Search Farmer Goes to Market

Search Site
Monday February 19, 2018

Nebraska joined a list of 11 other states in early December pledging to back Missouri Attorney General Josh Hawley's renewed bid to sue California before the Supreme Court over that state's cage-free egg requirements.

Hawley's complaint argues that California law, which began as ballot initiative Proposition 2 and eventually took effect in 2015, violates the portion of the U.S. Constitution that forbids one state from restricting commerce between that state's citizens and another state's.

The lawsuit contends that although California Prop 2 may have began with the intent of improving the welfare of egg-laying hens and protecting public health by requiring California farmers to provide birds with larger and more stimulating cages, it quickly turned into little more than trade protectionism. After restricting its own farmers to a more costly production system, his suit says, California quickly discovered the economic reality that eggs from other states would begin flowing in to meet the demand for cheaper eggs. California's Assembly Bill 1437, passed in 2010, thus sought to extend the regulation to producers outside California in order to "level the playing field."

"Because Proposition 2 had already imposed these restrictions on California producers, the sole purpose and effect of AB 1437 was to regulate the conduct of non-California egg producers," which, Hawley argues, is not permitted under the Commerce Clause of the Constitution.

The lawsuit also argues that since California's law took effect in 2015, it has cost consumers nationwide up to $350 million annually because of higher egg prices.

A federal appeals court panel rejected similar claims last year in a separate case brought by six states, ruling that they failed to show California's law would affect more than just individual farmers. Missouri's latest lawsuit seeks to address that by citing an economic analysis of the California law showing the cost burden is widespread. Other plaintiff states are Alabama, Arkansas, Indiana, Iowa, Louisiana, Nevada, North Dakota, Oklahoma, Utah and Wisconsin. 

California produced about 5 billion eggs and imported an additional 4 billion from other states in 2012, according to the lawsuit. Of those out-of-state eggs, 30 percent came from Iowa, the nation's top egg producer. About 13 percent came from Missouri, the second-highest percentage cited in the lawsuit.

As a direct result of AB 1437, egg farmers in other states have incurred and will incur costs that are between $228 million and $912 million to comply with AB 1437, based on conservative assumptions, Hawley argues. These costs will be passed on to consumers, increasing prices nationwide by as much as 1.73 percent to 5.12 percent.

California's original Prop 2...

  • Requires that calves raised for veal, egg-laying hens and pregnant pigs be confined only in ways that allow these animals to lie down, stand up, fully extend their limbs and turn around freely.
  • Grants exception for transportation, rodeos, fairs, 4-H programs, lawful slaughter, research and veterinary purposes.
  • Provides misdemeanor penalties, including a fine not to exceed $1,000 and/or imprisonment in jail for up to 180 days.

Like Groundhog Day, the political advocates for environmental reform were out immediately following the devastation wrought by Hurricanes Harvey, Irma and Maria, with dire predictions for more environmental havoc because agriculture is contributing to global warming that sparks more and bigger hurricanes.

"With climate change increasing the likelihood and intensity of storms," says the environmental group Food and Water Watch, "now more than ever it’s time to get rid of factory farms."

"Becoming Vegan or cutting down on your own personal meat consumption could be the single most effective action that you can do to help reduce green house gas emissions," argues another environmentalist site, claiming eating meat is a major cause of gases released into the atmosphere that have the potential to cause global climate warming and bigger, more frequent hurricanes.

But is it true?

The World Resources Institute, an advocacy group for climate protection, alternative energy and environmental sustainability, published these detailed graphics to help visualize the real contributors to the carbon dioxide, methane, nitrous oxide and other minor gases, both on a global scale and for the United States only, that may contribute to global warming.

Where do greenhouse gases come from?

A careful review of the World Resources Institute graphics demonstrates what U.S. animal agriculture has argued for years: If everyone cut meat from their diets, it would indeed have an effect on reducing greenhouse gas emissions. However, the effect would be small. Arguing that going vegan is the most important change people must make to prevent global warming is a grossly oversimplified exaggeration.

