It’s Election Season – For Food Too. California Prop 12 Edition

At this point, you’ve probably seen enough campaign ads that you don’t need me to tell you that elections are around the corner. 

Among several food and agricultural issues up for vote this year across the country is Proposition 12 in California.  The official California voter guide has the following information on the initiative:

If this feels like deja vu, you’re right. California votes passed a similar law in 2008 (Prop 2).  The new bill (Prop 12) goes further by explicitly specifying a minimum amount of space per farm animal and by requiring cage free production systems for egg laying hens by 2022.

Allison Van Eenennaam, animal scientist at UC Davis, has weighed in with her (critical) thoughts on Prop 12, and she pointed out the irony that the main donor against Prop 12 is an animal advocacy organization that would like the conversion to cage free to happen sooner than is required in this proposition.

I’ve received a few calls from reporters asking my thoughts on potential market impacts of Prop 12. I’ll share them here.

• I’ve co-authored two papers on market impacts of the previous Prop 2 and the associated state legislation that went into effect in 2015 (see this paper with Conner Mallally and this one with Trey Malone). The paper with Conner showed a roughly 30% price impact of Prop 2 immediately after it went into place, an effect which fell to about 10% about a year and a half later.

• There are reasons to expect Prop 12 to have smaller or larger effects than what we measured for Prop 2.

  • Why smaller? An increasing share of egg production, nationwide, is coming from cage free production systems (see data here), and if pledges by food retailers to go cage free are upheld, more than three quarters of the industry will be cage free by 2025. Moreover, a number of other states have passed laws to go cage free. Given these apparent trends toward increasing cage free, the effects of Prop 12 per se may be small. That’s not to say that egg prices won’t rise (they will), but that Prop 12 may not be the ultimate proximate cause.

  • Why larger? Well, retailer pledges may not be upheld and industry conversion to cage free has slowed. Cage free and organic combined are only around 17% of the total laying flock at present. Moreover, our previously estimated price impacts of Prop 2 occurred in a situation where producers did not have to undertake large capital investments. Producers could comply with the space requirements that resulted from Prop 2 by removing a hen or two from a cage. By contrast, Prop 12 will require entirely new housing systems, resulting in significantly higher conversion costs than did Prop 2.

• If I was forced to make a guess about the effect size coming from a future study of the impacts of Prop 12 (a future study like the ones I conducted with Conner or Trey), I’d guess something around a 15-25% price increase in retail shell egg prices by mid-2022 relative to the counterfactual of no Prop 12.

• There are other impacts of Prop 12 that are getting less attention but could have big impacts. In particular, Prop 12 would prohibit sales of pork from gestation crate systems. Because California relies on the rest of the U.S. for virtually all it’s pork, I could imagine situations in the short run where retailers have difficulty sourcing enough supplies that comply with the new regulation. If this seems far fetched, remember when Chipotle had to stop selling carnitas, and then, for at time, sold the pork dish with supplies that did not meet it’s guidelines? Another potential consequence, noted by Van Eenennaam is that Prop 12 would prevent “scientific and agricultural” research from studying animal behavior in conditions that don’t comply with Prop 12. It’s hard to quantify the impact of the inability to learn about certain research questions, but the impact isn’t zero.

Happy voting!

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.

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.  

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.”

My New TEDx Talk on Animal Agriculture and Animal Welfare

A couple months ago, I was asked to give a talk at a TEDx event put on at Purdue University.  The video is finally available online.  I talked about the evolution of animal agriculture and the impacts on food prices and animal welfare, and I ended with my proposal for an animal welfare market, which I've previously written about here and here.

Recently there has been a strong push for better treatment of produce animals. Jason's talk asks whether society is ready to pay the price for the better treatment and if the better treatment society is pushing for really increases the animal's standard of living.

Scientific, Ethical, and Economic Aspects of Farm Animal Welfare

That's the title of a new report put out by the Council for Agricultural Science and Technology.  Nicole Widmar and I helped contribute to the section on economics.  

A lot is covered in a mere 40 pages.  The main section heads include: 

• Roles of Science and Ethics in Evaluating, Understanding, and Improving Animal Welfare
• Economics and Markets for Animal Welfare
• Regulation of Animal Welfare
• Assessment of Welfare
• Advances in Animal Welfare and Outstanding Challenges
• Emerging Topics
• Future Neets

It’s an honor to join such a prestigious group of scientists in pulling together this multidisciplinary report.  

Are animal welfare and profits well aligned?

I recently ran across a claim I've heard many times in the past about animal protein production and animal welfare.  It goes something like the following: happier animals put on weight more efficiently because they aren't stressed by disease and discomfort. So, a producer can't make money unless they takes care of their animals, meaning the profit motive and improving animal welfare are aligned.  

There is an element of truth to this line of reasoning.  But, it's not the whole story.  I discussed this issue in a paper entitled Animal Welfare Economics published back in 2011 with Bailey Norwood.

Here is a key paragraph describing the problem:

“It is instructive to consider the trade-off between animal well-being, productivity, and profitability using a simple example. Imagine an egg producer facing the short-run problem of deciding how many hens to stock in a barn with a fixed amount of space. Suppose the animal scientists’ arguments are correct and each hen tends to produce more eggs when they are happier and fewer eggs when sadder. If hens are too densely stocked—for example, so tightly caged that they cannot move or turn around—they will clearly be unhappy and unproductive. Thus, providing a bit more space per hen will increase both welfare and output. At some point, however, too much space is undesirable from both a production and a welfare standpoint. A single isolated hen is likely to be lonely (visitors to egg farms will notice that hens often prefer to flock in groups even in a free-range environment), and as chickens expend energy roaming about, they will be less productive compared to hens more tightly confined. Of course, productivity and welfare are not perfectly aligned and it is probably true that hens would prefer more space than would maximize their individual egg output.”

We then walk through a numerical example showing that even when animal welfare and animal output are very highly correlated, a producer will tend to stock hens more hens than would be given by the stocking density that would maximize animal welfare. The main insight is that the producer aims to maximize the profit from the BARN not the ANIMAL.  

The figure below shows the particular example we walk through.  The rest of the details are in the paper.

We write:

“Though many producers care passionately about the well-being of the animals under their care, few would argue that the goal of commercial agriculture is to maximize animal well-being. Nevertheless, many in the agriculture community want to argue that animals are most happy when producers are most profitable. A little economic reasoning shows that this is not the case. In a competitive environment, producers who wish to stay in business face incentives to adopt production systems and practices that maximize profit, and profit-maximizing outcomes are not the same as animal welfare-maximizing outcomes. Thus, the real question of interest is not whether profitability must be sacrificed to achieve higher levels of animal welfare, but rather how much.”