Consumer sovereignty vs. scientific integrity

This post by Olga Khazan at Atlantic.com highlights some recent food company decisions to remove ingredients of concern to certain consumers.  Yet, the best science we have available suggests these same ingredients are perfectly safe.

Examples mentioned in the story include announcements that Diet Pepsi is removing aspartame, Ben and Jerry's and Chipotle are removing GMOs (the former company's decision is a bit ironic given that they're essentially selling frozen fat with sugar; the later is duplicitous since  they're still selling sodas and cheese that will contain GMOs), Pepsi dropping high fructose corn syrup in some of their drinks, and Clif's Luna Bars going gluten-free.  To that we could add a long list of others such as Cheerios dropping GMOs, many milk brands years ago dropping rBST, etc.  

It's difficult to know what to make of these moves.  On the one hand, we ought to champion consumer freedom and sovereignty.   Whatever one might think about the "power" of Big Food, these examples clearly show food companies willing to bend over backwards to meet customer demands.  That, in principle, is a good thing.  

The darker side of the story is that many consumers have beliefs about food ingredients that don't comport with the best scientific information we have available.  As a result, food companies are making a variety of cost-increasing changes that only convey perceived (but not real) health benefits to consumers.  

The longer-run potential problem for food companies is that they may inadvertently be fostering a climate of distrust.  Rather than creatively defending use of ingredient X and taking the opportunity to talk about the science, their moves come across as an admission of some sort of guilt:  Oh, you caught us!  You found out we use X.  Now, we'll now remove it.  All the while, we'll donate millions to causes that promote X or prevent labeling of X, while offering brands that promote the absence of X.  It's little wonder people get confused, lose trust, and question integrity.  

I'm not sure there is an easy answer to this conundrum.  In a competitive environment, I'm not sure I'd expect (or shareholders would expect) one food company to try to make a principled stand for ingredient X while their competitor is stealing market share by advertising "no-X".  On the other hand, I'd like consumers to make more informed decisions, but I'm not all that sure "education" has much impact or that, at least for many middle- to upper-income consumers, that given the price of food they have much economic incentive to adjust their prior beliefs.  

Faced with the conundrum, I suspect some  people would advocate for some sort of policy (i.e., ban ingredient X or prevent claims like "no-X"), but I don't think that's the right answer.  Despite my frustration, I suspect the marketplace will work it out in a messy way.  Some companies will adopt "no-X", will incur higher costs than their consumers are willing to pay, and will go out of business or go back to X. Some companies that are seen as lacking integrity will lose market share. Some consumers will pay more for "no-X" only later to find out it wasn't worth it, and switch back.  Maybe the scientists wind up being wrong and some consumers avoided X for good reason, and all companies drop X.  The feature of the marketplace, dynamism, that is, at times, frustrating is also the key to ultimately solving  some of those same frustrations.  

Farm size and community prosperity

Darby Minnow Smith in an article for Grist writes:

“As the total number of farms goes down, the number of big* farms is going up — and this shift hurts rural America. According to an analysis by Food and Water Watch: “Communities with more medium- and smaller-sized farms have more shared prosperity, including higher incomes, lower unemployment, and lower income inequality, than communities with larger farms tied to often-distant agribusinesses.””

I didn't find a lot in the report by Food and Water Watch that would seriously substantiate a causation between increasing the number of small farms and higher income for a community.  What I did find there was a lot of correlational analysis and, in a few spots, some cherry picking of dates to make the argument more convincing.  

First, the article is correct that there is a long-term trend toward fewer, larger farms.  The cause isn't corporatization or greed or any of these factors, but rather increased technological progress that substitutes capital for labor and increases the returns to size.  The driving force on the other side of the supply chain are we consumers who relentlessly demand lower prices, higher quality, and more consistency.

When discussing the book Meat Racket, I previously listed a bunch of research on effects of vertical integration and concentration in animal agriculture (which is the focus of much of the above report). This review of the research by Michael Wohlgenant, for example, concludes:

“Studies on market power in meatpacking indicate that concentration in procurement of livestock (cattle or hogs) has not adversely affected prices received by producers or prices paid by consumers.”

Indeed, as I showed in this article in Animal Frontiers, the long run trend is much more output (due to technology gains) resulting in lower prices for consumers.  

So, what of the argument that communities with more small farms are financially better off than communities with more large farms?  That statistic may be true (or may not; I'm not sure what a representative look at the data would say).  But, even if so, I doesn't necessarily imply causation: that more small farms would increase the economic prosperity of a community.  Rather, I suspect the causation is the other way around.  

Most of the farms in this country are small farms, and you can be defined as a farm if you have just $1,000 is gross sales.  Most of these small farms/farmers aren't making a living from farming and they account for a very small share of the value of agricultural output.  The USDA classifies some of these as "residential" or "lifestyle" farms.  I suspect the more likely direction of causation is that people living in communities that happen to growing for some other reason  can afford to take on a "hobby farm."  That is, my guess is that economically growing communities spur growth in small farms, not the other way around.  

