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Filtering by Tag: Real Cost of Food

Consumer Demand for Fruits & Vegetables

Jacqui Stork

Last week we discussed the low percentage of U.S. farm land allocated for growing fruits and vegetables, and how that could contribute to a higher price point for those products. Today, we'll touch on the impact consumers have on the market for fruits and vegetables.

Typically, when demand for a product or service is lower than supply, the price will fall. But, what happens when low demand seems to be a driver of a shrinking supply? In the case of specialty agricultural crops, like fruits and vegetables, we end up with an equilibrium price that is higher than that of other products.

American consumption of fruit and veggies is well below what is recommended by the federal government. In the case of MyPlate (USDA), the guideline stipulates that you should make "half your plate fruits and vegetables" and the Centers For Disease Control & Prevention (CDC) the recommendation is to eat 1-2 cups of fruit plus 2-3 cups vegetables daily. If you're curious about what the CDC recommendation looks like in "real food" terms, check out this piece by The Kitchn which shows exactly how simple it can be to meet this requirement.

Unfortunately, the average American isn't getting anywhere close. In fact, just 10% of American adults met the CDC recommendation in 2018, down significantly from almost 30% in 20101. This trending down is especially apparent amongst adults 45 years and older, and is even more acute for those over the age of 652. One speculated reason for this decline is the reliance on convenience food items (like pizza, packaged pastas, or other one-dish meals) that eschew the traditional "center cut with vegetable side" meal template2.

In short, we've changed the way we eat. A recent Harvard Business Review report shares that just 10% of us self-identity as people who love to cook3. Preparing fresh produce (especially vegetables) requires a fairly significant investment of time, knowledge, and skill - peeling, chopping, cooking, etc. When you consider those two facts - that most Americans don't love cooking and that preparing vegetables takes work - it's unsurprising that many of us are opting out. When this information is then coupled with the preponderance of convenience foods available, its hard to feel shocked that the average adult in the U.S. eats just 1 serving of vegetables per day2.

This lack of consumer engagement provides disincentives for farmers who may otherwise be interested in growing these crops, which may help explain why such a small percentage of farm land is used for growing fruit and vegetables. Using an economic model developed at Purdue, one study estimated that if consumption increased to the point where Americans met the federal guidelines, farmers would increase growth of these products by 88%4. It's a classic catch-22: if people ate more fruit and vegetables, they could potentially be produced at a lower cost, thus encouraging people to eat more fruits and vegetables.

At the same time, produce is the most commonly wasted farm product we have. This occurs at all levels of the food supply chain. Farmers regularly leave produce unharvested in the field, there are many reasons for this but one that is commonly cited is the expectation by consumers of a "perfect" product. If produce is not symmetrical, blemish-free, bright, right-sized, and otherwise beautiful it is left in the field, kept out of the market, or not selected by consumers. The cost of producing this product doesn't go away, however. Farmers, knowing that they will ultimately "over-plant" each season must price their remaining product accordingly (read: more expensively).

Farmers' market and other direct-to-consumer shoppers already eat a greater quantity and variety of fresh produce than the average American5, but even we can do better. When it comes to food, we have a real opportunity to vote with our dollars. By choosing to invest in high-quality fresh produce, we can tell farmers that we want more of these foods. By looking past blemishes, weird shapes, or other so-called "imperfections" we can help circumvent some of the waste that drives up their cost.

Getting your "Five a Day" is not that hard, and more than half of all Oregonians aren't even doing that.

We can, and should, do better.



1 https://www.cdc.gov/nutrition/downloads/fruits-vegetables/2018/2018-fruit-vegetable-report-508.pdf

2 http://www.pbhfoundation.org/pdfs/about/res/pbh_res/State_of_the_Plate_2015_WEB_Bookmarked.pdf

3 https://hbr.org/2017/09/the-grocery-industry-confronts-a-new-problem-only-10-of-americans-love-cooking

4 https://www.ucsusa.org/news/press_release/less-corn-more-fruits-and-vegetables-0378.html#.W6vsWhNKgWo

5 https://farmersmarketcoalition.org/report-on-direct-to-consumer-fruits-and-vegetable-purchasing/

Labor & The Food System

Eamon Molloy

Last week we discussed some of the ways that the federal farm subsidy and crop insurance programs affect farmers and the food system. Specifically, we looked at how these policies impact the cost of food. If you didn't get a chance to read it yet, we'd suggest going back (and while you're at it, check out the Farm Bill update too). These aren't required for understanding where we're going today, but they'll sure help. You can find the back issues linked below. We should also note that, for the purposes of this series, we've decided to focus primarily on the costs and considerations associated with producing fresh produce - but that doesn't mean producers of meat, dairy, or other animal products aren't facing the same (and additional!) challenges when bringing food to market.