The chart shows livestock production globally contributes an estimated 5 percent of greenhouse gases directly (purple bar), most of which is methane from manure and animal digestive processes, an important greenhouse gas. But if livestock's share is only 5 percent globally—and just half that percentage in the United States—how then do advocates for veganism arrive at their conclusion? They do so by also including in agriculture's share the 18 percent contribution caused by deforestation (green bar in the WRI graphic.) That deforestation represents conversion of forest lands that store carbon into pasture and cropland to grow not only feed crops, but crops eaten by people, as well. When those contributions are taken into account, the United Nations estimates animal agriculture is responsible for about 9 percent of carbon dioxide emitted by human activity worldwide.

But that contribution pales in comparison to fossil-fuel use. Transportation, electricity and heating account for almost half of all carbon dioxide emitted across the globe. And even more confounding, in the developed countries, where veganism is most vocally advocated to prevent global warming, animal agriculture as a percentage contributes even less greenhouse gas in relation to other contributors. Notice, for example, the green deforestation bar disappears completely in the WRI graphic for the United States. In this country, fossil fuels are estimated to add more than 10 times the amount of greenhouse gas emissions than raising animals for meat, milk and eggs.

Of course, that interpretation is not to minimize livestock's contribution. Animal agriculture's 2.5 percent to 5 percent is a significant source of other greenhouse gases. However, it's important to recognize the importance of technology to reduce those gas emissions. Using technology permits more food to be raised using fewer resources, which improves sustainability. Advances in productivity driven by technology in beef production over the past 30 years, for instance, have reduced the carbon footprint and overall environmental impact of its production, argues Washington State assistant professor of animal science Jude Capper. Comparing the environmental impact of the US beef industry in 1977 to 2007, she says, shows that improvements in nutrition, management, growth rate and slaughter weights have significantly reduced the environmental impact of modern beef production. That technological boost improves beef's sustainability, she argues. “These findings challenge the common misconception that historical methods of livestock production are more environmentally sustainable than modern beef production,” said Capper.



CNBC reported in early August that with average retail egg prices at a market low of just $1.33 per dozen, consumers are—surprise!—"balking" at paying the higher cost of cage-free eggs. CNBC's grim news arrived just as the country's powerhouse animal-rights group, Humane Society of the United States, was continuing to publicly flog compliant retailers to "voluntarily" commit to the society's vision of a cage-free future by imposing the demand on their egg growers.

CNBC highlights one grower in California—ground-zero for the cage-free movement, where citizens backed a ballot initiative in 2008 to legally require that eggs in that state eventually be raised without benefit of the traditional cages. The CNBC-featured grower complains that with costs of $1 to $2 more per dozen than growers of conventional eggs, he is now being forced to sell eggs at below his cost to produce and to cut his flock.

"Despite promises by retailers and restaurants to convert to cage-free," sums up CNBC's Jane Wells, "some of them are starting to change their minds. And that's no yolk."

Here's the not-so-funny lesson for the food chain: The market stubbornly prevails. Food producers and retailers who rush to try to turn political virtue-signalling into a marketable product trait may get stuck paying the costs. That's especially a risk when outside interests like HSUS push through legislation and regulation without regard for either true consumer demand or food-production realities.

The latest evidence of that reality: University of Connecticut ag economics professor John Bovay, in a study scheduled for publication in the journal Agricultural Economics looked at the impact on consumer demand when tomato producers, under pressure from the U.S. Food and Drug Administration, adopted similar "voluntary" food-safety standards in the face of food-poisoning outbreaks in 2007.

Florida's tomato-grower organization wrote the requirements into a federal marketing order that applied to essentially all tomatoes grown in Florida, while the California grower cooperative whose members produce the vast majority of fresh California tomatoes likewise required it of the cooperative's members.

Bovay used USDA terminal market price data and the shipping-quantity data to track consumer demand for tomatoes from five different production regions before and after the standards were imposed: Florida and California, and Mexico, Canada and the rest of the United States.

His analysis shows no evidence that demand for fresh tomatoes improved in response to the collective food-safety practices. Adopting standardized, collective, food-safety practices was relatively unimportant in determining demand for fresh tomatoes, he says, even as FDA and consumer groups were demanding farmers produce them.

