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U.S. Agricultural Policies U.S. Agricultural Policies and Their Influence on and Their Influence on

Obesity Obesity

Daryll E. RayUniversity of Tennessee

Agricultural Policy Analysis Center

Farm and Food Policy and ObesityInstitute of Medicine

Washington, DCMay 19, 2010

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Here’s What We’re Going Do…Here’s What We’re Going Do…

• U.S. agricultural “policy of plenty” entering its six century

• When “plenty” outruns demand, ag has trouble self-correcting. Why is that?

• Enter commodity programs—what they were and what they morphed to. Why the change?

• Impacts of the “change” in commodity policy—and the obesity connection

• Policies that better embrace alternative food systems

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Historically—there have beenHistorically—there have beenTwo Two Major Components of U.S. Major Components of U.S.

Farm Commodity PolicyFarm Commodity Policy

• Policy of Plenty: Ongoing public support to expand agricultural productive capacity through research, extension and other means

• Policy to Manage Plenty: Mechanisms to manage productive capacity and to compensate farmers for consumers’ accrued benefits of productivity gains

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Ag Policy Did Not Start in 1932Ag Policy Did Not Start in 1932

• Historic policy of plenty– Land distribution mechanisms – 1620

onward– Canals, railroads, farm to market roads– Land Grant Colleges – 1862, 1890, 1994– Experiment Stations – 1887– Cooperative Extension Service – 1914– Federal Farm Credit Act – 1916

• This policy of plenty often results in production outstripping demand causing prices to be “low”

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So What’s the Problem…So What’s the Problem…

• Lower prices should automatically correct itself– Consumers buy more– Producers produce less– Prices recover—problem solved!

• That will work for food and agriculture too, correct?

• Well…

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Characteristics of Ag SectorCharacteristics of Ag Sector• Agriculture is different from other

economic sectors.On the demand side:

– With low food prices—

• People don’t eat more meals a day

• They may change mix of foods

• Aggregate intake remains relatively stable

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Characteristics of Ag SectorCharacteristics of Ag Sector

• Agriculture is different from other economic sectors.On the supply side:– With low crop prices—

• Farmers continue to plant all their acres• Farmers don’t and “can’t afford to” reduce

their application of fertilizer and other major yield-determining inputs

• Who farms land may change• Essential resource—land—remains in

production in short- to medium-run

• Timely self-correction does not occur

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Historically—there have beenHistorically—there have beenTwo Two Major Components of U.S. Major Components of U.S.

Farm Commodity PolicyFarm Commodity Policy

• Policy of Plenty: Ongoing public support to expand agricultural productive capacity through research, extension and other means

• Policy to Manage Plenty: Mechanisms to manage productive capacity and to compensate farmers for productivity gains that benefit consumers

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Traditional Farm Policy Traditional Farm Policy ElementsElements

• Historically, U.S. domestic farm policy generally included the following elements:– Base acreage

– Acreage reduction / set-asides

– Nonrecourse loans to support prices

– Government storage of commodities

– Domestic and foreign demand expansion

– Target price for major crop commodities• Deficiency payments for the difference between target price

and market price

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Critical ChangesCritical Changesin U.S. Policyin U.S. Policy

• Since 1985 there has been:– An export “mindset”

– A movement away from “managing plenty” to supporting income with government payments

• This view culminated in the 1996 FAIR Act:– Elimination of supply control instrument: set aside

program

– Replaced “price floors” with government payments

• Low price policy to expand grain exports

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Exports: The Key to Prosperity?Exports: The Key to Prosperity?

Index of US Population, US Demand for 8 Crops and US Exports* of 8 Crops

1979=1.0

US Population

US Exports *Adjusted for grain exported in meat

US Domestic Demand

1970s Syndrome

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Historical ResultsHistorical Results

Index of US Population, US Demand for 8 Crops and US Exports* of 8 Crops

1979=1.0

US Population

US Exports

US Domestic Demand

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Impacts of Agricultural PolicyImpacts of Agricultural Policy

• Made grains and oilseeds unrealistically cheap

– Which:• Enables processors to purchase raw commodities at a

fraction of their total production cost

• Greatly hastened the concentration of feeding operations (and associated problems)

– But without the policy change• Cattle, chickens and hogs would NOT have gone to a

primarily grazing and range fed finishing operations

• Prices would have been higher for whole grains, sweeteners, and cooking oils but still available in plentiful supplies at reasonable prices

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Things to Remember…Things to Remember…

• Cheap fossil fuel and technologies influenced

– Crop production (ever increasing machine sizes, inexpensive fertilizer, pesticides, etc.)

– Food transport costs, economies of size, packaging and assembly

• Cultural changes affected food consumption

– Two-income households; premium on convenience

– Jobs requiring less physical exertion

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(Other) Random Thoughts(Other) Random Thoughts

• I could buy five greasy hamburgers and a pound of french fries at a “Henry’s” fast food restaurant for $1.00 40 years ago

• Question: Over the centuries have our bodies become engineered to deal with famine not abundance?

• Agricultural policy hurried the trend toward less healthy food but…

– The fossil fuel revolution, more two-income families, need for convenience, time constraints, changing work habits and so on likely would have affected eating habits regardless…

• None of this gets agricultural policy off the hook!

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Quickening the Journey to Quickening the Journey to Alternative Food SystemsAlternative Food Systems

• Research

• Extension and coordination

• Commodity program changes

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ResearchResearch

• Quantitatively estimate the connections between farm prices, food prices, corporate marketing practices and food consumption

• Quantitatively estimate the total social costs and benefits of alternative nutritional food structures

• Investigate ways to optimize the health benefits of food assistance programs

• National effort to develop locally-adapted, highly-nutritional varieties of vegetables and other specialty crop (resistant to diseases, optimized to climate, etc.)

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More ResearchMore Research

• Additional research on:

– Sustainable practices that enhance nutrition as well as other characteristics (productivity, environment, etc., etc.)

– Grazing systems for cattle; Hoop structures on pastureland for hogs…

– Vegetable greenhouse systems

– Practices and technologies appropriate for:

• Family farms; low-capital small commercial operations

• Community Supported Agriculture operations

• Community gardens

• Family gardens

• Coordinating and management issues; interfacing with agribusinesses

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ExtensionExtension

• Opportunity to refocus the mission of Extension

– Urban areas are underserved relative to rural areas

– Develop opportunities, coordinate, provide information to community gardens, CSAs, family specialty-crop operations, family gardeners

– Develop marketing programs to expand sales for small specialty operations

– Provide a “clearing house” function to link dispersed specialty production operations to commercially viable markets

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Commodity ProgramsCommodity Programs

• Ensure adequate commodity prices—de-emphasize payments

– Reserves

– Price supports

– Supply Control

• Safety net products for specialty crop circumstances

• Special encouragements, dispensations, allowances and considerations

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Agricultural Policy Analysis Center The University of Tennessee 310 Morgan Hall 2621 Morgan Circle Knoxville, TN 37996-4519

www.agpolicy.org

Thank YouThank You

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