Paarlberg on Farm Policy

Yesterday, I posted on a paper I wrote critiquing some of the proposals of the food movement.  As such, its probably only fair that I share a paper sent to me by a reader.  It was written by Don Paarlberg in 1987 and takes issue with farm policy from the Depression up to that date.  I found the history fascinating; the paper is short and well worth a read.  By the way, Don was a Professor of Agricultural Economics at Purdue and was a former Assistant Secretary of Agriculture.  

Here's an excerpt that shows some of the challenges with trying to manage agricultural prices and supplies.

“Some of the antics of the commodity programs are so ludicrous as to be almost unbelievable. Dairy programs are perhaps the most fantastic. The government supported the prices of dairy products with the intention of increasing dairy farm incomes. But, as every student who has taken a beginner’s course in economics knows, the result was to stimulate production, reduce consumption, and accumulate a surplus. The surplus of butter, cheese, and dried milk was then donated to those on the welfare rolls. This proved to be an inadequate outlet so then these products were donated overseas. The surplus was still growing so the government bought and slaughtered whole herds of dairy cattle. Thereupon the beef cattle producers, who are self-reliant and are not shielded by price supports or production controls, complained of this subsidized competition with their product and the government responded by purchasing beef for donation to the school lunch program. This did not adequately alleviate the complaints of the beef producers so the government exported beef from the slaughtered dairy herds, a strange action indeed since we suffer from beef shortages and import substantial amounts. Our forced exports of dairy beef disturbed other beef exporters, making an additional problem for the GATT multinational trade negotiations in Geneva. All of these questionable strategies were undertaken because the government was unwilling to follow the most simple and effective expedient: lowering the official price.

Meanwhile, those dairymen who stayed in business currently anticipate a reduced supply of milk and a better market. They are increasing their herds and laying the basis for a larger supply of milk. Like the sorcerer’s apprentice, they have heard the signal for delivering more water (in this case, milk) and have heard no credible signal for stopping. The commodity programs create surplus. They make a burden of what should be a blessing—our capability to produce food.”

Policy Proposals of the Food Movement

The journal Applied Economic Perspectives and Policy (AEPP) just published a paper I wrote critically evaluating the policy positions advocated in a series of articles by Mark Bittman, Michael Pollan, Ricardo Salvador, and Olivier De Schutter (see here, here, and here). If you don't want to read the paper, I also recorded a podcast with AEPP editor Craig Gundersen, where we talked about a few of the high points.  

Debate about the next Farm Bill is already beginning, and I suspect many people in the agricultural community would argue that the so-called food-movement should be ignored because it does not seem to have much effect on farm policy.  I'd argue that view is short sighted.  First, the population dynamics have change dramatically over the past half century, giving more power to the food consumer.  Second, the larger size and more integrated nature of farms today is likely to make them less sympathetic as recipients of subsidies than has been the case in the past.  And, as I outline in the paper, evidence of the shift is beginning to emerge.

“While members of the so-called food movement have historically had much less influence on farm and food policy than, for example, farm commodity organizations, recent events suggest that dynamic could be changing. Food movement members have been extraordinarily adept in fomenting the modern day food and farm zeitgeist, selling numerous bestselling books and garnering space in influential media outlets. For example, in 2015 the New York Times hosted a “Food for Tomorrow” conference, which focused on food and farm policy issues that are centerpieces of the food movement agenda. Former First Lady Michelle Obama made food policy a signature issue by planting a White House garden, retooling school lunches, and including the White House chef as a policy advisor. The emergence of the local food movement, as well as state ballot and local initiatives on labeling of genetically engineered food, soda taxes, and farm animal housing, can also be seen as outgrowths of the impacts of the food movement.”

I won't summarize the whole paper here, but the main purpose is to try to bring the food and agricultural economics profession into this debate.  My own view is that Bittman et al. offer no consistent, underlying philosophical basis for when the federal government should (and should not) intervene and that they misjudge the trajectory of health, environmental, and productivity changes in food and agriculture and thus overstate the urgency and scope for intervention.  More specifically, I would argue that many of their specific proposals are unlikely to pass a cost benefit test.

Here is part of the concluding paragraph from the piece.

“There are some points of agreement related to the need to reform current farm subsidies and the need to alter existing government policies that act as barriers to entry. However, the authors spend virtually no time discussing those policies that are likely to have the biggest bang for the buck for the present farmers responsible for producing the bulk of the nation’s food supply or for the average food consumer. These include activities and policies that expand the size of the pie, rather than redistributing the pieces to favored groups. For example, research on productivity-enhancing technology improves both farmer and consumer well-being and lessens impacts on the environment. In addition, American farmers are more prosperous when they have access to consumers all over the world by having open borders and freer trade unhindered by nontariff trade barriers based on specious food safety claims; consumers benefit from trade as well by gaining access to more diversified foodstuffs and more affordable food. While Bittman, Pollan, Salvador, and De Schutter’s (2015) are not economists and should not be expected to frame their policy proposals in economic terms, that does not absolve economists of the responsibility to engage with their ideas, particularly in light of the fact that current trends suggest the policy proposals are gaining traction with a growing number of consumers and politicians.”

