US Food Costs

[SFJoe]

Whyburgers are cheaper than salads in the US.

 

[Jonathan Loesberg]

Burgers have probably been a cheaper source of protein in the US than grains and legumes--against all natural logic of the food pyramid--for 50 years. Federal subsidies may play a role, but demand creating a greater supply also plays a role. The increased price of feeding the cattle the grain rather than using the soil to grow grains and legumes and then transporting and slaughtering is more than made up for by economies of scale, given how much burgers we eat here, as opposed to how many chick peas. When my nephew used to proselytize for vegeterianism based on Diet for a Small Planet, I used to torment him with this logic, forcing him into arguing economics based on an ideal world, an obvious oxymoron.

I expect their price relative to salad also has something to do with differences in demand and economies of scale.

 

[Arjun Mendiratta]

There are some interesting observations in there, but I have to take issue with the disingenuous scaling of the chart.

As you can clearly see from the fact that the "Meat,Dairy" subsidy wedge goes about 3/4 of the way up the pyramid, they have used height to scale the percentages. Unfortunately, the human brain will naturally interpret the chart in terms of volumes, and since the base of a pyramid is wider than its top, this results in a severe distortion of the data. Of course, this distortion is in the same direction as the bias of the article.

 

[MarkS]

I wish they would break down the meat and dairy, and also break down what they are calling 'subsidies', for example, using US BLM land for grazing, milk price supports to keep dairymen from going bust, monies paid to Not produce, etc.

 

[Jeff Grossman]

PCRM is a front for a bunch of animal-rights kooks. I wouldn't trust their numbers or their judgment.

The other chart is more interesting.

 

[fillay]

originally posted by Jonathan Loesberg:
Federal subsidies may play a role, but demand creating a greater supply also plays a role. The increased price of feeding the cattle the grain rather than using the soil to grow grains and legumes and then transporting and slaughtering is more than made up for by economies of scale, given how much burgers we eat here, as opposed to how many chick peas.

That makes no sense - scale economies could just as easily be the result of subsidy. Either markets allocate resources according to consumer preferences (your demand argument), or government subsidies create a relative oversupply of a product and drive down its price. It's hard to argue both sides of the coin.

BTW, have you ever been to Salinas or the Central Valley? No lack of scale economies in cauliflower or strawberries...

 

[Tom Glasgow]

originally posted by fillay:

originally posted by Jonathan Loesberg:
Federal subsidies may play a role, but demand creating a greater supply also plays a role. The increased price of feeding the cattle the grain rather than using the soil to grow grains and legumes and then transporting and slaughtering is more than made up for by economies of scale, given how much burgers we eat here, as opposed to how many chick peas.

That makes no sense - scale economies could just as easily be the result of subsidy. Either markets allocate resources according to consumer preferences (your demand argument), or government subsidies create a relative oversupply of a product and drive down its price. It's hard to argue both sides of the coin.

BTW, have you ever been to Salinas or the Central Valley? No lack of scale economies in cauliflower or strawberries...

What if it's both? People like burgers and politicians like to subsidize what the voters eat.

You're also ignoring the possible efficiencies of a distribution system (including storage and food preparation as well as the retail end).

Scale economies don't result from subsidies but perhaps the illusion of scale economies could result from subsidy.

Central Valley: What makes you think that the prevalence of particular crops result from scale economies? What about climate? What about soil type? What about the misallocation of sparse water resources?

 

[Jonathan Loesberg]

These are amazingly naive readings of how these things work. Scale economies don't result from subsidies, but subsidies respond to the size of an industry, one of the causes of which will be scale economies. Why do you think the beef and dairy industries are strong enough to get subsidies at the expense of other agricultural products? Why aren't they subsidized in say Mexico?

And while we don't subsidize lettuce much, we do give considerable subsidies to wheat and grain and it's still cheaper to get your proteins from burgers in the US.

 

[Ian Fitzsimmons]

Are subsidies for grains used as cow fodder (e.g., corn) counted as meat or grain subsidies?

Subsidies do create a kind of perverse economy of scale: if the subsidy allows you to produce on one acre at a profit of a dollar, the more acres you plant to the subsidized product, the greater your profit (assuming lobbying costs are classified as overhead).

Politicians like to produce what their donors grow.

 

[Jonathan Loesberg]

originally posted by Ian Fitzsimmons:
Are subsidies for grains used as cow fodder (e.g., corn) counted as meat or grain subsidies?

This is a good point. In any normal economy, grass fed beef would be cheaper to raise than corn fed beef since the grass comes free. Of course, it's also true that one can raise fewer cattle, by a lot, per acre with grass feeding and further the taste of grass fed beef is much less popular. So the subsidy for grain no doubt makes grain feeding cheaper. But it is hardly enough by itself to account for its prevalence here.

 

[Rahsaan]

originally posted by Jonathan Loesberg:
And while we don't subsidize lettuce much, we do give considerable subsidies to wheat and grain and it's still cheaper to get your proteins from burgers in the US.

Not if you want to eat good meat.

Think about cost per serving for protein from lentils, beans, tofu. I know I do!

