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Lab grown meat

Quartz.com just ran a piece taken from one of the chapters of Unnaturally Delicious on lab grown meat.  Here's the start:

On Aug. 5, 2013, Mark Post went out to grab a hamburger. This was no drive-through Big Mac. Rather, Post bit into his $325,000 burger in front of an invitation-only crowd of journalists, chefs, and food enthusiasts in the heart of London.

The strangest part wasn’t the cost or the crowd but the meat. Post, a professor of vascular physiology at Maastricht University in the Netherlands, grew the burger himself. Not from a cow on his farm, mind you, but from a bovine stem-cell in a petri dish in his lab. Post’s research, partially funded by Sergey Brin, one of Google’s co-founders, has the potential to upend conventional wisdom on the environmental, animal welfare, and health impacts of meat eating.

Ironically enough, I first met Post at a meeting of some of the world’s largest hog producers.

The Quartz editors left out what I think is one of the most important points made in the chapter about relative inefficiencies of meat eating.  So, for sake of completeness, here's the segment they left out (long time readers will recognize that I've touch one this theme in previous blog posts).

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More broadly, this line of argument – that meat production (inside the lab or out) is “wasteful” because it requires feed inputs that humans might use – is misplaced.  To see this, it is useful to consider a thought experiment – an imaginary story that might help us get to the bottom of things. 

Imagine a biologist on an excursion to the Amazon looking for new plant species.  She comes across a new grass she’s never before seen, and brings it back home to her lab.  She finds that the grass grows exceedingly well in greenhouses with the right fertilizer and soil, and she immediately moves to field trials.  She also notices that the grass produces a seed that is durable, storable, and extraordinarily calorie dense.  The scientist immediately recognizes the potential for the newly discovered plant to meet the dietary demands of a growing world population.

But, there is a problem.  Lab analysis reveals that the seeds are, alas, toxic to humans.  Despite the set-back, the scientist doesn’t give up.  She toils away year after year until she creates a machine that can convert the seeds into a food that is not only safe for humans to consume but that is incredibly delicious to eat.  There are a few downsides.  For every five calories that go into the machine, only one comes out.  Plus, the machine uses water, runs on electricity, burns fossil fuels, and creates carbon emissions. 

Should the scientist be condemned for her work?  Or, hailed as an ingenious hero for finding a plant that can inexpensively produce calories, and then creating a machine that can turn those calories into something people really want to eat?  Maybe another way to think about it is to ask whether the scientist’s new food can - despite its inefficiencies (which will make the price higher than it otherwise would be) - compete against other foods in the marketplace?  Are consumers willing to pay the higher price for this new food? 

Now, let’s call the new grass corn and the new machine cow. 

            This thought experiment is useful in thinking about the argument that corn is “wasted” in the process of feeding animals (or growing lab grown meat).  Yet, the idea that animal food is “wasted” is a common view.  For example, one set of authors in the journal Science wrote,

“Although crops used for animal feed ultimately produce human food in the form of meat and dairy products, they do so with a substantial loss of caloric efficiency. If current crop production used for animal feed and other nonfood uses (including biofuels) were targeted for direct consumption, ~70% more calories would become available, potentially providing enough calories to meet the basic needs of an additional 4 billion people. The human-edible crop calories that do not end up in the food system are referred to as the ‘diet gap.’”

The argument isn’t as convincing as it might first appear.  Few people really want to eat the calories that directly come from corn or other common animal feeds like soybeans.  Unlike my hypothetical example, corn is not toxic to humans (although some of the grasses cows eat really are inedible to humans), but most people don’t want to field corn.    

So if we don’t want to directly eat the stuff, why do we grow so much corn and soy?  They are incredibly efficient producers of calories and protein.  Stated differently, these crops (or grasses if you will) allow us to produce an inexpensive, bountiful supply of calories in a form that is storable and easily transported. 

The assumption seems to either be that the “diet gap” will be solved by convincing people to eat the calories in corn and soy directly, or that there are other tasty crops that can be widely grown instead of corn and soy which can produce calories as efficiently as corn and soy.  Aside from maybe rice or wheat (which also require some processing to become edible), the second assumption is almost certainly false.  Looking at current consumption patterns, we should also be skeptical that large swaths of people will want to voluntarily consume substantial calories directly from corn or soy.

