Effects of Agricultural Policies on gHuman Nutrition and Obesity

Stephen A. VostiJulian Alston (PI)Julian Alston (PI)

Daniel SumnerLucia KaiserLucia Kaiser

Department of Agricultural and Resource Economics

Agricultural Issues Center

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and Resource Economics

This project was supported by the National Research Initiative, CSREES, USDA, Grant 2006-55215-16720 (016501).

Motivation

“[Our] cheap-food farm policy comes at a high price: …[with costs including] the obesity epidemic at home –[with costs including] the obesity epidemic at homewhich most researchers date to the mid-70s, just whenwe switched to a farm policy consecrated to theoverproduction of grain.” (NYT, 2003, Michael Pollan)overproduction of grain. (NYT, 2003, Michael Pollan)

• This view has become accepted as a fact, in spite of – No real evidence presented– Questions about the nature of effects– Grounds for skepticism about the size of effectsGrounds for skepticism about the size of effects

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Objectives and Research Activities• Key Objectives

– Better understand the effects of selected agricultural policies on obesityy

– Identify policy culs-de-sacs• Based on policy-outcome links that never existed• Based on policy-outcome links that have changed over time

Id tif i lt l li ti f h l i t dd th– Identify agricultural policy options for helping to address the obesity problem

• Mechanisms• Unexpected side-effects• Likely size of effects

• Selected Elements of Our Research Program– Price Trends

F Bill– Farm Bill• Commodity Subsidies• Food Stamp Program

– Market for Sweeteners

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– Latino Toddlers Participating in WIC Program

Trends in Commodity and Food P iPrices

&One Key Driving Force

or“Healthy Foods Are Increasingly OutHealthy Foods Are Increasingly Out

of Reach to the Poor (and Bad

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Agricultural Policy Is Responsible).”

Nominal Commodity Prices Received by Farmers Have Increased

Nominal Commodity Prices Received by Farmers Have IncreasedFarmers Have Increased Farmers Have Increased

600

400

500

9=10

0)

200

300

Pric

e In

dex

(194

9

100

00P

01949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

Year

Fruit and nut crops Vegetables Field crops Nur & greenhouse Livestock Specialty crops

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Fruit and nut crops Vegetables Field crops Nur. & greenhouse Livestock Specialty crops

Source: Alston, J. M. and P. G. Pardey. 2006. Public Funding for Research into Specialty Crops. Paper Prepared for the CAL-MED Workshop, USDA ERS

Real Commodities Prices Received By Farmers Have Generally Declined

Real Commodities Prices Received By Farmers Have Generally DeclinedFarmers Have Generally DeclinedFarmers Have Generally Declined

120

140

80

100

9=10

0)

.

60

80

ce In

dex

(194

9

20

40Pri

01949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

YearFruit and nut crops Vegetables Field crops

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Fruit and nut crops Vegetables Field cropsNur. & greenhouse Livestock Specialty crops

Source: Alston, J. M. and P. G. Pardey. 2006. Public Funding for Research into Specialty Crops. Paper Prepared for the CAL-MED Workshop, USDA ERS

Prices Paid By Consumers Have Also Generally Fallen, but Less Swiftly Than Commodity Prices

Consumer Prices for Eggs Deflated by CPI (food at home)

1.001.201.40

Consumer Prices for Ground Beef Deflated by CPI (food at home)

2.00

2.50

0.000.200.400.600.801.00

980

984

988

992

996 00 04

$/do

z.

0.50

1.00

1.50

$/lb

.

19 19 19 19 19 20 20

Year

Eggs, Grade A Large

0.00

1980

1984

1988

1992

1996

2000

2004

YearGround Chuck, USDA Choice Cons.Food_Prices!$N$7, 100% Beef

Consumer Prices for Chicken deflated by CPI (food at home)

0.80

0.90

1.00

Consumer Prices for White Sugar Deflated by CPI (food at home)

0 50

0.60

0.70

0.40

0.50

0.60

0.70

$/lb

.

