"It's a Really Dramatic Change": A Discussion of the Economics of Food

10/12/2018

Raphael Bostic: Well hello, everyone. I want to welcome you to the latest edition of the PA Forum that we have here at the Federal Reserve Bank of Atlanta. My name is Raphael Bostic. I'm the president and CEO of the Bank—I guess a guest host for this version. I'm really excited to be here with Jayson LuskOff-site link. Jayson is the distinguished professor and department head of agricultural economics at Purdue University, and he's come to join us to talk about food, which is something that I know is probably near and dear to many of your hearts, and in fact you can't live without it. So Jayson, it's a pleasure to welcome you here. You've been a professor for a while.

Jayson Lusk: A little while, yes. I guess I finished my PhD in 2000, and had an opportunity to work at several places, but for the last year and a half I've been at Purdue.

Jayson Lusk (distinguished professor and department head of agricultural economics at Purdue University) during the recording of a podcast episode.
Photo: David Fine

Bostic: Well, you were a professor at Mississippi State University for a while.

Lusk: I was, yes—not too far from here.

Bostic: I was just in Mississippi last week, visiting. Mississippi state's not in our district—it's actually in the St. Louis district—but the state is pretty integrated, so everyone's aware of all the things that are going on there, so we'll count you as one of ours.

Lusk: Well, good. And I should note, too—my in-laws lived for a while here in an Atlanta suburb, so I've spent a lot of time in the city and really enjoy it.

Bostic: Well, very good, and welcome again. It's good to have you here. I wanted to start our conversation by talking about food from a global perspective. We know that the population on the planet is growing considerably, and some estimates have it even growing by 60 percent by 2050. There's some research that the Kansas City Fed has published, which says that we need a dramatic increase in our productivity, in terms of food per acre of land, such that we're producing maybe even twice as much food as we are right now. And then finally, there's all this climate change stuff, and you hear people talk about how changes in the climate are going to affect what we can grow and where we can grow it. In the context of all that, how do you think about global food systems, and what are some of the biggest challenges that you think we face?

Lusk: Yes, well, of course it's an easy problem, right? We need more food, using less land, less labor, less water, right? [laughter] It's a big, big complicated problem, for sure. I think this challenge, and the concern of being able to feed the world's population, is one that's been with us for many centuries, dating probably back to at least Malthus, if not before. And continually over the years, people expressed these concerns about population growth. The really good news is that we've been able to rise to the challenge and continue to feed the world's population. You look at the world we live in now, actually we have some of the lowest rates of global poverty ever, lowest rates of malnutrition that we've ever seen in terms of just percentage of the world's population.

So one question is, how did we get there, and how were we able to achieve that? And the answer by and large has been we've figured out ways to be a lot more productive, adding science, technology, innovation to our ag sector. We've figured out ways to produce more using less. In fact, in countries like the U.S. today, we actually have less land, and a lot less labor, in U.S. agriculture even though we're producing almost twice as much as we did, say, in the late 1940s.

So I think science and innovation has to be one of the ways we solve this problem. It's not just the question of food production. As you alluded to, it's a whole complicated mix of things. Now, too, we've got concerns about environmental problems, whether it's climate change or soil runoff or those sorts of things. There are also concerns not just about whether we're going to have enough food to feed people, but in some cases we have people that might be a little overfed, and what do we do about problems of obesity and diabetes? These are all big challenges, and I don't know that there's going to be any silver bullet to solving any of those. But I think one way to think about it is we've got to have all cards on the table. And frankly, I'm a little bit of a contrarian. A lot of the food policies that are proposed to address a lot of these problems that, whether it's the move to more local, more organic—these are all fine and good things—but in terms of policy prescriptions to solve these big global problems, they're probably not going to do much to move the needle.