One of the most important inputs in bringing our food from seed to table is people power, and it gets expensive. This holds especially true for specialty crops like fruits and vegetables. Across all types of farming, hired farm wages represented about 14% of total expenditures in 2016. For farms specializing in fruit and/or vegetable production, this cost was closer to 39% [1].

Why is there such a big difference? Well, a lot of hands are involved in the process of planting, growing, harvesting, and selling produce. In general, fruits and vegetables are more delicate and require more careful handling than, say, any of the five commodity crops. Because of this, calorie-for-calorie more industrial crops can be produced per acre - with less effort. As one article on the mechanization of agriculture puts it, we're way better at producing corn than lettuce[2].

Foods produced as part of the industrial agriculture system, like commodity crops, are often grown in what's known as a mono-culture or duo-culture, meaning that just one or two crops are grown on a vast acreage of land. Additionally, crops grown in this way are usually planted in evenly spaced rows.

All this makes it easier for producers to rely on machines (instead of human labor) for many of the necessary steps in the production process. Contrast this with the labor involved on a smaller, diverse, mixed-crop farm, like those who attend farmers' markets. Last year, Gathering Together Farm published the Life of a GTF Tomato which outlines the lifecycle of the tomato crop. It is a great example of the hard work required to bring us produce each week. (Read the blog as soon as possible, it's truly eye-opening.) The short version? Every step of the process - from seed selection, to planting, to maintenance, to delivery, to sale - is done, meticulously, by hand. This takes a level of skilled labor unmatched by anything you'd see on an industrial farm operation. It also take A LOT of time.

It's not impossible to increase efficiency by incorporating technology into growing produce, and even most small farms rely on machines to some extent, but the applications are fewer and further between. One reason for this is the delicate and methodical nature of produce production.  But another reason is a lack of investment in technological research on the part of the federal government.

Even though specialty crops make up a quarter of the value of farm products in the U.S., less than 15% of federal research and development funding has been directed to this sector over the past several decades[2]. As a result, the efficiency of growing grains has increased much faster than for vegetables. More research could help vegetable farmers build better infrastructure and increase production of the foods we're told we should eat. Starting with the 2008 Farm Bill, the government has made strides to close the research investment gap - now $400M of the $3B annual agriculture research budget is dedicated for specialty crops2. This could pay off in reduced labor cost for farmers. Current USDA research projects include testing robots to harvest, select, and package apples; flavor improvements for commercial tomatoes; and changes to packaged lettuces and spinach[2].

It's unlikely that any of our farmers will be using apple-picking robots to harvest, but technological advances do have a way of trickling down.

And, the need for alternatives to people-power may soon reach its peak. About half of all U.S. farm labor is legally authorized to work here, and hired crop workers are even most likely to have been born outside of the U.S.[1]. "Enforcement only" immigration policies, such as those being practiced by the current administration, put pressure on an already shrinking workforce. One 2014 study estimated that the lack of a skilled workforce could lead to up to 40% revenue loss for fruit and vegetable farmers[3]. In the short term, this has already been brought to bear. Since 2016, farmers have experienced a net income loss of 9%[4]. Many producers are unable to expand acreage, or even meet the yield of previous seasons, because they can't replace the skilled labor that has traditionally been done by undocumented immigrants. It is not uncommon for farmers to leave 15-20% of their product unharvested, and this number could go even higher if these trends continue[4]. A smaller supply of produce could lead to higher prices for consumers.