0.20

0.30

0.40

0.50$/

lb.

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0.30

1980

1984

1988

1992

1996

2000

2004

Year

Chicken, w hole, fresh

0.10

1980

1987

1994

2001

YearSugar, w hite, all sizes

Almost All Consumer Prices forPrices for

Foods Have Fallen, Some More Swiftly Than Others

White Bread: 0.0Rice: -.029Pasta: -.020

Lettuce: -.009Tomatoes: +.004 Turkey: -.026Bananas: -.013

Apples: 009

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White Sugar: -.024 Butter: -.013

Statistics report proportional changes in real prices over 1980-2003: Data sources USDA

Milk: -.011Cheese:- .033

Carrots: -.009Potatoes: 0.0

Chicken: -.012Eggs: -.019 Beef: -.021

Apples: -.009Oranges: 0.0Grapefruit: -.004

Trends in Aggregate Agricultural ProductivityProductivity

Index of Land Productivity (1977=100)

120

140Index of Labor Productivity

(1977=100)

140

160

40

60

80

100

40

60

80

100

120

140

0

20

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

YearLand Productivity

0

20

40

1910

1914

1918

1922

1926

1930

1934

1938

1942

1946

1950

1954

1958

1962

1966

1970

1974

1978

1982

Year

L b P d ti itLabor Productivity

Total Factor Productivity Index(1948=100)

250

300

50

100

150

200

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0

50

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

YearTFP

Public Sector and Private Sector Trends in Agricultural R&D Spendingg p g

Total Federal and State Spending on Ag. R&D (1925-1997)

3000

3500

1000

1500

2000

2500

mil.

$

Total Private Sector Spending on Ag R&D (1960 1992)

0

500

1925

1929

1933

1937

1941

1945

1949

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

Year(1960-1992)

2500

3000

3500

4000

$

Total Ag. R&D Spending

0

500

1000

1500

2000m

il. $

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0

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

YearPrivate Ag R&D Spending

The Effects of U.S. Farm Subsidies on ObesitySubsidies on Obesity

or“If It Weren’t for Corn SubsidiesIf It Weren t for Corn Subsidies, We’d All Be as Slender as Reeds”

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Logical Sequence Linking Farm Subsidies to Obesityto Obesity

• First, farm subsidies must have made farm commodities that i i di f l i l f i f dare important ingredients of relatively fattening foods

significantly more abundant and cheaper.

• Second, the lower commodity prices caused by farm subsidiesmust have resulted in significantly lower costs to the food industry, and cost savings to the food marketing firms must h b d t i th f f l ihave been passed on to consumers in the form of lower prices of relatively fattening food.

Thi d f d ti tt t h h d• Third, food consumption patterns must have changed significantly in response to these policy-induced changes in the relative prices of more-fattening versus less-fattening foods

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foods.

USDA Budget, 2007

USDA Program Expenditure in 2007

Percent of Total

billions of dollars percentFood, Nutrition, and Consumer Services 54.4 43.3

Farm Service Agency (farm programs) 33 9 27 0Farm Service Agency (farm programs) 33.9 27.0Rural Development 14.4 11.5Natural Resources and Environment 7.7 6.1Foreign Agricultural Service 5.2 4.1Risk Management (mainly crop insurance) 4.2 3.3Res Educ and Econ (mainly ag R&D) 2 3 1 8Res., Educ. and Econ. (mainly ag. R&D) 2.3 1.8Marketing and Regulatory Programs 1.7 1.4Other 1.8 1.4

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TOTAL 125.6 100.0

Fundamental Misconceptions Regarding The Effects of Agricultural PoliciesEffects of Agricultural Policies

• Directions of Effects on Production and Prices Are Not the Same for All Policies, e.g., …– Sugar is more expensive due to trade and other policies– Corn and soybeans are probably cheaper than they otherwise would be – Dairy policies make milk products more expensive, but policies that make

animal feed cheap work in the opposite direction– Some of these effects might actually help reduce obesity

