Are Agricultural Policies Making Us Fat? Likely Links Between Agricultural Policies and Human Nutrition and Obesity, and their Implications

Transcription

1 Are Agricultural Policies Making Us Fat? Likely Links Between Agricultural Policies and Human Nutrition and Obesity, and their Implications Julian Alston Daniel Sumner Stephen Vosti Agricultural Issues Center USDA Department of Agricultural and Resource Economics IAAE Meetings, Queensland, Australia, August 26

2 Obesity* Trends Among U.S. Adults: 1991,, 23 (*BMI 3, or about 3 lbs overweight for 5 4 person) No Data <1% 1%-14% 15%-19% 2%-24% 25% Source: Behavioral Risk Factor Surveillance System, CDC.

3 Adolescent Population Is of Particular Concern Obesity has risen rapidly since the mid-197s Percent of adults who are obese Percent of adolescents who are overweight

4 Economic Costs Direct Increased health care costs Indirect $78.5 billion in the U.S. in 1998 $7.8 billion in California alone, % of total CA outlays for HHS in 23-4 Morbidity costs Lost productivity Absenteeism Mortality costs Over 3, death per year attributable to obesity Obese individuals have a 5 to 1% increased risk of premature death from all causes

5 Key Issues Why Is Obesity on the Rise? Long-Term and Worsening Energy Imbalance Energy Intake > Energy Expenditure Mechanisms Affecting of This Imbalance Types and sources of food consumed Food portions Energy expenditure patterns Drivers of Behavioral Changes Opportunities Increases in incomes and choices Food preferences Incentives Changes in relative prices, especially for foods What Role of Agriculture and Agricultural Policy? Getting us to this point? Prices, quality, availability Course correction?

6 Is Agricultural Policy (Partially) Responsible? [Our] cheap-food farm policy comes at a high price:... farmers in the United States have managed to produce 5 additional calories per person every day; each of us is, heroically, managing to pack away 2 of those extra calories per day. (Pollan 23) Commodity prices... are so low that restaurants have been able to double serving sizes without doubling prices. (Davis 23) Why healthier foods are slipping out of reach of large segments of the US population is a question with many policy and political implications. (Drewnowski and Barratt-Fornell, 24)

7 One Smoking Gun Trends in Consumption of Corn Sweeteners Avg. Kcalories/person/day Corn sweeteners

8 The Suspected Culprit Corn Policy Support to Corn Producers -- Absolute 12, 1, Millions USD (current) 8, 6, 4, 2, -2, III. Producer Support Estimate (PSE) 1. Based on unlimited output C. Payments based on area planted D. Payments based on historical entitlements E. Payments based on input use E. Payments based on input use G. Payments based on overall farming income Source: OECD

9 The More Complete Story Trends in Consumption of Selected Sweeteners Avg. Kcalories/person/day Refined cane and beet sugar Corn sweeteners All Added sugars

10 White Sugar Policy What Role? Sugar Prices in the USA s VII.1 World reference price VIII.1 Domestic reference price (New York Spot) Support to Sugar Producers -- Absolute $1,2 $1, $8 $6 $4 $2 $ cents/pound (current) Millions USD (1977) PSE

11 The Much More Complete Story Calories from Differrent Food Groups Avg. Kcalories/person/day Meat, eggs, and nuts Dairy Fruit Vegetables Flour and cereal products Added fats Added sugars

12 Types and Magnitudes of Agricultural Outlays USDA Program Food, Nutrition, and Consumer Services Farm Service Agency (mainly farm commodity programs) Rural Development Natural Resources and Environment Foreign Agricultural Service Risk Management (mainly crop insurance) Research, Education and Economics (mainly ag. R&D) Marketing and Regulatory Programs Other TOTAL Expenditure in 24 billions of dollars Percent of Total percent

13 Trends in Agricultural R&D Spending 4 Total Private Sector Spending on Ag R&D ( ) mil. $ Total Federal and State Spending on Ag. R&D ( ) Private Ag R&D Spending Total Ag. R&D Spending mil. $

14 Trends in Aggregate Productivity Measures Index of Land Productivity (1977=1) 16 Index of Labor Productivity (1977=1) Land Productivity Labor Productivity 3 Total Factor Productivity Index (1948=1) TFP

15 Trends in Crop/Product Productivity Average Yield of Corn Avg. Corn Yield Milk Production per Cow bush./acre lbs./cow Milk per Cow

16 Trends in Prices Received By Farmers Prices received Deflated w ith prices paid (Commodities, services, interest, taxes, w ages) (1977=1) Deflated Prices Received for Selected Grains (1977=1) All Crops Livestock & Products All Farm Products Deflated Prices Received for Selected Fruits (1977=1) s Rice (PP) Wheat (PP) Corn for Grain Apples Oranges Table Grapes

