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Hormones in Soybeans and Beef

About 90% feedlot cattle in the US are administered some type of growth hormone to promote growth.  Use of the hormones convey economic benefits to consumers (lower prices) and a host of environmental benefits (more meat using less land, less water, less C02).  The biggest drawback, from my perspective, is the evidence that use of such hormones reduces the eating quality of steaks, particularly by reducing tenderness.  

While reduced tenderness might be a reason to eschew hormones, food safety isn't.  Some people are worried about the health effects of these hormones, but such concerns do not mesh well with the scientific literature, and the concerns tend to ignore relative risk.  Specifically, there are much higher levels of naturally occurring hormone-like substances in many foods we eat.

As a result, there have been many attempts to communicate this information to the public.  Examples of such discussions appear at BeefMyths.org, US Meat Export Federation, the NCBA, and extension facts sheets from Michigan State University, University of Nebraska,University of Georgia, and many others.  

A common approach is to compare the extra amount of estrogen in a serving of beef from an animal that has received a hormone implant to one that hasn't, and then compare that to estrogen-like substances in other foods like soybean oil (it is a comparison I've made myself in a study on the effectiveness of such communication), cabbage, peas, and potatoes.

After making this comparison in a talk a couple weeks ago, an audience member gently questioned my numbers on soybean oil.  While it is true that soybeans have high levels of isoflavones, which acts like estrogen in humans, it turns out that these compounds are not in soybean oil.  

Here is a publication from the USDA Ag Research Service showing the isoflavone content of a long list of foods.  As you can see, soybeans have quite a bit, but if you'll look down on page 38, you'll find soybean oil listed in a table titled "List of Foods Containing Zero Values for Isoflavones."  This website neatly summarizes the USDA data.

So, where does that leave us.  First, those that have used this comparison should try to correct the record (as I'm doing here).  If we are arguing that the public should make decisions on "the facts," we darn well better get our facts straight.  Second, the relative hormone comparison remains useful (though only marginally persuasive with most consumers), but one needs to drop soybean oil and use other soy products instead.  An Iowa State University Fact's Sheet by Dan Loy helps make the proper comparisons.

Here is a key screenshot



One way to reduce food waste

Here is an interesting attempt by a French supermarket chain to reduce food waste (HT Bailey Norwood)

Why are beef and pork prices so high?

There continues to be a lot of interest among consumers and the media about the causes of high beef and pork prices we've witnessed in recent months.  It is a topic I touched on a couple months ago.  I pointed to drought, previously high corn-prices, disease, and other supply side factors like technology disadoption.  This piece in at the Atlantic blog says it can't be the drought and it is a result of consumer demand.  This short post at TIME.com, says China and Japan are partly to blame.  Chris Hurt at farmdocdaily says a lot of it is unexplained.

So, what's going on?  Here is data from the Bureau of Labor Statistics, on retail meat prices (May is the last month they report).

Starting in mid 2010, prices ($/lb) for steak and ground beef started increasing, as did prices for bacon.  They swung sharply higher in the most recent months. Pork chop prices were more steady, only noticeably increasing in April and May.  Prices of boneless chicken show no apparent trend.  

The above graph shows prices in nominal terms, but when looking at a 10-year time period it might also be useful to look at the data in real (inflation adjusted) terms, as I've done in the following graph.  The general trends remain the same, except notice that in real terms, chicken breast prices have been falling, and sirloin steak prices are lower today than they were in 2004. Others, like ground beef and bacon, are higher today than they were a decade ago even after accounting for inflation.

These effects also trickle down to the markets for cattle and hogs.  For example, here is data from the Livestock Marketing Information Center (LMIC), showing that prices for slaughter cattle are today far above where they were last year or in the previous six years.

The data seem pretty clear that a lot of the price pressure results from tight cattle supplies.  Here's data from the LMIC on the cattle inventory (the total number of cattle in the US).  We have fewer cattle in the US today than was the case in the 1950s.

The same broad trend isn't necessarily true for pork, but one can see from the graph below that there is a downward trend in pork inventory since 2008, and noticeably lower supplies this year in 2014.

Holding all else constant, lower supplies will mean higher prices (with less meat around, there is increased competition for existing supplies, and people bid up the price of meat).  So, that pushes the question back on step.  Why are there are lower supplies?

