Blog

The Superbowl and Chicken Wing Demand

With the Superbowl coming up this Sunday, I thought I’d take a quick look at whether this annual event has much effect on the market for a food it has come to be closely associated with: chicken wings.

I turned to USDA data compiled by the Livestock Marketing Information Center, which reports weekly prices on whole wings going back to 1992. Here is the price trend in nominal terms. There has been a strong upward trend in chicken wing prices over this time period, but of course some of that is due to inflation. However, even after adjusting for inflation, wings were about $0.90/lb in the early 1990s ($0.50/lb in nominal terms), and they averaged about $1.50/lb in 2018; during the latter part of 2018, prices were above $2.00/lb.

wing1.JPG

In the graph above, it’s hard to make out when, exactly, the Superbowl occurred. Looking at the history of the event over this time period, the Superbowl occurred in late January or early February every year since 1992. With that knowledge, I added orange lines to the graph to indicate the periods surrounding the Superbowl.

wing2.JPG

It sure looks like there is a price spike right around the time of the Superbowl each year, with a price decline immediately following. Indeed, if I look at the most recent decade, prices rise about 7% from early January to the Superbowl period (late January, early February), and then fall about 5% going in to mid- to late-February.

The price spikes are indicative of increasing demand over this time period. This is also consistent with data we collected in the monthly Food Demand Survey, were we often found a spike in consumer willingness-to-pay around the event.

Too bad I don’t have data on napkins and antacids …

P.S. One might wonder why this price phenomenon is different than that for turkeys. As I discussed back in November, turkey prices tend to fall around Thanksgiving when demand is peaking, perhaps due to strategic pricing behavior by retailers or from producers planning ahead and increasing supply around this time. A key difference with turkeys and wings, is that one is a whole and the other is a part. If there isn’t an overall demand increase for chicken around the Superbowl, then the wings will be in relatively short supply. It might make sense for a turkey producer to grown a whole bird in anticipation of the holidays, but it’s not possible for a producer to only grown wings in anticipation of the Superbowl.

The Coming Meat Wars

By now, I suspect many of you have seen the report by the EAT-Lancet Commission on Healthy Diets from Sustainable Food Systems, which was released on January 16th.

Among other things, the report recommends a dramatic reduction in consumption of meat and animal products. Here is their recommended plate.

new my plate.JPG

Much has been made on Twitter and other places about the size of the small meat and animal product proportions suggested (e.g., 1/4 egg per day), and the fact that more added sugar is suggested than most meat products.

Rather, than going line-by-line through the report, I think it’s useful to take a step back and see this report as another front in what seems to be an escalating war on meat and animal food products (recall the debate surrounding the scientific advisory report on dietary guidelines back in 2015? Here were my thoughts then). What I thought I’d do in response is to provide some broader thoughts about some of the debates that have arisen about meat consumption. My purpose isn’t to defend meat and livestock industries, but to help explain the consumption patterns we see, add some important context and nuance to these discussions, and help ensure consumer welfare isn’t unduly harmed. (Full disclosure: over the years, I’ve done various consulting projects for meat and livestock groups such as the Cattlemen’s Beef Board, the Pork Board, and the North American Meat Institute. All of this work was on specific projects or data analysis related to labels or demand projections, and none of these groups support writing such as this, but I mention it here for sake of transparency).

Here are my thoughts.

  • These debates can be contentious because meat, dairy, and egg production is big business and critically important to the economic health of the agricultural sector. For example, these USDA data show in 2017 in the U.S. the value of cattle/calves was about $67 billion, poultry and eggs about $43 billion, diary about $38 billion, and hogs about $21 billion, for a total of $176 billion at the farm gate. Contrast this with the value of corn ($46.6 billion), vegetables and melons ($19.7 billion), fruits and nuts ($31 billion), or wheat ($8.7 billion). In many ways, livestock/poultry can be see as “value added” production because these animal products rely on corn, soy, hay, and grass

  • Given the farm-level statistics, it shouldn’t be surprising to learn that consumers spend a lot on meat, dairy, and eggs. Data from the Bureau of Labor Statistics, Consumer Expenditure Survey suggest that in 2017 consumers spend about $181 billion on animal products eaten at home. This doesn’t count food away from home, which is 43.5% of food spending according to these data (spending on food away from home isn’t segregated into food types as is food at home). Of total spending on food at home, 32% goes toward meat, dairy, and eggs.

