Are Healthy Alternatives Available for All?
Some Insights From An Agricultural
Economics Perspective
Stephen Vosti
UC Davis Team
Agricultural
Issues Center
Department of
Agricultural and
Resource
USDA (NRI-CSREE # 2006-55215-16720)
Economics
ECOR Workshop on Poverty and Obesity, March 2007
Vosti et al., UCD/AIC/ARE
Overview of Presentation
• ‘Availability’
– How we think about it and some measures of it
– Historical record, driving forces, and one ‘smoking gun’
• ‘Alternatives’
– How we think about them
• Food Choices
– Where ‘Availability’ and ‘Alternatives’ Meet
• Role of Public Policy in Changing Food Choices
– Special attention paid to the Food Stamp Program
• Parting Thoughts
–
–
–
–
Time/income constraints
Relative poverty
Fat traps
Positive deviance approach
Vosti et al., UCD/AIC/ARE
‘Availability’
• Economic Determinants of Food Availability
– Resources available -- income & time
– Product options
– Relative prices
Vosti et al., UCD/AIC/ARE
Economic ‘Availability’ of Food
and Other Goods
Budget Line
Other
Goods
Increases in Income
and Reductions in Prices
Increase the Size of the
Available Basket
Available
Basket
0
Food
Vosti et al., UCD/AIC/ARE
Trend In Real Income Is Positive
Vosti et al., UCD/AIC/ARE
Real Wages for Females Have Increased Since
the 1970s, but Not for Males
Vosti et al., UCD/AIC/ARE
Poverty Rates Are Flat Since the Early 1980s,
Number of Poor Has Trended Upward Since Then
Vosti et al., UCD/AIC/ARE
Changes in Food Prices
• What We Know
• Driving Forces
Vosti et al., UCD/AIC/ARE
Nominal Commodity Prices Received by
Farmers Have Increased
600
Price Index (1949=100)
500
400
300
200
100
0
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Year
Fruit and nut crops
Vegetables
Field crops
Nur. & greenhouse
Source: Alston, J. M. and P. G. Pardey. 2006. Public Funding for Research into Specialty
Crops. Paper Prepared for the CAL-MED Workshop, USDA ERS
Livestock
Specialty crops
Vosti et al., UCD/AIC/ARE
Real Commodities Prices Received By Farmers
Have Generally Declined
140
Price Index (1949=100) .
120
100
80
60
40
20
0
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Year
Fruit and nut crops
Nur. & greenhouse
Vegetables
Livestock
Source: Alston, J. M. and P. G. Pardey. 2006. Public Funding for Research into Specialty
Crops. Paper Prepared for the CAL-MED Workshop, USDA ERS
Field crops
Specialty crops
Vosti et al., UCD/AIC/ARE
Real Prices Received by Farmers Have Fallen,
But Unevenly Across Crop Types
Average Annual Rates of Decline (percentage)
0.00%
-0.50%
-1.00%
Nursery &
greenhouse
Vegetables
Fruit and nut
crops
Specialty crops
-1.50%
Livestock
-2.00%
-2.50%
Source: Alston, J. M. and P. G. Pardey. 2006. Public Funding for Research into Specialty
Crops. Paper Prepared for the CAL-MED Workshop, USDA ERS
Field crops
Vosti et al., UCD/AIC/ARE
Prices Paid By Consumers Have Also Generally
Fallen, but Less Swiftly Than Commodity Prices
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
Vosti et al., UCD/AIC/ARE
Almost All
Consumer
Prices for Foods
Have Fallen,
Some More
Swiftly Than
Others
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: Data sources USDA
Milk: -.011
Cheese:- .033
Turkey: -.026
Chicken: -.012
Eggs: -.019
Beef: -.021
Vosti et al., UCD/AIC/ARE
Food Prices in Terms of the Wage Rate in
Manufacturing Have Fallen
• 12-Item Food Basket (60% of the historical price)
– 1955: 3 hours*
– 1997: 1.75 hours
• 3-Pound Chicken (40% of the historical price)
– 1958: 35 minutes
– 1997: 14 minutes
• Soft Drink (53% of the historical price)
– 1950: 2.8 minutes
– 1997: 1.5 minutes
• Pizza (88% of the historical price)
– 1958: 57 minutes
– 1997: 50 minutes
*Number of hours of work in the manufacturing sector required to purchase each item, by year.