17 Prices Paid By Consumers Basic Stuff Consumer Prices for Eggs Deflated by CPI (food at home) Consumer Prices for Ground Beef Deflated by CPI (food at home) $/doz $/lb Eggs, Grade A Large Consumer Prices for Chicken deflated by CPI (food at home) Ground Chuck, USDA Choice Cons.Food_Prices!$N$7, 1% Beef Consumer Prices for White Sugar Deflated by CPI (food at home) $/lb $/lb Chicken, w hole, fresh Sugar, w hite, all sizes 21

18 Consumer Prices for Oranges Deflated by CPI (food at home).9 Prices Paid By Consumers Fresh Fruits and Vegetables $/lb Oranges, Navel Oranges, Valencia Consumer Prices for Strawberries Deflated by CPI (food at home) $/12 oz Straw berries, Dry pint

19 Getting the Price Story Right: Strawberries Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

20 A Closer Look at Strawberry Prices June Strawberry Prices (BLS data) Price $ per dry pint (12oz) y = -.89x R 2 = Feb Strawberry Prices (BLS data) Price $ per dry pint (12oz) y = -.3x R 2 =

21 Consumer Prices for Foods White Bread:. Rice: -.29 Pasta: -.2 Lettuce: -.9 Tomatoes: +.4 Carrots: -.9 Potatoes:. Bananas: -.13 Apples: -.9 Oranges:. Grapefruit: -.4 Statistics report proportional changes in real prices over White Sugar: -.24 Butter: -.13 Milk: -.11 Cheese:-.33 Turkey: -.26 Chicken: -.12 Eggs: -.19 Beef: -.21

22 Food Prices in Terms of the Wages 12-Item Food Basket (6% of the historical price today) 1955: 3 hours 1997: 1.75 hours 3-Pound Chicken (4% of the historical price today) 1958: 35 minutes 1997: 14 minutes Soft Drink (53% of the historical price today) 195: 2.8 minutes 1997: 1.5 minutes Pizza (88% of the historical price today) 1958: 57 minutes 1997: 5 minutes Source: Dallas Fed

23 Preliminary Conclusions for USA and Policy Implications Agricultural Policy Commodity Prices Commodity Support Programs Effects on farmer income are large; Effects on commodity prices are small, varied and difficult to predict Publicly Sponsored Agricultural Research Chiefly responsible for past yield increases and price declines Commodity Prices Food Prices Increasing disconnect between commodity prices and food prices Role of food industry needs to be better understood and exploited Entry points for regulating in food preparation technologies and portion sizes Food Prices Caloric Intake Price responses are generally low Micro-management of food prices might not be wise Agricultural Policy for Dealing with Obesity Increased yields, and improved quality/availability of fresh fruits/vegetables Fragmented markets and social benefits call for public policy action Changes in Prices of Fruits/Vegetables Are Hard to Identify Difficult to Defend the Increasingly Out of Reach Hypothesis

24 Lessons for Developing Countries Too Early for USA Blueprint for Controlling Obesity Costs of Obesity Can Be Very Large Improve Health Monitoring Now Decreases in Food Costs Are Necessary to Combat Hunger Productivity growth in agriculture is essential But over-consumption of food may occur Regulation of the food industry may be needed Commodity Prices Fall More Quickly than Food Prices Structure of food industry and changes in all input costs matter greatly Commodity price policies are poor tool for managing food prices Changes in Food Prices Are Not Easy to Track Changes in food quality and availability complicate the issue Healthy Diet Is Still Mysterious Identifying and clarifying site-specific objectives is important Food Preferences Matter Greatly Policy based solely on food costs will likely fail

25 Links Between Selected Agricultural Policies and Human Nutrition Agricultural R&D Agricultural Subsidy and Trade Policies WIC Farm Production Costs Commodity Prices Farm Income Food Industry Sweeteners Food Prices Disposable Income Information & Sociocultural Factors Food Intak e Genetic Factors Ac tiv ity Levels Nutritional Status

26 Next Steps in Research and Outreach Review Trends Food consumption, food prices, commodity prices, and food and agricultural policies Analyze the Effects of Alternative Subsidy and R&D Policies on Commodity Prices Retrospectively Delphi method Prospectively FAPRI model Analyze the Effects of Prices on Consumption and Nutrition Complete demand system Food composition tables

27 Next Steps in Research and Outreach (cont.) Case Study of the Sweeteners Industry Multi-market model Case Study of Proposed Changes to the WIC Program On WIC participants consumption of fresh fruits and vegetables (FFV) California Latino family experiment On demand for FFV On prices FFV in the short and long term On farmers FFV supply response Curriculum Development Policy Guidance to WIC