Meatonomics (13 page)

Another compromised component of the organic program is the access-to-pasture requirement. To qualify for the organic label, products of ruminants (i.e., cud chewers) like cattle, sheep, and goats must come from animals who have “access to pasture” during their lives. This phrase remained undefined for nearly a decade, leading to widely disparate interpretations and little oversight. For meat and dairy producers, providing access to pasture is more costly than simply sticking animals in the small, muddy feedlot that is emblematic of factory farming. Animal agribusiness naturally sought to minimize the length of time that ruminants must spend in pasture in order to be deemed organic, and they succeeded.

In 2010, the USDA issued regulations defining the access-to-pasture requirement. In order to qualify as organic, ruminants must now spend only one-third of each year in pasture, and only one-third of their food must be pasture based (i.e., grasses). Nevertheless, these animals may still be fed significant quantities of foods they don't
naturally eat, and they may be denied access to pasture for two-thirds of their lives.

In the animal food industry's toolbox of regulatory influence, one handy device is the ability to pick up the phone and call former industry insiders in government jobs. The Monsanto Company patents and sells 90 percent of its GE crop seeds in the United States, and the crops from these seeds yield most of the animal feed supplied to farm animals in the United States.
⁴³
Before Monsanto got into GE seeds, its other products included Agent Orange, polychlorinated biphenyls (PCBs), dichlorodiphenyltrichloroethane (DDT), and, as we've seen, the bovine growth hormone rBST. A number of Monsanto's thirty thousand employees have strutted right through the revolving door from business into federal government, snagging influential posts. Monsanto expatriates include a US Supreme Court justice, a US trade representative, US secretaries of commerce and defense, an EPA deputy administrator, and FDA leaders in the posts of branch chief, deputy commissioner for foods, and deputy commissioner for policy.
⁴⁴

The USDA's playbill also includes a star-studded cast of industry veterans in high places. According to a 2004 report, a dozen of the USDA's top-ranking officials during the George W. Bush administration previously worked in the agricultural industry.
⁴⁵
These included the agency's secretary, her chief of staff and deputy chief of staff, a deputy secretary, three undersecretaries, and three deputy undersecretaries. The officials who left the Heartland for stints in the Beltway came from groups like the National Cattlemen's Beef Association, the International Dairy Foods Association, the National Cheese Institute, the American Butter Institute, and a pork plant.
⁴⁶
Eric Schlosser, author of
Fast Food Nation
, wrote of the USDA in a 2004
New York Times
article, “You'd have a hard time finding a federal agency more completely dominated by the industry it was created to regulate.”
⁴⁷

Of course, some agency personnel change when presidents change, but the basic principle of industry control doesn't change much. Obama's appointee to head the USDA, Tom Vilsack, was said by the
Organic Consumers Association to be a “shill for agribusiness biotech giants like Monsanto.”
⁴⁸
While governor of Iowa, Vilsack was regularly invited to fly in Monsanto's corporate jet and was named Governor of the Year by the Monsanto-dominated Biotechnology Industry Organization.
⁴⁹
As secretary of the USDA, Vilsack returned the favor by approving the use of Monsanto's genetically engineered alfalfa as feed for cattle. In a controversial move that one commentator called a “stunning reversal,” Vilsack set aside a carefully worked compromise applauded by food industry critics like Marion Nestle (author of the book
Food Politics
) but opposed by Monsanto.
⁵⁰

If you haven't noticed it, there's a pattern emerging. Guidance and protection from the FDA and the USDA on animal food matters are often concerned more with helping industry than with guarding Americans' health and safety. Or perhaps to put it more bluntly, as Rory Freedman and Kim Barnouin do in their best-selling volume
Skinny Bitch
, “Governmental agencies don't give a shit about your health.”
⁵¹
Because agency guidance often reflects little more than industry's desire for booming sales, our choices are frequently—and unwittingly—not in our own best interest. We might choose not to buy rBST-treated milk, if only we could identify it. We might choose not to consume more than our recommended daily maximum of saturated fat in one sitting with a pizza, if we were warned instead of encouraged. Sometimes the complex division of duties between the agencies results in confusion and finger-pointing. Do we deserve better protection from our watchdogs? The short answer is yes, but more on that later.

• In a classic fox-in-the-henhouse story that might be funny if it weren't so true, the animal food industry has captured the very agencies meant to regulate it. As a result, policy-making at the FDA and the USDA is heavily influenced by producers of meat, fish, eggs, and dairy, and by those who keep animal agribusiness stocked with supplies like drugs, feed crops, and crop seeds.
  
• Because corporations seek regulation in order to enhance their profitability rather than to benefit society, industry-dominated policy making usually hurts consumers. Among other things, government complicity in misleading or confusing practices diminishes consumers' ability to make informed decisions.
  
• At the FDA, industry control has resulted in such harmful results as the agency's inability to withdraw dangerous animal drugs and its refusal to require labeling of genetically engineered foods. At the USDA, regulatory capture leads to inconsistent and misleading nutrition recommendations, as when one branch of the agency tells us to eat less cheese while another tells us to eat more. Industry influence also yields watered-down labeling standards and weak enforcement in the use of regulated terms like
  organic.
  

In 1991, you could walk into any McDonald's in the United States, hand the teenager behind the counter a single dollar bill, and take home a double cheeseburger or a chicken sandwich. Back then, a gallon of gas cost an average of $1.14 in the United States (today it's $3.83), and the federal hourly minimum wage was $4.25 (today it's $7.25). In fact, the purchasing power of a dollar was 70 percent higher two decades ago. In the words of the immortal Yankee Yogi Berra, “A nickel ain't worth a dime anymore.”

