What's the Price of Milk?

The excellent team at the new Center for Food Demand Analysis and Sustainability (CFDAS) has just pulled together a new dashboard illustrating data on the prices of more than 50 food and beverages items over time (underlying data come from the Bureau of Labor Statistics). Click on a food, and the dashboard shows the price of of the food over time in nominal terms, switch over to another tab and the same price trend will be shown in inflation-adjusted terms, or switch over to the final tab and see the time-price of the food. The time-price is the amount of the food that can be bought with an hour’s worth of work given the average wage rate (also measured by BLS) at the time the price was measured.

Check out the dashboard here.

Oh, and if you’re wondering, the price of milk was $3.74/gallon in December 2021 (the most recent data available from BLS). And, a worker at the average wage in December 2021 could buy 8.39 gallons of milk with one hour of work.

Launch of Consumer Food Insights

I’m pleased to share the results of a new, monthly survey of U.S. food consumers, we’ve named Consumer Food Insights. Consumer Food Insights is a monthly survey of more than 1,200 Americans from across the country, and it is the one of the products of the new Center for Food Demand Analysis and Sustainability (CFDAS) that we launched this fall. With the survey, we seek to better understand changes in our national food environment and help businesses navigate their supply chains. Consumer Food Insights reveals where, how, and what food U.S. consumers bought and ate, with a focus on the implications for food systems at the national scale.

One set of questions aims to track self-reported sustainability of food purchases along five different dimensions.

There are many cool insights from the new survey, and you can read a summary of this month’s results here. Some highlights from this month’s survey include:

• 21% purchased their last groceries online

• 32% are waiting for their next paycheck to buy groceries again

• 16% are food insecure

• 46% ate home-cooked meals 4-6 times per week

• 11% identified as a vegetarian or vegan

• 25% unable to find a specific food product at the grocery store, most commonly listing items like chicken, beef, dairy, and bread products

• 87% said they’re happy with the food their diet

• Food spending averaged $158/week.

Some of the additional measures we’ll be tracking every month are illustrated below.

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We will also be adding timely questions in response to ongoing events. This month, we added a question related to perceived causes of the increases in meat prices over the past year. Of note, market concentration in the meat packing industry has received national media attention in recent months. The Biden administration argues that industry consolidation is partly responsible for climbing grocery prices. What do consumers think? As indicated below, a relatively small percentage of respondents attributed high prices at the store to concentration and market power. A majority of respondents (51%) blamed COVID-related shutdowns for the increase in meat prices over the last year, but the top five causes also included labor shortages across supply chains, higher prices for animal feed, higher energy prices, and higher wages across supply chains.

There’s a lot more, including links to the underlying methodological details, available here.

Are you interested in additional analysis or adding questions to the survey?  Consider joining our consortium of Consumer Food Insights members.

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P.S. This new survey effort is designed to complement the ongoing Meat Demand Monitor (MDM) that Glynn Tonsor is running at Kansas State, and it is a follow-up to and evolution of the Food Demand Survey (FooDS) project I ran from 2013 to 2017.

New York Times Opinion Video

A recent opinion video from the New York Times entitled “Meet the People Getting Paid to Kill Our Planet” is making the rounds.

I don’t intend to respond to the the claims in the video in entirety (if you’re curious, my view resembles those of Aaron Smith at UC Davis). However, because I made a 2 second cameo in the video saying the word “cow tax,” I think it’s important to widen out that selective edit. Here’s the background commentary from the narrator in the video.

“It’s outrageous what the Big Ag lobby has gotten away with. Here are some big wigs. Any suggestion that methane should be regulated are quickly branded a “cow tax.” A catchy rallying cry that politicians and commentators compare it [insert video of several folks, including myself saying “cow tax”] that flips a smart green idea to something that sounds absurd and wont pass. That’s the Big Ag lobby in action. ”

If you’re curious to see my “cow tax” comment in wider context, the whole interview I gave with Steward Varney on Fox Business is available here. I’ll leave it to you to judge whether I gave the impression that greenhouse gas emissions are unimportant or that there aren’t actions we could take to reduce greenhouse gas emissions from animal agriculture. Moreover, one can read, among other things, my post from March 2019 entitled “A Case for a Carbon Tax - Meat and Livestock Edition.” Here’s a broader discussion I provided summarizing my food policy research.