• E.g., more expensive sugar and dairy products may reduce calorie and fat consumption

• Magnitudes of Effects Are Generally Small, e.g., ..– Policy effects on the prices of most field crops (e.g., wheat, corn and

soybeans) are small– Policy effects on other commodities (e.g., rice, cotton and sugar) are

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larger

Production and Price Effects of Eliminating U.S. Commodity Programs and Policies

% Change in Output in 2016*

% Change in Producer Prices in 2016*p

Soybeans -2.86 -1.14 Wheat -7.58 1.52 Maize -3.79 0.26 Ri 11 71 3 87Rice -11.71 -3.87Cotton -13.88 -6.10 Cane and beet -33.31 -15.30 Fruit and vegetables 4 42 -5 16Fruit and vegetables 4.42 -5.16Beef cattle 1.44 -3.31 Pigs and poultry 0.41 -0.01 Milk -0.45 -0.01

Source: McDonald et al. 2006, reported in Alston 2007.

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(*based on the differences in 2016 between the prices and quantities that emerge from a status quo policy scenario and those that emerge from a scenario in which all commodity programs are gradually eliminated over the period

2006-2016)

Conclusions for the U.S. and Polic ImplicationsPolicy Implications

• The U.S. Farm Bill’s Commodity Programs are y gInefficient and Unfair– These are good (and sufficient) reasons to eliminate them – But do NOT expect that action to affect obesity, because …

• Commodity Programs’ Effects on Commodity Prices A G S iAre Generally Small and Varied

• The Effects of Commodity Prices on Food Prices Is D li iDeclining

• The Responsiveness of Food Demand to Changes in Food Prices Is Generally Low

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Food Prices Is Generally Low

An Economic Assessment of A Proposed Ch t th F d St PChange to the Food Stamp Program

• Proposed ChangesR i h U f F d S f– Restrict the Use of Food Stamps for ‘Unhealthy’ Foods

Wh W ld h Lik l Eff O• What Would the Likely Effects On:– Food consumption of FSP participants– Food consumption of eligible non-participants

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Supply Response to Policy Change

Price(P )

The Market for “Unhealthy” Food Price(P )

The Market for “Healthy” Food

P 0

SU

(Pu)

P

SH

(Ph)

Pu,0

Pu,2

P 1

Ph,1

Ph,2

P

DU2(Ph 2, FSP1)

DU0(Ph,0, FSP0)

Pu,1

DH2(Pu 2 FSP1)

DH1(Pu,0, FSP1)

Ph,0

DU1(Ph,0, FSP1)

DU2(Ph,2, FSP1)

DH0(Pu,0, FSP0)

DH2(Pu,2, FSP1)

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0 Unhealthy Food (u ) u2 u0 u1 0 Healthy Food (h )h2 h1

1h0

Main Conclusions• Restriction of food stamps to only healthy foods

may have unintended consequencesmay have unintended consequences– If constraint is not binding (because “healthy” food

expenditure exceeds food stamp value) no effectp p )– If constraint is binding . . . .

• Reduced participation by some eligible households• Reduced consumption of “unhealthy” foods by some FSP

households => induced price changes and increased consumption of “unhealthy” foods by non-participants

• Targets and instruments– Use food stamps to provide food for the poor

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– Use other policies to encourage a healthy diet

An Economic Analysis of the yMarket for Sweeteners

or“If I W ’ f HFCS W ’d All“If It Weren’t for HFCS, We’d All

Be Svelte”

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Issues Addressed

• What Is the Influence of Farm Policy onWhat Is the Influence of Farm Policy on Changes in Added Sugar in the US Diet?

• Has Farm Policy Contributed to the Change• Has Farm Policy Contributed to the Change in Sweetener Consumption and Composition?Composition?

• What Is its Contribution Today?

