Food Demand Survey (FooDS) - April 2017

The April 2017 edition of the Food Demand Survey (FooDS) is now out. 

A few comments on the regular tracking portion of the survey:

• Willingness-to-pay for all meat products (except deli ham) fell from March to April.
• WTP for pork chops reached the lowest point in the almost four-year history of food.  
• Comparing April 2017 to April 2016, only WTP for hamburger is higher than was the case a year ago.
• Awareness of bird flu in the news fell this month and concern for bird flu as a food safety issue experienced the smallest increase of any of the issues studied.  Awareness and concern for animal welfare issues rose this month.

We added several new ad-hoc questions to the survey this month.  

There has been a lot of discussion in the news about whether hydroponics should be able to be labeled organic.  We put the question to our participants.  They  were asked: “Do you think hydroponic vegetables should be allowed, under certain conditions, to be labeled organic? (note: hydroponic vegetables are grown without soil - their roots grow in water with added nutrients and minerals)” 

About 46% of participants stated “yes”, hydroponic vegetables should be labeled organic, 24% said “no”, and the remaining 29% said “I don’t know”.   It should be noted that due to a glitch in survey administration, only 250 people answered this particular question and as such, the sampling error is higher than usual (it is +/-6% rather than the usual +/- 3%).

A couple weeks ago, I discussed some research we'd conducted studying when consumers don't want to know about certain agricultural production practices.  We followed up on this research in this month's edition of FooDs.  We were interested in whether people actively sought to avoid information they may find undesirable.  

We split people into two equal sized groups.  Those in the first group were asked: “On the next page you have two choices of what to see.  You can either see a picture of how pregnant hogs are housed on a typical farm or a picture of a blank screen.  Which do you prefer?”

To check whether people simply preferred to see a blank screen in general, respondents randomly allocated to the second group were asked a similar question but instead of the option to see a picture of “how pregnant hogs are housed on a typical farm”,  they could choose between “a picture of a nature scene or a picture of a blank page.”

Fifty four percent said they wanted to see the picture of how pregnant hogs are housed.  By contrast, 46% preferred instead to see a blank page.  Thus, slightly less than half the sample actively chose to ignore free information about hog housing.  Those who preferred to see the blank screen were less concerned about farm animal welfare as a food safety risk (mean of 3.2 vs. 3.6 on the 5-point scale of concern) and placed less relative importance on animal welfare as a food value (mean of -0.116 vs. -0.097). 

Ninety one percent of respondents choose to see the nature scene.  Overall, the results suggest just about half the respondents preferred not to know how pregnant hogs are housed. 

Finally, we added some questions about food insecurity.  I'll discuss these in a separate post.   

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.

Why large scale organic requires large scale non-organic

The NPR Planet Money podcast just ran an interesting episode about the challenges a farmer started having with bald eagles when he went organic and started raising chickens outdoors.  It's a nice story, but I want to take a minute to correct a subtle (but important) message about organic production promoted in the podcast that is widely mis-understood.  It has to do with the nitrogen cycle.  Here is Planet Money:

“He went organic. He started making changes. To replace the chemical fertilizer, he brought in chickens and let them roam free. Free-range chickens would fertilize the grass; the grass would nurture the cattle, and shoppers at Whole Foods would love Harris’s organic beef.”

Here is the problem - the "chemical fertilizer" wasn't actually replaced (at least not fully).  

All farms, if they want to be productive, need fertilizer, and they need nitrogen in particular.  There is ample nitrogen in the air, but it is not in a form that is available to most plants or animals.  Up until about a hundred years ago, we had to get the bulk of our nitrogen from microbes that grew alongside legumes that "fix" the nitrogen in the air and make it available to plants.  Animals would then eat the plants, use some of the nitrogen, and then excrete some of the nitrogen in their manure.  This is why manure is a great fertilizer - it contains residual nitrogen. But, here's the main point: the nitrogen didn't come from the cow, pig, or chicken.  It came from the microbes in the soil and made it into the animal via the plant. 

