'Baysanto' and the Competitiveness of the Ag Sector

There is a nice post summing this up over at the Farmer Hayek blog:

It seems to me that the relationship between anti-trust legislation and regulation is an under-discussed issue in these cases. Agribusiness firms are heavily regulated by three of the most powerful regulators in the US: the FDA, the USDA, and the EPA. Many regulations function as fixed costs, implying that there are economies of scale in regulatory compliance. Thus, the greater the regulatory burden placed on firms in an industry, the greater the inducement to merge.

Similarly, from a 2003 issue of Regulation:

'In the end, EPA and the USDA regulatory policies place federal bureaucrats in the middle of virtually all field trials of gene-spliced plants, spelling disaster for small businesses and academic institutions whose scientists lack the resources to comply with burdensome, expensive, unnecessary regulation. The cost of field-testing gene-spliced plants is as much as 20-fold higher than for virtually identical plants crafted with older, less precise genetic techniques.' -Regulation, Summer 2003 

See also:
More details related to this from a 2010 post at EconomicSense - Monsanto Antitrust Case

Reference:
Henry Miller and Gregory Conko. 'Bootleggers and Biotechs.' Regulation. Summer 2003

Gary Shilling, Bees, Glyphosate and Industrial Ag in NYT

Surprisingly, when listening to an older Bloomberg Masters in Business podcast,with Barry Ritholtz and Gary Shilling, in the 2nd half of the podcast they segway into a discussion on bees and colony collapse disorder....Gary discusses major causes....and its not pesticides.

The EPA finally concludes, glyphosate probably is not a cause of cancer.

Jayson Lusk discusses the environmental benefits of industrial agriculture....it looks like even the NYT readers might learn that modern agriculture is sustainable agriculture.

Shilling also gives some interesting thoughts about the macro economy and the impact of international trade and technological change on the job market, and takes on some of the theories of malaise related to secular stagnation (the idea that we have run out of new investment opportunities, everything useful has already been invented etc.) and other things.  

Science Literacy and GMO Perceptions (Study)

This certainly provides some evidence that an learning path associated with QR codes might be ideal for informing consumers without scaring them away.

 

From the Abstract:

 

"A survey experiment was designed to measure the effect of science and genetics literacy on consumer perception and acceptance of GMOs and GMF. A sample population of college students answered a questionnaire either before or after a 50-minute lecture about science and genetics concepts relevant to GMO development and cultivation....Comparison of pre-lecture and post-lecture responses revealed that science and genetics literacy had—at least—a short-term effect on student perception of GMOs, which led to increased desirability of GMF, including food containing transgenic and first-generation GMOs."

Article: Can Science and Genetics Literacy Affect Student Perception of Genetically Modified Organisms? Gerardo H. Nunez, Alisson P. Kovaleski, Bruno Casamali, and Rebecca L. Darnell

University of Florida

 

See also:  

 

An Econometric and Game Theoretic Analysis of Producer and Consumer Preferences Toward Agricultural Biotechnology

 

Perceptions of GMO Foods: An Hypothetical Application of SEM

Will new GMO labeling law stir a revolution....or an opportunity for fact driven revelation?

A recent NYT piece is titled: G.M.O. Labeling Law Could Stir a Revolution

The main thesis I think is driven by this question:

Has the argument that food production processes are as important as ingredients begun to make sense to policy makers?

Maybe it has. This is exactly why we need to be careful about the learning path that these QR codes provide consumers. Because the truth is the author might have a point here, and snake oil food marketers (i.e. Cliff Bar and Chipotle) will exploit this if they can.

On another note I can't help but comment on the following commentary in the article:

Another problem is that by simplifying the growing of almost unimaginably large tracts of crops, especially corn and soybeans, G.M.O.s have become an indispensable crutch for the fertilizer- and pesticide-dependent monoculture that is wrecking our land and water and generating the execrable excess of corn- and soy-based junk food that is sickening our population and decreasing our life spans.

I'd direct interested readers here. 

One thing these QR codes have the ability to do is clear up misconceptions and hyperbole like this that tend to keep creeping up.

See also: Big Data + Genomics not = Your Grandparent's Monoculture

Great Insight on Food Policy and Reform

Jayson Lusk has a very good summary of probably one of the best pieces I have read about the politics of food policy in a long long time. Very well written.