The New York Times video attempts to raise the alarm on some serious issues. If the film makers are really serious about engaging on these complex issues instead of trying to score cheap shots, I’m all ears.

Effects of Prop 12 in California

Back in November 2018, 63% of California poll-goers voted in favor of Proposition 12. The effect of the passage of Prop 12 is to require shell eggs sold in the state to come from cage free production systems. For pork, Prop 12 would impose certain space requirements and effectively ban the use of some housing practices like gestation crates. Prop 12 was slated to take effect on Jan. 1, 2022.

Prior to implementation, many good economic studies were conducted to estimate the potential impacts of Prop 12 on the prices and consumption of eggs and pork in California. For example, this excellent paper by Sohae Eve Oh and Tom Vukina, which was just released by the American Journal of Agricultural Economics, projected that because of Prop 12 in California, “the new marginal costs of what used to be conventional eggs would increase, on average, by 56%. The prices of originally conventional eggs would increase by 65%.” Other studies by Barry Goodwin and by Dan Sumner and Rich Sexton and by Christine McCraken have provide estimates of the cost of Prop 12 on the pork industry.

Now that January 1, 2022 has come and past, what’s actually happening?

For eggs, it appears that the rules around Prop 12 have taken place and are in force. To get a sense of what impact the policy is having, I took a look at the data reported by the USDA in the National Shell Index Price Report. Because the report lists 5-day rolling averages of wholesale prices, I looked at the Friday report of egg prices in California and for the U.S. for the weeks just before and after the first of the year.

Unsurprisingly egg prices in California are higher than in the rest of the U.S. What’s more relevant to the debate around Prop 12 is how that price premium has changed. The average gap between California and U.S. egg prices jumped from 70 cents/dozen prior to Jan 1st to 142 cents/dozen after Jan 1st. As we and others have done in other studies of the effects of prior California egg policies (e.g., see here, here, or here), we can calculate the so-called difference-in-difference, which in this case amounts to 142-70=72 cents/dozen.

That is, California egg prices are 72 cents/dozen more expensive after the 1st of the year than they would have been if the California price-premium had staid at 2021 levels. The California premium jumped 103%. If I apply this changed to premium to the average national egg prices after the 1st of the year, it implies an increase in egg prices in California of about 85%. Why is this observed jump (85%) higher than the projections by Oh and Vukina (65%)? Hard to know, but as Dan Sumner pointed out in a comment on my paper with Conner Mullally on the effects of a prior California animal welfare regulation, legal and regulatory uncertainty can have effects above and beyond the direct effect of the policy itself. Whatever the causes, the evidence here suggests Prop 12 is having significant price impacts on the prices of eggs in California, at least in the initial month following implementation.

Speaking of regulatory uncertainty, let’s turn now to pork. It appears implementation of Prop 12 for pork has been put on hold for at least a few months because the state of California has yet to release final rules, and a state judge pushed off enforcement until final rules are released. So for now, we’ll have to satisfy ourselves with the aforementioned ex ante projections of the potential impacts of the policy on pork prices. For what it’s worth, here’s a slide I prepared for a talk yesterday where I used some of the previous pork demand estimates from an analysis with Glynn Tonsor, coupled with an economic model, to project potential of Prop 12 if it is conceptualized as a tax.

Finally, in case you missed it, my University President, Mitch Daniels, recently weighed in on Prop 12 in an op-ed in the Washington Post.

How people cognitively group different foods

I ran across this interesting ethnographic study of how people conceptualize different foods. It’s a small sample of only 27 people, so one might take the results with a grain of salt, but nonetheless, I found the following figure interesting. The results are from a “pile sorting” exercise where people were asked to group 42 different foods in terms of their similarity to one another in as many groups as they wanted.

Source: Fox, E.L., Davis, C., Downs, S.M., McLaren, R. and Fanzo, J., 2021. A focused ethnographic study on the role of health and sustainability in food choice decisions. Appetite, p.105319.

I thought it was interesting that plant-based burgers and milk were neither classified as “meat” or “dairy” or “plant” but in categories of their own; by contrast the in-vitro meat burger was closer to the meat category.

They also found that:

“the most salient considerations cited by our participants were price, health, taste, and time.”

These findings are consistent with the broad literature on food values; I should note that we have published several papers in the past where we asked larger samples of consumers to rate and rank different foods along multiple dimensions (e.g., here, here, or here)