Then, along came Haber and Bosch.  They figured out a way to get nitrogen from the air.  This greatly increased the amount of nitrogen available, increased crop yields, the number of animals we could feed, and ultimately the human population.  Here is Thomas Hager in the fantastic book The Alchemy of Air on the effects of this extra nitrogen:

“As a species we long ago passed the natural ability of the planet to support us with food.
Even using the best organic farming practices available, even cutting back our diets to
minimal, vegetarian levels, only about four billion of us could live on what the earth and
traditional farming supply. Yet we now number more than six billion, and growing, and
around the world we are eating more calories on average than people did in [the late
1800s]”

So, what does any of this have to do with the NPR podcast?  The farmer (and the reporters) apparently believe they have escaped the use of "synthetic" fertilizer brought about by the Haber-Bosch process because the farmer's fertilization now relies on manure from chickens.  But, where did the nitrogen in the chicken manure come from?  The answer is that it came in via the feed the farm bought and brought in from another farm.  

Maybe the farmer bought organic corn to feed his chickens.  That solves the problem, right? Not exactly.  Your see, the organic corn farmer who sold our organic chicken farmer corn undoubtedly used fertilizer.  There is a very good chance that this fertilizer was some form of manure.  Yet (and this is a very important point), organic rules don't discriminate whether manure comes from an organic or non-organic fed animal.  Because there are many, many more non-organic animals, chances are that the manure came from an animal fed non-organic grain.  Where did the nitrogen in that non-organic grain and then manure come from?  Haber and Bosch.

Thus, even assuming that organic chicken feed was used, there is a very high probability that the nitrogen in the chicken manure that was used on our organic farm featured in the NPR story came from corn that was fertilized with manure that came from a cow or pig or chicken that was fed corn that was fertilized using nitrogen made available via Haber and Bosch.  

So, despite what is implied by the journalists (and perhaps even believed by the farmer), we haven't returned to some kind of "natural" nitrogen cycle.  We've simply found ways of importing "synthetic" nitrogen into a system that makes it look "natural."  This academic paper looking at French farms, for example, calculated that organic farms strongly rely on non-organic farms for their nutrient flows finding on average, 73% of phosphorus, 53% of potassium, and 23% of the nitrogen used in the organic farms in their studies was imported from conventional, non-organic farms via processes like the one I described above.  As one writer put it:

“However much nitrogen exists in manure today, much of it has been fixed industrially before being taken up by corn plants and laundered through the guts of conventionally-farmed animals. ”

Now, one could avoid all this by requiring organic producers to use only manures from organic animals fed organic feed.  However, I seriously doubt there is enough available nitrogen from this "natural" system to support the present size of the organic market.  As the organic market grows, this likelihood becomes even more remote.  Indeed, if one wants large scale organic, it almost certainly implies (given the current population) the need for large scale non-organic.  All that life-supporting nitrogen has to come from somewhere.  Until we find a better way, right now it is coming from Haber and Bosch and is smuggled into organic agriculture via animal manure.  

Assorted Links

• This NYT article by Stephanie Strom discusses an interesting fault line in the organic movement: whether hydroponic crops (which are not grown in soil) can be called organic. 
• A couple days ago, the USDA Economic Research Service put out this "chart of of note" showing trends in private and public spending on agricultural research.  As the chart shows, public spending has been falling, although private spending has increased.
• The USDA-AMS has started putting out what appears to be a relatively new monthly report on production and prices of cage free and organic eggs. 
• The Journal of Economic Psychology has released a special issue I co-edited with Marco Perugini on food consumption behavior.  There are 11 articles on a whole host of interesting topics from organic, food labeling, school lunches, nutrition, "fairness", food security, and more.
• More controversy over chicken pricing, this time from the Washington Post.  I spoke to some industry folks about this a few days ago, and one thing they highlighted is that the type of chicken priced by the Georgia Dock is quite different (higher quality - contracted in advance) than what is being priced by other indices like the Uner-Barry (chicken parts - in spot markets).  Thus, a lot is being made of an apples-to-oranges comparison (even if the apple price report is flawed). 
• One of my former students, Brandon McFadden, has a new article in PloS ONE looking at the factors that drive a wedge between public and scientific option about climate change and genetically engineered food.  He's got some cool graphs showing people's joint beliefs about climate change and genetically engineered foods, and he explores how those beliefs are affected by cognitive ability, illusionary correlations, objective knowledge, and political party affiliation.

