Saturday, September 07, 2019

Illinois specialty farmers talk about inequities in the trade war bailout

Tufts Friedman School alum Jeff Hake is featured in yesterday's report from the Illinois State University NPR Station, WGLT.
Jeff Hake and his immediate family run Funks Grove Heritage Fruits and Grains, a nine-acre farm in rural McLean. McLean County has secured the largest payouts through the Market Facilitation Program of any county in the country, but Hake's farm won't see any of that money.

As a family farm that sells most of its products directly to consumers—things like black raspberries and Johnny cake mixes—Hake is not exactly on the front lines of the trade war, but he sees the bailouts as a symptom of a greater problem.

“It’s just throwing money at the problem and hoping that things will work out later,” Hake said.

Wednesday, August 21, 2019

Mystery and discovery in the economics of fishing on the high seas

Fishing on the high seas may frequently be economically unsustainable, according to an analysis last year by Enric Sala and colleagues in Science Advances.

This comparatively unregulated fishing industry beyond national exclusive economic zones presents grave environmental concerns, so the motivation for continued fishing under unprofitable conditions is somewhat of a mystery. Sala and colleagues mostly argue that the industry is propped up by government subsidies, but they also discuss two other factors. One is substandard wages and working conditions, even sometimes modern slavery. Another is the possibility that some countries cheat on their harvest reporting and are really more profitable than they appear. The study's data source already corrects for standard estimates of catch underreporting, so this last possibility might require especially brazen underreporting on a scale that has not yet been recognized.

Fig. 3 Net economic benefit of high-seas fishing (Sala et al., 2018). 
Range of estimates of fishing profits (US$ millions) before (π) and after (π*) subsidies for (A) major fishing countries and (B) gear types.

The 2018 study is part of a blossoming research literature that takes advantage of modern tracking data to estimate the "fishing effort" of thousands of individual vessels. To get a sense of this remarkable type of data, see the online mapping capability at Global Fishing Watch. It lets you track individual vessels as they criss-cross the ocean in both the national exclusive economic zones and the high seas.

I came across this study after watching a video from Greenpeace featuring one of the authors, Daniel Pauly, a professor of fisheries at the University of British Columbia. He explains that the decline of fisheries has been going on so long that even adults in fishing communities may not fully understand the long-term baseline bounty that could be possible without overfishing. The environmental sustainability of human consumption of smaller fish is less fraught, but, in the video, Pauly argues that "we are chasing the last of the big fish."

Wednesday, August 14, 2019

Federal government's beef checkoff program buys advertising to discourage grocers from stocking plant-based alternatives

The federal government's beef checkoff program this week is running advertisements in GroceryDive, a trade news site, targeting grocery retailers with claims that disparage new plant-based alternatives.

"Despite the placement of beef substitutes in the meat case," the ad says, "these products aren’t generating sales like the authentic beef products they share the case with." 

Yet, a savvy reader may think the ad itself indicates a high level of concern among beef checkoff program leaders.

The beef checkoff program is a public-private partnership, managed by a board appointed by the Secretary of Agriculture and funded by a mandatory assessment on beef producers, using the federal government's power of taxation. Checkoff marketing campaigns must be approved in writing by USDA's Agricultural Marketing Service (AMS). Checkoff advertisements to promote beef have legal status as "government speech," just like government public interest messages to promote public health.

Earlier this year, Republican Sen. Mike Lee (UT) and Democratic Sen. Cory Booker (NJ) re-introduced their legislation, the Opportunities for Fairness in Farming Act of 2019 (OFF Act), which would make several reforms in federal checkoff programs:
  • Prevent checkoff programs from contracting with organizations that lobby. The current practice has an unseemly circularity, as the federal government enforces the collection of checkoff money, which then goes to industry organizations that lobby (mostly but not entirely with non-checkoff dollars) to influence federal regulatory and marketing policies;
  • Require transparency through publication of checkoff program budgets and expenditures; and
  • Establish standards that prohibit anti-competitive behavior, such as using federal checkoff money to disparage other legitimate American food businesses in the marketplace, as the GroceryDive advertisement did this week.
These reforms seem reasonable to me.

Tuesday, August 13, 2019

Are SSB taxes good or bad for the poor?

