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Slow Growth Chicken - What do Consumers Think?

What do you think about slow-growth chickens?  If you're like most people I've asked, your answer is probably "what the heck is a slow growth chicken?"  

Food retailers, however, aren't wondering because they're being asked by animal advocacy organizations to make new commitments to only buy chicken from slower-growing birds (here is the request in the EU and here is the Humane Society of the United States on the issue).

First, what is slow growth chicken?  Here's from my new paper on the topic just released by the journal Poultry Science (references omitted):

Genetic improvements have allowed poultry producers to rear broilers faster and to heavier weights than was possible in previous decades , with the result being more affordable chicken for consumers. However, some research has suggested that rapid growth may result in broilers that suffer from leg damage and pain. These ideas have recently gained traction in popular media and have led to calls for older heritage breeds of chickens, or newer slower growing chickens that are argued to be associated with improved taste and higher broiler welfare. Some research suggests little to no independent relationship between days of growth and consumer sensory evaluations of chicken , and other research suggests that slow-growing breeds are deemed less tender and less juicy than conventional chicken breeds. Nonetheless, consumer preferences for chicken may be as much affected by perceptions and labels than by actual sensory characteristics.

The new paper reports on the results of some surveys I conducted late last year with about 2,000 U.S. chicken consumers for a project funded by the Food Marketing Institute, the Animal Agriculture Alliance, and the Foundation for Food and Agricultural Research (a fuller, un-gated report of the results is here).  One of the main results is that most consumers don't know much about slow growth chickens, and as a result, positive or negative information can really sway people one way or the other.  

One group of people were given no extra information.  Another group of people received "pro" slow growth information from articles in NPR (as reported by Dan Charles) and the New York Times (as reported by Stephanie Strom), and yet another group of people received "anti" slow growth information from the National Chicken Council.

After receiving this information, consumers made a number of choices in a simulated retail environment showing packages of chicken breasts with different labels and prices.  These choices were used to back out consumers' willingness-to-pay for the slow-growth label (at present there is no widely adopted slow-growth label, so I created one myself for use in this study).  Here is the distribution of willingness-to-pay ($/lb) for slow growth and organic labels in the different information treatments.

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Some of the most interesting results related to the extreme lack of knowledge people have about broiler production in general and slow-grown in particular.  For example, here are some results when they were asked what they thought a variety of different labels implied.  

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The table shows the average beliefs about animal welfare, expense, healthfulness, safety, and taste of different labels. Without extra information, slow growth labels tended to be associated with disadvantageous beliefs. Without additional information, slow growth labels are associated with signaling the lowest safety, taste, and health of the labels considered.

Here's how I concluded the article:

Given the disadvantageous beliefs consumers hold about slow growth claims, a substantial marketing effort would likely be needed for the attribute to become a major determinant of consumer choice. Given consumers’ lack of knowledge about broiler production, simply informing consumers of already existing practices (e.g., cage free and no added hormones) could be a more cost-effective way of boosting chicken demand. That said, it is possible that the presence of hormone absence labels may exacerbate the misinformation problem by indirectly suggesting that there are some brands of chicken that use growth hormones. While organic labels are associated with positive beliefs and are valued relatively highly by consumers, organic production entails significantly higher costs in comparison to non-GMO or no antibiotic claims.

Perhaps the most significant factor explaining the increase in chicken consumption over the past several decades is price. Increases in production efficiencies have reduced chicken prices relative to the price of beef and pork. Perhaps not surprisingly then, this study also shows price to be a major determinant of choice for consumers. Nonetheless, there is a non-trivial minority of consumers who are relatively unconcerned about chicken prices, and these consumers are the target market for the label claims considered in this study.

No, Farm Policy Doesn't Have Much to Do with Obesity

Yesterday, David Ludwig and Kenneth Rogoff, prominent pediatrician and economist respectively, published an article in the New York Times about obesity.  The following is a passage from the piece.  