Even so, this pales in comparison to the human cost of such policies. In Oregon, 87,000 people are employed within the agricultural system - and much of the workforce is made up of families who have been living undocumented in our state since the 1990s or early 2000s[5]. Last spring, Immigration and Customs Enforcement (ICE) began a series of raids in farming regions that led to the detainment and deportation of immigrants with children and spouses that are U.S. citizens5. This means that families have been separated and entire communities have been living in fear.


By shopping at farmers' markets and supporting small, local agriculture we are somewhat removed from these challenges. But, we don't exist in a vacuum. Try as we might to build a better food system, the truth is that farmers' markets and small family farms remain a tiny portion of our larger food environment and are therefore affected by the larger forces and policies at work. We're affected by changes in technology that enable to further mechanization of industrial agriculture, widening the price gap between commercial and locally produced foods. Similarly, we're affected when immigration policies change the shape and size of the overall agricultural workforce. Finally, and perhaps most importantly, we're affected when those who the put food on our tables are being forced, en masse, to leave homes, families, and communities that they've built over decades.

[1]USDA Economic Research Service (2016)


[2] Politico (2017)


[3] Modern Farmer (2017)


[4] Food & Wine (2017)


[5] The Oregonian (2017)


Farm Subsidies & Federal Crop Insurance

Eamon Molloy


With the Agricultural Adjustment Act of 1933, Franklin Roosevelt signed into law what would become one of the largest and longest running safety net programs in America. The program began as a way to temporarily support struggling farmers and boost the economy during the Great Depression, but its central tenets - namely, paying farmers to not produce and guaranteed purchase by the government - were codified into law as part of the every 5 years Farm Bill in 1938[1].


In the years since, parts of the food system have circumvented the normal rules of supply and demand because they have been deemed too important to fail. The vast majority of farm subsidy dollars are directed towards just five crops: corn, soybeans, wheat, cotton, and rice[2]. When these so-called commodity crops are over-produced, the U.S. government steps in to purchase at a guaranteed price, and store the excess until it is needed. The program is designed to artificially limit supply and create a price floor so that farmers can continue production even in "lean" years. Essentially, the volatile swings inherent in an industry that is dependent on so many uncontrollable factors (i.e. weather, soil conditions, larger economic forces, etc.) are smoothed by the various programs in the subsidy system. Farmers are guaranteed an income, and consumers are guaranteed a product - stored product can be released and sold in times of  shortage.


But, the system that was designed to support family farmers hasn't worked as intended. Over the years, the major elements that make up the patchwork of the subsidy program have been adjusted and rearranged, but the problem remains that two-thirds of all subsidy payments are made to large-scale, wealthier-than-average producers of the five commodity crops. Small farmers, even those who do produce one or more of the commodity crops, are unlikely to reap the benefits. Fruits, vegetables, and meats are considered "specialty" products and do not qualify for the vast majority of subsidy programs. You would be hard-pressed to find a vendor at the Hillsdale Farmers' Market who is able to participate in federal subsidy programs outside of the crop insurance that they've bought into (and even that would be a stretch). The top 3% of farms receive 40% of all subsidy payments annually2.


Unfortunately, the Federal Crop Insurance Program hasn't proven to be much more equitable. Through this program, producers can purchase insurance policies that protect them in the event of a revenue loss due to crop loss or a drop in price[3]. Despite the fact that policies exist for over 100 crops, payments for producers of the commodity crops make up over two-thirds of all payouts3. Farmers pay just 40% of the premium (the other 60% is subsidized by taxpayers). In effect, the Federal Crop Insurance Program operates as a subsidy given that taxpayers foot the bill for over half of the premium, and are also responsible for a large portion of the payment to farmers in the event of revenue loss3. 


To be clear, we fully understand the importance of mitigating risk for farmers. We need producers to keep our country fed and our economy moving forward. There are so many uncontrollable factors in the farming industry that it makes perfect sense to provide a safety net for a sector that has such a large net impact on our society. A system in which 3% of farms receive 40% of payments doesn't make sense. Neither does a system in which five crops are kept (artificially) viable. Fruits and vegetables are widely regarded, even by the USDA, as the basis for a healthful diet. Yet these items are considered a specialty and their producers are given little, if any, financial support from the federal government.


