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Thursday April 26, 2018

What would the end of GMOs cost?

You've heard the accusation: Companies that market genetically modified crops talk a good game about the need to increase farm productivity in order to feed the world, but when all things are considered, their high-tech products really do nothing to feed the hungry. Typical runs the line from Environmental Working Group, for example: "Given that creating just one genetically engineered crop variety can cost upwards of $130 million, you’d think Big Ag companies would invest in strategies that have been proven to work and less on GMOs that may not even increase crop yields. But what corporations really care about is increasing their profits, not feeding a hungry world."

But now a study, presented at this year's annual meeting of the Agricultural & Applied Economics Association by Purdue ag economics professor Wallace Tyner, makes the first real attempt to tally the economic and environmental consequences of losing the GMO traits for the major U.S. crops of corn, soybeans and cotton.

Tyner's study first collected from published scientific studies the best predictions for how much U.S. farmers would lose in productivity if they moved completely away from GMO traits. Then, Tyner and his study co-authors plugged those yield losses into a complex mathematical economic model. That model used actual economic data to model--as realistically as possible--how those productivity losses would impact the entire economy.

Their results showed losing the ability to plant GMO crops in those crop categories would cost in several ways:

■ A significant amount of land would need to be converted from other crops, cropland, pasture and forest in order to meet the global demand for food that would not go away simply because farm production declined.

■ The amount of land drawn into producing those three major crops would likely surpass that drawn into use by the entire U.S. ethanol program.

■ Environmental emissions caused by agriculture would increase by between 7 percent and 17 percent.

■ Crop prices would increase. Price changes for corn were as high as 28 percent and for soybeans as high as 22 percent under Tyner’s modeling. Those predicted price increases, again, were on average higher than those actually observed by ethanol mandates.

■ Food costs for consumers would increase by an estimated $14 billion to $24 billion per year.

Receiving his award as the 29th Service to Agriculture Award winner at the Nebraska Rural Radio Association  in Lexington, former U.S. Senator, Secretary of Agriculture and Nebraska Governor Mike Johanns paints a challenging picture of the task Nebraska's farmers are up to in the near future. 


Twitter lunch revolt

As more than 300,000 Nebraska kids head back to public school, their congressmen have also returned to Washington just in time to hear Agriculture Secretary Tom Vilsack lobbying them to quickly reauthorize the Healthy, Hunger-Free Kids Act set to expire this month.

Nebraska National Public Radio reports evidence suggests the 5-year old act, very visibly championed by First Lady Michelle Obama, has helped make the meals school cafeterias serve healthier by increasing standards for vegetables and whole grains while limiting salt and fat. A Centers for Disease Control analysis, for instance, identifies a significant increase in the number of schools serving at least two vegetables and whole grain foods daily.

On the downside, studies still show kids are wasting the food rather than eating it. Thousands of kids across the nation continue to post photos and comments to Twitter under the hashtag #ThanksMichelleObama to blame the first lady's pet program for skimpy, wasted and inedible school lunches. And now, according to the NPR report, another unintended consequence is that fewer students are buying lunch. A GAO report from last year showed as many as 1.6 million fewer students eating school lunch at the full price.

"As school cafeterias have cut back on salt, limited their selections of a la carte snacks, and mandated more fruits and vegetables, some school food administrators say it's tougher to keep paying students in the lunch line," NPR says. A recent survey by the School Nutrition Association found that 58 percent of the responding school districts reported a decline in participation in their lunch programs.  

Does the school lunch revolt mean new opportunity for the grocer? It can, if you adapt some creative merchandising of the old sandwich/chips/apple routine:

Empower the kids. Guided shopping advice can make an impact on the factor recognized as the No. 1 most important point in getting children to eat healthy, whether at home or at school: Making them feel like they are making the choice for themselves. Help parents offer choices between, say, sandwich types or fruit options, which will help involve the child in the decision, leaving them more likely to eat the offering they find in their lunchbox. Encourage shoppers to take kids along when grocery shopping and let them pick one new fruit or vegetable to try. Sometimes parents need permission to come to the conclusion its not an all-or-nothing proposition: Enticing a child to eat half a healthy lunch because they were involved in the decision is twice as good as having them discard the entire thing. "Don’t get discouraged if your child rejects a food on first taste," advises Dodge County's University of Nebraska Associate Extension Educator for Family and Youth Lisa Poppe. "It can take 15 to 20 tries before a child gets used to a new food."

