of the total waste.

However, fruits and vegetables don't provide many calories.  The panel on the upper right-hand side of the chart is food waste measured per calorie of food produced.  Now, fats ad oils are the biggest culprit and followed by grains.  By this measure, fruits and vegetables and most meat products are only a small fraction of waste.  

The last pie-chart on the bottom of the figure measures waste per unit of greenhouse gas emitted.  Because beef is a ruminant and produces methane during digestion, it is a relatively large contributor of greenhouse gasses.  As a consequence, when measured in terms of greenhouse gases, beef, veal, and lamb appear as the biggest contributors of food waste followed by dairy.  

So, which measure is the "right one"?  I suppose that depends on whether you're most concerned about lost food pounds, lost food calories, or lost greenhouse gases.  

P.S.  The Heller and Keoleian paper has another fascinating and surprising result.  They simulate what would happen if people kept eating the same calories but instead shifted to eating the way suggested in the federal Dietary Guidelines.  The result?  A 12% increase in diet-related greenhouse gas emissions.  

How Animal Welfare Laws Affect Egg Prices and Production

Like  California,  at least five  other  states (Massachusetts, Michigan, Ohio, Oregon, and Washington) have passed laws that will eventually limit the use of so-called battery cages in egg production, and retailers like Walmart and McDonald's have made pledges to do the same.  Because this move started earlier in California, and due to the size of that state and the volume of egg production there, California represent a good case to analyze the effects of these laws.  

While I've written on this topic a number of times here on the blog (e.g., here), Conner Mullally and I have finally pulled together a revision of our earlier work that is much more comprehensive and hopefully informative.

One question that I haven't seen much addressed is: what happened to egg production in California as result of their animal welfare laws (these laws include passage of Proposition 2 by voters in 2008 which banned the production of eggs from battery cages and the subsequent passage of state law AB 1437 which banned the sale of eggs from battery cages - both were  ultimately enforced on January 1, 2015 via California Department of Food and Agriculture (CDFA) rules)?   

Before all of this went down, Dan Sumner and other researchers at UC Davis warned that passage of Prop 2 could lead to an exodus of California egg producers and lead California retailers to increase imports of eggs from other states (that's one reason state law AB 1437 came into being - to try to prevent this outcome).  The chart below shows our analysis of the number of egg laying hens in California, which generally confirms the UC Davis researcher's conjecture made back in 2008.  

We estimate that:

“by July 2016 both egg production and the number of egg-laying hens were about 35% lower than they would have been as a result of the new regulations. Out-of-state eggs were able to compensate for falling California production until around the time of implementation of the new rules, at which point imports of eggs into California fell. ”

Here is a graph of egg imports into the state, which Conner obtained via a FOIA request from CDFA, along with egg production in the state.

In addition to these production impacts, we were also interested in the impacts on prices paid by food consumers.  To address this issue, we obtained retail scanner data from Nielsen.  

“We find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions. The price impact fell over time, from an initial impact of about 33% per dozen to about 9% over the last six months of the observed time horizon. These price increases correspond to welfare losses of at least $117 million for the three California markets [in LA, San Diego, and San Francisco from December 2014 to September 2016]. Our results suggest annual average welfare losses of at least $2 per California household in future years.”

Here is a graph of the actual (or observed) price of eggs in California compared to our prediction of what egg prices would have been had the new animal welfare laws not gone into place.

Authentic Food?

Over at Bloomberg, Megan McCardle questions consumers' fascination with authentic (dare I say "natural") food.  The whole thing is well worth a read.  Here is an excerpt.

“Too, we must remember that not everyone was a good cook. Cooking was a job, not an absorbing hobby, and as with any other job, many people did it badly. Every farm wife could produce enough calories to feed her family (at least, if the raw materials were available). Not all of them could produce anything you’d want to eat. Modern food-processing technology has relieved us of that most “authentic” culinary experience: boring ingredients processed by an indifferent cook into something that you’d only voluntarily consume if you were pretty hungry. Even the memory of these cooks has fallen away, though you’ll encounter a lot of them if you read old novels.

These facts help explain the great paradox at the heart of the authenticity obsession: If those authentic old foods were so great, how come our ancestors were so eager to switch to processed foods? ”

Does everybody prefer organic?

A few years ago I was giving a talk at a conference in Europe, and I showed the following figure illustrating demand curves for organic milk.  The curves were created based on an analysis of grocery store scanner data (the underlying estimates and analysis are in this paper in the journal Food Quality and Preference).  

I showed the graph to illustrate to the group how demand for organic milk was lower for people that placed a higher relative importance on food safety than it was for people who placed a lower relative importance on food safety.  But, almost in passing, I told the audience that they might take the figure with a grain of salt because it shows that even if organic was the same price as conventional (i.e., the organic premium was $0), the demand curves predict market shares for organic of only about 8% and 14% (depending on the importance of food safety), which I thought was implausibly low.  

After my presentation, an individual who worked for a European food retailer asked why I thought the figures were implausibly low.  I said that I presumed most people would choose organic if it were priced the same as conventional. He said, however, that his retail experience was fully consistent with the graph I showed - even when he substantially lowered the price premium for organic, the market share remained relatively low.   

I've had those anecdotal thoughts in my mind for a while and recently was able to test them out in a more controlled, survey setting where we could vary product price in a way that there aren't confounds.  One of the "confounds" with the European's observation was likely the fact that the organic attribute was likely to appear on less-well-known brands, so we don't know if it was the lesser-known brand or the organic attribute causing the low market share.  Our attempt to remove these confounds is this new paper in the journal Applied Economics Letters co-authored with Seon-Woong Kim and Wade Brorsen.  

We conducted studies with apples and with milk.  In the studies, people made choices between different apples that varied by color (red or green), condition (bruised or not bruised), price, and production method (organic or conventional).  Alternatively, people made choices between milk that differed by fat content (skim, 1%, 2%, or whole), package type (cardboard or plastic), price, and production method (organic or conventional).  

We used the choices to infer the demand curves for organic vs. conventional, allowing for the fact that different consumers are likely to have different preferences for organic and other milk/apple attributes.  Here's what we found.

Even in these controlled studies, we find that if organic were priced the same as conventional (a price premium of 0%), not everyone would buy organic.  Priced evenly with conventional, organic would pick up only about 60% of the apple market (the remaining 40% going to conventional), and organic would pick up only about 68% of the milk market (the remaining 32% going to conventional).  

Given differences in yield and production costs, organic is almost surely going to be routinely higher priced than conventional. But, even if this weren't the case and organic could be competitively priced, these survey results show us that not every prefers organic food.