Source: Federal Reserve Bank, Dallas Texas
Vosti et al., UCD/AIC/ARE
Factors Determining Food Price Trends
• Agricultural Research and Development
• Productivity Increases
– Returns to land, labor, and total inputs
• Smoking Guns
– Commodity policies
• E.g., corn program
Vosti et al., UCD/AIC/ARE
Public Sector and Private Sector Trends in
Agricultural R&D Spending
Total Federal and State Spending on Ag. R&D
(1925-1997)
3500
3000
2000
1500
1000
500
1997
Total Private Sector Spending on Ag R&D
(1960-1992)
Year
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
Vosti et al., UCD/AIC/ARE
Trends in Aggregate Agricultural Productivity
Index of Land Productivity
(1977=100)
140
Index of Labor Productivity
(1977=100)
160
120
140
100
120
80
100
60
80
60
40
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
Vosti et al., 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
14000
10000
8000
6000
4000
2000
1993
1989
1985
1981
1977
1973
1969
1965
1961
1957
1953
1945
1941
1937
1933
0
1929
lbs./cow
12000
1949
1990
1984
1978
1972
1966
1960
1954
1948
1942
1936
1930
1924
1918
1912
1906
0
1900
bush./acre
120
Year
Milk per Cow
Vosti et al., UCD/AIC/ARE
One ‘Smoking Gun’
A vg . K calo ries/p erso n /d ay
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
Vosti et al., UCD/AIC/ARE
The Suspected Culprit – Payments to Corn Producers
Support to Corn Producers -- Absolute
12,000
The Real Culprit –
Productivity
Growth in Corn
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
-2,000
19
87
0
19
86
Average Yield of Corn 1900-1997
III. Producer Support Estimate (PSE)
160
1. Based on unlimited output
C. Payments based on area planted
D. Payments based on historical140
entitlements
E. Payments based on input use
E. Payments based on input use
120
G. Payments based on overall farming income
bush./acre
100
80
60
40
20
1996
1990
1984
1978
1972
1966
1960
1954
1948
1942
1936
1930
1924
1918
1912
Source: OECD
1906
0
1900
Millions USD (current)
10,000
Year
Avg. CornVosti
Yield
et al., UCD/AIC/ARE
What We Don’t Know About
Changes In Food Prices
• Changes in Product Availability
– E.g., seasonality of availability
• Changes in Product Characteristics
– E.g., taste, shelf-life, nutritional value
Vosti et al., UCD/AIC/ARE
Consumer Prices for Oranges Deflated by CPI (food at home)
0.90
0.80
0.70
0.60
$/lb.
0.50
0.40
0.30
0.20
0.10
2004
2000
1996
1992
1988
1984
0.00
1980
Prices Paid By
Consumers for
Some Fresh Fruits
and Vegetables Seem
to Trend Upwards
Year
Oranges, Navel
Oranges, Valencia
Consumer Prices for Strawberries Deflated by CPI (food at home)
2.50
1.50
1.00
0.50
2004
2000
1996
1992
1988
1984
0.00
1980
$/12 oz.
2.00
Year
Straw berries, Dry pint
Vosti et al., UCD/AIC/ARE
But The Data Can Be Very Spotty: 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
Vosti et al., UCD/AIC/ARE
Controlling for Seasonality, Prices May
Indeed Decline
1
0.8
0.6
0.4
y = -0.0089x + 18.289
R2 = 0.5356
0.2
0
1975
1980
1985
1990
1995
2000
2005
2010
Year
Feb Strawberry Prices
(BLS data)
Price $ per dry pint (12oz)
-
Price $ per dry pint (12oz)
-
June Strawberry Prices
(BLS data)
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
Vosti et al., UCD/AIC/ARE
Economics of ‘Alternatives’
• Consumer Preferences Determine the TradeOffs Consumers Are Willing to Make
Vosti et al., UCD/AIC/ARE
‘Alternatives’ In the Eyes of Consumers
‘Healthy
Foods’
Trade-Offs Acceptable to Consumer A
Trade-Offs Acceptable to Consumer B
0
‘Unhealthy
Foods’
Vosti et al., UCD/AIC/ARE
Food Choices – Where ‘Availability’
and ‘Alternatives’ Meet
• Determinants of Food Choices
– ‘Availability’
• Income
• Product options
• Relative prices
– ‘Alternatives’
• Consumer preferences
Vosti et al., UCD/AIC/ARE
Faced With Identical Incomes and Relative Prices,
Food Choices Can Differ Greatly
‘Healthy
Foods’
Consumer A
‘Fat Taxes’ May Not Be
Sufficient To Move Consumer B
to Consumer A’s Diet
Healthy
FoodA
Budget Line
Consumer B
Healthy
FoodB
0
Unhealthy
FoodA
Unhealthy
FoodB
‘Unhealthy
Foods’
Vosti et al., UCD/AIC/ARE
Public Policy Instruments for
Changing Food Choices
• Change Incomes
– Targeted groups
• Poor, children -- WIC
– Special currencies
• Poor – Food Stamp Program
• Change Relative Prices
– Tax ‘fat foods’
– Make ‘healthy foods’ cheaper
• Change Product Options
– E.g., allowable foods for the Food Stamp Program
• Change Food Preferences
– Revised USDA Pyramid and other ad campaigns
• No Policy Action Is Costless
– Some are more effective and more cost effective than others
Vosti et al., UCD/AIC/ARE
A Policy Experiment: Changing the List of
Allowable Foods in the Food Stamp Program
• Proposed Changes
– Eliminate ‘unhealthy foods’
• Examining Proposed Changes through an Ag Econ
Lens
– Effects on demand for ‘healthy’ and ‘unhealthy’ foods
• For FSP participants and others
– Supply response by farmers and the food industry
• Short, medium and long term
– Combined demand/supply effects on food choices
– Possible implications for nutrition outcomes
• For FSP participants and others
– Possible implications for participation in the FSP
Vosti et al., UCD/AIC/ARE
Parting Thoughts
• Time & Income Constraints Combine to Limit
Available Food Options
• Relative Poverty Rather Than Absolute Poverty May
Be Important in Understanding Behavior and
Crafting Anti-Obesity Policy
• Some Obese Individuals May Be Caught in ‘Fat
Traps’ that Are Difficult to Escape
• Finding and Understanding Success Stories (Positive
Deviance Approach) May Help Guide Food Policy
Vosti et al., UCD/AIC/ARE