I'm going to stick with my answer from a couple months ago:

“Contraction in cattle supplies can be explained by a number of factors, such as drought in the plains states that limited the amount of grass and hay available and higher feed (mainly corn) prices due to drought, ethanol policy, etc., which pushed pushed more cattle to slaughter several years ago, leading to smaller inventories today. Feed prices have now come down off their highs but cattle prices are still rising, partially because producers are holding back breeding stock to rebuild inventory.”

Yes, corn prices are today lower, but it is important to note the lags in production for cattle, and to a lesser extent pork, and to a much lesser extent poultry.  Let's say you're a cattle rancher back in 2008 and you're facing much higher corn prices and drought that limits forage and hay to feed.  What do you do?  You start selling off part of your herd.  As other ranchers make the same decision, prices initially fall but then start climbing.  Then, in 2013 corn prices start falling and drought conditions subside in many parts of the country.  So, you can feed cattle, but you don't have any excess sitting around.  In fact, if you want to capitalize on higher beef prices, you might have to forgo current profits for future profits and hold back some of your female breeding stock (further tightening supplies).  It might be another year till that new heifer is pregnant, another (almost) year till a calf is born, and another year and a half or so until you've got an animal that finally goes to the dinner table.  Of course, what I'm describing is just the biological production lag that often leads to cattle and hog price cycles.  This kind of cycle doesn't much occur with poultry because flock sizes can be changed relatively quickly, and that might explain why in the above graph, the price of chicken has been much more stable.  (On the pork side, the porcine epidemic diarrhea virus, PEDv, is also partially responsible for the smaller inventories). 

What about other explanations that are often presented for the price increases?  I agree that consumer demand remains steady, something we've found in our Food Demand Survey (FooDS).  But, it isn't increasing.  You'd have to have increasing demand for consumers to be responsible for higher prices.  

What about consumers in other countries?  Exports?  Here is data from the US Meat Export Federation on beef exports:

There was been a sharp rise in exports from 2004 to 2011, but recall that the retail price spikes we've seen started in around 2010, and over this time period, the volume of beef exports is relatively flat.

According to USDA, we only export about 10% of the value of beef produced, and much of this is North American trade between Canada, US, a Mexico.  There was a 19% increase in the volume of beef exported from 2009 to 2010 and a 20% increase from 2010 to 2011, but then a 12% reduction from 2011 to 2012 and only a 3% increase from 2012 to 2013.  China significantly increased US beef imports from 2012 to 2013, but other countries like Japan, Mexico, and Canada import more volume than China, and in fact the volume of beef imported increased more from 2012 to 2013 for Japan than for China.  So far this year, Chinese imports are down compared to last year.  [Addendum: it was brought to my attention that export data to China is shaky since the Chinese have not officially approved US beef imports; as a result, a lot of our exports to China flow through other countries, making these stats a bit difficult to interpret].  It should also be noted that we import as many lbs of beef as we export each year.  All considered, I don't see foreign demand as the driving factor in the recent run-up in beef prices.

Ultimately, the old adage is likely to hold: the cure for high prices is high prices.  The high meat prices we're seeing today will eventually encourage larger beef and pork supplies, which eventually will put downward pressure on prices.  When will that day come?  Sooner for pork than for cattle.  If you've got a better answer than that, you can prove it by getting in the market. 

Consumer behavior in a changing world

The European Association of Agricultural Economics (EAAE) and the Agricultural and Applied Economics Association (AAEA) are jointly sponsoring a seminar entitled Consumer Behavior in a Changing World: Food, Culture, and Society.  The seminar is designed to foster research and collaboration on multidisciplinary  approaches to the analysis of food consumption and   consumer behavior.

More detail on the seminar is here (I should note I'm on the International Scientific Committee for the conference and am slated to give one of the keynotes). 

A key date to keep in mind is October 31, which is when abstracts are due if you'd like to present a paper.  The seminar itself is on March 25-27 in Naples, Italy.  

I'll also note that I'm co-editing a special issue of the Journal of Economic Psychology on food consumption behavior, which aims to publish some of the conference papers (in addition to other submitted papers).  

Feel free to contact me if you have questions.