Posts Tagged: farm bill
America’s rising obesity rates are exacting a high cost on society. In looking for solutions, many people blame federal farm subsidies for the current obesity problems. The Farm Bill is up for reauthorization this year. As Congress considers changes, I think it is important to understand that the Farm Bill is not to blame for America’s increasing weight gain.
It may seem obvious that subsidies make certain foods cheaper, therefore contributing to overconsumption, but every serious analysis of the relationship by economists has found the notion untrue. In fact, U.S. farm policies have had generally modest and mixed effects on prices and quantities of farm commodities; the overall effect on the prices paid by U.S. consumers for food has been negligible; consequently, eliminating farm policies would have a negligible influence on dietary patterns and obesity.
Farm subsidies have at times resulted in lower U.S. prices of some farm commodities, such as certain food grains or feed grains, and consequently lower costs of producing breakfast cereal, bread, or livestock products. But in these cases, the price-depressing (and consumption-enhancing) effect of subsidies has been contained (or even reversed) by the imposition of additional policies that restricted acreage or production. In addition, for more than a decade, about half of the total subsidy payments have provided limited incentives to increase production because the amounts paid to producers were based on past acreage and yields rather than current production. Moreover, for the commodities that are subject to U.S. import barriers, the effect of the policy is to increase farm and food prices domestically, providing a disincentive to consume foods that use these commodities as ingredients. Trade barriers that apply to imported sugar, dairy, orange juice and beef cause the prices of these agricultural commodities to increase, and thereby increase the cost and discourage consumption of foods that use these commodities.
What about corn? Farm subsidies are responsible for the growth in the use of corn to produce high fructose corn syrup (HFCS) as a caloric sweetener, but not in the way it is often suggested. The culprit here is not corn subsidies; rather, it is sugar policy that has restricted imports, driven up the U.S. price of sugar and encouraged consumers and food manufacturers to replace sugar with alternative caloric sweeteners, especially HFCS. Combining the sugar policy with the corn policy, the net effect of farm subsidies has been to increase the price of caloric sweeteners generally, and to discourage total consumption while causing a shift in sweetener use between sugar and HFCS. This discouragement has been enhanced recently by U.S. biofuels policy. The current U.S. ethanol policy benefits U.S. corn growers by driving up the demand for corn as feedstock. This effective subsidy to corn growers much more than offsets any impact of other farm policies that might increase the availability of corn for use in food and livestock feed. So the overall effect of the full set of policies is to make all of the corn-based food products more expensive, not less expensive to consumers.
Even if the effects of policy on the prices of farm commodities were large and in a direction that would contribute to obesity, the ultimate impacts on food prices would be comparatively small. Farm commodities used as ingredients represent a small share of the total cost of retail food products, and this share has been shrinking for all farm commodities over the past three decades. On average the farm commodity cost share is approximately 20 percent, but it varies widely: for grains, sugar, and oilseeds, it is less than 10 percent; for soda, a food product that is often associated with obesity, the share is approximately 2 percent.
U.S. farm policies might well be seen as unfair and inefficient. But whether we like these policies or not for other reasons, their effects on obesity are negligible. Farm subsidies are a red herring in the obesity context just as obesity is a red herring in the context of farm subsidy policy. Our careful quantitative analysis of these issues indicates that U.S. farm subsidy policies, for the most part, have not made food commodities significantly cheaper and have not had a significant effect on caloric consumption. In fact, eliminating all farm subsidies, including those provided indirectly by trade barriers, may, if anything, lead to an increase in annual per capita consumption of calories and an increase in body weight. Farm policies have more likely slowed the rise in obesity in the United States—but any such effects must be small. Compared with other factors, the policy-induced differences in relative prices of farm commodities have played only a tiny role in determining excess food consumption and obesity in the United States.
Julian Alston is a Professor in the Department of Agricultural and Resource Economics at the University of California, Davis, and a member of the University of California’s Giannini Foundation of Agricultural Economics.
