Thursday, September 10, 2009

Pollan's Big Ideas about Big Food

Pollan, in a lot of his writings tries to make connection between corn syrup and obesity and the connection between farm 'subsidies' and corn syrup. I would like to know exactly which 'subsidies' he is talking about. I'm not sure that countercyclical payment or loan deficiency payment type programs at the farm gate level really have an impact at the retail level great enough to create super savings and increased consumption of these 'bad' foods.

Even with these 'subsidies' in the past couple of years, we have seen some record high corn prices, having much to do with ethanol requirements and increased demand for corn, increased purchases by hedge funds, and increased world demand. We did see a rise in retail food prices, but much of those increases were likely due to increased fuel and processing costs. i.e. even large changes in commodity prices ( vs. other factors) had little effect on retail consumers, so eliminating subsidies probably would not elicit large changes in consumption. Or stated differently the connection between corn prices and retail prices ( subsidized or not) is weak. ( see here for an analysis from LECG).

'Increases in energy prices for example exert a greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices –
which translates into a $1.00 per gallon increase in the price of conventional regular gasoline – results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.'

Additional research taking the claim of a connection between obesity and farm policy in a more direct fashion can be found here( from UC Davis).

"Given that consumers generally show limited responses to retail food price changes, eliminating the corn subsidy would reduce corn-based food consumption by
at most 0.2 percent."

Pollan also proposes a food tax to curb consumption. Again, research ( from the Mercatus Center at George Mason University) indicates that the taxes required to have any real affect on obesity would be in the 1200 percent range, and even if taxes eliminated ( in this case soda) consumption, the impact on obesity would be very small. The study concludes that "the sensitivity of individuals to changes in relative food prices is not sufficient to make “fat taxes” a viable tool to lower obesity."

To coin a phrase 'what's obesity got to do with the price of corn in Iowa'?- not much

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