Farm policies have made low-nutritional commodities exceptionally cheap, providing the food industry with enormous incentive to market processed foods comprised mainly of refined grains and added sugars. In contrast, vegetables, whole fruits, legumes, nuts and high-quality proteins are much more expensive and, in “food deserts,” often unavailable.

The authors have already taken a bit of a beating about this on Twitter from the agriculturally-literate-intelligentsia. Why?  Because these sentences give the incorrect impression that farm policy is a major contributor to obesity.  That's not saying farm policies aren't inefficient, only that they do not have the effects many people claim they do.

Why would farmers support policies that would make commodities "exceptionally cheap" and thus lower their profits?  Yes, there are some policies that likely increase production beyond what would happen in an un-distorted market, but there are other policies that reduce production.  Take corn, for example, which is the largest agricultural crop in the U.S. in terms of value of production.  The existence of subsided crop insurance subsidies and commodity programs might increase the tendency to produce more than would otherwise be the case, but ethanol policies from the EPA re-direct much of that production to fuel rather than food. Moreover, there are countervailing policies such as the Conservation Reserve Program (CRP), which remove land from production.  In addition, sugar policies push the price of sugar up, not down.  

The authors also point to processed food as another big evil, but in so doing they (correctly) undercut the argument that farm policy is a major culprit.  How so?  Well, for every $1 we spend on food, only about $0.15 results because of the cost of the farm product.  The other 85% of the cost is from transportation, processing, packaging, marketing, retailing, etc.  As a result, changes in farm commodity prices have relatively small impacts on retail prices.  

Fruits and vegetables are indeed more expensive than many commodity crops, but that's because of biology not policy (see more on that here and here).  Here's what I wrote in one of those posts:

why do we grow so much corn, soy, and wheat in the U.S.? A primary answer is that these plants are incredibly efficient at converting solar energy and soil nutrients into calories (they’re the best, really the best). Moreover, these calories are packaged in a form (seeds) that are highly storeable and easily transportable - allowing the calories to be relatively easily transported to different times and to different geographic locations. Contrast these crops with directly-human-edible fruits/vegetables like kale, broccoli, or tomatoes. These plants are poor converters of solar energy to plant-stored energy (i.e., they’re not very calorie dense), and they are not easily storeable or transportable without processing (mainly canning or freezing), which requires energy.

If you don't believe me, there is a long literature by agricultural economists on this subject.  See this book by Julian Alston and Abby Okrent or these papers in American Journal of Agricultural Economics or Journal of Health Economics, the later of which was co-authored with Brad Rickard.  Other papers take entirely different approaches but arrive at the same conclusion.  See this paper in Food Policy by Corey Miller and Keith Coble or this one by Alston, Sumner an Vosti, also in Food Policy.

As for the efficacy of the other policies proposed by Ludwig and Rogoff, I'm skeptical of their efficacy in truly affecting obesity.  See this paper I recently published in Applied Economic Perspectives and Policy or my 2013 book, The Food Police.

The Most Popular Fruits and Vegetables

I recently had some questions about which fruits and vegetables are most commonly consumed. The USDA Economic Research Service reports data on per-capita availability of different foods.  This is not a direct measure of consumption per se, but it is an indirect extrapolation of what was left in the U.S. for consumption after accounting for exports and storage.  Their latest update was for the year 2015.

Here is per-capita "consumption" of fresh fruit.

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And, per-capita "consumption" of fresh vegetables is below.

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Do any of these findings surprise you?  One of the results that was a little surprising to me is that melons were the 2nd most commonly consumed fresh fruit. Why are melons so commonly consumed?  There are likely a variety of reasons, but I suspect price is one factor.

Here is 2016 retail data from USDA Economic Research Service for fresh fruit.  I've shown prices in $/lb and $/cup equivalent ("a 1-cup equivalent equals the weight of enough edible food to fill a measuring cup") for some of the most commonly fresh fruits.