Read more:

The Politics of Food Reform Has Disappeared From the Democratic Agenda - by James McWilliams (Pacific Standard)

Link

Also in the article we find:

"If there is to be any hope of bringing agriculture back to the plate of national politics, we need to move beyond the dichotomies that frame our current debates. We need a new set of organizing principles. A starting point might be to shift our thinking away from how food is produced to something more fundamental: What is it that we’re even producing? The United States grows a handful of staple crops — mostly corn and soy — to feed a handful of animal species — mostly chickens and cows. What if we could re-claim those resources to pursue a diversity of food production — mostly plants — in a way that focused on nutritional rather than caloric density? "

The author does use the word *might* but there are a lot of trade-offs that go unrecognized with this line of argument....like the fact that grain is a complement in a much more complex food production process turning inedible plants into high quality protein that we other wise would not have were it not for raising the grains....i.e. feeding them to livestock. Sure we could have some form of grass finished food production but the environmental costs would be much higher leading to less sustainable sources of protein.

See also:

Telegram: Beef, It's What's for Dinner

The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science,Capper, J. L., Cady, R. A., Bauman, D. E. 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781

Summer Roundup....CRISPR, Ford Trucks, and Cliff Bars

 ICYMI some recent posts from AgEconSense from this summer:

Are Farm Subsidies Making Us Fat? How the Left and Right View Food Subsidies

CRISPR Applications in Agriculture vs The End of GMOs?

Freedom is the miles I’m rollin’ on….not if you can’t meet emissions  standards

Chipotle, Cliff Bar and Snake Oil Marketing Tactics

Left vs Right Differences in Preferences for Regulation and Food Labels

Are Farm Subsidies Making us Fat....

There is a big difference between when those on the left criticize farm subsidies vs those on the right. Coming from the left, its not the subsidies they dislike, so much as subsidies for politically incorrect agriculture. In fact, many times in the same argument they will turn around and advocate for more subsidies for politically correct agriculture (local, organic, etc.) For the left, a criticism of farm subsidies is more often an underlying criticism of modern agriculture. From the right arguments are more about efficiency and distortions. The irritating thing is sometimes some on the right might get a little lazy and sloppy in their thinking about subsidies and take up some of the same specious arguments made by the left...helping the cause for more regulation, higher prices, and fewer choices for consumers.

Any way, along these lines there was almost what I would call a hit piece in the NYT recently drumming up a connection between farm subsidies and obesity. Its more like sci-fi than anything science based. They are basically extrapolating some meaningless correlations until they turn into a giant industrial ag monster. Worse, its like a bad sequel, because we see this spurious connection creeping up time to time in the popular media.  Following the typical script its not the subsidies in general that they don't like....in fact some of the authors interviewed advocate for subsidies for 'politically correct' foods. Its the connection to politically incorrect industrial agriculture that is the emphasis here. This isn't really a critique of subsidies so much as a critique of modern agriculture itself.

From the NYT: How the Government Supports Your Junk Food Habit

"While the study does not prove cause and effect, its authors say that this strong association is consistent with other research showing that diets that are higher in subsidized foods tend to be poorer quality and more harmful to health."

“This tells us that the factors that influence the prices of our foods are an additional factor,” said Ed Gregg, chief of the epidemiology and statistics branch in the C.D.C.’s Division of Diabetes Translation. “We’re hoping that this information reaches policy makers and the people who influence how subsidies work.”

The causal chain of events they are suggesting just completely breaks down. The factors that influence prices…i.e. farm policies…have way too small of an effect on the retail prices consumers pay. And consumers just aren’t sensitive enough to these prices to respond by consuming more. That’s at least what the science tells us…and I hope that information reaches policy makers.

Economist Jayson Lusk knocks it out the the park. He addresses the science behind these specious connections  (and links to a number of related research articles) and includes some of his work in the area:

"There are actual lots of people who know how much farm subsidies contribute to food consumption, and they're called agricultural economists (in fact, McMillian goes on to then cite two prominent food and agricultural economists on the issue: Parke Wilde and David Just)…..In the model I used for the forthcoming paper I wrote on the distributional impacts of crop insurance subsidies, I find that the complete removal of crop insurance subsidies to farmers would only increase the price of cereal and bakery products by 0.09% and increase the price of meat by 0.5%, and would also increase the price of fruits ad vegetables by 0.7%.  So, while these policies may be inefficient, regressive, and promote regulatory over-reach, their effects on food prices are tiny, and depending on which policy we're talking about, could push prices and consumption up or down. " 

Here are 3 more big questions that might serve as trailers for future sci-fi NYT ag hit pieces:

1) Do farm subsidies encourage farmers to plant biotech or GMO seeds?

2) If subsidies drive the production of commodities and most of these are GMO,  aren’t we indirectly subsidizing GMOs?

3) Do farm subsidies largely prop up wealthy farmers vs. helping small farmers thrive in a volatile, competitive global and corporate dominated marketplace?

For answers to these questions (and a big spoiler alert to anti-ag activists) see:  http://ageconomist.blogspot.com/2015/04/whats-big-deal-about-farm-subsidies.html