Why the rise in demand for chicken?

Last month I discussed the ways economists attempt to study changes in beef demand.   Over at meatingplace.com, Mack Graves delves into the issue and questions why chicken demand has risen at a faster pace over the past several decades compared to beef.  He writes.

“A recent study of beef demand by Glynn Tonsor and Ted Schroeder of Kansas State University published on Feb. 3, 2017 showed beef demand rising from an index of 75 (1990 = 100) in 2010 to 93 in 2015. That’s a gain of 18 points in five years! However, the 75 index in 2010 was the lowest value in the 25 year period.

For some perspective, the chicken demand index rose from slightly more than 100 in January of 2011 to about 112 in October of 2016 although it had reached a high of 128 in late 2015. ”

Graves' diagnosis as to why chicken demand has fared better than beef demand?

“Analyzing chicken’s success starts with one word—fat. There is no question that the science community with its study after study deploring the saturated fat in beef was a kick starter for chicken consumption. All the fast food chains jumped on this bandwagon led by McDonald’s with their chicken McNuggets. ”

I suspect he's partially right.  Fat concerns probably explain part of the decline in the 1980s and early 1990s.  But, there is another major part of the story: relative prices.  

If beef and chicken are demand substitutes, then a fall in the the price of chicken will cause people to substitute away from beef toward the lower priced chicken.  This will result in a fall in the beef demand index (or at least make the index smaller than it would have been otherwise). 

So, what's happened to the retail price of chicken compared to beef since the 1970's?  Here's the retail price of beef divided by the price of chicken according to USDA data.

In the early 1970's, a pound of beef was about 2.5 times more expensive than a pound of chicken, and this figure trended upward over time.  Today, beef is over 4 times more expensive than chicken.

The lesson here is that increased efficiency of chicken production, resulting in lower relative chicken prices, has led to an increase in chicken consumption and reduction in beef demand.     

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? ”