US Food Costs

originally posted by Jonathan Loesberg:

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?
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Sorry, I was a bit unclear. Rice is not used for feed much in the U.S. but does receive a large subsidy--along with wheat and cotton (the byproducts of which are used in feed and oil). But I think the answer to your question--at least in the aggregate--is yes.

Corn receives the largest dollar amount over all because it's used in so many ways--ethanol, HFCS, feed. The programs are apparently enormously complicated, but they provide direct payments to growers under various bills, as well as a price floor. Because need is not a factor, my understanding is that larger farms receive substantial amounts in direct payments; many small farms receive very little or none.

Regardless, as I said, I agree that subsidies are only one part of the issue. Four meatpackers do most of the slaughtering and fattening in this country. A handful of companies process most of the grain. The price pressures are pretty great all around.
 
originally posted by 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?
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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.
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Grass doesn't come free you're ignoring land costs.
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Reread the third sentence you have quoted.
 
originally posted by 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.
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This is more or less what I was trying to say, much less efficiently.
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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?
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Subsidies probably started out as a short term solution to a decline in exports due to currency fluctuations.

Unfortunately these subsidies are now a permanent feature of the Federal budget. The US diet probably has helped keep the subsidies in place.
 
originally posted by Jonathan Loesberg:
originally posted by 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?
Click to expand...

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

Reread the third sentence you have quoted.
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I read the third sentence as addressing productivity of the land and production methods.
 
originally posted by Tom Glasgow:
originally posted by 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.
Click to expand...

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

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?
Click to expand...
Subsidies probably started out as a short term solution to a decline in exports due to currency fluctuations.

Unfortunately these subsidies are now a permanent feature of the Federal budget. The US diet probably has helped keep the subsidies in place.
Click to expand...

You continue to evade the question. In the 19th century, when it was still economically more efficient to get one's proteins from legumes and grains, and when subsidies didn't exist, beef made Chicago the butcher to the world. As a result, in the 20th century, when exports threatened the industry--if that is what happened--it had sufficient force to demand subsidies. Brussel sprouts don't. There are still places in Africa, where subsidies don't exist, where farmers raise beef because it is a dietary stable of population subgroup. I'm not arguing that subsidies don't distort economies. But they aren't the only distorting force.
 
originally posted by Tom Glasgow:
originally posted by Jonathan Loesberg:
originally posted by 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?
Click to expand...

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

Reread the third sentence you have quoted.
Click to expand...
I read the third sentence as addressing productivity of the land
Click to expand...

Which, of course, are unrelated to land costs.
 
originally posted by 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.
Click to expand...

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

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?
Click to expand...

It's not like it's bred in the bone or something. I suppose to be simplistic, we have real chicken and egg situation here, but at least one of the the more prolific chickens seems to be agricultural policy. I understand that you are not arguing subsidies don't distort markets, but I think that in this case, subsidies have had a most acute influence on our changing food habits.

American agricultural subsidies are mostly a thing of the last 75 years. Before that, it was just free land, cheap water, that sort of thing. And they've become increasingly more complicated and successful. Americans today eat 60+ more pounds of white and red meat per year than they did before the WWII.

Also, I would argue, re: grain and grass-fed beef, that Americans have developed a taste for grain-fed that they may not have once had.
 
originally posted by Jonathan Loesberg:
You continue to evade the question. In the 19th century, when it was still economically more efficient to get one's proteins from legumes and grains, and when subsidies didn't exist, beef made Chicago the butcher to the world. As a result, in the 20th century, when exports threatened the industry--if that is what happened--it had sufficient force to demand subsidies. Brussel sprouts don't. There are still places in Africa, where subsidies don't exist, where farmers raise beef because it is a dietary stable of population subgroup. I'm not arguing that subsidies don't distort economies. But they aren't the only distorting force.
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Subsidies of various sorts, as we're talking about them here, began in the Depression. But, again, they were subsidies on grain--price supports mostly--not, directly, on meat production. Americans ate less meat (still a lot by global comparison, no doubt) then, but began to eat more as grain-fed beef became cheaper (for whatever reason) and as they became richer.
 
originally posted by Doug Padgett:
Americans today eat 60+ more pounds of white and red meat per year than they did before the WWII.
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Bingo. Which is why the argument that somehow subsidies follow deep consumer preferences or inherent economies of scale is bunk. Eating copious amounts of beef is learned behavior, and the Farm Bill subsidizes that learning (and promotes large-scale industry) to an extraordinary degree.