The United States farm bill is up for renewal this year, and what goes into the $400 billion, 5,000-plus page piece of legislation will affect what tens of millions of Americans eat — and don’t eat — in the coming years. On April 5, UC Berkeley’s College of Natural Resources fired off an enlightening salvo in the public discourse, with a panel of heavy hitters calling on the public to let their voices be heard in the quest to, as panelist Karen Ross, Secretary of the California Department of Food and Agriculture, put it, “move farmers and eaters closer together.”
Looking at the bill’s history, it’s not surprising the two groups have been driven apart. The farm bill was implemented during the Great Depression in the 1930s in order to raise commodity prices and farmers’ incomes, said Gordon Rausser, UC Berkeley professor of agricultural and resource economics and the event’s moderator. The commodities it focused on — food grains, feed grains, dairy, tobacco and peanuts — became political powerhouses while much of the food on our dinner tables — fruits, vegetables, and nuts — were relegated to the category of “specialty crops.”
Broccoli and oranges … specialty crops? “That’s what we grow here in California,” Ross said. And that's what's on the U.S. Department of Agriculture’s food plate. In the past 15 years such growers have been taking a more active role in the farm bill to make sure they are not marginalized, she said.
Over eight decades the bill has morphed from a farm to a food bill, the panelists said. Seventy-seven percent of the bill now goes to support the federal Supplemental Nutritional Assistance Program (SNAP), the reinvention of the food stamps program.
Ken Hecht, just retired from his position as the director of the California Food Policy Advocates, reeled off some facts about the people who use SNAP:
- 50 percent are working households
- 93 percent are below the poverty level
- 50 percent of benefit recipients are children
- 75 percent are households with children
“There are 1.3 million children who are getting enough to eat because of this program,” Hecht said. “It avoids all those consequences of food insecurity that we all know about: lack of adequate nutrition, lack of adequate health, lack of academic opportunity and performance, lack of social development.” The program not only helps its participants, Hecht, said, but the rest of the people in the community as well.
In addition to SNAP, support for sustainable agriculture emerged as a theme of the presentation. For insight, In Defense of Food author and UC Berkeley journalism professor Michael Pollan offered the audience the perspective of a Martian: we Earthlings are now eating oil instead of eating sunlight. What he referred to as the “free lunch of photosynthesis” was swapped out, starting in the 1940s, for high-yield, industrialized farming that relies on pesticides, machines and giant feed-lots for animals. Pollan said that while farmers were enormously successful in achieving productivity goals, the environmental costs make agriculture second only to cars in fossil fuel production, and the producer of 20 to 30 percent of the country’s greenhouse gases. He recommends a simple criteria should be applied to every provision of the farm bill, from farmers market support to the SNAP program to obscure payment structures: “The question we should ask ourselves is, is this pushing agriculture back onto the sun or is it leaving it on the fossil fuel basis?” he said. “That’s the standard I think we need to apply.”
Environmental Working Group, framed the issue in terms of dollars. “One cotton farmer in 2004 received $2 million. That’s the same amount of money we spent for the entire federal program devoted to organic agricultural research,” he said.
He emphasized the connection between good food practices and good environmental practices, and called SNAP EWG’s number one priority. “We’re trying to inject healthy eating into the farm bill as a legitimate concern of public policy,” he said. He cited a pilot healthy-snack program, in which evaluators noted students who had never seen a pineapple or celery or carrots before. “We should be spending billions of dollars on this program ... getting kids hooked on fruits and vegetables."
Cook pointed out that that much of what drives the farm bill is the politics of committee members securing subsidies for their home states, and conjured the specter of the recent pink-slime debacle to show how effective a little activism can be. Fail to get involved at your peril, Cook, said. “I guarantee you will get more of the same or worse.”
Pollan passed along advice from one of Cook’s staffers: “Simply calling your representative and saying you want more healthy food, you want more environmentally sustainable food, is all you need to do.”
The event was a presentation of the UC Berkeley College of Natural Resource's Spring 2012 Horace Albright Lecture in Conservation. Watch an hour and a half video of the presentations and Q&A: