So I was reading The Economist‘s recent special report on obesity. It’s pretty standard Economist fare – on the one hand but on the other, government can only do so much, meanderings down the path of arguments from left and right only to end up right back somewhere in the middle. (Don’t get me wrong. I love The Economist, but it’s rather like having a conversation with that uncle of yours who knows more than you’ll ever know and loves to sit there dismantling your preconceptions, but never seems to move from his seat.) My mind was beginning to meander a little itself when this little tid-bit caught my eye:
“Removing corn subsidies is a much-touted solution. However, a paper by Bradley Rickard of Cornell University argues that removing America’s subsidies for corn and soyabeans would have produced only a small dip in calorie consumption.”
That corn subsidies distort and pervert the American food system by incentivizing the production of unhealthy food (think high-fructose corn syrup; think soda, corn chips and almost the entire contents of your nearest 7-Eleven) is something of a catechism among advocates for food justice and sustainable agriculture. I know I’ve made the argument several times myself. But is it true?
Through the power of the inter-webulator, I pulled up the paper in question. I must confess that much of it is well over my head, involving statistics and differential equations and many other things that were presumably covered in school while I was thinking about girls. Essentially though, the paper attempts to model the effect of removing all farm subsidies on the cost of commodities and the behavior of consumers, concluding that removing such subsidies would have only a minor – and diminishing – effect on either.
I would think it’s very difficult for fellow economists to evaluate the soundness of those predictions, let alone a layman. It’s hard to imagine the withdrawal of subsidies wouldn’t disrupt the profit models of agribusiness and major corn peddlers like McDonalds and PepsiCo to some extent. Their vociferous lobbying efforts certainly suggest so. Any attempt to bring some analytical rigour to this question is welcome, though (oh god, now I’m starting to sound like that Economist editorial voice). It just may be that the authors didn’t quite focus on the right one.
Unless I’m missing something in the thicket of equations and statistical terminology, the study seems only to explore the question of whether the elimination of farm subsidies (including indirect subsidies through trade tariffs) would lead to lower consumption of calories, and so a drop in obesity rates. It does not explore what would happen if the production of healthy fruits and vegetables were subsidized and incentivized in the same way that corn is subsidized today. (Interestingly, it mentions several restrictions on the growing of fruits and vegetables, and concludes that the withdrawal of the current system of subsidies would cause people to eat more of them.)
Perhaps agribusiness would simply turn all the apples in the orchards into high fructose apple syrup and perpetuate the calorie-bomb system of food manufacture. But perhaps not. Surely there are ways to incentivize the growing (and the eating) of healthy foods. Supporting urban agriculture and local food initiatives comes to mind.
One other note from the study is potentially revealing – “marketing input” in the selling of cereals, baked goods, beverages and food that’s consumed outside the home (eating out – meaning, to a great extent, fast food) accounts for over 90 percent of the “cost share” of those (highly-processed) products. Ninety percent. That figure suggests that it’s dirt cheap to produce crap and that its producers spend enormous amounts of money convincing you to eat it. (Note too: “The cost share of marketing inputs is relatively low for food products that involve little processing.”)
The authors take this as evidence that the removal of subsidies would have a negligible effect on the cost structure of production, essentially because these commodities are so cheap to produce already. And they may have a point. Technology has made it possible to produce so much corn so cheaply that subsidies may not make much of a difference either way. But doesn’t that result from it being in the interests of industry to create such a system? Couldn’t all that ingenuity, innovation, and technological wizardry be put to use to produce an abundance of healthy food choices for all? All it takes is the right … incentives.