1

12a. What Is Food Policy

& What Are The Key Issues?(Knutson Ch. 14, 15)

Larry D. Sanders

Fall 2005

Dept. of Ag Economics Oklahoma State University

2

Introduction

Purpose: – to understand food policy issues & options

Learning Objectives:

1. Become aware of food policy issues.

2. Understand key food issues, options & consequences.

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Food Policy Issues

Price & Availability Marketing Share Structural Changes Food Safety Food Nutrition & Obesity Hunger

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Rank the most serious food safety hazards (1=most serious)

____Deliberate food additives

____environmental contaminants (lead/mercury)

____foodborne diseases

____malnutrition

____naturally occurring toxins

____pesticide residue

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The Myth of Regulation:

How may regs to make a fast-food burger?

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Food Price Policy Options Price Controlsblack markets Export Embargoesshortrun price drop Reduced Import Restrictions--WTO, etc.-may harm

domestic producers/agribusiness Marketing Order Controls--more regs? Farm Program Provisions--who is helped? Antitrust Restraints--structutural change vs. competition vs.

global change-may weaken competitiveness Other Govt: tax, education, co-op promotionhigher taxes Free Market--who gains/loses? question of stability

?

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Food Safety--Is It a Problem?

Estimates of numbers contracting food-borne illnesses from microbial pathogens (CDC): – 6 mil.-33 mil./yr.– As many as 9,000/yr. die

1 case of E.coli OH157:H7 outbreak in Pacific Northwest (1992):– 4 deaths, over 800 ill in 4 states

Listeria meat recall of 2002– 10 deaths? 45-50+ ill?

Other cases:– strawberries w/Hepatitis A– raspberries w/Cyclospora parasite (Guatamala)– unpasteurized apple cider w/E. Coli

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Food Safety--What’s the Problem?

Restaurants & Consumers don’t know how to handle/prepare food?

Farmers/ranchers are using unsafe practices & nasty chemicals?

Food handlers & processors are using unsafe practices & nasty chemicals?

Mysterious bacteria are popping up to make food unsafe? Them “durn furiners” are sending us dangerous food? Bio-engineered food opens up a “Pandora’s box” of new

threats to human health (“Frankenfoods”)?

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Food Safety: Are consumers the problem?

Bad Habits Study (FDA, May 97)– 50% consumers eat raw/undercooked eggs

– 23% consumers eat undercooked hamburger

– 17% consumers eat raw clams/oysters

– 26% consumers don’t wash cutting boards after cutting raw meat/poultry

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Food Safety:Are producers the problem?

Some of the public is concerned about pesticide use/residue

While HACCP* hasn’t yet targeted producers, “traceback” could do so

Animal waste blamed for some health problems

Food Quality Protection Act imposes new responsibilities on chemical use

*Hazard Analysis Critical Control Point

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Food Safety:Are handlers/processors the problem?

New Food Safetyregs (HACCP) target this group

more than others The media often pins the blame here

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Food Safety:New Mysterious Bugs the problem?

E coli (CDC study):– 1982--first recognized as pathogen (ground beef)– 1984-child care center– 1985--associated w/acute kidney failure in children– 1987--more common than Shigella in US– 1990--drinking water– 1991--lake swimming; apple cider– 1992--most common bacterial cause of diarrhea in US– 1993--multi-state outbreak--fast-food burgers– 1999--unpasteurized apple cider in Oklahoma– 2000+--continuing recalls, other cases

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Food Safety:New Mysterious Bugs the problem?

Other “bugs” highlighted in media(may be microbial pathogens or parasites)

– Salmonella– Campylobacter– Cryptosporidium– Pfiesteria– Cyclospora

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Food Safety:Is imported food the problem?

Over 30 bil. Tons food

imported each yr

--40% of fruit consumed; 12% of vegs FDA samples less than 1% In short: we don’t know.

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Food Safety: Defining the Problem

There is widespread concern whether the public has access to safe food supplies and can be assured that practical preparation techniques are available/in use. This concern relates to both domestic and imported foodstuffs, as well as concerns by foreign customers w/respect to US food product.

