Are Agricultural Policies Making Us Fat?
Likely Links Between Agricultural
Policies and Human Nutrition and
Obesity, and their Implications
Agricultural
Issues
Center
Julian Alston
Daniel Sumner
Stephen Vosti
Department of Agricultural
and Resource Economics
January 2006
Alston, Sumner, Vosti UCD/AIC/ARE
Presentation Outline
• Obesity in the U.S. – Trends, Costs and Presumed
Causes
• One „Smoking Gun‟ – HFCS and „Related‟ Ag Policies
• A Broader Look at Agricultural Policy – Farm Subsidies
and R&D
• Commodity Prices
• Food Prices
• Preliminary Conclusions and Implications for Research
and Policy
• Lessons for Developing Countries
Alston, Sumner, Vosti UCD/AIC/ARE
Obesity* Trends Among U.S. Adults
BRFSS, 1991, 1996, 2003
(*BMI 30, or about 30 lbs overweight for 5’4” person)
1991
1996
2003
No Data
<10%
10%-14%
15%-19%
20%-24%
 25%
Source: Behavioral Risk Factor Surveillance System, CDC.
Alston, Sumner, Vosti UCD/AIC/ARE
Economic Costs
• Direct
– Increased health care costs
• $78.5 billion in the U.S. in 1998
• $7.8 billion in California alone, 1998-2000
– 28% of total CA outlays for HHS in 2003-04
• Indirect
– Morbidity costs
• Lost productivity
• Absenteeism
– Mortality costs
• Over 300,000 death per year attributable to obesity
• Obese individuals have a 50 to 100% increased risk of premature
death from all causes
Alston, Sumner, Vosti UCD/AIC/ARE
Key Issues
• Why Is Obesity on the Rise?
– Long-Term and Worsening Energy Imbalance
• Energy Intake > Energy Expenditure
• Mechanisms Affecting of This Imbalance
– Types and sources of food consumed
– Food portions
– Energy expenditure patterns
• Drivers of Behavioral Changes
– Opportunities
• Increases in incomes and choices
– Food preferences
– Incentives
• Changes in relative prices, especially for foods
• What Role of Agriculture and Agricultural Policy?
– Getting us to this point?
• Prices, quality, availability
– Course correction?
Alston, Sumner, Vosti UCD/AIC/ARE
Is Agricultural Policy (Partially)
Responsible?
• “[Our] cheap-food farm policy comes at a high price: . . .
farmers in the United States have managed to produce
500 additional calories per person every day; each of us
is, heroically, managing to pack away 200 of those extra
calories per day.” (Pollan 2003)
• “Commodity prices . . . are so low that restaurants have
been able to double serving sizes without doubling
prices.” (Davis 2003)
• “Why healthier foods are slipping out of reach of large
segments of the US population is a question with many
policy and political implications.” (Drewnowski and
Barratt-Fornell, 2004)
Alston, Sumner, Vosti UCD/AIC/ARE
One „Smoking Gun‟
Avg. Kcalories/person/day
Trends in Consumption of Corn Sweeteners
250
200
150
100
50
0
1965
1970
1975
1980
1985
1990
1995
2000
2005
Year
Corn sweeteners
http://www.ers.usda.gov/data/foodconsumption/FoodGuideIndex.htm#calories
Alston, Sumner, Vosti UCD/AIC/ARE
The Suspected Culprit – Corn Policy
Support to Corn Producers -- Absolute
12,000
Millions USD (current)
10,000
8,000
6,000
4,000
2,000
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
19
86
0
-2,000
III. Producer Support Estimate (PSE)
1. Based on unlimited output
C. Payments based on area planted
D. Payments based on historical entitlements
E. Payments based on input use
E. Payments based on input use
F. Payments based on input constraints
G. Payments based on overall farming income
Support to Corn Producers -- %
45
40
35
30
25
20
15
10
5
00
4
00
3
00
2
00
1
00
0
99
9
99
8
99
7
99
6
99
5
99
4
99
3
99
2
99
1
99
0
98
9
98
8
98
7
0
98
6
Producer Support Estimate (%)
50
Alston, Sumner, Vosti UCD/AIC/ARE
The More Complete Story
Avg. Kcalories/person/day
Trends in Consumption of Selected Sweeteners
600
500
400
300
200
100
0
1965
1970
1975
1980
Refined cane and beet sugar
1985
1990
Year
Corn sweeteners
1995
2000
2005
All Added sugars
http://www.ers.usda.gov/data/foodconsumption/FoodGuideIndex.htm#calories
Alston, Sumner, Vosti UCD/AIC/ARE
White Sugar Policy – What Role?