What we typically do is take our relatively un-tasty corn and soy, and plug them into our machine (the cow or pig or chicken, or in Post’s case the Petri dish) to get a form of food we want to eat.  Yes, it seems inefficient on the surface of it, but the key is to realize that the original calories from corn and soy were not in a form most humans find desirable.  As far as the human pallet is concerned, not all calories are created equal; we care a great deal about the form in which the calories are delivered to us.

The grass-machine analogy also helps make clear that it is probably a mistake to compare the calorie and carbon footprint of corn directly with the cow.  Only a small fraction of the world’s caloric consumption comes from directly consuming the raw corn or soybean seeds.  It takes energy to convert these seeds into an edible form – either through food processing or through animal feeding.  So, what we want to compare is beef with other processed foods.  Otherwise we’re comparing apples and oranges (or in this case, corn and beef).

 The more relevant question in this case is whether lab grown meat uses more or less corn, and creates more or less environmental problems, than does animal grown meat.  

How bad, really, is meat eating?

Last week, Scientific American published a piece on how to get people to eat less meat.  Apparently, the science is settled and we now only need to come up  with the right "messages." 

There are an awful lot of apocalyptic pronouncements about the adverse effects of meat eating on the environment.  In a widely viewed TED talk, Mark Bittman likens meat production to a nuclear explosion and says it is leading to a "holocaust of a different kind," pointing directly to impacts on climate change.  As another example, Bill Maher, comedian and host of an HBO talk show, has written, “But when it comes to bad for the environment, nothing—literally—compares with eating meat. . . . If you care about the planet, it’s actually better to eat a salad in a Hummer than a cheeseburger in a Prius.”   I could, quite literally, provide dozens of these sorts of quotes from well known journals, writers, actors, etc, but I think you get the point.  The overall message is pretty clear: we should become increasingly more vegetarian.  

Let's take a look at one of the outcomes people are most worried about and where externality is relatively clear: climate change.   I went to the EPA's calculations, and surmise the following carbon equivalent impacts for the US attributable to beef cattle, swine, and poultry production during the year 2014 (MMT is million metric tons):

  • beef cattle: 116.7 MMT C02 (from digestion) + 4 MMT C02 (from waste management) = 119.7 MMT C02;
  • swine: 1 MMT C02 (from digestion) + 22.4 MMT C02 (from waste management) = 23.4 MMT C02; and
  • poultry: 0 MMT C02 (from digestion) + 3.2 MMT C02 (from waste management) = 3.2 MMT C02.

Elsewhere, the EPA suggests using using a social cost of carbon of $36/metric ton of C02 (assuming a discount rate of 3%) for cost benefit analysis and rule making.  Multiplying the C02 impacts above by the price tag of $36 implies the following total carbon costs in 2014.

  • beef cattle: $4.3 billion;
  • swine: $842 million; and
  • poultry: $115 million.

That seem like a lot, but keep in mind that we also eat a lot of meat.  Data from the USDA suggests that in 2014, farmers/ranchers in the US produced 24.32 billion pounds of beef, 22.86 billion lbs of pork, and 44.98 billion lbs of poultry.  Putting the carbon costs on a per-pound basis (i.e., dividing total carbon cost by pounds produced), suggests the following.

  • beef: $0.177/lb;
  • pork: $0.037/lb; and
  • poultry: $0.002/lb.

I don't know about you, but those don't seem like enormous costs.  Let's think about it a different way.  Suppose you wanted to "internalize" the the impacts you're having on climate change by altering how much beef, pork, and poultry you buy.  To do this, take the price you see at the grocery store and add about $0.18/lb to the price of beef, $0.04/lb to the price of pork, and less than a penny to the price of poultry, and act as if these were the prices actually being charged.  Would you change your behavior much based on such price increase?  If not, we'd could say the climate impacts are relatively small.

I saw the following from the economist Bob Lawson on twitter this weekend.

The key isn't to have zero greenhouse gas impacts, but rather to to make sure you're taking into account the cost of those impacts.  For the case of beef, that means acting as if the price were about $0.17/lb higher.  Do that and you can shop away, guilt free (well, at least the guilt of carbon impacts).

P.S.  USDA data suggests the retail price of beef in 2014 was around $5.60/lb.  An $0.18/lb price increase would represent about a 3% increase in the price of beef.  Assuming the own-price elasticity of demand is, say, -0.6, this price increase would lead to a 1.9% reduction in the quantity of beef demanded. So, to internalize the carbon impacts of beef eating, Americans would reduce beef consumption by 1.9%.   It's not zero but its a far cry from vegetarianism.  