But here's a surprise. Walk into a McDonald's today and hand one thin dollar to the teenaged descendant of your former cashier. Unless you no longer eat such things, you can still leave with a double cheeseburger or a chicken sandwich. In fact, animal food prices in the United States have been remarkably resistant to the forces of inflation over the past century, falling across the board (in inflation-adjusted terms) while most other consumer goods continue to rise in price.

In the book's second half, I explore why the retail prices of meat and dairy are so low and what these low prices really mean for consumers. The common, knee-jerk reaction to lower prices is “Great! I can buy more!” But in this case, low prices are both cause and effect of a microeconomic system out of whack. In fact, by keeping the system in a perpetual state of disequilibrium, or market failure, the forces of meatonomics create problems that affect almost everyone. For the skeptical, there is a mounting pile of evidence that artificially low prices actually hurt, rather than help, consumers. This chapter introduces some of the hidden costs of meat and dairy production and explores one particularly controversial item: subsidies.

Meat and dairy
are
cheap. From 1980 to 2008, the inflation-adjusted prices of ground beef and cheddar cheese fell by 53 and 27 percent, respectively.
¹
During roughly the same period, the inflation-adjusted prices of fruits and vegetables rose by 46 and 41 percent, respectively.
²
The result is that in contrast to their relative prices three decades ago, today a dollar buys three times the ground beef compared to vegetables that it once did.

The main reason for the steep drop in meat and dairy prices is that producers have made animal agriculture practices vastly more efficient. Back in the day, animal farming was heavily land intensive. But the modern shift to high-density, hyper-confinement methods has greatly reduced the need for wide open spaces. Automated processes have reduced labor costs. Consolidation and increased output volumes allow producers to enjoy economies of scale. And animals are now bred to grow larger and reach slaughter weight sooner.

The efficiency gains are noteworthy. Per-hen egg production has doubled in the last century.
³
Per-cow dairy production has tripled.
⁴
And the average weight of broiler chickens has almost tripled, while the birds' growth rate has more than doubled.
⁵
On the surface, it looks like innovation is doing what it should, which is to reduce prices. But a closer look at the economic costs of animal foods suggests something more complicated is happening.

If I pay a garbage service to collect my trash, my disposal costs are internalized. Appropriately, because I generated the trash, I pay the collection costs. But if I drive over to the local park at midnight and dump my trash there, I've imposed my disposal costs on others. Such “externalized costs” are those expenses related to producing or consuming a good that are not reflected in the good's price and are instead passed on to third parties. This concept is critical to understanding the economics of animal food production.

As taxpayers, we routinely pick up the check for externalities that everyday transactions generate. Take cigarettes. Because of the costly health problems associated with smoking and exposure to second-hand smoke, the US Centers for Disease Control and Prevention estimate that each pack of cigarettes sold imposes externalized health care costs of $10.47 on Americans.
⁶
But even with cigarette taxes as high as $5.85 per pack in some areas, governments are far from recovering all of the externalized costs. Cigarette manufacturers, of course, pay almost none of these costs. The result is that the additional price of smoking is borne by many who don't smoke, including taxpayers and those who pay health insurance premiums. In other words, even if you don't smoke, you're writing checks to cover the doctor bills of those who do.

Calculating external costs can be controversial. To summon a well-worn cliché, the devil is in the details. Free market advocates downplay the extent and value of externalities, while those who favor market regulation find costly externalities wherever they turn. For example, imagine that the construction of an oil pipeline harms caribou herds in remote areas. Some might argue that as a non-market animal—that is, a species we don't normally use for food, clothing, or entertainment—these remote herds have no economic value and their decline generates no external costs. Others would say that the amount that animal-friendly humans are willing to pay to protect the caribou is an external cost of building the pipeline.

In the case of animal foods, their low retail prices obscure a significant, measurable set of external costs that make the real costs to society much higher. Many of these expenses, such as taxpayer subsidies, health care costs, and environmental costs, have been extensively researched and documented. When these documented tallies are considered, the true price of a Dollar Menu double cheeseburger turns out to be a lot higher than a buck. Moreover, there is little comfort in the superficially pleasing idea that economic conditions keep prices low for consumers. Anything that
seems
too good to be true probably
is
too good to be true. In fact, low animal food prices are largely illusory because these goods' true costs are shifted to consumers in
roundabout ways. Ultimately, the numbers show that the big winners from these heavy external costs are a handful of animal food industry fat cats and the few companies who provide them with supplies like feed, drugs, and equipment.

It's common—and usually perfectly legal—for corporations to externalize as much of their costs as possible. And of course, animal agribusiness isn't the only American industry to impose billions in hidden costs on consumers and taxpayers. But this sector is far and away leading the pack in the category, offloading more costs than any other.

Consider electricity generation. That industry is known to impose tremendous external costs on society, mainly in the form of health problems and ecological damage resulting from burning coal and oil. A 2009 study by the National Research Council summed up the quantifiable, externalized costs of US electricity generation and found they total $63 billion yearly (in 2005 dollars).
⁷
That's a sizable figure, but even adjusting it for inflation ($75 billion), it's less than
one-fifth
of animal foods' measurable external costs.

One way to estimate the total cost to consumers of animal foods is to add external costs to retail prices, since generally, Americans who consume animal foods will incur both the retail prices and the externalized costs.
⁸
The industry's total annual retail sales are about $251 billion.
⁹
But that's chump change compared to the total external costs of animal food production, which are shown below to be $414 billion.
¹⁰
As
Chart 5.1
shows, adding external costs to retail sales yields total consumer costs of about $665 billion.
¹¹
From this perspective, each $1 in retail sales of animal foods generates about $1.70 in external costs. The true cost of a $5 carton of organic eggs is roughly $13. A $10 steak actually costs about $27.