Other ideas to make the brown-bag lunch more fun, according to Poppe:

  • Get a couple of cookie cutters and have kids cut sandwiches into different shapes.
  • Think beyond bread: whole-grain bagels, whole-grain pita wraps and whole-wheat tortillas. A good alternative is a whole-wheat pita pocket with hummus, shredded vegetables and grilled chicken strips.
  • Pack a variety of options to keep a child’s interest. Beat boredom by avoiding packing the same lunch every day.
  • Vary the preparation: Grilled or baked, chopped or grated, plain or with a dip.

Expand it beyond lunch. Empowering children to make their own healthy lunch choices should be part of a wider effort to get them into the kitchen. "Practice good nutrition yourself," Poppe writes. "Children learn by association — you need to be a role model. Discuss with them the benefits of healthy eating." Participation begets acceptance. Parents who start the healthy lunch decision in your aisles and move it to preparing and packaging better nutrition will experience success in moving toward healthful eating--at all meals.

Creatively offer staples. Whole-grain pockets, wraps, pasta or bread cross-merchandised with simple nut butters, cream cheese, fruit jams, cheeses or low-fat meats can still entice kids, if offered creatively. Promote fruits and vegetables that are in season and suggest creative serving ideas. Examples include baby carrots with yogurt dip or other cut vegetables with low-fat dip or hummus. And it's OK to promote small treats that also pack some nutrition: Think healthy muffins or low-fat peanut-butter treats, for instance. Even traditional sweets can help boost lunch consumption if you counsel parents to include only a small portion. Even if junior eats the two cookies first, he's likely to still be hungry enough to be tempted into the (more healthy) remainder packed alongside. Healthy budgeting of sweets throughout the day and week can be one of the most important aspects of overall healthier eating, an aspect the grocer can play an important part in promoting.

Help parents plan. The fastest way to unhealthy lunch is to throw it together as kids are going out the door in the morning. Promote healthy lunch alternative planning as another part of meal planning that begins in your store.

Make lunch your event. Don't fight forces; use them. Look for opportunities to partner with local schools and nutritional advisors to send a co-branded message that healthy choices matter--in the school and in the home--and that you're there to play your rightful role. Connect healthy lunch-related events you may not be involved in with in-store promotion and creative shelf-tagging.

  California state assemblyman Kevin Mullin said his bill to forbid selling meat, milk and eggs in the state from animals that been given an antibiotic for any purpose other than treating a disease was "inspired by the standards now in place in European nations like Denmark...," according to Public Radio International.

But new annual figures from Denmark once again reinforce a little-known dirty little secret about Denmark's antibiotic experience that's not quite so inspirational.

Legislation by Denmark in the early 1990s to similarly restrict its farmers is generally held up as the beginning of a movement Europe-wide to control antibiotic use. Today, Danish farmers, unlike U.S. farmers, may only use antibiotics to treat and prevent specific disease in specific animals, and it must be done under prescription from a veterinarian--much like California's new law requires. Those restrictions, according to advocates of similar legislation in this country, have been a success in cutting Danish animal antibiotic use in half between 1994 and 2000.

But here's the untold story, and it's not pretty.

First, a little context. The World Health Organization classifies all antibiotics, whether they're used in people or in animals, into one of three categories:

  • Critical: If an antibiotic is either the only antibiotic available or one of just a few available to treat diseases that can be transmitted by a source other than other people, it is considered the most important, or "critically important" in WHO terms.
  • Highly important: Antibiotics that meet only one of those two criteria are labeled "highly important."
  • Least important: All others are considered the least critical for protecting human health.