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Why do people eat a lot of fresh melons?  Apparently one reasons is that they're relatively affordable.

Farmer's Share of the Retail Dollar - Enough Already

Every so often, the people seem to get excited about the farmer’s share of the retail dollar – particularly when USDA updates the figures or a news article mentions the issue.  A couple months ago, for example, the National Farmer’s Union issued a press release decrying the fact that farmers “only” receive 14.8 cents of every dollar consumers spend on food.  About the same time, the Food Tank put out this tweet.

The widespread implication seems to be that a lower share of the retail dollar is an unambiguous sign that farmers are worse off.  But one has very little to do with the other.  Let me try to illustrate with an example.   

Suppose there are two countries where the farmer’s share of the retail dollar differs dramatically.  In Country A, the share is only 10% and in Country B, the share is 90%.  So, when a consumer spends $1 on food, the farmer in Country A receives 10 cents and the farmer in Country B receives 90 cents.  On a dollar-spent-on-food basis, it thus looks like a farmer would much prefer to live in Country B than Country A.  But, let’s dig a little deeper.

Suppose the farmers in our two countries actually produce the same value of agricultural output.  To make the math easy, let’s say farmers in Country A produce $100 billion worth of ag output and farmers in Country B do the same. 

What are consumers in the two countries spending on food?  By definition, consumers in Country A are spending $100 billion/0.1 = $1,000 billion and consumers in country B are only spending $100 billion/0.9 = $111.11 billion. By definition, for a fixed value of ag output, a smaller value for the farmer's share of the retail dollar implies a larger total food economy. As I'll show in a minute, it matters a lot if you're selling into a $1 trillion market or a $111 billion market.

Why might consumers in Country A spend so much more on food than consumers in Country B despite the same volume of ag output in both countries?  Well, it could be there is more market power with greedy agribusinesses and retailers siphoning off profits in Country A than B (that seems to be the common layman’s interpretation).  But, it could also be that consumers in Country A have the preferences or ability to pay more for better packaging, increased food safety, better working conditions in food processing, more convenience (they pay the processor or a restaurant to do more of the preparation for them), etc.

So, what happens if there is a 10% increase in consumer demand for food in both Country A and Country B?  This could happen, for examples, if the populations increase in each country or if the respective food industries run advertisements or there are post-farm innovations that increase quality. 

Now, let’s construct a very simple economic model (such as the one we use in this paper), where, in both countries, the elasticity of demand is -0.8 and the elasticity of supply is 0.2, and the farm product is supplied to the retail sector in fixed proportions. 

In this situation, a 10% increase in consumer demand in country A (with only a 10% farmer’s share of the retail dollar) will increase farmers' profits by $29 billion.  However, in country B, where farmers “get” a full 90% of the retail dollar, that same 10% increase in consumer demand only increases farmers' profits by $8.8 billion.  So, for the same percentage increase in consumer demand, farmers in country A are more than 3x better off than farmers in country B despite the fact that their share of the retail dollar is only 10% instead of 90%. 

So, here’s a fundamental lesson: a small share of a big number can be much higher than a larger share of a smaller number.

Now, none of this means that one cannot construct scenarios in which producers are worse off when the farmer’s share of the retail dollar falls.  That’s easy to do too.  But, as I’ve shown here, I can easily do the opposite. 

The point?  Changes in the farmer’s share of the retail dollar are meaningless insofar as telling us whether farmers are better or worse off. 

Don't believe me?  Listen to other agricultural economists.  Here is Gary Brester, John Marsh, and Joseph Atwood and colleagues writing in a 2009 journal article:

We have empirically demonstrated that [the farmer’s share of the retail dollar] statistics and, by construction, farm-to-retail marketing margins, are not reliable measures of changes in producer surplus (welfare) given exogenous shocks to various economic factors … In fact, little or no accurate information is conveyed by [farmer’s share of the retail dollar] statistics … Consequently, these data should not be used for policy purposes.