Bostic: Well, I'm going to…we'll get back to that, because there's been a fair amount of work that's been done in the System on the local and the regional food. But I wanted to actually go back to something that you said about when we think about food and the challenges, that it's not just scarcity. Sometimes it's also abundance as well, and I've become more sensitive to that. In the Sixth District, we have many cities that routinely rate as the least healthy, the most obese, and so this question about how food is managed and how it's distributed and who accesses it, is really, really important.

Lusk: Yes, I totally agree. And I think one of the challenges there with food, too, is often some of those problems of obesity and food access often tend to be correlated in a lot of cases with other adverse economic outcomes—poverty, and use of, say, SNAP, food stamps, if you will. I think that's one important thing to think about as some of the policies people propose are things like, "We want fat taxes," for example, or "We're going to make ‘unhealthy food' more expensive so people buy less of it"—those policies are often thought of as they often impact people on the lower end of the socioeconomic spectrum, so I think some of those policies can be somewhat regressive in that sense.

It's just a real challenge I think about in dealing with some of those issues. And this is not an easy thing to do, either, but in a lot of cases like that I think thinking about economic growth—you know, giving people hope that if they invest in education and health, that they'll have some longer term payout—is one part of the puzzle there I think in terms of thinking about how to improve these adverse health outcomes in neighborhoods where people haven't had a lot of economic opportunities.

Bostic: So that's interesting. I definitely think that there's some truth to that. I've also been made more aware of distribution challenges and conventional wisdoms about the types of foods people that live in poorer neighborhoods might want to eat. One of my favorite studies when I was a professor at USC [the University of Southern California] was by a colleague, and he had a team of researchers that went to convenience stores and grocery stores in poor neighborhoods and in more affluent neighborhoods, and he was—I guess he probably wasn't surprised—I was surprised at the extent to which the types of products completely diverged. When you went to a convenience store or a grocery store in a lower-income neighborhood, you often wouldn't have fresh food or vegetables and things available. You wouldn't have low-fat milk or no-fat milk. And so the choice set that you have is totally different.

So when we think about these taxes and things, they're only going to work to the extent that the folks who we want to consume less of the "bad" goods actually have access to the "good" goods, because if they don't have access to them, there's really not much that you're going to be able to do. So I think your point is well taken.

Now, this kind of gets to…I want to now talk about your work. So the big picture, we've done some of that, and I'm going to try to whittle this down to a very simple description of what your underlying hypothesis or thesis is, and it's basically that the so-called industrial farming gets a bad rap. All these people complain, and they need to stop all this crying about Big Ag and really acknowledge that there's been some progress and success there. Can you talk a little bit about that? First of all, is that really how you would say it? And then sort of expound on that a bit.

Lusk: Yes. I think you said it in a provocative way, but I would agree with it. [laughter] I don't want to be misconstrued to say there aren't some trade-offs there—that there aren't some adverse outcomes—but I like the way you said it, that commercial agriculture in large respects has gotten a bad rap these days. And getting back to talk about these global issues of how you solve all these food problems, to be honest, I think one of the solutions in a lot of places is further intensification—in other words, growing our food more productively on a smaller area is one way to make sure that we have as small an environmental impact as possible in, say, "global warming outputs per unit of production," and that would be by further intensification, not by spreading those over more units. So I do think that there is a lot the public could learn by trying to engage a little more in these discussions rather than just what they read in a casual understanding in the press.

Bostic: So tell me a little bit about how this had been accomplished. When I talk about the U.S. economy I often go back to the 1850s, where most U.S. workers were farmers, and that is certainly not the case now. There's been a lot of change in farming to get us to a level of productivity—you're talking about almost doubling productivity since 1940. That's amazing. I don't think a lot of people are sensitive to how much change has happened in the ag space.

Lusk: That's right. So if you go back, say, 100 years ago in this country, about 40 percent of the U.S. population worked on the farm. Today it's about 2 percent are involved in agriculture. So it's a really dramatic change. And there's this romantic ideal that we should have more people involved in food and ag, and that might be okay on the margin, but one challenge you'd have there is, look around across the world at which countries are rich and which countries are poor, and poor countries are going to have a lot more labor into agriculture. One of the evidences of a country that's developed and is relatively rich today is countries that have figured out ways of moving population from the farm to other areas that are somewhat productive.

