Impact of Plant-Based Meat Alternatives on Cattle Inventories and Greenhouse Gas Emissions

That’s the title of a new working paper I’ve co-authored with Daniel Blaustein-Rejto, Saloni Shah, and Glynn Tonsor. Here’s the abstract:

“New plant-based meat alternatives that aim to mimic the taste and texture of beef could have significant economic, environmental, and animal welfare impacts if they replace animal-based meats and reduce livestock production. Whether plant-based meat alternatives can achieve these ends depends on the extent to which consumers are willing to substitute for plant-based meat alternatives, the structure of the meat industry, and the inter-linkages of the livestock industry with the other parts of the economy. We construct and calibrate an economic model to estimate how a reduction in plant-based meat prices, or increases in demand for plant-based meat, in the United States affect cattle production. For every 10% reduction in price or increase in demand for plant-based meat alternatives, we estimate U.S. cattle production falls approximately 0.15%, U.S. cattle producers’ economic welfare falls by $300 million/year, and U.S. consumer welfare rises by $513 million/year. Increases in U.S. demand for plant-based meat alter trade patterns, leading to a reduction of beef imports and an increase in beef exports, a phenomenon that further reduces global greenhouse gas emissions and land use given the relative efficiency of U.S. beef production. For every 10% reduction in the price of plant-based meat alternatives, we estimate that the global reduction in emissions is equivalent to 0.41% of U.S. emissions from beef production and 1.4 % when including carbon sequestration from reforestation of abandoned cropland and pasture and reduced land-use change emissions.1 Even substantial reductions in prices of plant-based meat alternatives are unlikely to have substantive impacts on the U.S. cattle population and emissions, suggesting the need to also pursue alternative mitigation strategies, such as innovations to reduce the methane emissions per head.”

You can read the whole thing here.

What Is Driving the Increase in Food Prices?

That’s the title of a piece I wrote for Econofact. In it, I discuss the latest figures out from the Bureau of Labor Statistics, and discuss some of the drivers of volatility in food prices since the onset of the pandemic.

“More than a year into the pandemic, they are facing another unfamiliar trend when it comes to accessing food: notably higher prices. Increases in wages in the food sector, rising agricultural commodity prices, transportation bottlenecks, and strong consumer demand have led to the highest annual grocery price increases in a decade and the highest annual restaurant price increases since the early 1980s.”

The main facts I outlined and discussed were:

• Food prices have risen at a faster average rate since the onset of the pandemic than they did over the prior decade.

• Food prices have been extraordinarily volatile throughout the pandemic.

• Meat price changes have been a primary driver of overall food price increases.

• Agricultural commodity prices have increased.

• Heightened consumer demand has contributed to food price increases.

• Wage rates in the food industry have significantly risen over the course of the pandemic and these higher wages get reflected in higher food prices.

• Food isn’t necessarily less affordable — especially when considering a longer horizon.

You can read the whole thing here.

The Achilles Heel of the U.S. Food Industries: Exposure to Labor and Upstream Industries in the Supply Chain

That’s the title of a new paper co-authored with Ahmad Wahdat, in which we attempt to quantify potential vulnerabilities of different food processing sectors to disruptions in the upstream input supplies.

Here is the abstract:

“The modern day food industries are part of a complex agri-food supply chain, where food production has become efficient, yet potentially vulnerable to supply chain risks. The COVID-19 pandemic is a testament to that end. This article measures and identifies the U.S. food manufacturing industries’ vulnerability to upstream industries and labor occupations by (i) calculating a food industry’s diversification of intermediate input purchases across upstream industries, (ii) quantifying the relative exposure of food manufacturing in a given industry and location to upstream input suppliers and labor occupations, and (iii) estimating each food industry’s gross output elasticity of inputs. Among our results, we find the evidence that the animal processing industry’s output is relatively vulnerable to production labor which is consistent with the observed disruptions to the meat packing sector during COVID19, which were largely caused by labor issues. Our results may help academics and practitioners to understand food industries’ vulnerabilities to upstream industries and labor occupations.”

The approach also allows us to explore geographic differences in a food processing sector’s concentration of input purchases, as shown for example, in the charts below for the oilseed milling industry.

Food Prices are Increasing - Again

The topic of food price inflation has surfaced again, with a lot of concern being expressed about the issue. Earlier today, I participated in a webinar for the US Chamber of Commerce on the topic. I presented data on the current rate of food price increases and then discussed monetary, demand, and supply-side factors contributing to the phenomena. For those who might be interested, my slides are here. Some of the key graphs are below.

Most Expensive Thanksgiving Ever?

A couple days ago, I was asked by a reporter whether I thought this year would be the most expensive thanksgiving ever. I sidestepped the question because I didn’t think it was very serious. Today, I see headline after headline after headline is asking the same question or making the claim that 2021 will be the priciest Thanksgiving.

Is it true?

One can certainly look at food prices over time. The figure below shows data from the Bureau of Labor Statistics showing the percent change in prices of food for at home consumption relative to January 1980. In September 2021, the price of food at home is 210% higher than in January 1980. By, this measure we are indeed on pace for the priciest Thanksgiving ever. But, look at the graph. Wouldn’t that statement be true each and every Thanksgiving since 1980? Because of inflation, prices tend to inch upward every year. Thus, looking only at changes in the price of food over a long period time doesn’t really tell us much about whether food is more expensive.

What we want to know is whether food prices are rising at a faster rate than other items that we might care about. One key economic variable many households care a lot about is their income. Income and wages also increase over time because of inflation. But, by comparing prices to income, we can get a sense of whether food items are, in fact, more expensive for a worker.

To explore this issue, I pulled data from the Bureau of Labor Statistics (BLS) on median weekly earnings for people employed full time going back to 1980. I also pulled average price data from the BLS for selected food items that have been reported on a fairly regular basis since 1980. Assuming people work an average of 2,400 minutes a week (40 hours a week * 60 minutes per hour), I calculate the amount of work time it takes to earn enough money to buy selected food items today compared to 1980. To my liking this is a much better measure of whether food is, in fact, more expensive.

Back in 1980, a worker earning the median weekly salary would have to work about 175 minutes (almost 3 hours) to earn enough money to buy a 20 lb turkey. By 2019 (this is the latest data available because the BLS unfortunately stopped reporting retail turkey prices in 2019), shows the median worker only had to work about 80 minutes (1 hour 15 minutes) to buy a 20 lb turkey. Why has the time price of turkey fallen so much? As I described here, there have been incredible efficiency improvements in turkey production over this time.

In 1991, a worker earning the median salary would have to work about 170 minutes to earn enough to buy a 10 lb ham (1991 is the first year BLS reports retail ham prices). Today, the median-salaried worker only has to work 113 minutes to buy a 10 lb ham. The time price of ham is 33% lower today than in 1991. In other words, ham is less expensive today relative to our incomes than it was in 1991.

While the overall trend is less apparent for items like potatoes and bread, it is clear from the figure above that the time-price of these items are not at their peaks. Bread and potatoes were more expensive in the years 2008 to 2012 than they are today.

Steak is indeed expensive today relative to the past. The most recent data suggests a worker making the median wage would have to work about 102 minutes to earn enough to buy 4 lbs of beef sirloin steak at retail. Nonetheless, steak has been more expensive in the recent past. The time price of sirloin steak was higher in 2004 (104 minutes) and 2014 (103 minutes) than it is today in 2021.

The figure above does show that food is more expensive (at least the the way I’ve measured it) in 2021 than was the case before the pandemic began. But, is Thanksgiving 2021 going to be the most expensive ever? No.