 

 

Where have all the cows gone?

Over past the half century or so, there has been a dramatic shift in where most of the cattle in the U.S. are feed just prior to slaughter.  Using data from USDA-NASS, I calculated the percentage of all U.S. cattle on feed that were in 6 selected states at the beginning of January each year from 1965 to 2005.

The story is familiar to industry analysts.  Over this time period, cattle largely moved from the upper Midwest (Iowa and Illinois) to drier climates in Texas, Oklahoma, and Kansas.  Whereas 19% of cattle on feed were in Iowa in 1965, the figure was only 8% by 2005; by contrast only about 5% of cattle on feed were in Texas in 1965, but around 20% were in the state by 2005.  Whereas only 47% of all US cattle on feed were in these six states in 1965, concentration had increased as 67% of all cattle were being fed out in these six states by 2005. Stated differently, if you eat a steak today, there's a roughly two-thirds chance it came from a cow that was fed in Iowa, Nebraska, Illinois, Kansas, Oklahoma, or Texas.  

The trends in the above figure might appear to be something of a paradox because Iowa, Illinois, and Nebraska grow a lot more corn (i.e., cattle food) than Kansas, Oklahoma, and Texas.  But apparently the economics were such that it made more sense to ship to corn (and the cattle) to drier climates and locations where large packing plants could be situated far away from population centers.  

I'm wondering if this trend is starting to change, even if just by a little bit.  Beginning in the early to mid 2000s, US policy started to encourage corn-ethanol production in a big way.  Now, all that corn didn't need to travel to cows, it could go to all those ethanol plants which began popping up around the upper Midwest.  Here's a graph of the percentage of U.S. corn use that went to ethanol production from 2000 to 2012 (data are from the Feed grains yearbook, USDA-ERS).

Such a dramatic shift in the use of corn must have had some effect on cattle feeding.  Perhaps even in the geographic location of cattle.  According to a least one source, the largest producers of ethanol in 2015 were Iowa (at 3,820 million gallons/year capacity), Nebraska (1,976 gallons), and Illinois (1,525 gallons).  Much further down the list were Kansas (529), Texas (381 gallons), and Oklahoma (no capacity reported).  

Often lost in the discussions of food waste is the acknowledgement that cattle (and other livestock) are often big consumers of what would otherwise be waste products.  In this case, cattle can eat so-called distillers grains that are byproducts of ethanol production.  However, this distillers grain is not as easy or cheap to transport.  Thus, the economics might have shifted a bit toward bringing the cattle back closer to their finishing food.  

Here's the same graph as the one above but for the more recent time period from 2005-2016.  

There aren't dramatic geographic shifts, but the trends are consistent with the idea that ethanol has altered the geographic location of cattle finishing. Fitting a linear trend line through each state's data over this time period indicates that the states heavy with ethanol production have gained cattle and states with relatively little ethanol production have lost cattle.  Iowa, Nebraska, and Illinois have increased their share of the US cattle on feed inventory by an average of 0.11%, 0.11%, and 0.05% per year over the last 11 years.  By contrast, Kansas, Oklahoma, and Texas have decreased their share of the US cattle on feed inventory by an average of -0.13%, -0.04%, and -0.09% per year over the last 11 years.

Obviously a lot has changed during the past 10 years other than ethanol production (drought and lower overall cattle inventories come to mind), but this might be a factor contributing to the spatial location of cattle in the US.

Nutrition and Genetics

But this new study, funded by the National Institutes of Health and the U.S. Department of Agriculture, shows that different people may need radically different ratios of the substances in their diet depending on their genes, and it supports the growing evidence against a one-size-fits-all approach to nutrition and for highly personalized advice.

That's from this article in the Washington Post discussing some recent research that has found a genetic variation that is much more prevalent among vegetarians.  The author writes:

Cornell University researchers have found a fascinating genetic variation that they said appears to have evolved in populations that favored vegetarian diets over hundreds of generations. The geography of the vegetarian allele is vast and includes people from India, Africa and parts of East Asia who are known to have green diets even today.

Researcher Kaixiong Ye said that the vegetarian adaptation allows people to “efficiently process omega-3 and omega-6 fatty acids and convert them into compounds essential for early brain development.”

Food Demand Survey (FooDS) - January 2016

The January 2016 edition of the Food Demand Survey (FooDS) is now out.