  • If anything, data suggest demand for meat (i.e., the amount consumers are willing to pay for a given quantity of meat) has been steady or rising over the past decade. For example, see these demand indices created by Glynn Tonsor. His data also shows there has been a steady increase in demand for poultry for the past several decades. At the same time, my FooDS data suggests a slight increase in the share of people who report being vegetarian or vegan over the past five years - going from around 4% in 2013 to around 6% in 2018. So, aggregate demand for animal products is up, although there seems to be increasing polarization on both ends of spectrum. We also find that meat consumption is increasingly related to political ideology, with conservatives having higher beef demand than liberals.

  • There are important demographic differences in meat consumption, but the results highly depend on which meat cuts we are talking about. For example lower income households have higher demand for ground beef and lower demand for steak than higher income households. Broadly speaking, meat consumption is a “normal good”, which means that consumption increase as incomes rise. This is particularly true in developing countries. One of the first things people in developing countries add to their diet when they get a little more money in their pockets is animal protein.

  • Given the high levels of aggregate meat consumption indicated above, the evidence suggests strong consumer preferences for meat and animal-based products. Taxes on such products will harm consumer welfare, and will be costly if, for no other reason, because of the size of the industry. Stated differently, consumers highly valuing having animal protein in their diets. This study shows the average U.S. consumer places a higher value on having meat in his or her diet than having any other food group.

  • Calls for taxes are often predicated on the notion that there are externalities from meat, egg, and dairy production that need to be internalized (otherwise, this would amount to little more than “nannying” or paternalism). The externalities on the health care front presumably come from the fact that we have Medicare and Medicaid, which socialize health care costs. As I’ve written about on many occasions (e.g., see this paper), these “externalities” do NOT create economic inefficiencies because they simply represent transfers from healthy to the sick. Any inefficiencies that arise occur because of moral hazard (i.e., people eating unhealthy because they think the government/taxpayers will foot the bill), and the solution to this insurance problem is typically to require deductibles or risk-adjusted insurance pricing, which nobody seems to be proposing as a solution. As for environmental externalities, the key is to ensure prices for inputs such as water or energy, or outputs such as carbon or methane, reflect external costs. In this sense it isn’t the cow or chicken that is the “sin” but the under-priced water or carbon. Here the goal is to adopt broad policies that apply to all sectors (ag and non-ag) and that encourage and allow for innovation to reduce impacts.

  • On climate impacts of animal agriculture, it is important not to confuse global figures of climate impacts with U.S. figures, which tend to be much lower (e.g., see my piece in the WSJ a few years ago on this topic). Why would climate impacts be lower in the U.S.? Because we tend to be more intensified and productive than elsewhere in the world. I know it sounds counter-intuitive, but more intensive livestock operations (because of the massive productivity gains) can significantly reduce environmental impacts when measured on a per unit of output (e.g., pound of meat or egg) basis.

  • As for carbon impacts, the big culprit here is beef and to a lesser extent (due to the smaller cattle numbers), dairy. Why? Because cattle are ruminants. The great benefit of ruminants is that they can take foodstuffs inedible to humans (e.g., grass, hay, cottonseed) and convert them into products we like to eat (e.g., cheese, steak) (see further discussion on this here). The downside is that ruminants create methane, which is a potent greenhouse gas (GHG). The good news is that the GHG emissions from beef production have significantly fallen over time because of dramatic productivity gains (see this paper), but they’re not zero. It’s also important to note that not all greenhouse gasses are created equal, and while methane is a potent greenhouse gas, my understanding is that the impacts from livestock are less persistent in the atmosphere than are other types of greenhouse has emissions. While we can cut GHG emissions by eating less beef, at least in the U.S., the impacts are fairly small (the EPA puts contributions from livestock at around 3-4% of the total), we can also make strides by continuing to increase livestock productivity.