In an economic sense, the optimal soda tax is surprisingly high, even if one values economic redistribution and opposes "regressivity" in the tax system, according to a recent NBER working paper from Hunt Allcott, Benjamin Lockwood, and Dmitry Taubinsky.

The three economists recognize that sugar sweetened beverage (SSB) consumption may have a larger budget share for poor consumers than for rich consumers, but, somewhat offsetting this pattern, they consider the possibility that low-income consumers are more responsive to price -- that they have a larger "own-price elasticity" -- enabling them to avoid a larger share of the tax burden, compared to middle- and high-income people. In the end, the authors find that an optimal national tax might be about one or two cents per ounce, equal to or slightly higher than current municipal taxes in Berkeley, Philadelphia, and elsewhere.

This paper relates to an interesting debate over several years in the progressive media, which arises because of the possible tension between public interest goals, including public health nutrition goals on the one hand and anti-poverty goals on the other. For example, Bernie Sanders in 2016 opposed soda taxes, but Anna Lappé wrote in Mother Jones encouraging him to reconsider and support these taxes. Similarly, in 2017, Max Sawicky wrote in In These Times opposing such taxes, while Tom Philpott favored support.

In research in the American Journal of Public Health in January, my colleagues and I estimated the costs and effects of a national penny-per-ounce SSB tax separately for multiple stakeholders: including both richer and poorer groups of consumers, employers (who save money in health care costs with the tax), SSB producers (who lose out especially if they must absorb part of the tax and cannot pass the full value onto consumers), and the government (which wins twice, once from the tax revenue and once from the healthcare cost savings in public insurance programs such as Medicaid).

Clearly, it is not enough to compute effects for an "average person" when studying SSB taxes. Yet, even when we consider the interests of multiple income groups in society, the merits of such taxes may be surprisingly strong.

In These Times.

Friday, August 02, 2019

Dietary guidelines, processed meat, and risk of cancer

In a public comment submitted today, my colleagues Fang Fang Zhang, Jennifer Pomeranz, and I encourage the 2020-2025 Dietary Guidelines Advisory Committee (DGAC) to evaluate the entire scientific literature on processed meat and colon cancer risk.

The DGAC is the external committee that summarizes the scientific evidence on nutrition and health, which two federal departments, USDA and DHHS, then use in writing the actual Dietary Guidelines for Americans, an influential document in U.S. nutrition policy.

USDA and DHHS have determined that the 2020-2025 DGAC may only address topics that were explicitly given in a list of questions by the departments.

One of the questions is: "What is the relationship between dietary patterns consumed and risk of certain types of cancer?"

Our public comment today recommends that the DGAC include the entire scientific literature on processed meat and cancer risk, as part of its systematic review of evidence on dietary patterns and cancer.

Why is this even in doubt?

As our recent article in the Milbank Quarterly recounts, in the previous 2015-2020 Dietary Guidelines for Americans, the federal government muddled its message on processed meat and cancer.

On the one hand, it included lower intake of processed meat in a list of characteristics of healthy eating patterns: "Lower intakes of meats, including processed meats; processed poultry; sugar-sweetened foods, particularly beverages; and refined grains have often been identified as characteristics of healthy eating patterns."

On the other hand, it said that processed meats can be recommended as long as sodium, saturated fats, added sugars, and total calories are within limits. This latter favorable comment in the official policy document from USDA and DHHS had no basis in the earlier independent scientific report from the 2015-2020 DGAC.

Even though it is not responsible for the final DGA report, we think the 2015-2020 DGAC report may have overlooked some of the important research on processed meat and colon cancer, by interpreting the words "dietary patterns" too strictly, screening out some research on processed meat merely because this one food category is not a "dietary pattern."

Why is the cancer risk from processed meat important?

The issue is important because the best available systematic literature reviews concluded that consuming processed meat increases the risk of colon cancer. In particular, see authoritative reports from the International Agency for Research on Cancer and the World Cancer Research Fund and American Institute of Cancer Research.

Luxian Zeng, Fang Fang Zhang, other colleagues, and I recently reported in the Journal of the Academy of Nutrition and Dietetics (JAND) on trends in processed meat intake based on data from the Nutrition and Health Examination Survey (NHANES). While red meat declined, processed meat held steady in recent years. This issue is big enough to matter for national nutrition policy.