When Denmark banned antibiotics for "growth promotion," it was precisely that last category, those antibiotics relatively least important to human medicine, that it removed from the market. Denmark's own monitoring system proves that removing those least important antibiotics actually spurred an increase in animal disease, followed closely by heavier use of the more important antibiotics--those very antibiotics advocates argue are most important to protect from use in animals. That higher use of those more important drugs has continued to this day, despite constant pressure from government to cut it.

Danish antibiotic use

If that illustration of the law of unintended consequences weren't bad enough, here's more: When activists praise Denmark even as they condemn American farmers for using "as much as 70 percent of all antibiotics" in animals, not humans, they're ignoring an important statistical reality. In contrast to those U.S. estimates, which Farmer Goes to Market has warned you are often inflated, manipulated, and based on human antibiotic usage estimates that are unknown and formed from decades-old guesswork, the Danish government carefully counts and publicly reports all its antibiotic use, both animal and human. And the results?

The 2014 report shows the percent of antibiotics used in animals remains steady at approximately 68 percent of all antibiotics prescribed. But the alarming part of that untold story is Denmark uses 70 percent of its critically important or highly important anbiotics in animals. In the United States, precisely because farmers are still permitted to do so by the government, a large portion of antibiotics they use are those considered least important to human medicine.

Denmark really does use 70 percent of antibiotics in animals

How Wal-Mart

Food giant Walmart announced in late May it would begin requiring farms supplying its animal products to agree to meet certain standards of "humane treatment" of farm animals, including restrictions on use of antibiotics. As part of this latest move, the retailer which reportedly now controls one-fourth of the world's grocery food sales will "ask" all its U.S. fresh and frozen meat, deli, dairy and egg suppliers to watch for and report animal abuse, change buildings and management practices that crowd animals or cause avoidable pain, and write out and report on their animal-welfare policies.

Walmart's action joins those of other retailers and restaurants making similar "voluntary" demands on their suppliers. Burger King, Hyatt and Sodexo have announced they will sell eggs that come from cage-free birds only. Fast-food chain Chipotle claims it sells only “all-natural,” and “antibiotic-free” pork. McDonald’s, Applebee’s, Denny’s and Safeway are just a few of the large food buyers and sellers recently announcing they will begin or have begun to demand farmers stop using gestation crates in raising pigs.

Advocates argue all these moves come in response to growing consumer demand for better animal welfare. “Since 2013, the number of consumers who say it is important that their grocery store practice animal welfare has grown from 17 percent to 21 percent,” says the Food Marketing Institute's June 10 41st annual U.S. Grocery Shopper Trends study. A survey conducted by the American Humane Association, which audits and certifies farms for animal welfare standards, claims 93 percent of nearly 6,000 respondents said buying products from humanely raised animals is "very important," and nearly three-quarters said they would be willing to pay more for it.

But does consumer demand really support Walmart's new dictates? Should community grocers follow along? Here are three good reasons to be cautious about this emerging trend toward demands on production and marketing practices, from traceability to environmental standards to animal-welfare and other “sustainability” claims:

1. What it all means is vague

Studies prove the seemingly simple term "animal welfare" covers some complex nuances, says Belgian professor Filiep Vanhonacker, not only in objective terms but also in consumer perception. Some consumers infer animal welfare from a subjective combination of animal-welfare aspects, often clouded and colored by confusing marketing that uses imagery of pastoral farms and "happy" animals. Other consumers may take a more studied and objective approach based on specific standards, but even those can often be unsubstantiated and even contradictory. Case in point of this paradox: Walmart's announced restriction on use of antibiotics could be--and has been--argued by some experts to actually be an impediment to improving animal welfare.

All those uncertainties cloud the real consumer demand picture hiding behind those rosy studies like FMI's.

2. Evidence of any real demand is thin to nonexistent

It's important to bear in mind, Texas Tech ag economist Darren Hudson reminded economics scholars in a 2010 article, companies--like Walmart--have always tried to shape public opinion to differentiate their brands and increase consumers' willingness to pay a better price. But that kind of supply-side manipulation says little about what consumers are really willing to pay for. Hudson cites studies noting that when consumers who say they favor animal-welfare standards are asked if they still favor them if they cost more in price and taxes, their support significantly wanes. He considers the scientific literature supporting true economic impact of animal welfare to be "scant."

