Category - Agriculture/Food

In last month’s New York Review of Books, Freeman Dyson leads off with an essay on “Our Biotech Future“. He predicts that biotechnology will, in this new century, become relatively cheap and widespread in a similar way to the cheapening and spreading of physics-based and computer technology over the past several decades.

It has become part of the accepted wisdom to say that the twentieth century was the century of physics and the twenty-first century will be the century of biology. Two facts about the coming century are agreed on by almost everyone. Biology is now bigger than physics, as measured by the size of budgets, by the size of the workforce, or by the output of major discoveries; and biology is likely to remain the biggest part of science through the twenty-first century. Biology is also more important than physics, as measured by its economic consequences, by its ethical implications, or by its effects on human welfare.

By Helen Scharber, CPE Staff Economist

Last month, the recall of 60 million cans and pouches of pet food by Menu Foods left Americans concerned and confused. The pet deaths and illnesses that spurred the recall have since been linked to melamine, a chemical added to animal feed in China to boost its reported protein content. Melamine is not digested in the same way as vegetable protein, however, and therefore lacks nutritional value. Why, then, are Fluffy and Fido eating it? In short, because companies value profits over pets. Using melamine increases profits by lowering costs, and without effective regulation, the drive for profits tends to trump other concerns, including human and animal health.

Melamine is a hard, white, coal-derived substance used primarily to make fertilizer and plastics. You may have melamine bowls or plates in your house; a warning on the bottom declares them unfit for use in microwaves or dishwashers, since high temperatures can cause the plastic to break down and contaminate your food. Animal feed manufacturers in China buy scrap melamine cheaply and add it to feed in order to boost its nitrogen content, which inflates protein levels in tests. According to a Chinese animal feed factory manager interviewed in the New York Times, “If you add it in small quantities, it won’t hurt the animals.” He goes on to justify the substitution of vegetable protein with melamine’s indigestible protein. “Pets are not like pigs or chickens… they don’t need to grow fast.” Profits, he might have added, do need to grow fast, and substituting melamine, at one-fourth the cost of vegetable protein, helps profits grow.

The pet food recall case illustrates the problems that can spring from increasing globalization paired with poor regulation. While the use of melamine in food is prohibited in the United States, it isn’t in China. Because it reduces costs and has the added benefit of beefing up advertised protein levels, Chinese manufacturers use it as a filler, despite its total lack of nutritional content and poorly understood health effects.

The contaminated feed makes its way into the U.S. via companies like ChemNutra, the American importer that supplied the contaminated wheat gluten to Menu Foods. Steve Miller, the chairman of ChemNutra, claims that his company is actually the victim, not the offender. “We are concerned that we may have been the victim of deliberate and mercenary contamination for the purpose of making the wheat gluten we purchased appear to have a higher protein content than it did,” he writes in a public letter. Moreover, according to Miller, “[ChemNutra] had no idea that melamine was an issue until being notified by the FDA on March 29. In fact, we had never heard of melamine before.”

If ChemNutra did not know about the melamine, Menu Foods, the Ontario-based pet food manufacturer that bought wheat gluten from ChemNutra, could not have known either. But if Menu Foods is not to blame for the contamination, they are responsible for the extent of the problem. Menu Foods, a company most Americans hadn’t heard of before March, manufactures wet cat and dog food under nearly 100 familiar brand names. These brands are sold in most major grocery and pet food stores around the country.

Incidents like the pet food recall and last year’s spinach contamination reveal just how concentrated – and, therefore, vulnerable – our food supply is. Such incidents also underline the importance of market regulation. It was the operation of the free market – specifically, Chinese animal feed processors seeking higher profits – that resulted in melamine-enhanced wheat gluten. Legally, the U.S. Food and Drug Administration (FDA) is responsible for protecting our food supply from harmful and illegal substances such as melamine. But faced with increasing numbers of food imports and inadequate staff, the FDA is unable to filter out every last potential culprit. Because the short-staffed FDA is unable to conduct necessary inspections, the Center for Science in the Public Interest (CSPI), in a press release from April 24, advocates a temporary ban of grain products from China. “If U.S. pets must serve as the ‘puppies in the coal mine,’” writes CSPI executive director Michael Jacobson, “we urge FDA to heed the warning and take action now to ban grains and other grain products until the Chinese government and producers can guarantee that these imports are free of illegal and dangerous substances.”

Even if Chinese grains were banned for a while, food production in the U.S. would continue to be complexly intertwined with the global food supply. Thus, federal regulatory agencies must step up their efforts to protect consumers from unsafe food, often a direct result of cost cutting by companies eager to increase profits. Current food safety laws are over 100 years old, and according to the CSPI, the FDA inspection staff has shrunk by 15 percent since 2003. To better protect the public from food-borne illnesses, Senator Dick Durbin and Representative Rosa DeLaura have introduced the Safe Food Act that would create a unified food agency with more modern rules. In tandem with better regulations, we should also make it harder for companies like Menu Foods to sell contaminated food to such large swathes of the country, by encouraging a less concentrated food processing and distribution system. After all, what’s the point of healthy profits if we don’t have healthy pets and healthy people?

