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
Obesity* Trends Among U.S. Adults: 1991,, 23 (*BMI 3, or about 3 lbs overweight for 5 4 person) 1991 23 No Data <1% 1%-14% 15%-19% 2%-24% 25% Source: Behavioral Risk Factor Surveillance System, CDC.
Adolescent Population Is of Particular Concern Obesity has risen rapidly since the mid-197s 35 3 25 2 15 1 5 1971-74 1976-8 1988-94 1999- Percent of adults who are obese Percent of adolescents who are overweight
Economic Costs Direct Increased health care costs Indirect $78.5 billion in the U.S. in 1998 $7.8 billion in California alone, 1998-2 28% 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
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?
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)
One Smoking Gun Trends in Consumption of Corn Sweeteners Avg. Kcalories/person/day 25 2 15 1 5 1965 197 1975 198 1985 199 1995 2 25 Corn sweeteners http://www.ers.usda.gov/data/foodconsumption/foodguideindex.htm#calories
The Suspected Culprit Corn Policy Support to Corn Producers -- Absolute 12, 1, Millions USD (current) 8, 6, 4, 2, -2, 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1997 1998 1999 2 21 22 23 24 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
The More Complete Story Trends in Consumption of Selected Sweeteners Avg. Kcalories/person/day 6 5 4 3 2 1 1965 197 1975 198 1985 199 1995 2 25 Refined cane and beet sugar Corn sweeteners All Added sugars http://www.ers.usda.gov/data/foodconsumption/foodguideindex.htm#calories
4 35 3 25 2 15 1 5 White Sugar Policy What Role? Sugar Prices in the USA -- 1986-24 1987 1988 1989 199 1991 1992 1993 1994 1995 1997 1998 1999 2 21 22 23 24 1986 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) 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1997 1998 1999 2 21 22 23 Millions USD (1977) PSE
The Much More Complete Story Calories from Differrent Food Groups Avg. Kcalories/person/day 7 6 5 4 3 2 1 1965 197 1975 198 1985 199 1995 2 25 Meat, eggs, and nuts Dairy Fruit Vegetables Flour and cereal products Added fats Added sugars http://www.ers.usda.gov/data/foodconsumption/foodguideindex.htm#calories
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 45.4 27.4 15.5 8.4 6.4 4.1 2.5 1.8 1.4 112.9 Percent of Total percent 4.2 24.3 13.7 7.4 5.7 3.6 2.2 1.6 1.2 1.
Trends in Agricultural R&D Spending 4 Total Private Sector Spending on Ag R&D (196-1992) 35 3 25 2 15 1 5 196 1962 1964 1966 1968 197 1972 1974 1976 1978 198 1982 1984 1986 1988 199 1992 mil. $ 35 3 25 2 15 1 5 Total Federal and State Spending on Ag. R&D (1925-1997) Private Ag R&D Spending 1925 1929 1933 1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 Total Ag. R&D Spending mil. $
14 12 1 8 6 4 2 Trends in Aggregate Productivity Measures Index of Land Productivity (1977=1) 16 Index of Labor Productivity (1977=1) 14 12 1 8 6 4 2 191 1915 192 1925 193 1935 194 1945 195 1955 196 1965 197 1975 198 1985 199 Land Productivity 191 1914 1918 1922 1926 193 1934 1938 1942 1946 195 1954 1958 1962 1966 197 1974 1978 1982 Labor Productivity 3 Total Factor Productivity Index (1948=1) 25 2 15 1 5 1948 1951 1954 1957 196 1963 1966 1969 1972 1975 1978 1981 1984 1987 199 1993 TFP
16 14 12 1 8 6 4 2 Trends in Crop/Product Productivity Average Yield of Corn 19-1997 19 196 1912 1918 1924 193 1936 1942 1948 1954 196 1966 1972 1978 1984 199 Avg. Corn Yield 18 16 14 12 1 8 6 4 2 Milk Production per Cow 1929- bush./acre 1929 1933 1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 lbs./cow Milk per Cow