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Food Safety Policy: Alternatives to Resolve the Problem

1. Status Quo

--Inspection, HACCP & education, private

2. Free Market

--Let market signals work (pay for quality; tech. solutions)

--Limited education programs (private/public support)

3. Increasing Regulation & Investment in Research & Technology Application

--Expand regulation from inputs to/thru consumer

--Expand education thru marketing chain

--Expand public support for research

--Expand public support to apply technological solutions

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Food Safety Policy: Background Issues

Risk Acceptability--Tolerance Options:– Zero Tolerance– De Minimus (Negligible) Risk (1/1 mil)– No Significant Risk (1/100,000)– Risk Benefit (Benefits > Costs)

Biotechnology Information & Labelling Irradiation “Traceback” Free Market

???

FOOD

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Is Our Food Supply Safe?Are Ag Chemicals a Health Hazard?

PRIVATE CHOICES & PUBLIC ISSUES: “Americans decide as a matter of public policy how much risk they are prepared to tolerate, but they do not do it in the same way at all times in all places & in all contexts. . . .”

D. Kennedy, Former FDA Commissioner

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Is Our Food Supply Safe?Are Ag Chemicals a Health Hazard?

EXAMPLES– Saccharine

– Caffeine

– Alar & Apples

– Nuclear Power

– Tobacco

– Autos

– E.Coli/meat consumption

– Alcohol

– Cyanide/Grapes

– Water

– Red food dye/M&M’s

– Sweets

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The Public Issue of Food Safety “Determination of ‘safe’ food does not necessarily

imply zero risk but rather a personal & societal judgment about the level of acceptable risk. The basic economic problem . . . is one of balance between acceptable risk . . . in terms of health consequences, & cost.” Sporleder & Kramer, ‘89

Historical context to issue; 1960s (additives), 1980s (pesticides), 1990s (microbial)

Issue has shifted from scientific debate to consumer, media & political debate

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Cancer/Other Life-Threatening Risks of Common Substances (Ames, Wilson, Crouch)

Source RiskPCB’s 1/15 million

DDT/DDE 1/10 million

Tap water 1/3.3 million

Peanut Butter(2T) 1/115,000

Diet Cola 1/60,000

Background radiation 1/50,000

Raw mushroom(1/day) 1/35,000

Home accidents 1/9,000

Police work 1/4,500

Auto accident 1/4,200

Beer(12 oz/day) 1/1,200

Wine(8 oz/day) 1/750

cigarettes (pack/day) 1/300

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Top Food/Food Safety Hazards/ Concerns: Perception Vs. Reality

Consumer perception: 1990: pesticide residue in food

1997: both pesticides & food-borne diseases

SCIENTIFIC FACTS BASED ON ANALYSIS (ranked in order):1. Food-borne diseases

2. Malnutrition

3. Environmental contaminants (lead/mercury)

4. Naturally occurring toxins

5. Pesticide residue

6. Deliberate food additives

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Food Safety: Scientific Studies--results

Ames study:– 99.9% of carcinogens in diets result of natural

toxins in plant– By weight, natural toxins about 10,000 times

more concentrated in plants than synthetic chemicals

Pesticide residue-tested food:– 67% --no residue– 96% --residue in allowable limits– <1% --exceeds federal tolerance

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Alternatives To Reduce Food Safety Concerns

1. General education on risks

2. Improve food prep skills

3. Eliminate environmental contaminants

4. Increase testing procedures/regulation

5. Certify foods as

Pesticide-free

6. Eliminate chemical use

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Food Safety Policy Alternatives/Consequences: Status Quo Inspection HACCP FQPA (Food Quality Protection Act) FDA Guidelines Education Likely Consequences

– Continued federal/state/local outlays for inspection/enforcement & education

– Public acceptance of relative food safety levels– Private sector push to minimize HAACP implementation cost– FQPA is controversial, & commercial ag is seeking changes– Some increase in food prices

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HACCP--What is it?