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Per Capita Sweetener Consumption

160

120

140sugarcorntotal

80

100

dry

wei

ght HFCS

40

60

poun

ds

0

20

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0

19661969

197219

7519

7819

8119

8419

8719

901993

199619

9920

0220

05

Source: USDA/Economic Research Service

Industrial Use of Sugar, by Product Group

Vosti UCD/AIC/ARESource: Calculated from U.S. Census Bureau

Farm Value Share in Retail Cost f P d F d P d t

70

Bakery and cereal products

for Processed Food Products

50

60Bakery and cereal productsFresh vegetables3Meat productsDairy products3

40

shar

e (%

)

20

30

valu

e s

10

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0

19671969

19711973

19751977

19791981

19831985

19871989

19911993

19951997

199920012

Source: USDA/Economic Research Service

Changes in US Sugar Market

Correlations among raw, whole, and retail sugar prices

Time period Retail, wholesale refined

Wholesale refined, raw

Retail, rawrefined refined, raw

1960-1981 0.97 0.99 0.94

1982 2006 0 44 0 58 0 141982-2006 0.44 0.58 0.14

1995-2006 0.60 0.65 0.01

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Changes in Links Among Markets

Correlations among corn, HFCS, and carbonated drink prices

Corn, carbonated

drinks

HFCS, carbonated

drinks

Corn, HFCS

drinks drinks1978-2006 -0.21 -0.30 0.42

1978-1992 -0.06 0.51 0.47

1993-2006 -0.28 0.07 0.33

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Summary and Lessons Learned

• Ag R&D Affects Commodity Prices – Corn price has fallen faster than sugar price– Corn price has fallen faster than sugar price– Price of HFCS has fallen over time and lowered

unit cost of sweetenersunit cost of sweeteners • Ag input costs are falling relative to other input

costs in food processingcosts in food processing • Today: tenuous link between farm/commodity

policy and the retail cost of sweetened goodsp y g• Evidence from other high-income countries shows

little relationship between consumption of sugar

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p p gand sugar policies

Latino Toddlers in the WIC Program

• Research Questions– What are the effects of child feeding practices on nutritional

t t d th?status and growth?– How do caregiver, household and neighborhood factors

condition these effects?• Sample• Sample

– Approximately 100 Latino toddlers from the Sacramento, California area

R h M th d• Research Methods– Baseline data collection: anthropometrics, feeding practices

(new survey instrument developed), dietary intake, socioeconomic factorssocioeconomic factors

– Second round data collection: anthropometrics, feeding practices, dietary intake, changes in key socioeconomic factors

– Econometric model to identify links

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Econometric model to identify links

Toddler Weight Status (n=94):WHO     NCHS

Normal 68 1% 77 6%

Toddler Weight/LengthNormal   68.1%  77.6%

Overweight  24.5%   16%Obese  7.4%  6.4%

Weight/Length Z-Scores

WHO Standards

WIC Sample Children

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Preliminary WIC Study ResultsMaternal BMI (n=95):

Toddler Macronutrients( )