What are the policy implications of ignoring this issue?

Currently, far from encouraging reductions in processed meat intake, the federal government supports advertising and marketing programs to increase consumption. The semi-public checkoff programs have been covered previously in this blog. Just to give one current illustration, here is advertising from the federal government's pork checkoff program for bacon and ice cream. If the Dietary Guidelines for Americans were based on a full evaluation of the scientific literature about processed meat and colon cancer, it might facilitate policies to encourage reductions, or at the very least a halt to these advertising programs encouraging yet more processed meat consumption.

National Pork Board advertising endorsed by USDA.

Thursday, July 25, 2019

U.S. China agricultural trade and the bailout boondoggle

Late last fall, Choices Magazine from the Agricultural and Applied Economics Association (AAEA) had a special issue on U.S. - China trade, highlighting the enormous value of China trade for U.S. farmers.

Introducing the special issue, which received an award at this week's AAEA annual meeting in Atlanta, Mary Marchant and Holly Wang wrote:
The United States and China, the world’s largest economic powers, have dueled in an escalating trade dispute since January 2018.... This trade dispute is important to U.S. agriculture, because China has been the United States’ top agricultural export market outside of North America since 2009 with an annual sale of nearly $20 billion in 2017 (USDA, 2018b).... Although the current trade dispute continues to evolve, it is valuable for us to understand the potential negative impact and to be informed of possible consequences. It is our sincere hope that U.S. and Chinese negotiators will reach an agreement, since both countries ultimately lose with a trade war, as seen from the 1930s Smoot–Hawley Tariff.
The Trump administration has sought to offset some of the harm to farmers with bailout funding to selected producers. Using data received under the Freedom of Information Act (FOIA) law, the Environmental Working Group last month reported that many payments exceeded a planned $125k limit. Some subsidy recipients received more than $900k.

For Iowa farmers, the Des Moines Register today has a fascinating report with clever searchable web tools, allowing detailed breakdowns.

How can U.S. agricultural policy remain so absurdly dysfunctional even while being exposed to this level of public transparency?

Monday, May 06, 2019

USDA announces 3 finalists for ERS and NIFA location

The U.S. Department of Agriculture (USDA) on May 3 announced three finalists for the potential new location of the Economic Research Service (ERS) and the National Institute for Food and Agriculture (NIFA).

USDA has said the move will save money but has offered little information to support this view. Employees of the agency are demoralized by what they see as an effort to exert political control over research.

Agriculture Secretary Sonny Perdue said:
Relocation will help ensure USDA is the most effective, most efficient, and most customer-focused agency in the federal government, allowing us to be closer to our stakeholders and move our resources closer to our customers. Our commitment to the public and our employees is to continue to be transparent as we proceed with our analysis.
The three finalist locations announced by USDA are:
  • Indiana. U.S. agricultural output ranked 10th (2.8% of national total). Leading products are corn, soybeans, and hogs. Won by President Trump in 2016 with 57% of the vote.
  • Kansas. U.S. agricultural output ranked 7th (4.2% of national total). Leading products are cattle, corn, and soybeans. Won by President Trump in 2016 with 57% of the vote.
  • North Carolina. U.S. agricultural output ranked 8th (3.1% of national total). Leading products are chicken, hogs, and turkey. Won by President Trump in 2016 with 50% of the vote.
Just for comparison, the biggest agricultural state is not on the list:
  • California. U.S. agricultural output ranked 1st (13.5% of total). Leading products are dairy, produce, grapes, almonds, and strawberries. Lost by President Trump in 2016 with 33% of the vote.
The USDA definition of "closer to stakeholders" may have in mind a particular vision of U.S. agriculture, heavy on meat and animal feed production. Along with farmers, other important USDA stakeholders are food manufacturers, food retailers, and food consumers in all parts of the country. Approximately 80% of the department's budget is for U.S. nutrition assistance programs. Critical issues for the department in the next several years include supporting farm incomes, protecting the labor rights of farmworkers, supporting rural and urban food economies, promoting nutrition in a time of rising insurance costs, and mitigating and adapting to climate change.

I am not persuaded that the proposed move will achieve its stated objectives of saving taxpayer funds and helping USDA better serve its most important stakeholders. I hope USDA can keep in mind all of its important public purposes.