“Affordable” Food Panel Oct. 1, 2013

1. “Affordable” Food Panel Oct. 1, 2013

2. “International Food Systems: Affordability” C. Jerry Nelson, Professor Emeritus of Plant Sciences Office: 109 Curtis Hall Phone:(573) 882-2802 email: nelsoncj@missouri.edu

3. Affordable food: Food that is available and priced so it is consistent with household income as affected by cultural and social factors. As incomes increase there is greater demand for: - animal products (meat, milk) - higher quality products (processed, taste) International dimension: Depends on whether or not the person/family lives on a farm or in an urban area. Subsistence farmer: Cost is mainly for seed and minimal inputs with little consideration of land and labor costs. Farm size is small. Even though most staple food is grown on the farm, some is purchased or bartered locally to balance diets and have food year round. Non-farmer (urban): Cost is higher than for the subsistence farmer since price includes labor and other production costs plus middleman, transport and storage costs. So overall, food costs are higher in urban areas than for the subsistence farmer.

4. Subsistence agriculture is not efficient or sustainable • Compare Kenya, Vietnam and North Korea • 2. Ratio of rural income to urban incomes • 3. What criteria to compare? • Education level of rural people • Access to technology • Infrastructure (education, loans, markets) • Birth rate • Incentives to increase production

5. Comparative Analysis Among Countries • Country Kenya Vietnam North Korea • Government/Economy1 Cap/Cap Soc/Cap Soc/Soc • Foreign Investment (jobs) Low Medium Very little • Land ownership/expansion Low High Not option • Education level of rural people Low Medium Low • Access to technology Low High Low • Infrastructure (loans, markets) Poor Good Fixed • Children per family 3-5 1-2 1-2 • Incentives to increase production Low Good Very Low • Gross National Product (GNP) Low Medium Very Low • Access to food for rural pop Medium High Medium • Access to food for urban pop Medium High Low • 1Cap=capitalistic, Soc=socialistic

6. Summary of Main Points • Affordability is different within the population • Policies relative to government are strong influence • - Policies on land tenure/ownership • Loans for input costs • Market and distribution structure • Education is critical for affordability • Not universal in what to improve (country specific) • - Need to carefully evaluate each situation • - Develop specific strategies to achieve solutions

7. C. Jerry Nelson, Professor Emeritus of Plant Sciences Office: 109 Curtis Hall Phone:(573) 882-2802 email: nelsoncj@missouri.edu

8. Dr. Scott Brown Division of Applied Social Sciences College of Agriculture, Food and Natural Resources brownsc@missouri.edu Website: amap.missouri.edu

9. In the discipline of economics, “affordable” food means . . . Food affordabilitymeasures the ability of consumers to purchase food, their vulnerability to price shocks, and the presence of programs and policies to support consumers when shocks occur. The Global Food Security Index The Economist Intelligence Unit

10. Affordability Defined by the Global Food Security Index

11. Global Food Affordability And Percentage of Food Consumption Relative to Household Expenditures - 2013 Source: The Global Food Security Index

12. Undernourishment is strongly associated with a low food security ranking - 2013 Source: The Global Food Security Index

13. Wide Range of U.S. Production Alternatives Emerging Commodity Production Driven by large economies of scale No direct link between producers and consumers May have other externalities Local Production A more direct link between producers and consumers Usually smaller so there are fewer economies of scale How does consumer utility compare between these alternatives? How do these production alternatives affect global affordable food outcomes? Do these different production methods coexist?

14. Comparison of Local Versus Commodity Beef

15. Comparison of Washington, DC Area Milk Chains 1Mainstream chain revenue allocations are calculated from the Virginia State Milk Commission Presumed Costs reports, Eastern Market, for plastic half-gallon 100+ cases. Estimates are based on 3-month averages from September- November, 2009. These reports do not specifically identify revenue allocations for the Maryland and Virginia Cooperative or its retail customers and are representative of the milk industry in the DC area in general. 2Revenue shares calculated for Trickling Springs milk sold as MOM’s private-label milk. Trickling Springs-labeled glass bottles add $0.30 per half gallon to the retail value, which accrues solely to the retail stores. 3Mainstream: Based on September-November 3-month average class 1 price announcement for Federal Milk Order Number 1, Frederick, MD/New Holland, PA ($14.95/cwt). Direct: the dairy farm also operates as the processor. 4Includes the estimated portion of producer revenue attributed to costs of processing and home delivery. Total per unit revenue for the producer is 1.22+2.03 = 3.25 ($/half gal.). 5Calculated as the difference between raw product costs in the VA Presumed Costs reports and the class 1 price announcement (i.e., producer revenue). Includes revenue that may accrue to the cooperative or third-party milk haulers. 6Mainstream: Calculated as the difference between wholesale delivered costs and raw product costs from the VA Presumed Costs reports. Includes revenues attributable to delivery to the retail stores. Intermediated: Trickling Springs operates as both the processor and distributor to retail stores. 7Mainstream: Median retail price of half-gallons from January to December, 2009. Direct: Half-gallon prices listed on the South Mountain website as of December 2009. Intermediated: Median retail price of half-gallons from January to December, 2009.