 

[Jonathan Loesberg]

originally posted by Rahsaan:

originally posted by Jonathan Loesberg:
And while we don't subsidize lettuce much, we do give considerable subsidies to wheat and grain and it's still cheaper to get your proteins from burgers in the US.

Not if you want to eat good meat.

Think about cost per serving for protein from lentils, beans, tofu. I know I do!

Of course not, but that's not the argument.

 

[Ian Fitzsimmons]

I'm not sure I follow your reasoning in all its detail, John, but if grain-fed meat prices are artificially depressed through fodder-grain subsidies and the production regime they facilitate (e.g., large-scale feed-lots), then the popularity of the burger could be explained to a large degree by the subsidy, since buyers often choose on the basis of price tag, rather than an assessment of total cost and value. The purchase price of the burger is low, but if the tax cost of the subsidy were reckoned in, it would be higher. Valuation of production externalities would take the purchase price higher yet.

There are some good movies out on this subject, by the way, including Food, Inc., King Korn, and Super-Size me - no doubt biased, but worth a watch. I particularly love the bit about treating trimmed beef fat with ammonia, then adding it back into the ground patties, to reduce the rate of infection from virulent E. coli strains bred in anti-biotic treated, feed-lot raised cattle. A recent long article on this process in the NYT magazine finally persuaded my wife to remove hamburger from our son's school menu choices.

By the way, some drift, who knows anything about the beef industry's special libel protections?

 

[Doug Padgett]

originally posted by Jonathan Loesberg:
And while we don't subsidize lettuce much, we do give considerable subsidies to wheat and grain and it's still cheaper to get your proteins from burgers in the US.

What you say is otherwise true--and eliminating subsidies won't necessarily change behavior, but your missing the essential point here: Livestock farmers get very little in the way of direct subsidies (more complicated for dairy farmers). The bulk of the subsidies are in the form of cheap grain. Corn, wheat, rice, soy farmers get huge subsidies, more if they're bigger, and that grain is used to fatten livestock not to feed people. Thus, cheap beef. If it weren't so cheap, people wouldn't eat as much of it.

That said, I think the point that eliminating subsidies would somehow make Americans healthier in any direct or short-term way is wrong.

Update: I see Ian made this argument.

 

[Doug Padgett]

originally posted by Jonathan Loesberg:

originally posted by Ian Fitzsimmons:
Are subsidies for grains used as cow fodder (e.g., corn) counted as meat or grain subsidies?

This is a good point. In any normal economy, grass fed beef would be cheaper to raise than corn fed beef since the grass comes free. Of course, it's also true that one can raise fewer cattle, by a lot, per acre with grass feeding and further the taste of grass fed beef is much less popular. So the subsidy for grain no doubt makes grain feeding cheaper. But it is hardly enough by itself to account for its prevalence here.

Over time, I think it may be. In the forties, Americans didn't eat as much beef. Meat--even chicken--was much more expensive (I understand; I have no figures at my fingertips) in the early part of the century. Many things have gone into changing that, but the subsidization of grain is one of them.

 

[Jonathan Loesberg]

originally posted by Doug Padgett:

originally posted by Jonathan Loesberg:
And while we don't subsidize lettuce much, we do give considerable subsidies to wheat and grain and it's still cheaper to get your proteins from burgers in the US.

What you say is otherwise true--and eliminating subsidies won't necessarily change behavior, but your missing the essential point here: Livestock farmers get very little in the way of direct subsidies (more complicated for dairy farmers). The bulk of the subsidies are in the form of cheap grain. Corn, wheat, rice, soy farmers get huge subsidies, more if they're bigger, and that grain is used to fatten livestock. Thus, cheap beef.

Is it really the case that the subsidies are higher depending on the use the grain is put to? I didn't know that. Also, is rice used to feed cattle?

 

[Ian Fitzsimmons]

originally posted by Doug Padgett:
Thus, cheap beef. If it weren't so cheap, people wouldn't eat as much of it.

This is more or less what I was trying to say, much less efficiently.

 

[Jonathan Loesberg]

originally posted by Ian Fitzsimmons:

originally posted by Doug Padgett:
Thus, cheap beef. If it weren't so cheap, people wouldn't eat as much of it.

This is more or less what I was trying to say, much less efficiently.

But why do beef and dairy get these subsidies here and not elsewhere? Do you really think it has nothing to do with American dietary habits that predated subsidies?

 

[Tom Glasgow]

originally posted by Jonathan Loesberg:

originally posted by Ian Fitzsimmons:
Are subsidies for grains used as cow fodder (e.g., corn) counted as meat or grain subsidies?

This is a good point. In any normal economy, grass fed beef would be cheaper to raise than corn fed beef since the grass comes free. Of course, it's also true that one can raise fewer cattle, by a lot, per acre with grass feeding and further the taste of grass fed beef is much less popular. So the subsidy for grain no doubt makes grain feeding cheaper. But it is hardly enough by itself to account for its prevalence here.

Grass doesn't come free you're ignoring land costs.

 

[Jeff Grossman]

America has a lot of pasture and scrub land. Gotta do something to keep the people in business. No?