Hazard Analysis & Critical Control Points– science-based preventive approach that sets new

requirements for slaughter & processing plants – Industry identifies production, manufacturing &

transportation points where contamination could occur, then implements control measures

All plants implementing HACCP since 2000

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HACCP (continued)

7 Steps:

1. Analyze hazards

2. Identify critical control points

3. Establish preventive measures

4. Establish monitoring measures

5. Establish corrective actions

6. Establish effective recordkeeping

7. Establish verification procedures

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Food Safety Policy Alternatives/Consequences: Free Market Let market signals work

– Public, thru trial/error, would find where to purchase safe food, what brands to avoid, how to store/prepare food safely

Limited public education– Some ongoing federal/state/local public education programs

informing producers/processors/retailers/ consumers about safe food handling, storage, preparation

Likely Consequences– Rise in incidence of disease/death

– Increased expenditures on health care

– Decline in food prices

– Changes in consumer preferences/behavior

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Food Safety Policy Alternatives/Consequences: Increasing Regulation & Investment in Research/ Technology Application Expand regulation from inputs to consumer Expand education Expand public support for research Expand public support to apply technological solutions Likely Consequences

– Increased federal/state/local outlays– Increased public confidence in food safety– Mixed results on global competitiveness– Decline in food imports– Increase in food prices

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Food Safety Policy: What can consumers do?

Become more informed on issues, policies & safe food handling/ preparation techniques (County Extension can help)

Most residue, microbial & parasitic problems can be alleviated by practices such as proper storage, washing and cooking

Note the cleanliness of restaurants & their record of violations

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Food Safety Policy: What can farmers & ranchers do?

1. Become more informed about issues, policies & production practices that keep food safe (County Extension can help)

2. Proper use and disposal of chemicals (follow labels), & considering integrated pest management practices can minimize problems.

2. Educate the public on practices used

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Food Safety Policy: What can the voting public do?

1. Continue to let interest groups & elected representatives know their needs.

2. Become more aware of the policy alternatives & their consequences.

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Food Safety Policy: What can agribusiness do?

1. If you handle inputs into the food production process, be aware & advise producers on toxic effects

2. If you handle/process produced food to market direct/value-added, be aware of risk of marketing unsafe food

3. Be aware of & in compliance with appropriate regulations

4. Invest in R & D for safe food processing

5. Partner w/public educators to improve consumer awareness & responsibilities.

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Food Nutrition and Obesity—A Public Problem?

There is widespread concern that Americans, especially children, are not eating nutritiously, in part contributing to the onset of many serious health problems, including obesity which may be at epidemic proportions.

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Food Nutrition/Health Policy Options

Education Labeling Food Assistance

– Food Stamps

– Food Distribution Programs

– School Lunch Programs

– WIC

– Welfare Reform

Change farm bill programs Free Market

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Summary

Food policy issues include: Price & availabilityMarketing shareStructural changesFood safetyFood nutritionHunger--issue is economic (distribution/development)

Food safety--current primary issue Government role--emerging issue World hunger continues

– With population pressures, this may be the single biggest issue

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APPENDIX

A. HACCP (slide 38)

B. E. coli (39-40)

C. FSRIA 02 Nutrition Programs (41-42)

D. Obesity (43-56)

E. Biosecurity (57-60)

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HACCP--ADDENDUM

Estimated “3-5 yrs to develop competent inspection force & undo 90 yrs of practice” (The Kiplinger Agriculture Newsletter, 10/24/97)

Traditional mechanism in place until phase-in complete HACCP may cost Meat & poultry plants $1.3 bil over 20

yrs, but savings from reducing food risks 20% are estimated at $1.9 bil in health costs & lost productivity

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E.coli 0157:H7--Addendum

Significant because:– Affects all age groups (diarrhea, abdominal pain,

intestinal bleeding, kidney failure)– has low infectious dose– is acid-tolerant– is especially associated w/ruminants

Less than 10 cells may cause foodborne illness Hardy, long survival Successful prevention: reduce/eliminate presence, rather

than preventing pathogen growth HACCP can reduce risk, but not infallible

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E.coli 0157:H7--Addendum (continued) What’s effective in killing it?

– heat pasteurization (milk & juice)– ionizing radiation (meat*, fresh fresh fruits, vegs)– steam pasteurization (carcasses)– NOTE: not yet approved for beef & seafood

Incidence: – 3% of dairy calves; 2% of feedlot cattle– raw milk, apple cider, water– dry-cured salami– lettuce, produce from manure-fertilized gardens,

potatoes, radish/alfalfa sprouts, yogurt, sandwiches

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FSRIA 02 Nutrition Program Update (May 04)

International School Lunch: USDA issued a final rule implementing the McGovern-Dole International Food for Education and Child Nutrition Program.