  • While cattle are more problematic on the GHG front, it is important to note that there are likely tradeoffs (real or perceived) on the animal welfare front in comparison with other species. Most beef cattle live most of their lives outdoors on a diet of grass or hay. Cattle often make use of marginal lands that would be environmentally degrading to bring into row crop production. By contrast, most pork and poultry live the vast majority of their lives indoors on a diet of corn and soy. See my book with Bailey Norwood on the topic of animal welfare.

  • There are some interesting innovations happening on the “lab grown meat” and “plant-based protein” space, which aim to replace protein from animal based sources. I haven’t seen these innovators make many claims about relative health benefits, but they often suggest significant benefits in terms of environmental impacts. I hope they’re ultimately right, but they’ve got a long way to go. Lab-grown meat isn’t a free lunch, and all those cells have to eat something. As I’ve also noted elsewhere, it is curious that these products (plant- or cell- based) are still more expensive than conventional meat products. If these alternative proteins are really saving resources, they should ultimately be much less expensive. Time will tell.

  • Despite the excitement around the alternative protein sources, I don’t think we’ll see an end to cattle production anytime in the near future. Why? Well, there is the aforementioned marginal land issue; many agricultural lands aren’t very productive for use in other activities other than feeding cattle or housing other livestock or poultry. Another issue is that cattle and other livestock are food waste preventing machines. A big example here is distillers grains. What happens to all the “spent” grain that runs through ethanol plants or beer breweries? Its feed to livestock. The same is true of “ugly fruit”, non-confirming bakery items, and more. Also, without animal agriculture, where will organic agriculture get all it’s fertilizer, which currently comes from the manure of conventionally raised farm animals?

  • Back to the EAT-Lancet commission, one of the big arguments for reducing meat consumption is health. While there are many studies associating meat consumption with various health problems, the strength of evidence is fairly weak. One big problem is that it’s really tough to do dietary-impact studies well and a lot of the evidence comes from fairly dubious dietary recall studies, but the other issue is that there is generally little attempt to separate correlation from causation. As I’ve written in other contexts, “Its high time for a credibility revolution in nutrition and epidemiology.”

  • The EAT-Lancet report focuses both on health and sustainability issues. However, as I noted with regard to the 2015 dietary guidelines, which initially aimed to do the same, this conflates science and values. As I wrote then, “Tell us which foods are more nutritious. Tell us which foods are more environmentally friendly. But, don't presume to know how much one values taste vs. nutrition, or environment vs. nutrition, or price vs. environment. And, recognize that we can't have it all. Life is full of trade-offs.”

  • Finally, I’ve heard it suggested that we need new policies and regulations to offset bad farm policies, which have led to overproduction of grains and livestock. This view is widely believed and also widely discredited. For example, see this piece by Tamar Haspel in the Washington Post. In the U.S., beef, pork, broilers, and eggs receive no direct production subsidies. Yes, there are various subsidies for feedstocks like corn and soy, but there are also other policies that push the prices of these commodities up rather than down (why would farmers want policies that would dampen the prices of their outputs?). Large scale CAFOs (confined animal feeding operations) must comply with a host of rules and regulations that raise costs (it should be noted that the government provides some funding, through the Environmental Quality Incentives Program (EQIP) program, to incentivize certain practices by CAFOs thought to improve environmental outcomes). If U.S. farm bill was completely eliminated, there would not doubt be some change, but it wouldn’t do much to change the volume of meat, dairy, and egg produced.