So how did it happen? Well, maybe first let me further emphasize how dramatic the change is in a little bit of an example. So let's take a commodity like corn, for example. Let's say we wanted to enjoy the same amount of corn that we actually consumed this year, but we wanted to do that using 1950s technology—and by "1950s technology," I just basically mean "yield," how much corn per acre—we would need three times the amount of cropland, three times the amount of acreage of corn, if we wanted to…actually enjoy there, what we actually get to consume now, but we're doing it using 1950s technology—so that means a whole lot less land that we need today, it means less fertilizer, less pesticides, fewer tractors, less greenhouse…all the things we get to save now because we figured out ways to be more productive.

And that productivity has occurred in a variety of different ways. In some cases, it's better genetics—finding those seeds and animals that are just a lot more productive—has been one big piece of the puzzle. It's new knowledge. Figuring out ways of tilling the land that are better and more productive—applying tractors rather than horses and mules, for example, has been a pretty dramatic change over time. And then we have more modern kinds of innovations, like biotechnology, that I know there's a lot of controversy around and I'm happy to talk about that if we want to talk about GMOs [genetically modified organisms] and biotechnology, but that's—

Bostic: Yes, I was definitely going to go there, so—

Lusk: Okay, good. That's been one of the examples of those technologies. And then even today we have all kinds of new innovations: precision agriculture using GPS and satellite to measure what's happening on not just acres, but on every square meter of land so that we can be more judicious in our use of fertilizer and herbicides and those sorts of things. So it's not just one thing, it's a lot of science innovation that's been applied that's contributed to that increase in productivity.

Bostic: I'm glad you went through the full range, because when I was preparing for this I was thinking, "Okay, what kind of innovations are we talking about?" And I knew about the tractors, and I've talked to a bunch of agriculture businesses, and they've been talking a lot about drones, and I like the phrase "precision agriculture" because you can use machines in the algae to go plant by plant, almost leaf by leaf, to really know what's going on that's good.

And that's one kind of innovation that I really get. But then you get the other kind, which is innovation on the actual output itself—right? Changes in output, so when you see an apple, today it's not your grandmother's apple [laughter]>span class="podcast-interviewer">. There's a whole lot of other stuff going on there, and that gets to the best designs, and it gets to some of the genetics and the bioscience that has been introduced. And that second part seems to have engendered some pushback from some consumer circles. Why do you think that there's that kind of concern?

Lusk: Well, I think there are two reasons. One, I think there's kind of an inbred reason, if you will, to be somewhat skeptical of new foods and new food products. Michael Pollan had this book called Omnivore's Dilemma, and that dilemma of the omnivores is that we have to be risk-seeking enough that we'll try new foods and we'll get to a new environment, but you know what? You eat a bad mushroom, it can kill you [laughter]. And so we have to also be cautious of new foods and new food varieties.

And so over time—we talked about that change in labor that's in agriculture. It's not just the farmers themselves, but those rural communities. There's just a lot less connection with food and ag today, and people don't know as much about where their food comes from, so when they hear about these technologies, whether it's GMOs or sometimes pesticides, they're very unfamiliar. It's not obvious why farmers may be using them, and so there's this skepticism about what it's doing. And then you layer that on top of increased skepticism and concern about corporations and these sorts of things, that in some cases the concern might be justified, and so I think this is really why it's important to look at data, look at science, look at the evidence and see where some of that concern may be justified, and in a lot of cases where it may not be justified.

Let's take the issue of pesticides, for example: it just seems like, "Why does a farmer have to use pesticides?" Well, you put that apple out there in the grocery store, and you have an apple that has a worm hole in it and one that doesn't, which one are you going to choose? Well, you want the one that looks nice and pretty and clean.