Nutrition: USDA implemented Food Stamp rule changes which simplify the program and allow many legal aliens to be eligible for program benefits on the same basis that citizens are eligible.

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FSRIA 02 Title IV – Nutrition Programs Update (May 04)

First Year: – Funded Farmers’ Market Nutrition Programs for seniors and for

WIC recipients at over $30 million in FY 2003. – Implemented Food stamp rule changes which simplify the

program and allow many legal aliens to be eligible on the same basis that citizens are eligible.

– Provided $6 million to schools in a pilot to increase fruit and vegetable consumption. 

Second Year: – Issued purchase specifications involving irradiated food

products for use by schools wishing to purchase such products for school feeding programs.

– Awarded $5 million in food stamp participation grants to State agencies.

– Submitted EBT implementation report to Congress.

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The Claims about the Source of Obesity and Overweight Trends in the US

“The source is behavioral.”– Sedentary life/work– Affluence– Bad eating habits– Lack of exercise

“The source is the food system & that leads back to human behavior.”– Pre-packaged, over-processed foods– Fast food– High fat/cholesterol/sugar/carbohydrates– Food additives

“The source is govt payments to farm programs that cause low food prices that causes poor behavior.”

“The source is medical/organic (genetic, etc.).”

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Research & Claims about Obesity

Recent claims/studies suggest farm programs contribute to obesity

The argument:– Govt subsidies encourage production of foodstuffs that

contribute to obesity (sweetener, hi carbs, hi fat, etc) Other studies The Journal of Economic Perspectives: lower food prices couldn't cause obesity....that prices simply have not fallen enough and food demand is not that elastic

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US Overweight and Obesity by Age, 1960-2002 (% of population)*

-10

0

10

20

30

40

50

60

70

1960-62

1963-65

1966-70

1971-74

1976-80

1988-94

1999-2002

Children 6-11 yrs

Adolescents 12-19 yrs

Adults 20-74

Linear (Children 6-11yrs)Linear (Adolescents 12-19 yrs)Linear (Adults 20-74)

Note: some youth data not available in 1960-70

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US Direct Government Payments, 1960-2004

-5

0

5

10

15

20

25

govt payments

Linear (govtpayments)

1996 Farm Act

$ Billion

*Projected

2002 Farm Act

$15.7 b.

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US Nutritional Program Spending, 1974-present ($m)

0

5000

10000

15000

20000

25000

30000 Food Stamp Program

Women, Infant &Children's Program

National SchoolLunch Program

School BreakfastProgram

School Milk Program

CHILD/ADULTCARE FOODPROGRAM

Linear (Food StampProgram)

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Some Thoughts on Causation

Complex issue Farm programs and nutrition programs have different goals, and

different outcomes Difficult to separate farm and nutrition programs/spending when

medical profession disagrees on basic causes of obesity Co-incidence of increasing trends in obesity and government

farm program payments and nutrition program spending doesn’t prove causation

Correlation between obesity government payments and nutrition program spending doesn’t prove causation

If there is a relationship between what we encourage farmers to grow, what we educate the public on with respect to nutrition and obesity trends, it will likely take decades to change the current structure and support systems (consider tobacco as a model)

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Alternative Responses to the Obesity Situation in US

1. Status quo2. Aggressive research programs funded by private

sector and government3. Reduction of nutrition program spending and

government involvement, allowing private sector and consumers to find resolution

4. Reduction of farm program spending to reduce government incentives for existing mix of food production

5. Aggressive education program funded by private sector and government

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Status Quo: Likely/Potential Consequences

Continuation in trends of health problems Continuation in trends of federal nutrition program

spending Continuation in trends of federal farm program

spending Continued opportunity for private sector response

– Possible medical/medicinal responses that reduce or alter health problem trends for those who can afford it

– Consumers could choose to change behavior with resulting improvement in health

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Aggressive research programs funded by private sector and government: Likely Consequences

Increased spending likely to increase prices of pharmaceuticals to cover research expense

Increased spending likely to increase federal budget deficit or taxes, or force further cuts in other federal programs

Could result in breakthroughs in:– nature of obesity– more certainty with causes– New medical or alternative therapies and responses

that improve health

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Reduction of nutrition program spending and government involvement: likely consequences

Uncertain impact on health trends (no studies to indicate this will improve health trends)