That’s more than enough to chew on for now.

Reducing Meat Consumption?

A couple weeks ago, The Economist ran this story about people’s stated efforts to reduce meat consumption. Here is their key graph, which shows demographic breakdowns in how people responded to this question.

meat_politics.JPG

These demographic results are largely consistent with many of the survey results I’ve generated over the past few years. For example, here are demographic breakdowns of people who self declare as vegetarian/vegan vs. meat eater. Like the study mentioned in The Economist, we find politically liberal individuals are much more likely to be vegetarians/vegans as compared to politically conservative individuals.

Also, see this study where I estimated beef demand. Again, demand for steak and ground beef increases the more conservative the respondent.

More broadly, the study mentioned by The Economist suggests:

Twenty-seven per cent of respondents in our survey say they have made an effort to reduce their consumption of meat in the past year.

That’s a bit of a strange framing because if you look at USDA data on consumption (or “disappearance”), over the past four to five years it has been increasing. As for measures of meat demand, such as these complied by Glynn Tonsor at K-State, demand today for beef and pork is quite a bit higher than in 2010 or 2011.

Maybe, this is a way of saying that I’m skeptical of questions like that in The Economist that ask, in a somewhat leading way, how much are one trying to reduce consumption of X. A more balanced question shows much different results.

For example, see the results of this study on pork I conducted with Glynn Tonsor, Ted Schroeder, and Dermot Hayes for the Pork Board. We report:

One of the initial questions asked respondents, “Over the past five years, has your consumption of pork chops increased or decreased?” 32.9% indicated consumption had increased, 57.5% responded “stayed the same,” and the remaining 9.6% indicated consumption had decreased.

For the 9.6% who said “decrease”, we asked why, and the most common response was, “Other meat options have become more attractive.” So, in this case, even among people who said they were eating less pork, it’s because they’re eating more of other types of meat.

Or, here are the results of a survey I conducted last year, where I asked the same question but this time about chicken consumption. The result?

One of the initial questions asked respondents, “Over the past five years, has your consumption of chicken increased or decreased?” 47.4% indicated consumption had increased, 48.5% responded “stayed the same,” and the remaining 4.1% indicated consumption had decreased.

The most commonly stated reason among the 4.1% who said “decrease” was “Chicken has become less tasty.”

It’s interesting that when given the option of “increase or decrease”, I only find 9.6% of pork consumers and 4.1% of chicken consumers say they’re decreasing consumption, both of which are far lower than the 27% suggested by The Economist.

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.

slow_growth1.JPG

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.  

slow_growth2.JPG

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.

Future Food Demand

Will we be able to produce enough food to feed a more populated and likely richer world in 2050?  The answer to this question depends not just on what technologies we develop but also on what people in different parts of the world will want to eat in 2050.  A new paper by Christophe Gouel and Houssein Guimbard in the American Journal of Agricultural Economics takes data from consumption of 7 categories of food in over 100 different countries to explore how food demand changes with income and population, and then they use these estimates to project future food demand given estimates of income and population growth.  

First, they show that as incomes rise, demand for oils and fats and for animal-based food increases. 

futurefooddemand1.JPG

The following graph (from their appendix) shows the projected changes in global demand for different types of food on out to 2100.

futurefooddemand2.JPG

Here is a summary of their findings:

The main results of our projections to 2050 are that (a) food demand will increase by 47%, representing less than half of the growth experienced in the four decades before 2010; (b) this growth will come mainly from developing countries because in high-income countries, food demand is already at high per capita levels and population growth will be low; (c) growth in starchy staples will be small at 19%, supported by population increases because per capita consumption is predicted to decrease while demand for animal-based food will double, thereby increasing the global share of animal-based calories from 17% in 2010 to 23% in 2050; and (d) these projections present large uncertainties that are neglected in related studies: under alternative plausible futures for GDP and population, demand for animal-based calories increases between 74% and 114%.