Bostic: And we've all done that—we've all put that piece of vegetable or fruit back down when we saw something that we didn't like.

Lusk: Right, so how did you get that pretty-looking one? It's by using pesticides. That's how you get those, and that's how we partly get the higher yields. But of course, we want our products to be safe. We don't want to be consuming things that are going to cause cancer or cause undue harm to us, and I think the FDA [Food and Drug Administration] has a strict regulatory process that companies have to go through to demonstrate safety. It's not to mean we can't do better, and that we can't find new ways of doing things. I think that's part of science and innovation, too, is trying to find new kinds of protection for plants that don't involve certain kinds of pesticides that people may be concerned about.

Actually, GMOs has been one of those that actually has led to ways of protecting plants that don't require the application of pesticides on fields like we used to have, and so this thing that people say they're really scared of is actually the thing that's allowing the farmer to use a lot less—not all pesticides, but insecticides in particular.

Bostic: So let me push back a little bit on this, only because…like with the pesticides, like if you spray a field. When I was growing up, we washed every piece of vegetable or fruit, and you felt like you could do something to minimize the likelihood that that innovation was going to actually affect you. But when you have a genetically modified tomato, there's no way to get around the actual modification or that change, and the thing that I think about in this context is, like steroid use in sports: and we knew, everyone knew, what the short-run effect was going to be—we knew your muscles were going to grow faster, you're going to recover faster—but there was no research, because no one had actually lived with it for a very long time, to know what that impact was likely to be. Is there an analogy with that, in this context of the GMO? How should we feel comfortable about potential long-run impacts in an environment where we really haven't had a chance to live through that?

Lusk: Yes, well, I think your first point is a really good one: that the sense of control is probably one of the things that drives aversion to some of these technologies. And in that sense, I think that's one of great things about our market economy is that it provides people choices, and unfortunately some of those other choices sometimes cost more [laughs] when we want to avoid them, but at least there are choices in the market for them.

You're right. Everything has long-term risk, and sometimes it's hard to quantify all those risks—and that's true of using biotechnology, but it's true of conventional plant breeding [techniques] that have been around for a very long time as well. And so I think we really just want to look at the evidence, and we look at the currently approved forms of biotechnology, for example: what we can see is, we've been using these since the early 1990s—so over 20 years now—and still no evidence that the ones we've at least approved have caused any adverse harm to people.

And the thing to think about here is: what are these biotechnologies doing that we've created? And in a lot of cases they're replacing a single set of genes with something else, and those genes are conveying, often, resistance to an herbicide or resistance to some kind of insect. The interesting thing that you may or may not know is—and a lot of these seed companies have done is—you can produce those same kinds of traits through conventional plant breeding, it's just much more expensive and takes a much longer time to do it. So it's not obvious to me that the GMOs are doing something that's ungodly, or...[laughs]

Bostic: Or that's qualitatively different, it's just in terms of the techniques and methods. That's an interesting observation.

Lusk: But I might go back to, if you don't mind, one of the things you said is: I think a lot of these new traits that have happened through GMOs—or some of these others. You related pesticides—they're really, the benefits have been of the sort that the farmer knows the benefits. Farmers are big fans of these technologies. If you look at all the major commodity organizations, they're fans of these technologies.

But I think really where consumers might think more carefully about them is when they start producing outcomes that provide a tangible benefit to the consumer, so there's an apple that's about to hit the market now that's been genetically engineered so that it doesn't brown.

Bostic: Ever?

Lusk: Ever, that's right. So they've turned off the gene that causes browning in the apple. So think about food waste, or just the appearance of the apple that's sitting in front of you. Now, I can imagine some consumers might not like it, but this is an attempt to change something to change the quality for the final consumer.

Bostic: That's very interesting. I'll have to keep an eye out for that.

Lusk: It's called the Arctic Apple.

Bostic: The Arctic Apple?

Lusk: That's right.

