Farm Progress

A Cheap Food Policy: Good Or Bad?A Cheap Food Policy: Good Or Bad?

September 13, 2010

5 Min Read

Opponents of modern agriculture, who express concerns about the sustainability of improved seeds and fertilizers, call for food that is organic, local and slow. That is the type of food found in rural Africa, where impoverished farmers do not have the capacity to buy crop inputs, attend school, create infrastructure, and fund research. And with that beginning, a noted economist answers the rhetorical question, “Is there a high cost of cheap food policies?”

Luther Tweeten is the emeritus chair of the Ohio State University Department of Agricultural, Environmental, and Development Economics, and does not mince any words in response to those who criticize U.S. agriculture and today’s food production practices. Tweeten labels his adversaries as the AAA – the alternative agriculture advocates – who are “pessimistic regarding the nation’s food supply and environment.” While they are raising the question about “the high cost of cheap food,” Tweeten’s essay addresses the impact of today’s agriculture on society’s health and well-being, and asks the AAA for an attractive alternative.

The OSU economist begins with a response to the criticism about agricultural subsidies, which the critics say are responsible for unhealthy foods. One of those is Michael Pollan, whose attacks on “a plague of cheap corn” target former Secretary of Agriculture Earl Butz, and, according to Pollan, “induced a plague of factory mega farms, fast and cheap food and obese consumers.” Tweeten says commodity programs account for only 2% of consumer expenditures on food and not large enough to have much influence on consumer purchases. He estimates that farm policy increased output by 3% from 1998 to 2000, and decreased farm prices by 6%. He is quick to add that since farmers only receive 25% of a consumer food dollar, commodity programs only affected food prices by 1% and not enough to have an impact on either consumption or obesity.

When biofuels enter the discussion picture with agriculture policy opponents, Tweeten says the blenders’ credit that benefits ethanol totals $6 billion, “but biofuels use was sufficient to entirely offset the 3% increase in output due to commodity programs.” He notes that while ethanol utilizes 30% of the corn crop, it only uses 4% of total farm output, which he says is enough diversion of output to offset the 3% added by commodity programs. And, he adds, that shows government policy had a minor impact on food prices and incentives for overeating. Tweeten says there has been so much negative publicity about food production, it appeared in a recent study – funded by the corn, soybean, pork and beef associations and Farm Bureau in Illinois – that indicated consumers question modern farming methods and have a diminished perspective of the image of farmers.

The OSU economist says the U.S. and other nations have pursued a low-price food policy, helped by increased public investments in agricultural research to go along with private investments. He says that policy has had a positive payoff since private investment in farm inputs has increased only slightly in the past 60 years; the volume of outputs has increased three-fold. And he says farm-level food prices have declined about 3%/year since 1948, and that has resulted in an annual 1% reduction in consumer food prices. With food price elasticity, the economist says consumers are not consuming more food as the prices fall, but are benefitting from the lower costs. He says that savings represents $615/person due to the $188 billion saved on farm input expenses since 1948, and he adds that the “cheap food policy” has raised consumer living standards.

So are farmers to blame for overeating? No, says Tweeten, because that is a result of societal changes. He says low-cost foods have been made tastier with the help of salt, fats and sugars, which are cheap ingredients in our society, and with more women in the workforce, their food preparation at home has to be quick and easy, and that happens with the heavier reliance on processed and prepared foods. So he says that public programs have not had a decisive impact on America’s chronic overeating program. Additionally, he says the Centers for Disease Control have not pointed to higher food prices as a means of reducing chronic overeating.

With that collection of arguments, Tweeten inquires about the viability of the low-cost food alternatives of the AAA or his alternative agriculture advocates, which he says is a food system of “small, organic, local farms producing organic crops and livestock, grass-fed cattle and free-range hogs and chickens delivered to nearby farmers’ markets serving local vegetarian and vegan consumers.” He says that kind of food is very expensive, and since people consume more animal products as income rises, it would be a poor example for developing countries. Tweeten believes the organic market may continue to grow, but remain small because of their higher expense, and the fact that it takes twice as many acres to produce an organic crop compared to the same volume from a conventional crop.

Citing an article friendly to organic farming, Tweeten says it, “published the annual cost of a representative organic ($1,732) and a conventional market basket ($825) of a typical food consumer. Assuming no glitches in markets, such numbers indicate that organic foods require more than twice as many resources as conventional foods per unit, a massive loss of resource productivity compared to conventional foods.” And he says food policy critic Michael Pollan justifies $8/dozen organic eggs by saying you only eat two at a time and that would be only $1.50. Another AAA viewpoint is to promote local food production and save energy by not importing it from a distant point. But Tweeten says the cost per pound of food transportation is much higher in a family car compared to a transport truck. Calling them “locavores,” Tweeten says farmers’ markets are promoted for freshness and tastes of local foods. With wealthy urbanites frequenting such local markets, he says that does not cure the problem for those with food insecurity, who cannot afford to pay such premium prices.

The current U.S. food policy has benefited both producers and consumers by providing abundant foods of a vast diversity, and at the same time keeping farmers profitable by helping reduce production costs. While critics of U.S. agriculture policy want to see more localized food production and sales, such foods are higher in costs, and do not serve those needing food assistance.

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