Sugar Prices in the USA -- 1986-2004
35
30
25
20
Support to Sugar Producers -- Absolute
15
10
$1,200
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
0
Years
VII.1 World reference price
VIII.1 Domestic reference price (New York Spot)
Millions USD (1977)
5
$1,000
$800
$600
$400
$200
80
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Support to Sugar Producers -- %
1986
$0
PSE
70
60
50
40
30
20
10
0
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
Producer Support Estimate (%)
cents/pound (current)
40
Alston, Sumner, Vosti UCD/AIC/ARE
The Australian Story: Sugar Policy
Sugar Prices -- Australia
300
200
150
100
50
0
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
AUD/ton (current)
250
V. Consumption price (at farm gate)
VII. Reference price (at farm gate)
Alston, Sumner, Vosti UCD/AIC/ARE
The Australian
Story: Obesity
Trends
Alston, Sumner, Vosti UCD/AIC/ARE
The Much More Complete Story
Avg. Kcalories/person/day
Calories from Differrent Food Groups
700
600
500
400
300
200
100
0
1965
1970
1975
Meat, eggs, and nuts
Vegetables
Added sugars
1980
1985
Year
1990
Dairy
Flour and cereal products
1995
2000
2005
Fruit
Added fats
http://www.ers.usda.gov/data/foodconsumption/FoodGuideIndex.htm#calories
Alston, Sumner, Vosti UCD/AIC/ARE
Types and Magnitudes of Agricultural Outlays
USDA Program
Expenditure
in 2004
Percent of
Total
billions of dollars
percent
Food, Nutrition, and Consumer Services
45.4
40.2
Farm Service Agency (mainly farm
commodity programs)
27.4
24.3
Rural Development
15.5
13.7
Natural Resources and Environment
8.4
7.4
Foreign Agricultural Service
6.4
5.7
Risk Management (mainly crop insurance)
4.1
3.6
Research, Education and Economics
(mainly ag. R&D)
2.5
2.2
Marketing and Regulatory Programs
1.8
1.6
Other
1.4
1.2
112.9
100.0
TOTAL
Alston, Sumner, Vosti UCD/AIC/ARE
Links Between Selected Agricultural
Policies and Human Nutrition
Agricultural R&D
Agricultural Commodity Programs
Farm Production Costs
Commodity Prices
Farm Income
Food Industry
Food Prices
Food Intake
Disposable Income
Available Time
Genetic Factors
Information &
Sociocultural Factors
Activity Levels
Nutritional Status
Alston, Sumner, Vosti UCD/AIC/ARE
Trends in Agricultural R&D Spending
Total Federal and State Spending on Ag. R&D
(1925-1997)
3500
3000
2000
1500
1000
500
1997
Year
Total Private Sector Spending on Ag R&D
(1960-1992)
Total Ag. R&D Spending
4000
3500
3000
2000
1500
1000
500
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1962
0
1960
mil. $
2500
1964
1993
1989
1985
1981
1977
1973
1969
1965
1961
1957
1953
1949
1945
1941
1937
1933
1929
0
1925
mil. $
2500
Year
Private Ag R&D Spending
Alston, Sumner, Vosti UCD/AIC/ARE
Trends in Aggregate Productivity Measures
Index of Land Productivity
(1977=100)
140
Index of Labor Productivity
(1977=100)
160
120
140
100
120
80
100
60
80
40
60
40
20
20
1982
1978
1974
1970
1966
1962
1958
1954
1950
1946
1942
1938
1934
1930
1926
1922
1918
1910
Year
1914
0
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
Year
Land Productivity
Labor Productivity
Total Factor Productivity Index
(1948=100)
300
250
200
150
100
50
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1963
1960
1957
1954
1951
0
1948
1940
1935
1930
1925
1920
1915
1910
0
Year
TFP
Alston, Sumner, Vosti UCD/AIC/ARE
Trends in Crop/Product Productivity
Average Yield of Corn 1900-1997
160
140
100
80
60
40
20
1996
Year
Avg. Corn Yield
Milk Production per Cow
1929-1996
18000
16000
12000
10000
8000
6000
4000
2000
1993
1989
1985
1981
1977
1973
1969
1965
1961
1957
1953
1949
1941
1937
1933
0
1929
lbs./cow
14000
1945
1990
1984
1978
1972
1966
1960
1954
1948
1942
1936
1930
1924
1918
1912
1906
0
1900
bush./acre
120
Year
Milk per Cow
Alston, Sumner, Vosti UCD/AIC/ARE
Trends in Prices Received By Farmers
Prices received Deflated w ith prices paid (Com m odities,
services, interest, taxes, w ages) (1977=100)
Deflated Prices Received for Selected Grains
(1977=100)
180
250
160
140
200
120
150
100
80
100
60
50
40
20
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1960
2002
1999
1996
1993
1990
1987
Years
Rice (PP)
All Farm Products
Wheat (PP)
Corn for Grain
Deflated Prices Received for Selected Fruits
(1977=100)
250
200
150
100
50
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1963
1960
0
1966
1984
1981
1978
1975
1972
1969
1963
1960
1966
All Crops
Year
Livestock & Products
1963
0
0
Year
Apples
Oranges
Straw berries
Table Grapes
Alston, Sumner, Vosti UCD/AIC/ARE
Prices Paid By Consumers – Basic Stuff
Consumer Prices for Ground Beef Deflated by CPI (food at home)
Consum er Prices for Eggs Deflated by CPI (food at hom e)
2.50
2.00
1.00
0.80
$/lb.