The pattern is similar to the outcome of mandatory country-of-origin labeling (COOL) of seafood, meat and other perishable commodities in 2002's Farm Bill, he says. Although COOL was shown to have an effect on demand for shrimp, according to one study, other work showed it made no significant impact on demand for U.S.-raised meat.

The implication for produce growers and handlers who adopt supplier standards is as grim as it is for the CNBC egg grower: They are likely to incur additional costs—$10,400 per regulated farm in the tomato growers' case—without improving either the perceived quality or demand for their products. "When the costs of complying...are passed through to consumers," Bovay notes, "some substitution to products unaffected by the rule (and with lower relative prices) is likely to occur."

If benefits to society do come out of those standards, whether in the form of reduced food-borne illness in the tomato growers' case or in the form of questionable improvements to animal welfare in the case of cage-free eggs, farmers, handlers and retailers are likely to subsidize those benefits, not get paid for them.

The effect should make perfect theoretical sense, writes Swedish organic advocate and sustainability consultant Gunnar Rundgren. The unregulated market offers no guarantees. And he believes that free market is not at all efficient in translating a consumer's true willingness to pay for indirect benefits of a product into an increase in income for the farmer who agrees to make changes in production to accomodate. In the particular case of "fair-trade" items, he says the balance of power still remains tilted against the farmer.

"Buyers...dictate most of the conditions. Their view of what is fair and just is what is codified; as are their definitions of quality rules. There are no codes of practices for the supermarkets to follow, they can and sometimes do mark up fair trade products as much as they want. The consumers who buy the products are also not subject to any commitments—they can buy or not buy on a whim. The producers," he writes, "are mainly objects in the marketing..., in much the same way as the fake Grandma is on a biscuit-maker’s packaging."


Should EBT replace summer school lunch?

Now that Nebraska children have returned to school, experts predict a large share will, overnight, have better access to reliable healthy meals through the federal program that cuts the cost of school lunches for poor families. During the school year, the federal government subsidizes free and reduced-price lunches for an estimated 22 million schoolkids in this country; on average, 41 percent of Nebraska schoolkids eat free or at a discount—more than 90 percent in some districts.

But in summer, that number drops to under 4 million across the country, distributed through 50,000 locations. That inaccessibility by most kids who aren't in summer school has led some policymakers and advocates to be concerned about whether those school-age children are going hungry during the summer.

To test that question, Congress earmarked funding as part of the 2010 Agriculture Appropriations Act to increase the amount of EBT funds it sends to those households getting free school lunch in a handful of test-pilot locations. The "Summer EBT for Children" increased payments to households with school-age children who, in the prior school year, had been on the reduced-price and free lunch programs. A total of ten state and Indian-reservation agencies in 16 sites participated in the evaluation. Over the course of the pilot's three years, program benefits were distributed randomly to about 100,000 households.

"The findings are simple and dramatic," according to a new report on the pilot's results, soon to be published in the journal Applied Economic Perspectives and Policy: A $60 per-child monthly SEBTC benefit reduced the level of so-called very low food security among children by one-third—a three percentage-point decline from a control group level of 9.1 percent. Very low food security means someone in the household was hungry at some point in time but could not afford to eat. The benefit increase also reduced food insecurity among children by one-fifth—an 8.3 percentage-point decline from a control group level of 43.0 percent. Food insecurity means someone in the household may have been able to eat whenever hungry, but couldn't afford to eat what they wanted at some point.

Affect of additional summer EBT payments on food security

Additional benefits also improved the food security for the adults in the household alongside the children, the study shows, and the impact may have been even larger among households the poorer they were. These results, the authors write, suggest that a nationwide SEBTC-like program would have substantial impacts on child, adult and household food security. Funding for such a nationwide implementation of the benefits program that would shift food purchasing subsidies from schools to retail grocers would have to be passed by Congress, likely as part of the next Farm Bill coming in 2018. Interested retailers should monitor developments closely, as changes are likely to be complicated by a concurrent move to possibly block-grant SNAP funding to states.

S5 Box