Normal = 22%Overweight = 37%

Obese = 41%

20%14%

% calories from fat

blb d

Oils, and Lard2 0%

Non‐Alcoholic Beverages

0.9%

Alcoholic Beverages1.5%

% calories fromcarbohydrate% calories fromprotein

Household Characteristic Mean

size of household 5.24

Vegetables9.9%

Fruit 10%

Miscellaneous

Canned and Bottled Goods4.7%

Baby Food0.3%

2.0% Other Miscellaneous 

Foods10.6%

66%

% live with extended family 0.35

number of children 2.30

Seafood4.0%

Cookies, Crackers and Baker Goods

Dried Beans, Pasta, and Rice 2.0%

Miscellaneous Dry Goods

2.2%

born in US 0.23

speak English at home 0.14

employed 0.35

Meat and Poultry 22%

B d d C l

Tortillas5.0%

and Bakery Goods4.7%

% of Monthly

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years of school 10.88

monthly income 2215.13Prepared Foods

4.2%

Dairy Products10.7%

Breads and Cereals6%

% of Monthly Food Expenditures

Complex Links among Factors Potentially Influencing Toddler Nutritional Outcomes

Neighborhood LevelFood Outlets

TypesDensities

Recreational Options

Household Level Food Purchases

Densities

Housing Characteristics

Income and Wealth

Nutritional Knowledge

Food Purchases

Food Availability

Caregiver LevelNutritional KnowledgeToddler Feeding

Practices

Employment Status

Nutritional Status

N t iti l St tToddler Level

Genetics EnergyExpendituresFood IntakeCharact.

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Nutritional Status

Next Steps

• Agricultural Policies– Specialty crop R&D– Biofuels

• Sweetener Study– Changes in market structureg– Model simulations

• WIC Toddler StudyWIC Toddler Study– Final round of data collection

Analysis and policy messages to WIC

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– Analysis and policy messages to WIC

Publications to Date• Alston, J.M., D.A. Sumner, and S.A. Vosti. “Are Agricultural Policies Making Us Fat? Likely Links between Agricultural

Policies and Human Nutrition and Obesity, and Their Policy Implications.” Review of Agricultural Economics28(3)(Fall 2006): 313-322.

• Alston, J.M. and P.G. Pardey. “Public Funding for Research into Specialty Crops.” Staff Paper Series P07-09, Department of Applied Economics, University of Minnesota, May 2007.

• Alston, J.M., and D.A. Sumner. “Perspectives on Farm Policy Reform.” Journal of Agricultural and Resource Economics32(1)(April 2007): 1-19.

• Chaidez, V. and L. Kaiser. “Early Child-feeding Practices in Mexican Americans Deviate from Current Recommendations.” Abstract published in the American Dietetic Association Journal Supplement for the American Dietetic Association Annual Meeting, September 29-Oct 1, 2007. (J Am Diet Assoc. 2007;107(supp3-Abstracts):A18)g p pp

• Beghin, J., and H.H. Jensen. “Farm Policies and Added Sugars in US Diets.” “Farm Policies and Added Sugars in US Diets”. 2008. CARD Working Paper, 08-WP 462, Center for Agricultural and Rural Development, Iowa State University. February.

• Alston, J.M., D.A. Sumner, and S.A. Vosti, “Farm Subsidies and Obesity in the United States.” ARE Update 11(2) (November/December 2007): 1-4.( )

• Mullally, C.C., J.M. Alston, S.A. Vosti, D.A. Sumner, and M. Townsend. “Proposed Modifications to the Food Stamp Program: Likely Effects and their Policy Implications.” Chapter in Elliott Blass (ed.) Obesity: Causes, Mechanisms, and Prevention, published by Sinauer Associates, Inc., Sunderland, MA, 2008.

• Alston, J.M., D.A. Sumner, and S.A. Vosti, “Farm Subsidies and Obesity in the United States: National Evidence and International Comparisons.” Forthcoming in Food Policy in a special issue “Food Product Composition, Consumer p g y p p ,Health, and Public Policy,” L. Unnevehr and E. Golan (eds).

• Beghin, J., and H.H. Jensen. “Farm Policies and Added Sugars in US Diets.” Forthcoming in Food Policy in a special issue “Food Product Composition, Consumer Health, and Public Policy,” L. Unnevehr and E. Golan (eds).

• Alston, J.M. and P.G. Pardey. “Public Funding for Research into Specialty Crops.” HortScience (2008): In Press.• Beghin J C and H H Jensen Farm Policies and Added Sugars in US Diets Food Policy (forthcoming 2008)

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Beghin, J.C. and H.H. Jensen. Farm Policies and Added Sugars in US Diets. Food Policy (forthcoming 2008). • Beghin, J.C. and H.H. Jensen. Farm Policies and Added Sugars in US Diets. CARD Working Paper 08-462.