Here are a few highlights from the regular tracking portion of the survey:

  • Willingness-to-pays (WTP) for all meat products, except pork chops, were down a bit this month compared to last, but were generally higher than was the case a year ago.  The changes in WTP were generally small and within the margin of error (which varies across meat products but is typically about +/- 7%).  
    • On a related note, my paper with Glynn Tonsor, where we used these WTP choice data to estimate demand inter-relationships is now finally out in the journal Applied Economic Perspectives and Policy (I previously discussed that paper here)
  • There was a large drop in plans to eat away from home in January compared to December.
  • There was also a large drop in awareness of E Coli and Salmonella in the news, and a small drop in concern for these issues as well (a likely Chipotle effect).  The same pattern of results was also true for GMOs and antibiotics.  
  • Two different questions suggested an uptick in concern for farm animal welfare at the beginning of 2016.

Three new ad hoc questions were added to the survey this month.

The three questions inquired about consumers’ perceptions of taste, health, and safety of the eight different food products for which we track WTP.  The first question asked: “How tasty or untasty do you consider the following products, where -5 is very untasty and +5 is very tasty?” Participants were asked the same questions twice more, only the words “tasty or untasty” were replaced with “healthy or unhealthy” and “safe or unsafe”.


Chicken breast was, on average, perceived as most healthy and as the most tasty. While beans and rice were perceived as the safest option, it was also the least tasty of the eight choices. Participants perceived deli ham was, on average, one of the least healthy, least tasty, and least safe products. Pork chop and chicken wing fell in the middle for each of the three categories. On average, all six meat products were perceived as less safe than the two non-meat products.

The average perception of taste can be plotted against average perceived health or
average perceived safety.

There is a slight positive correlation between perceived taste and health (correlation
coefficient of 0.15).  Similar plots reveal a slight negative correlation between perceived taste and safety (correlation coefficient of -0.14) and a strong positive correlation between perceived health and safety (correlation coefficient of 0.83).   All of this of course is at the aggregate level; plots like this could be created for each and every one of the 1,000 respondents.

What the above graph shows is that although beef products rate relatively well in terms of taste, they fall well below chicken breast in terms of perceived health.  I can use my demand model estimates (the model that gives rise to the WTP values) to do some thought experiments.  What if ground beef was perceived as healthy or as tasty as chicken breast?  How much would WTP for ground beef increase?  

First, we have to ask how much people value improvements in taste, health, and safety.  My model estimates suggest, unsurprisingly, that the higher the perceived taste, health, and safety, the higher the WTP for a product. But, by how much?  I find that a 1 unit increase in perceived taste (on the -5 to +5 scale) has about twice the impact on WTP as a 1 unit increase in safety (again on the -5 to +5 scale) and about the 1.4 times the impact on WTP as a 1 unit increase in perceived health (again on a -5 to +5 scale).  So, changes in perceived health have a bigger impact than changes in perceived health, which in turn has a bigger impact than changes in perceived safety.

All that would seem to suggest that  meat industry organizations would want to focus on improvements in perceived taste.  And that's true.  Increasing the perceived taste of pork chops by 1 unit, for example, would increase WTP by $0.36, whereas increasing perceived health by one unit only increases WTP by $0.25 (note: the mean WTP for chops was about $3.94 this month).

But, it is also important to note that there are larger differences in perceived healthiness across the meat products than there is in perceived taste or safety.  This leads me back to the question I asked earlier: What if ground beef was perceived as healthy or as tasty as chicken breast? How much would WTP for ground beef increase?  Here are my projections based on the model estimates and average perceptions.  

If ground beef had the same average taste perceptions as chicken breast, WTP for ground beef would increase $0.09.  If ground beef had the same average health perceptions as chicken breast, WTP for ground beef would increase $0.45.  If ground beef had the same average safety perceptions as chicken breast, WTP would increase $0.11.  For reference, average WTP for ground beef was $4.36 this month.  

The last thing I'll note is that it's not all about perceived taste, health, and safety.  Average WTP for steak, for example, is about $7.43 whereas average WTP for chicken breast is only $5.34.  How is it that people are willing to pay more for steak than chicken breast when they tell us that they think chicken breast is tastier, healthier, and safer?  The answer is that people care about other stuff than just these three things.  There's just something that makes a steak a steak and a chicken breast a chicken breast that is hard to put in words.  Call it "steakyness"  (not to be confused with the popular dance move).  Of the roughly $2 premium people are willing to pay for steak over chicken breast, about 20% can be explained by taste, health, and safety perceptions, and the other 80% is a desire for "steakyness."