Bostic: Okay, so we all just learned something. I'm going to keep an eye out for that in the stores.

I wanted to now turn a little bit to one of things you said earlier about potential solutions to our global food issues, and your skepticism about local and regional food efforts to really make a dent in this. There's been a lot of work at the Fed here and in the Federal Reserve System that has called out to the local agriculture as a means for building community, helping communities become more resilient, and have it be a springboard for broader economic development. How would you react to that? I mean, how do you think about that perspective as opposed to where we started, saying, "It's either big ag or we're not really going to see much?"

Lusk: Yes, well, I think these sorts of local agriculture, they do provide benefits. Some of them are aesthetic, and some of them do come through in improved quality of foods and produce, so these are not irrational things to want to do and promote. I go to our local farmer's market almost every weekend. As a kid I grew up hoeing cotton weeds, and sometimes sitting with my neighbors' friends selling watermelons out of the back of their pickup, so this is not something I'm not familiar with. [laughs]

I also understand the pleasures that come with getting to know the people growing your food, so I think all those are really good things. But I think when we think about the longer-term economic viability—when we talk about wanting to be sustainable, to me it means we want to be able to produce more using at least the same or fewer resources. We don't want to leave money on the table, so to speak, by avoiding certain technologies or practices that can let us make more efficient use of our resources, and so I think these trade-offs between higher end quality issues—and some of these may be related to quality, along with efficiency—are important trade-offs. I think one way to think about it is: there's a lot of debate and discussion these days about trade.

Bostic: Yes, there are—I hear about them a lot.

Lusk: That's right. And in general, I think economists tend to think about trade as being a good thing, and letting people specialize in what they're good at and trade with each other, and so that carries over, not just across countries, but in terms of localities. And so when I think about Georgia, for example, or the Southeast, I think about things like Vidalia onions and peaches. For whatever it is, the environment that's around here or the cultural customs, that this is something that this region has a comparative advantage in producing, we should let you all do that. I come from a state, Indiana, where we're apparently good at corn and soybeans, so let's trade those things and let us do what we do most productively and trade. I think those things, it doesn't change just because we're talking about local issues. We've come to become a much richer society by specializing in what we can do well and trading with others. And so I think I would just offer that as a counterpoint to some of what are admittedly some positive benefits that come from some of these local food systems as well.

Bostic: So we're just about out of time, so I just want to give you one more shot to give us your perspective on the future of food—and I would preface this by saying, from my reading of your work, you're pretty much an optimist.

Lusk: [laughs] Yes.

Bostic: So if I look at your most recent title—or, I think, your most popular book is—"Unnaturally Delicious: How Science and Technology Are Serving Up Super Foods to Save the World." That's such an uplifting, happy type of message. What are you most optimistic about when you think about food on this planet, and in our communities, as we look ahead for the next five or ten years?

Lusk: Yes, well, I have the great pleasure of, and have had the great pleasure of, working in a number of universities where I sit down the hall from plant breeders and food scientists and animal scientists, and so I just get to see all this really cool stuff they're working on. These are people that are passionate—not just about increasing efficiency, but about the planet, and they want their kids to live in a world where they don't have to worry about hunger or obesity, and so that's probably where a lot of that optimism comes from—probably just some of it, frankly, is born in. [laughs]

Bostic: I'm guessing a lot of it.

Lusk: Yes, that's right, but I think a lot of is just being able to see some of the research people are working on, and the really passionate scientists we have out there that are spending their careers thinking carefully about these problems and trying to use the gifts they have to think about providing technological and scientific solutions to some of these problems.

Bostic: Well, we'll have to leave it there. I've been talking with Jayson Lusk, he's the distinguished professor and department head of agricultural economics at Purdue University. He's here at the Bank to do a presentation at our Public Affairs Forum, and it's just been a pleasure to talk with you. Thank you for coming, and I look forward to your talk.

Lusk: Thanks, Raphael—it's a pleasure to be here.