0.60
0.40
1.50
1.00
2004
2000
1996
1992
1988
0.00
Year
1984
0.50
2004
2000
1996
1992
1988
1984
1980
0.20
0.00
1980
$/doz.
1.40
1.20
Year
Eggs, Grade A Large
Ground Chuck, USDA Choice Cons.Food_Prices!$N$7, 100% Beef
Consumer Prices for White Sugar Deflated by CPI (food at home)
1.00
0.70
0.90
0.60
0.80
0.50
$/lb.
0.70
0.40
0.60
0.30
0.50
0.20
0.40
Chicken, w hole, fresh
2001
1994
1987
2004
2000
1996
1988
1984
1992
Year
1980
0.10
0.30
1980
$/lb.
Consumer Prices for Chicken deflated by CPI (food at home)
Year
Sugar, w hite, all sizes
Alston, Sumner, Vosti UCD/AIC/ARE
Prices Paid By Consumers – Fruits and Vegetables
Consumer Prices for Oranges Deflated by CPI (food at home)
0.90
0.80
0.70
$/lb.
0.60
0.50
0.40
0.30
0.20
0.10
2004
2000
1996
1992
1988
1984
1980
0.00
Year
Oranges, Navel
Oranges, Valencia
Consumer Prices for Strawberries Deflated by CPI (food at home)
Consumer Prices for Potatoes Deflated by CPI (food at home)
2.50
0.35
2.00
0.30
$/12 oz.
0.20
0.15
1.50
1.00
0.10
0.50
0.05
Year
Potatoes, w hite
2004
2000
1996
1992
1988
1984
0.00
1980
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0.00
1986
$/lb.
0.25
Year
Straw berries, Dry pint
Alston, Sumner, Vosti UCD/AIC/ARE
Getting the Price Story Right: Strawberries
Year
Jan
Feb
Mar
1980
Apr
May
Jun
0.653
0.608
0.66
Jul
1981
0.886
0.69
0.637
0.696
0.77
1982
1.016
0.914
0.73
0.778
0.775
0.728
0.708
0.752
0.863
1983
Aug
1984
0.912
0.663
0.648
0.78
0.827
1985
1.016
0.809
0.646
0.774
0.913
1986
0.637
0.797
0.718
0.84
0.899
1.081
0.937
0.824
0.955
1.071
1.029
1987
Sep
Oct
Nov
0.943
1988
1.181
0.693
0.919
0.937
1.059
0.971
1.216
1989
1.218
0.966
0.831
1.055
1.117
0.986
1.087
1990
1.638
1.338
1.109
0.781
0.987
0.965
1.081
1.21
1991
1.467
1.268
1.112
0.976
0.924
0.948
0.961
1.014
1.035
1992
1.43
1.173
0.96
0.831
1.048
0.988
1.185
1.473
1.19
1993
1.467
1.26
0.908
0.874
1.066
1.013
1.069
1.151
1.261
1994
1.318
1.262
0.91
0.983
1.047
1.085
1.108
1.209
1.286
1995
1.926
1.34
1.001
1.14
1.18
1.209
1.398
1.355
1.316
1.505
1.236
1.082
0.957
1.226
1.247
1.164
1.42
1.409
1.514
1.317
1.179
1.073
1.213
1.383
1.375
1.488
2.08
1.751
1.613
1.386
1.413
1.346
1.454
1.469
1.779
2.102
1.96
1.751
1.419
1.49
1.375
1.557
1.679
1.664
1.935
1.825
1.45
1.218
1.187
1.246
1.263
1.416
1.619
2.14
2.01
1.737
1.482
1.465
1.486
1.628
1.916
1.996
2.137
2.137
1.941
1.551
1.527
1.552
1.545
1.695
1.873
1.884
2.224
2.153
1.871
1.762
1.678
1.568
1.776
1.84
1.986
2.246
2.41
2.332
2.124
1.661
1.672
1.847
1.629
1.817
1.843
2.6
3.185
1996
1.692
1997
1998
2.135
1999
2000
2.167
2001
2002
2.498
2003
2004
2.481
Dec
1.654
1.948
2.526
3.602
Alston, Sumner, Vosti UCD/AIC/ARE
A Closer Look at Strawberry Prices
Consumer Prices for Strawberries Deflated by CPI (food at home)
June Strawberry Prices
(BLS data)
2.50
Price $ per dry pint (12oz)
-
1.50
1.00
0.50
1
0.8
0.6
0.4
y = -0.0089x + 18.289
R2 = 0.5356
0.2
0
1975
1980
2004
2000
1996
1992
1988
1984
0.00
1985
1990
1995
2000
2005
2010
Year
Year
Straw berries, Dry pint
Feb Strawberry Prices
(BLS data)
Price $ per dry pint (12oz)
-
1980
$/12 oz.