So what is the impact of these policies on the cost of our food?


Truthfully, it's unclear. There is disagreement among economists, food scholars, and popular foodies over how much impact farm subsidies have on food prices. Many, Michael Pollan included, claim that these policies are directly responsible for the fact that unhealthier, processed foods are far cheaper than fresh fruits and vegetables. This argument does hold water, given that farm subsidies do encourage the production of commodity crops even when they're not truly "profitable". In contrast with the originally stated intent to control the supply and stabilize the market, decades of farm policy have led to a huge oversupply of the commodity crops[4]. Thus, these foods are incredibly cheap and wind up in all kinds of products at the grocery store.


But, others estimate that the impact is just a few cents on the dollar per calorie produced[5]. Tamar Haspel doesn't dispute the mechanism, but begs the question of scale when discussing the impact of subsidies on the cost of food. In an analysis based on the total cost to produce various food items, she argues that the value of subsidies for corn, soy, and wheat hovered around 10% of the crops' total value in 20165.


As with most things, the truth is likely somewhere in the middle. It is undeniable that commodity crops are much less costly to produce, and are therefore cheaper for consumers at the store. While subsidies surely have an impact, there are myriad other factors at play - the labor associated with production, yield per acre, cost of inputs during the growing cycle, transportation & refrigeration costs, and more. Keep that in mind because we'll explore some of these factors in next week's Grapevine.


Even if there is disagreement over the magnitude of the impact, there is widespread agreement that the current system is broken. Critics from a variety of backgrounds - including farmers, environmental advocates, nutritionists, policymakers, and economists - agree that too much taxpayer money is spent lining the pockets of wealthy farm operators[6]. This also means that too little is used to support the small and medium producers who bring us "specialty" crops.


There have been limits for the past 30 years on the amount of money operations could receive from subsidy payments. There are many loopholes that savvy producers have used to exceed the $125,000 limit each year, but in theory these limits do exist[7]. Whether or not they continue on after the 2018 Farm Bill is passed will be interesting to see. The version that passed the House would remove the cap and allow mega-farms to collect an unlimited amount of subsidy payments. It also seeks to eliminate funding for the education program that helps farmers to conduct risk assessments and reduce their own risk at the ground level7. At the same time, the Senate version provides hope: certain provisions seek to close existing loopholes and tighten eligibility requirements for subsidy and crop insurance payments.


The U.S. is far from creating policies that reduce the cost of fruits and vegetables for farmers and consumers, proposed changes to the federal subsidy and crop insurance programs do not include increasing payments for specialty crops, but reducing payments for wealthy commodity producers is a start.



[1] The Salt: https://www.npr.org/sections/thesalt/2011/09/26/140802243/the-farm-bill-from-charitable-start-to-prime-budget-target

[2] https://farm.ewg.org/subsidyprimer.php

[3] https://farm.ewg.org/crop_insurance_analysis.php

[4] https://michaelpollan.com/articles-archive/you-are-what-you-grow/

[5] https://www.washingtonpost.com/lifestyle/food/im-a-fan-of-michael-pollan-but-on-one-food-policy-argument-hes-wrong/2017/12/04/c71881ca-d6cd-11e7-b62d-d9345ced896d_story.html?utm_term=.9417904506c3

[6] https://www.washingtonpost.com/lifestyle/food/why-do-taxpayers-subsidize-rich-farmers/2018/03/15/50e89906-27b6-11e8-b79d-f3d931db7f68_story.html?noredirect=on&utm_term=.c65d951ecc26

[7] http://sustainableagriculture.net/blog/2018-farm-bill-commodities/

An Update on the 2018 Farm Bill

Jacqui Stork

Back in May, we shared a story about the Supplemental Nutrition Assistance Program (SNAP) and its relationship to the Farm Bill, a large-scale appropriations act that is responsible for the bulk of federal agricultural policy in America. At that time, no bill had been passed in either chamber of the Congress and it seemed unlikely that we would get a new package before the expiration of the 2014 Farm Bill (actually passed in 2015) on September 30, 2018.


It is still unclear whether or not the 2018 Farm Bill will meet the deadline for passage, and a lot has changed since May. What follows is a brief (read: not comprehensive) update on the 2018 Farm Bill and a look to what we can expect to learn in the coming weeks.