Food Demand Survey (FooDS) - November 2016

The November 2016 edition of the Food Demand Survey (FooDS) is now out.

The regular tracking portion of the survey suggest lower food demand overall.  For example, willingness-to-pay for all meat products fell by at least 8%, and reported spending on food at home and away from home fell by 5.7% and 10.5%, respectively.  Some of the WTP declines may be due to post-election uncertainty (the surveys were completed on November 10 and 11).  In addition, reported consumer awareness of all 18 issues we track fell in November relative to October as did reported concern for the same set of 18 issues.  

Three sets of new ad hoc questions were added this month.

The first question came about as a result of discussion with my OSU colleagues Damona Doye and Dave Lalman who have been exploring some alternative cattle production systems.  At issue is what the new systems should be called.  Thus, participants were asked: “Imagine shopping at your local grocery store for ground beef. What is the most you would be willing to pay ($/lb) for a package of ground beef that had the following labels? (Note: The current average price of ground beef in the U.S. is around $3.66/lb)”

Participants stated they would be willing to pay the most for ground beef labeled as “grass fed” at an average WTP of $4.26/lb followed by ground beef labeled “organic” at an average WTP of $4. 24/lb. Semi-free range was valued more than semi-confinement ($3.78 vs. $3.28). Participants stated they would pay the least amount for unlabeled ground beef at an average price of $2.92/lb. The sampling error for each WTP value is about +/- $0.15/lb with 95% confidence (thus, if two means are $0.30/lb apart or more, they are statistically different).

Next, participants were asked: “Farmers rely on fertilizers to promote plant growth and grow more food. How desirable or undesirable would you consider it to eat a fruit or vegetable grown with the following fertilizers?” Individuals responded on a five-point scale: 1=very undesirable, 2=somewhat undesirable, 3=neither desirable nor undesirable, 4=somewhat desirable, or 5=very desirable.

The most common answer for each item was “neither desirable nor undesirable”, except for municipal waste where very undesirable was the most common response. On average, fertilizer created through a process that uses natural gas and nitrogen in the air (this is the so-called Haber-Bosch process also called "synthetic fertilizer" by the organic industry) was perceived as most desirable followed by animal manure. Blood meal and municipal waste were rated as the least desirable fertilizer products. The sampling error is about +/- 0.075 with 95% confidence (thus, if two means are apart by 0.15 or more, they are statistically different).

Then, to follow up on this questions, participants were asked: “Which types of fertilizer are allowed in organic agriculture?” Participants could select all that applied.

Over half of the participants (correctly) believed that the use of animal manure as a fertilizer was allowed in organic agriculture. About 38% of respondents (incorrectly) believed fertilizer created through a process that uses natural gas and nitrogen air was an allowed fertilizer in organic agriculture. Only 13% of participants thought that municipal waste was an allowed fertilizer in organic agriculture (see here for a discussion of allowable fertilizers in organic). The sampling error is about +/- 3% with 95% confidence.

A couple comments.  First, it is curious that the fertilizer most respondents thought was allowable in organic (manure) only only believed to be allowable by about 50%.  It raises the question: how do respondents think organic producers fertilize their crops?  Perhaps I should have allowed that as a response option (e.g., something like "no added fertilizers are allowed in organic production").  Second, comparing the two graphs above, it is curious that the most desirable type of fertilizer (created via Haber-Bosch) is disallowed in organic agriculture - a fact that roughly 61% of respondents appear to recognize.