Resources

New York Times web page with links to articles about the pet food recall

Center for Science in the Public Interest press release, urging FDA to ban grain imports from China – April 24, 2007

Letter from the chairman of ChemNutra about the pet food recall

Senator Dick Durban’s bill to establish a Food Safety Administration, introduced February 15, 2007 [pdf]

© 2007 Center for Popular Economics

Econ-Atrocities and Econ-Utopias are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

Two weeks ago, after complaining to my daughter about how much I would dislike it, I bought Bill McKibben’s Deep Economy (New York, Henry Holt: 2007) from my local Amherst book store. Already familiar with his ideas from his various other writings (including The End of Nature; Staying Human in an Engineered Age; and various New Yorker articles), I suspected that his new book would be well written, an effective attack on much that ails us as a society, and would miss the point. It is this last that led me to threaten to throw the book against the wall in frustration. And that frustration led me to write this note. (Actually, it was my wife who wanted me to write this so that I would stop ranting to her.)

What could be wrong with a book that criticizes the Bush Administration, big oil, Cargill, Monsanto, and the Economics profession (among many many other villains)? Especially when the author has such good heroes: including farmers’ markets, urban gardens, organic farmers, Heifer International, and the Indian state of Kerala. Among economists, environmentalists like Herman Daly and Bob Costanza get most of the Kudos but a few, like Amartya Sen, make friendly cameo appearances. Individualism is bad; society is productive; and I agree that would all be better off, and the world a lot better off, if we listened to Bill McKibben.

The problem I have is that McKibben not only reads orthodox economists but believes them.

By Hasan Tekguc

What are honeybees, the favorite economic textbook example of a positive externality, doing nowadays? The short answer is: they are vanishing in droves, in billions.

Let’s take a step back and see what economics textbooks tell us. In many economics textbooks and introductory classes honeybees are referred to as the perfect example of a positive externality. A positive externality is the benefit from economic activity that falls on a party ‘external’ to the activity. Economics textbooks and professors explain that when honeybees visit flower after flower to collect nectar, they help flowers to pollinate. However, honeybee keepers are not paid by orchard owners for honeybees’ services and hence the pollination service is underprovided. The market-based solution offered in textbooks is to expand the market to include the positive externalities; in plain language if the orchard owners start to pay the beekeepers for bees’ services, the beekeepers will keep more honeybees, more flowers will be pollinated, and the trees will bear more fruit.

By Helen Scharber, CPE Staff Economist

On February 8, Representative Louise Slaughter (D-NY) introduced the Preservation of Antibiotics for Medical Treatment Act of 2007, a bill designed to limit the use of antibiotics in healthy farm animals. Though their surnames do not lend themselves as aptly to a bill about livestock, Senators Kennedy (D-MA) and Snowe (R-WA) introduced a nearly identical bill to the Senate the following week. Why are lawmakers suddenly so concerned with porcine penicillin? As Snowe explains, “The effectiveness of infectious disease fighting antibiotics continues to be compromised by their overuse for agricultural purposes.” In other words, the antibiotics we’re feeding our edible friends are speeding the development of drug-resistant super bacteria, a type of progress that’s bad for pigs and for people.

The latest (March 2007) newsletter from the Center for Rural Affairs has several good articles, mostly in response to the proposed Farm Bill and the President’s proposed federal budget now before Congress. [Note: once the next newsletter comes out, the link to this one will change and you’ll be able to find it through their newsletter archives.] And as usual, the “Corporate Farming Notes” are worth following. Some examples:

By Heidi Garrett-Peltier, CPE Staff Economist

You are what you eat. And according to Michael Pollan, author of The Omnivore’s Dilemma, that means we’re corn. Corn has now made its way into our diet in the form of fillers, sweeteners, oils, alcohols, pills, and breakfast cereals, not to mention of course the indirect path it takes through animal feed. Why should we care? Because cheap corn has been linked to obesity, and obesity will soon overtake tobacco as the leading cause of preventable death.

I don’t think that Tim Haab at Environmental Economics subscribes to the Econ-Atrocities, but by happy coincidence he’s written a blog post that would fit perfectly in the series. His topic is the Mexican government’s response to serious inflation in the cost of tortillas, which are a primary staple of the Mexican diet, and poor Mexicans (of which there are plenty) are getting hit by these price hikes like a punch to the gut. Should the Mexican government pursue a policy of price caps for tortialls? The “Theory of the Second Best” offers an interesting angle of analysis. I’ll let Tim explain it himself, but as a teaser here’s a bit of his conclusion:

If the price cap is a response to another inefficient policy, then the price cap may actually improve efficiency. The first best solution would be to remove the policies creating the inefficiently high corn prices. The second best solution might be to create a new policy to counteract the effects of bad policy. That’s the Theory of Second Best.

This all makes best sense as part of his full post, so go read it (it’s not long, so it won’t hurt).

By Heidi Garrett-Peltier, CPE Staff Economist

In 1810, 84 percent of the U.S. workforce was employed in agriculture. Today, it’s down to two percent. Thanks to dramatic increases in productivity resulting from advances in technology and the mechanization of agriculture, we can produce a great deal more food with far fewer people than we could 200 years ago. But does this progress come at a cost?

Large-scale corporate farms are able to out-compete small-scale (often family-owned) farms and drive them out of business. Economies of scale (the competitive edge gained by being bigger) enable large corporate farms to produce more cheaply than smaller farms. These large farms are able to invest in expensive machinery and buy their inputs (fertilizer, seed, etc.) more cheaply than small farms, which in turn makes it difficult for small farms to compete. One might think that corporate farming is better for the consumer – large farms, producing more efficiently, can offer products at lower prices. In addition, the vast network of global agriculture allows consumers access to many varieties of foods throughout the year that can not be produced locally.