Both the House & Senate have passed versions of the 2018 Farm Bill -

And these versions are very different from each other.


The House passed the exact same bill that was proposed in April and defeated in May. Passed it narrowly, with zero Democratic support and losing 20 Republican members of the caucus[1]. While our earlier piece focused primarily on the impact of the House Bill on SNAP, there were plenty of other "goodies" in there that farming advocates didn't want to see passed. These include the elimination of mandatory funding for a number of programs that support small farming operations; reduced support for programs like farm-to-school and produce prescriptions; expanded loopholes for subsidy and crop insurance programs that primarily benefit large commodity producers; and reduced incentives for farm-based conservation efforts[2].


To be clear, these are just a few of the most egregious examples of turning the clock backwards. On the day of its passage, Portland Congressional Representative Earl Blumenauer summed up his feelings, tweeting: "Another shameful day in the House. GOP turns its back on family farmers & our most vulnerable & passes GOP Farm Bill.".


A week later (June 28th) the Senate passed a version of the bill that is... not so bad. Actually, this version contrasted the House bill from the very beginning thanks to its standing as a popular, bipartisan piece of legislation that passed with 86 votes. Most notably, the Senate version does not include the work requirements and other restrictions to the SNAP program proposed by the House. It also maintains or increases investments in key conservation efforts; tightens eligibility restrictions for subsidy payments; and maintains funding levels for local food promotion programs[3].


In short, the Senate version preserves the Farm Bill as a critical piece of the social safety net for both producers and consumers, while the House version does not. What comes next is an effort to reconcile the two bills in a Conference Committee before a single version will go to a vote in both chambers.


And Now They'll Have to Compromise -

By early August, both chambers had announced their membership for the Conference Committee - a group which will work towards a negotiated bill that can be voted on by the full Congress[4]. They'll be working towards a consensus and compromise through a combination of public and closed-door meetings on the many key issues listed above. Additionally, the smaller discrepancies between the two bills will have to be negotiated as well. In the end, a majority of members from both the House and Senate committees must approve a single, consolidated farm bill to be introduced for a vote.


The National Sustainable Agricultural Coalition (NSAC)[5] provides a detailed breakdown of the major gaps that will need to be bridged before a final version can be voted on. In it, they also include handy, easy-to-read charts that contrast major provisions from the two bills plus their own policy recommendations. Unsurprisingly, NSAC is far more closely aligned with the version proposed by the Senate on every major provision.


Largely thanks to the quick passage of the Senate bill, there is hope that the 2018 Farm Bill will pass before the current version expires. But, since we're waiting on compromise by both chambers and the signature by the president, it's not likely. There are some major differences across the two bills, and areas in which it would be dangerous (or at the very least be a slippery slope) for the Senate to compromise on. It is also difficult to know exactly where the bill stands, because there hasn't been a peep from the conference committee. Other members of the Congress, and the general public, are still able to comment in an effort to shape the final piece of legislation.


What's Next?

In the coming weeks, we'll explore some of the issues related to the cost of food, including: subsidies, advertising, labor, and conservation. Each of these is deeply connected with and impacted by what happens with the Farm Bill, so you can expect that we'll refer back over and over again. As more news is made related to the 2018 Farm Bill, we'll share that too.


In the meantime, if you're interested in learning more about the history and contents of the farm bill, check out this video by the Food & Environment Reporting Network (FERN)[6].

[1] http://sustainableagriculture.net/blog/farm-bill-house-senate-2018/

[2] http://sustainableagriculture.net/blog/chairmans-mark-local-food-rd/

[3] https://www.washingtonpost.com/business/economy/senate-passes-sweeping-farm-bill-setting-up-fight-with-house/2018/06/28/0007d532-7aff-11e8-80be-6d32e182a3bc_story.html?utm_term=.2b184555f976

[4] http://sustainableagriculture.net/blog/farm-bill-conference-committee/

[5] http://sustainableagriculture.net/blog/farm-bill-conference-guide/

[6] https://thefern.org/2018/06/what-is-the-farm-bill-and-why-does-it-matter/