The fact is the economics research generally agrees that willingness-to-pay estimates are inflated, due to respondents' tendency to answer based on their own hypothetical assumptions and their unwillingness to give the politically incorrect answer to surveyors. Consumers may in fact be willing to put money on the counter for animal welfare, says Danish ag economics professor Laura Mørch Andersen, but so far it's only to a small degree. "Our results," she writes, "suggest that the stated willingness to pay observed in opinion a large extent is just cheap talk." Her work cautions retailers to consider the market for higher welfare products to be only a niche market, capable of attracting only certain consumer segments. Walmart's across-the-board requirements are precisely the opposite of the segmented and targeted marketing strategy necessary to make animal-welfare labeling profitable--particularly when you consider the consumer segments being most directly targeted, meat eaters, are the consumer segment that most value taste and related sensory attributes and consistently value them above animal-care issues.

Furthermore, it's important to consider whether consumer demand is being manufactured or inflated by interests like the growing cottage industry in certifying animal farms as humane. American Humane Association, for instance, the same "no animals were harmed in the making of this movie" non-profit that audits commercial movies, shows revenue of about a half million dollars a year and pays out about $1.7 million in expenses on its farm certification program, according to 2014 IRS documents. Although tiny by comparison to WalMart's sales, that kind of money earned from only 10 percent of all animals raised for food demonstrates at least the potential exists to create a demand for welfare auditing even absent any real consumer demand. (Note: American Humane Association did not respond to Farmer Goes to Market's request for clarification on its income and expenses derived from auditing and certifying farms.)

But perhaps the most compelling evidence that consumers say they want voluntary production constraints like Walmart's but won't pay for them comes from the biggest real-world experiment in such practices so far, says University of California at Davis economist Tina Saitone. Numerous studies demonstrate consumers routinely tell surveyors they will buy more organic foods at a price premium, yet the market share for organic in the United States has remained stalled over the last decade at only about 3 percent of food sales. Saitone calls the difference between experimental studies and the real marketplace a "vast chasm."

3. Volunteer? Maybe, but everybody pays at the end of the day

Saitone's most recent research, scheduled for publication in an upcoming issue of the American Journal of Agricultural Economics, deftly takes apart the argument that WalMart's dictates are nothing but free-market "consumer choice" giving shoppers a wider range of choices. In the case of restricting antibiotic use in animals to improve their productivity, Saitone writes in "What Happens when Food Marketers Require Restrictive Farming Practices?" the practice ends up costing all farmers on the production side and all consumers on the consumption side. In a nutshell, she observes, the problem is that most of the food produced by restrictive agreements ends up going into marketing channels in which a premium can't be captured. In other words, even though McDonalds, for instance, may buy 18 percent of a hog in terms of cuts (bacon, sausage, ham), it's not possible to raise a "partially antibiotic-free" hog. That means even though that 18 percent antibiotic-free pork may conceivably earn a premium, the remaining 82 percent that's antibiotic-free but going into conventional channels will have incurred the added cost without hope for added price premium. The same argument could be posed for WalMart's humanely-raised animals. At the end of the day, the demand by such a powerful market entity will increase costs for the entire chain, including you.

It's a reality that free-market philosopher Milton Friedman illuminated more than 40 years ago. In arguing against the then-fashionable trend for businesses to demonstrate their "social responsibilities," the economic theorist and University of Chicago professor objected to small boards of corporate directors imposing such social-justice demands on their customers. By spending somebody else's money to underwrite a general social interest, Friedman believed, big business is in effect imposing a tax by dictate that is counter to the American way. "We have established elaborate constitutional, parlimentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in accordance with the preferences and desires of the public--after all, 'taxation with representation' was one of the battle cries of the American Revolution." By short-cutting that process, as Walmart has done, over-bearing big business appoints itself legislator, executive and jurist to decide whom to tax by how much and for what purpose. Walmart's dicates are precisely that kind of extra-governmental regulation in action.

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