16. Review of Main Points • Food affordability definition differs around the world • Economies of scale important drivers to large commodity production systems • Local or hybrid systems provide food alternatives • Feeding a growing global population requires technology • Identifying externalities may give a “true” picture of food affordability

17. Dr. Scott Brown Division of Applied Social Sciences College of Agriculture, Food and Natural Resources brownsc@missouri.edu Website: amap.missouri.edu

18. Charlie Hopper, Marketing Specialist Missouri Department of Agriculture 1616 Missouri Boulevard Jefferson City, Missouri 65109 Phone: (573) 522-4170 Fax: (573) 751-2868

19. Economy (the whole) Ecology Economics (the transactions) $ Resources Community Total Economy

20. The Laws of Economy and Nature The Conservation of Energy-cannot be created or destroyed -changes in form (kinetic, potential) -can be removed from life cycle The Conservation of Matter -cannot be created or destroyed -changes in form (solid, liquid, gas) -can be removed from the life cycle The Necessity of Agents of Change -form cannot change on its own The Law of Action and Reaction -for every action there is an equal and opposite reaction

21. “The Earth’s Economy” Energy Fossil fuel emissions Carbon Cycle Fossil is mined when production exceeds consumption Plant Respiration Photosynthesis Animal Respiration Plant Waste Animal waste Decay / Mycorrhizee Root Respiration Organic Carbon Excess organic carbon is banked as fossil fuel

22. Agriculture is the stewardship of the earth’s economy.

23. Energy

24. Cost vs. Price Cost (What you give up) Price (What you pay) • Money • Time • Resources • Ecological • Community Both are Absolute. (Cost > Price = Deficit Spending)

25. What is value? Values are the personal principles that determine what cost you will incur for the price you pay. Extrinsic Intrinsic Supply Demand Want Need Personal Social Values are Subjective. (what you will)

26. Food is Energy

27. Fossil Fuel Human Fuel 10 Calories In 1 Calorie Out

28. Peak Energy

29. Energy Stored in Matter

30. AnnualCost of Erosion Losing 10X faster than it is replaced 37,000 square miles of cropland 37.6 billion dollars in production Kansas loses 2” of topsoil per winter When matter is lost Energy is lost: E = MC2

31. Agriculture Economic Trends Since 1960 Percentage of Income Spent on Food 50% Percentage of Retail Dollar to Farmer 50% Percentage of On-Farm Income 75% Total Farm Employment 95% Total Farm Population 90% Total Rural Population 50% Percentage of All Jobs, Manufacturing 75% Percentage of All Jobs, Service 50% Production Expenses 80% Farm Debt 70% Household Debt 100%

32. “Eating is an Agricultural Act” Wendell Berry

33. Agents of Change What makes you different?

34. With Reason Comes Understanding With Understanding, Responsibility

35. Be the change you wish to see in the world.

36. Charlie Hopper, Marketing Specialist Missouri Department of Agriculture 1616 Missouri Boulevard Jefferson City, Missouri 65109 Phone: (573) 522-4170 Fax: (573) 751-2868

37. Food Affordability Sandy Rikoon RikoonSandy@missouri.edu Interdisciplinary Center for Food Security http://foodsecurity.missouri.edu

38. Food Affordability (FA):The ability of a household to purchase the food necessary to maintain food security.

39. How we measure FA Why should we care? FA and food security Objective measure, subjective impacts 5-minute agenda:

40. The percent of household income necessary to purchase 21 meals per household member --meal costs per person --median household income per person FA MEASURE (2013 hunger Atlas):

45. Is food affordability a sufficient predictor of food security?

49. Other factors often influence the ability of households to make required purchases Current research from Michelle Kaiser (Ohio State University) and Annie Cafer (University of Missouri) using Missouri Huger Atlas data and other measures

50. How much food does the household need to purchase with its funds ? For households, the amount of SNAP benefits is critical