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) 18 16 25 14 12 1 2 15 8 6 4 1 5 2 196 1963 1966 1969 1972 1975 1978 1981 1984 All Crops Livestock & Products All Farm Products Deflated Prices Received for Selected Fruits (1977=1) 25 2 15 1 5 196 1963 1966 1969 1972 1975 1978 1981 1984 1987 199 1993 1987 199 1993 1999 22 1999 22 196 1963 1966 1969 1972 1975 1978 1981 1984 1987 199 1993 s Rice (PP) Wheat (PP) Corn for Grain 1999 22 Apples Oranges Table Grapes
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. 1.4 1.2 1..8.6.4.2. 198 1984 1988 1992 2 24 $/lb. 2.5 2. 1.5 1..5. 198 1984 1988 1992 2 24 Eggs, Grade A Large Consumer Prices for Chicken deflated by CPI (food at home) Ground Chuck, USDA Choice Cons.Food_Prices!$N$7, 1% Beef Consumer Prices for White Sugar Deflated by CPI (food at home) 1..7.9.6.8.5 $/lb..7.6.5.4 $/lb..4.3.2.3 198 1984 1988 1992 Chicken, w hole, fresh 2 24.1 198 1987 1994 Sugar, w hite, all sizes 21
Consumer Prices for Oranges Deflated by CPI (food at home).9 Prices Paid By Consumers Fresh Fruits and Vegetables $/lb..8.7.6.5.4.3.2.1. 198 1984 1988 1992 2 24 Oranges, Navel Oranges, Valencia Consumer Prices for Strawberries Deflated by CPI (food at home) 2.5 2. $/12 oz. 1.5 1..5. 198 1984 1988 1992 2 24 Straw berries, Dry pint
Getting the Price Story Right: Strawberries 3.62 3.185 2.6 1.843 1.817 1.629 1.847 1.672 1.661 2.124 2.332 2.481 24 2.41 2.246 1.986 1.84 1.776 1.568 1.678 1.762 1.871 2.153 23 2.224 1.884 1.873 1.695 1.545 1.552 1.527 1.551 1.941 2.137 2.498 22 2.526 2.137 1.996 1.916 1.628 1.486 1.465 1.482 1.737 2.1 2.14 21 1.619 1.416 1.263 1.246 1.187 1.218 1.45 1.825 1.935 2.167 2 1.948 1.664 1.679 1.557 1.375 1.49 1.419 1.751 1.96 2.12 1999 1.779 1.469 1.454 1.346 1.413 1.386 1.613 1.751 2.8 2.135 1998 1.654 1.488 1.375 1.383 1.213 1.73 1.179 1.317 1.514 1997 1.49 1.42 1.164 1.247 1.226.957 1.82 1.236 1.55 1.692 1.316 1.355 1.398 1.29 1.18 1.14 1.1 1.34 1.926 1995 1.286 1.29 1.18 1.85 1.47.983.91 1.262 1.318 1994 1.261 1.151 1.69 1.13 1.66.874.98 1.26 1.467 1993 1.19 1.473 1.185.988 1.48.831.96 1.173 1.43 1992 1.35 1.14.961.948.924.976 1.112 1.268 1.467 1991 1.21 1.81.965.987.781 1.19 1.338 1.638 199 1.87.986 1.117 1.55.831.966 1.218 1989 1.216.971 1.59.937.919.693 1.181 1988 1.29 1.71.955.824.937 1987 1.81.899.84.718.797.637 1986.913.774.646.89 1.16 1985.943.827.78.648.663.912 1984.863.752.78.728 1983.775.778.73.914 1.16 1982.77.696.637.69.886 1981.66.68.653 198 Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan
A Closer Look at Strawberry Prices June Strawberry Prices (BLS data) Price $ per dry pint (12oz) - 1.8.6.4.2 y = -.89x + 18.289 R 2 =.5356 1975 198 1985 199 1995 2 25 21 Feb Strawberry Prices (BLS data) Price $ per dry pint (12oz) - 1.2 1.8.6.4.2 y = -.3x + 1.435 R 2 =.3 1988 199 1992 1994 1998 2 22 24 26
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 198-23 White Sugar: -.24 Butter: -.13 Milk: -.11 Cheese:-.33 Turkey: -.26 Chicken: -.12 Eggs: -.19 Beef: -.21
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
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
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
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
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
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