On Scientific Ignorance

Consumers are often woefully ignorant of basic facts about food and agriculture.  For example, in this paper I published with Brandon McFadden, we report multiple lines of evidence that most people know very little about genetically engineered food.  When scientific names are used for food ingredients (e.g., sodium chloride instead of salt), perceptions of naturalness and safety substantially decline.  A typical response to these sorts of findings is, "we need to spend more on consumer education." Such a statement is an implicit endorsement of the knowledge deficit model - it is a view that "experts" convey the information, consumers accept it and update their beliefs accordingly.

Dan Kahan's work on cultural cognition had gone a long way toward dismantling the knowledge-deficit model of how consumers change opinions.  His work shows that "more education" doesn't necessarily lead to convergent beliefs; rather, it seems we filter information through our group identities.  I recently ran across a book chapter Kahan wrote, and thought I'd share the abstract as it does a good job describing why consumers (and scientists) may not be fully informed and how we might change their minds on controversial issues.

“It is impossible to make sense of persistent controversy over certain forms of decision-relevant science without understanding what happens in the vastly greater number of cases in which members of the public converge on the best available evidence without misadventure. In order to live well — or just to live, period — individuals must make use of much more scientific information than any (including a scientist) is in a position to comprehend or verify for him- or herself. They achieve this feat not by acquiring even a rudimentary level of expertise in any of the myriad forms of science essential to their well-being but rather by becoming experts at recognizing what science knows — at identifying who knows what about what, at distinguishing the currency of genuine scientific understanding from the multiplicity of counterfeit alternatives. Their rational recognition of valid science, moreover, is guided by recourse to cues that pervade their everyday interactions with other non-experts, whose own behavior convincingly vouches for the reliability of whatever scientific knowledge their own actions depend on. Cases of persistent controversy over decision-relevance science don’t stem from defects in public science comprehension; they are not a result of the failure of scientists to clearly communicate their own technical knowledge; nor are they convincingly attributable to orchestrated deception, as treacherous as such behavior genuinely is. Rather such disputes are a consequence of one or another form of disruption to the system of conventions that normally enable individuals to recognize valid science despite their inability to understand it. To preempt such disruptions and to repair them when they occur, science must form a complete understanding of the ordinary processes of science recognition, and democratic societies must organize themselves to use what science knows about how ordinary members of the public come to recognize what is known to science.”

Is Food Waste Really Such a Waste?

That's the question Marc Bellemare asks in an article in the Wall Street Journal yesterday.  The subtitle points out an important truth that likely seems counter intuitive to the masses, "The optimal amount of waste is not zero."  Note, Marc doesn't say food waste isn't a potential problem or that we ought not think about ways of reducing waste.  Rather, let's not be wasteful in trying to prevent waste.  That is, we could end up expending more resources to save food than we reap in benefits, which of course is wasteful.  

Here are a couple key paragraphs:

“Moreover, the optimal amount of food waste is not zero. Even the most efficient supply chain isn’t frictionless. If you are like me, your purchases of fresh fruits and vegetables more often than not reflect how you’d like to eat rather than how you actually eat. When you go out for dinner, you might end up not liking your meal, or you might order too much and not bring the leftovers home. Some of these issues may be solvable in theory, but the closer we get to zero waste, the more expensive trying to eliminate waste altogether would become.

This is especially important to understand given that “saving” edible food from going to waste is not the same thing as sending it to feed the hungry. Popular discussions often seem to implicitly assume that wasted food could be somehow reallocated to feed the poor at little to no cost. But if lower levels of food waste have any positive effect on food security, it’s far from obvious. The U.N. says that the 5.9 billion people who live in developing countries and the 1.2 billion in industrialized ones waste roughly the same amount of food—about 715 million tons a year. As food becomes an increasingly small fraction of a household’s budget, wasting food becomes cheaper relative to other expenditures.”

The article covers some of the the same issues Marc and colleagues addressed in their academic article in the American Journal of Agricultural Economics.

Labeling Food Processes: The Good, the Bad and the Ugly

That's the title of an interesting new article in the journal Applied Economic Perspectives and Policy by Kent Messer, Marco Costanigro, and Harry Kaiser.  Here's the abstract:

“Consumers are increasingly exposed to labels communicating specific processing aspects of food production, and recent state and federal legislation in the United States has called for making some of these labels mandatory. This article reviews the literature in this area and identifies the positive and negative aspects of labeling food processes. The good parts are that, under appropriate third-party or governmental oversight, process labels can effectively bridge the informational gap between producers and consumers, satisfy consumer demand for broader and more stringent quality assurance criteria, and ultimately create value for both consumers and producers. Despite the appeal of the “Consumer Right to Know” slogan, process labeling also can have serious unintentional consequences. The bad parts are that consumers can misinterpret these labels and thus misalign their personal preferences and their actual food purchases. The ugly parts are that these labels can stigmatize food produced with conventional processes even when there is no scientific evidence that they cause harm, or even that it is compositionally any different. Based on this review of the literature, we provide three policy recommendations: (i) mandatory labeling of food processes should occur only in situations in which the product has been scientifically demonstrated to harm human health; (ii) governments should not impose bans on process labels because this approach goes against the general desire of consumers to know about and have control over the food they are eating, and it can undermine consumer trust of the agricultural sector; and (iii) a prudent policy approach is to encourage voluntary process labeling, perhaps using smart phone technology similar to that proposed in 2016 federal legislation related to foods containing ingredients that were genetically engineered.”