Moreover, if you look at work by my colleagues Brian Whitacre and Trey Malone, what you'll see in their graphs is that farmers markets and CSAs are largely an urban phenomenon.  They write: 

“Generally, in counties where high percentages of Community Supported Agriculture or direct-to-human consumption exist, residents have higher incomes and population density is also high. In other words, the farms that enjoy high levels of support from their local populations are not typically located in more rural parts of the country.”

This leads me to believe that  urban areas experiencing economic growth for reasons beyond agriculture are one of the key causes of more small farms.   So, again, it's not the small farms causing economic growth and vitality, it's the economic growth and vitality enabling small farming.  

XPrize in Food Security

The world faces important food challenges.  How do we incentivize researchers and innovators to address these challenges?  One option is through prizes.  Set a desired target outcome, and the first person (or team) to achieve the outcome wins a sizable monetary prize.  

Xprize is an organization seeking to apply this model to a variety of applications.  They are now floating the idea of a prize related to food security .  Here's the motivation 

“With the growth of the world’s population, and the negative effects of climate change, the demand for food will become increasingly greater, putting our food security at risk. With nearly 70 percent of the population living in urban areas by the year 2050, the distance between food sources and consumers will lengthen, further jeopardizing our food security. ”

While I agree with the first sentence, I'm not sure the 2nd one makes must sense.  We've been urbanizing for a century in the US, and food security in this country (at least for most people) has generally improved.  Nonetheless, research on these issues is worthwhile.  The good news is that there are many researchers working on precisely these issues.   Here's the sketch of possible prizes:

“Multiple prize concepts can be developed to help ensure food security. Depending on the prize designed, the winning team will a) produce the highest edible calorific output grown on a given piece of arid desert land using less than a TBD amount of water, fertilizer, and other inputs; b) create a “farm in a box” that provides enough caloric yield daily for a family of four using less than TBD water and other inputs, costs less than a TBD amount per year, and has a footprint of less than one square meter; or c) create a system that produces and delivers 10 crucial, predetermined micronutrients for human health in a sustainable manner at a cost less than TBD.”

Technology use in livestock production

This summer, I was interviewed by some folks with the North American Meat Institute on the use of technology in livestock production.  The video was released last week

Effects of Plant Variety Protection

New varieties of "self pollinated" crops have, in the past, been released by the public sector.  Self pollinated crops refer to those where farmers can save the seed after harvest, replant next year, and expect to have a new crop that is the same as the previous year (i.e., the "kids" are the same as the "parents").  Wheat is a staple crop that his both "self pollinated" and "inbred."

A lot of the research on wheat breeding has occurred in the public sector because of the belief that it would be difficult for private companies to recoup their investments when farmers can save their seed.  As a result, it is thought that private investment in wheat breeding would be "sub optimal" from a social welfare standpoint.

However, in recent years, a variety of changes have led to public and private companies being able to license new varieties and capture some of the benefits of the improvements in genetics.  Most controversial is the specter of GMO wheat, in which new varieties may have genes protected by intellectual property laws.  Unsurprisingly, some farmers and industry organizations don't like variety protection because it raises the cost of seed.  A cost that was previously borne by all taxpayers is now borne by the smaller group of farmers, millers, and bread consumers.  

A new paper in the American Journal of Agricultural Economics by Russell Thomson studies the effect of the introduction of new plant variety protection laws in Australia that allowed breeders to capture royalties on their new varieties. Thomson argues that the protection laws in Australia are "stronger" than in the US - giving breeders greater potential returns to their investments.

I have to admit that the findings are not what I would have expected.  Thomson writes: 

“The results indicate that varieties released by royalty-funded breeders are less valuable than those released by breeders operating under the alternative, prereform regime. The data provide no evidence that the transition to royalty-funded breeding is associated with an increase in the rate of variety release. Taken together, these findings suggest that the reform led to a fall in breeder output relative to what would have otherwise been the case. This statistical analysis is supplemented with a series of semistructured interviews with senior scientists, who were employed at Australian breeding programs over the period of reform. This qualitative evidence suggests that the fall in breeder output was caused by a combination of fewer research spillovers, lower release standards, and a possible fall in total investment in breeding. Analysis presented in this article suggests that plant variety protection alone does not ensure socially optimal breeding outcomes in the case of open-pollinated varieties.”

It is a little unclear whether this paper (which compares outcomes before and after a reform) is picking up the effect of the change in the law or some other secular trend.  Could it be the case that breeder output was falling everywhere even outside Australia (perhaps all the low hanging fruit had already been picked)?  The paper also doesn't tell us much (beyond anecdote) about whether total investment (public and private) in wheat breeding was steady or falling in real terms over this time period.  We also aren't told whether there were changes in how breeders who remained in the public sector were compensated after the law change.  Nonetheless, this is an interesting paper that should provoke more research in the area.