And I wouldn't call it a "chicken and egg" problem - in economics we call it path dependence. After decades of farm bills, there is no neutral position for us to assess what Americans really "prefer".
 
Both grain fed beef, and prior to it, grass fed beef has always been relatively cheap here. The next time you watch Shane, ask yourself why, despite Shane's fast gun, we are eating Starret's beef (or whoever's beef it was after Shane shot him). It wasn't subsidies. If you have vast tracts of land to work with, it's a lot less work to raise cattle than to grow wheat and more profitable since you would be able to grow far more wheat than you can sell (actually, Shane was defending shepherds, but we won't go into that). Before you ever get to the 20th century, you have an American diet that does not look at all like one on the mainland of Europe.
 
originally posted by fillay:
originally posted by Doug Padgett:
Americans today eat 60+ more pounds of white and red meat per year than they did before the WWII.
Click to expand...

Bingo. Which is why the argument that somehow subsidies follow deep consumer preferences or inherent economies of scale is bunk. Eating copious amounts of beef is learned behavior, and the Farm Bill subsidizes that learning (and promotes large-scale industry) to an extraordinary degree.

And I wouldn't call it a "chicken and egg" problem - in economics we call it path dependence. After decades of farm bills, there is no neutral position for us to assess what Americans really "prefer".
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What he said.
 
originally posted by Jonathan Loesberg:
Both grain fed beef, and prior to it, grass fed beef has always been relatively cheap here. The next time you watch Shane, ask yourself why, despite Shane's fast gun, we are eating Starret's beef (or whoever's beef it was after Shane shot him). It wasn't subsidies. If you have vast tracts of land to work with, it's a lot less work to raise cattle than to grow wheat and more profitable since you would be able to grow far more wheat than you can sell (actually, Shane was defending shepherds, but we won't go into that). Before you ever get to the 20th century, you have an American diet that does not look at all like one on the mainland of Europe.
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I've read something similar--that early America was notable for its ample supply of meats, among other differences from the Old World. That said, we are still talking about a stark rise in meat consumption per capita from even 1939. We were eating Starret's beef, but we weren't eating as much of it. Not sure about the economics of ranching vs. wheat farming--we're mostly, I think, talking about very different kinds of land.
 
So here's your position as I understand it: prior to WWII, the North American diet was not differentiable from the mainland European diet in terms of relative beef consumption. Further, the 20th century subsidies of wheat and grain (which could, after all have produced more wheat and grain in our diet) ended up as a subsidy of beef, well, just because.
 
People often assume economies of scale are due to production efficiencies. But presumably, unless the commodity is a natural monopoly (continuously declining costs per unit as production goes up), these peter out or become very minor at some point. The main "economy of scale" for many large companies comes from beating the crap out of your suppliers. Suppliers in turn often become larger in order to either exercise more bargaining power, or because smaller producers give up and sell out.
 
Standardisation of the feeder cattle market (both actuals and paper) contributed to much lower cost of capital for large operations; no way the little guy survives in a market where cashflow is an annual issue.
 
originally posted by Yixin:
Standardisation of the feeder cattle market (both actuals and paper) contributed to much lower cost of capital for large operations; no way the little guy survives in a market where cashflow is an annual issue.
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Yes, but even this couldn't have happened without a cheap, concentrated source of calories to fatten the cattle on--and hay ain't it.
 
My grandparents maintained that they and many of their friends started eating much more meat after the Great Depression as a sort of celebration of their return to affluence. They had not been able to eat meat except occasionally for many years and suddenly they could. Aside from issues of aesthetics and subsidies, and of course to the degree to which this personal experience is generalizable, this suggests that there is a sort of commodity fetish for meat foods that took root in the generation that survived the depression as a symbol of their prosperity and their identity as prosperous people.

I have sometimes thought that the absurd size of the steaks in The Man Who Shot Liberty Valance and the fetishization of beef in certain other older films helps to corroborate the chain of association (eating meat = being prosperous = being free = being American) as a strand of US identity.
 
Corn and soybean were being paperised as well.

I think agricultural agglomeration would not have been possible otherwise; at a smaller scale the houses in Champagne would probably not be their size without l'chelle des Crus and contract/price standardisation. Before that I think multiple equilibria was a feature of the region; after the riots the big houses could only get bigger. The relaxation in pricing to the percentile has also coincided with the rise of R-Ms; while I'm not bold enough to claim causation it's an interesting datum.
 
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