2.00
1.2
1
0.8
0.6
0.4
y = -0.0003x + 1.4305
R2 = 0.0003
0.2
0
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Year
Alston, Sumner, Vosti UCD/AIC/ARE
Consumer
Prices for
Foods
White Bread: 0.0
Rice: -.029
Pasta: -.020
Lettuce: -.009
Tomatoes: +.004
Carrots: -.009
Potatoes: 0.0
Bananas: -.013
Apples: -.009
Oranges: 0.0
Grapefruit: -.004
White Sugar: -.024
Butter: -.013
Statistics report proportional changes in real prices over 1980-2003
Milk: -.011
Cheese:- .033
Turkey: -.026
Chicken: -.012
Eggs: -.019
Beef: -.021
Alston, Sumner, Vosti UCD/AIC/ARE
Food Prices in Terms of the Wages
• 12-Item Food Basket (60% of the historical price
today)
– 1955: 3 hours
– 1997: 1.75 hours
• 3-Pound Chicken (40% of the historical price today)
– 1958: 35 minutes
– 1997: 14 minutes
• Soft Drink (53% of the historical price today)
– 1950: 2.8 minutes
– 1997: 1.5 minutes
• Pizza (88% of the historical price today)
– 1958: 57 minutes
– 1997: 50 minutes
Source: Dallas Fed
Alston, Sumner, Vosti UCD/AIC/ARE
Wheat Prices Received by Farmers
120
„Disconnect‟
Between
Commodity &
Food Prices
PPI (1977=100)
100
80
60
40
20
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0
Consumer Prices Deflated by CPI (food at home)
0.70
0.60
0.40
0.30
0.20
0.10
0.00
19
8
19 0
8
19 1
8
19 2
8
19 3
8
19 4
8
19 5
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
04
$/lb.
0.50
Month/Year
All Purpose Flour, white
White Bread, pan
Alston, Sumner, Vosti UCD/AIC/ARE
Preliminary Conclusions for USA
and Policy Implications
• Agricultural Policy  Commodity Prices
– Commodity Support Programs
• Effects on farmer income are large; Effects on commodity prices are small,
varied and difficult to predict
– Publicly Sponsored Agricultural Research
• Chiefly responsible for past yield increases and price declines
• Commodity Prices  Food Prices
– Increasing „disconnect‟ between commodity prices and food prices
– Role of food industry needs to be better understood and exploited
• Entry points for regulating in food preparation technologies and portion sizes
• Food Prices  Caloric Intake
– Micro-management of food prices might not be wise
– Price responses are generally low
• Agricultural Policy for Dealing with Obesity
– Increased yields, and improved quality/availability of fresh fruits/vegetables
• Fragmented markets and social benefits call for public policy action
• Changes in Prices of Fruits/Vegetables Are Hard to Identify
– Difficult to Defend the „Increasingly Out of Reach‟ Hypothesis
Alston, Sumner, Vosti UCD/AIC/ARE
Lessons for Developing Countries
• Too Early for USA „Blueprint‟ for Controlling Obesity
– Costs of Obesity Can Be Very Large
– Improve Health Monitoring Now
• Decreases in Food Costs Are Necessary to Combat Hunger
– Productivity growth in agriculture is essential
– But „over-consumption‟ of food may occur
– Regulation of the food industry may be needed
• Commodity Prices Fall More Quickly than Food Prices
– Structure of food industry and changes in all input costs matter greatly
– Commodity price policies are poor tool for managing food prices
• Changes in Food Prices Are Not Easy to Track
– Changes in food quality and availability complicate the issue
• “Healthy Diet” Is Still Mysterious
– Identifying and clarifying site-specific objectives is important
• Food Preferences Matter Greatly
– Policy based solely on food costs will likely fail
Alston, Sumner, Vosti UCD/AIC/ARE