Private sector likely to pick up advocacy of various nutrition regimes– More likely to benefit those who can afford it and leave

behind those who can’t– Information likely to be less objective than government

info and biased in favor of profit potential Decreased federal spending will improve federal

deficit situation or give decision makers options for alternative use of funds

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Reduction of farm program spending: likely consequences

Uncertain impact on health trends (no studies to indicate this will improve health trends)

Decreased federal spending will improve federal deficit situation or give decision makers options for alternative use of funds

Decreased farm income support likely to have adverse impact on program farms in short run

54

Aggressive education program funded by private sector and government: likely consequences

Uncertain impact on health trends if more of the same

Increased spending likely to increase prices of pharmaceuticals to cover program expense

Increased spending likely to increase federal budget deficit or taxes, or force further cuts in other federal programs

Begs the question: Do we know what we should be educating consumers to do beyond the standard message “diet and exercise”?

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Implications for Agriculture, Federal Support & Education Programs

Obesity alone not likely to be a major reason to cut/alter farm program support

Obesity may be a contributing factor (w/budget deficit, trade talks) to make some adjustments

Obesity likely to be a key factor in continued evolution of nutritional programs that could discourage consumption of some ag production (grains, meat), but not likely significant in near term

Obesity likely to be a key factor in encouraging consumption of vegetables and some nuts, and the use of local markets for fresh and less processed product

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Implications for Agriculture, Federal Support & Education Programs (cont.)

Further evaluation of what it means that there is a coincidence between increases in farm program payments, nutrition program spending and obesity– Are either farm subsidies or nutrition programs or both actually contributing

to obesity?– Would obesity trend be worse if we didn’t have the level of farm subsidies or

nutrition programs?– Is the relationship just coincidental or spurious?

Further science needed on what causes obesity and what “good nutrition” means

Do we need a new direction in or more funding for nutrition programs and farm support?

There is a need for public extension educators to increase the understanding of the public on this subject

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Another Emerging Food Chain Issue:Agrosecurity/Biosecurity

An issue before 9/11, that turning point has shifted focus from natural/accidental incident concern (mad cow, food poisoning, etc) to acts of terrorism

All sectors of food chain at risk (input, production, processing, distribution thru retail to customer)

Both domestic and global markets at risk Magnitude and breadth of the problem suggests the

complexity of the issue Traceability and impact on cost becomes critical

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At each control point in the farm,the pack house, the trucks, the containers, the repackaging centre,the Retailer DC, lot numbers andbar codes are created linking all Traceability information to the very beginning

SUPPLIERCentral

TraceabilityDatabase

Pack House 1

Pack House 2

RETAILREPACKING

RETAIL DISTRIBUTION

CENTER

Tenerife

Port

Cadiz

Port

Store 1

Store 950

Store 267

Tracing Fruit & Vegetablesfrom 4500 farms to 950 supermarkets

RETAILERCentral

TraceabilityDatabase

Farm 1

Farm 376

Farm 2763

Farm 4499

TraceAbility PartnersSupply Chain Integrators

Goods Flow

Information FlowManual label

XML

XML

XML

XML

XML

XML

XML

XML

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Tracing Processed FoodPasta Example

Salt receiving

Pepper receiving

Flour receiving

Eggs receiving

Salt plantCuracao

PepperIndia

Flour MillBelgium

Egg FarmBelgium

Importer/Retailer DC

Store 78Store 1

Store 190 Store n

Physical flow

Traceability flow

**

**

*

*

* * *

Transfer to

Process Hall

*

*

*

*

*

*

*

*

*

* External control pointvia XML

* Internal control pointplant

TraceAbility PartnersSupply Chain Integrators

Each * is a control point and generates a traceabilitylot number tracing back to the beginning

PlantTraceability

Database

PlantAdmin

Database

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DataBase

RepackagingCentre

XML

TraceabilityDataBase

Retailer

RetailerQuality

Management

RetailerERP

network

network

Stores

Smallfarm

Largefarm

Shipper

XML

Manual

DataBase

ExporterXML

DataBase

Importer

XML

XML

Via an electronic Advanced Shipping Notice,files with traceability information are attached, so that from each data base has complete traceability back to the field on line

TraceAbility PartnersSupply Chain Integrators

Data Flow from Source to Retailer via each intermediate Data Base