Are corporations allowed to sell healthy food?

Whenever advocates for healthy food talk to food business executives, one common response is:

Personally, I would like to serve a healthier product.  But, if these efforts threaten profitability, I risk getting sued by stakeholders.  Corporations are obliged to pursue maximum profits and no other goal.

The executives' response is not entirely correct.  Courts give a lot of deference to corporate management to use their own best business judgment.  Admittedly, a corporation cannot simply give away profits freely to serve public causes like better nutrition.  However, the managers have plenty of legal maneuvering space to develop a healthy product line, without fear that shareholder lawsuits will succeed. 

A recent working paper (.pdf) by Tufts economics professor Julie Nelson reviews the long history of relevant court cases.  She finds that, when people argue that the law requires profit maximization as the sole goal, they commonly are really describing their wishes that this were true, not evidence that it actually is true.

The profit maximization doctrine appears to operate far more strongly at the level of theory or ideology, than at the level of the actual practice of business management and corporate law. It seems, in short, to be a case of transcendental nonsense.

Nelson also tackles the more philosophical question of how profit-seeking should be related to other virtues and relationships, even love for our fellow person.  I suspect that I like markets better than she does, on balance.  But, like Nelson, I think markets should not be a social goal in themselves. They are a means to achieve bigger goals.  Just as a tennis game is most fun when two friends compete hard by the rules, I think competitive markets make our society better.  Markets are a great game, but a dreadful religion.

If one can argue with a straight face that selling healthier food enhances the reputation and long-term prospects of the company, I think that would count as a reasonable business judgment.  Corporations may not want to make sacrifices, but I doubt many claims that they are legally prevented from serving healthy food.

U.S. food industry using more energy

To reduce greenhouse gas emissions in response to climate change, it is essential to reduce energy use in the U.S. food system. A USDA report this Spring described trends in exactly the wrong direction.

USDA economist Patrick Canning and colleagues estimated that energy use in U.S. agricultural and food industries increased by 23% -- from 11.5 to 14.1 quadrillion British thermal units --  from 1997 to 2002, the most recent data available [typo corrected Sep. 7].  The increase is so large that it accounted for 80 percent of all increased energy use in the United States.

Only one quarter of the increased energy use in the food system is due to population growth.  Another quarter of the increase is due to increased food spending per person.  Fully half of the increase was due to adopting more energy intensive technologies in the food system.

At a time when one might expect that Americans would adopt more energy efficient technologies, we did the opposite.  We continued to move from labor intensive to energy intensive methods throughout food production and manufacture.  A fascinating accompanying article (.pdf) in the USDA magazine Amber Waves gives the example of adopting high-technology energy-intensive hen houses in the egg industry, increasing energy use per egg by 40%.

Consumers, similarly, were splurging on energy rather than economizing.  We purchased more dishwashers, microwave ovens, self-cleaning ovens, and second refrigerators than ever before, so our own household food systems were also becoming more energy intensive.

In some circles, there is a temptation to hope that technological improvement will solve our energy and climate change problems, making it unnecessary to change consumption habits.  This research casts some doubt on this hope.  Consumption change remains important.

A popular way to reduce the energy impact of our food choices is to buy local.  The energy used in transportation varies greatly by food group.  For example, shipping rice long-distance by ship or grain by train is fairly innocuous, while shipping fresh produce from across the country and overseas may be a more spendthrift use of energy.  Packaged food and restaurant food are both more energy intensive than home-prepared food from real ingredients.  The USDA article emphasizes food from animals as another important consumer choice:

Based on 2002 energy technologies, if households choose to substitute a portion of their at-home meat and egg consumption with expanded fish and fresh vegetable consumption, for example, there could be substantial savings in energy usage.

Reread this sentence.  This is a bold conclusion for a USDA magazine article.

Click for larger image.

Ramadan fast

Muslims around the world are currently observing the month of Ramadan, during which adults keep a fast without food or drink during the day.  A web primer explains the purpose:

Fasting helps one to experience how a hungry person feels and what it is like to have an empty stomach. It teaches one to share the sufferings of the less fortunate. Muslims believe that fasting leads one to appreciate the bounties of Allah, which are usually taken for granted – until they are missed!

Throughout the day Muslims are encouraged to go out of their way to help the needy, both financially and emotionally. Some believe that a reward earned during this month is multiplied 70 times and more. For this reason, Ramadan is also known as the month of charity and generosity.

To a Muslim, fasting not only means abstaining from food, but also refraining from all vice and evils committed consciously or unconsciously. It is believed that if one volunteers to refrain from lawful foods and sex, they will be in a better position to avoid unlawful things and acts during the rest of the year.

During a year of my youth spent living in Bandung, Indonesia, the world's most populous Islamic country, I never made it through a whole day of fasting without at least a snack or a little water.  In part, social roles for hosts and guests forced me to eat something to be polite, even with the host was keeping fast.  I was struck by the fasting practice of neighbors such as the becak (pedicab) driver and day laborers who hung out on the street corner by our house.  Any one of them, who at the time in the 1980s earned about $30 per month, could explain without any discernible irony that they kept the fast so that they might know what it is like to be poor and hungry. In the same vein, consider this month the fast being kept by people in Pakistan who are suffering from floods.

Last night, I took my two children to the community Iftar -- or evening meal after the fast -- hosted by the Islamic Center of Davis, CA.  Hundreds of people turned out for the call to prayer, a delicious meal, and a moving and lively sermon by Sheikh Alaa' El Bakry about "The Rights of Neighbors."  In one passage, he contemplated our modern lives, in which we think our neighbors are the like-minded people with whom we text and twitter.  Imagine our surprise, in a time of crisis, such as a house fire, when we find ourselves going next door for help from the person who is more literally our neighbor, but with whom we haven't ever tried to bridge differences and talk.

Muslims, Christians, Jews, and secular folk crowded in until the auditorium's long tables were filled and many ate standing along the walls.  There were warm greetings for ministers, rabbis, officials from the police and FBI, and local politicians.  One state legislator, who is Japanese American, reflected on the futility of ignoring the current climate of fear of Muslims, knowing and remembering that any community may have its turn in the crossfire.

Even many of the non-Muslims kept fast for the day, which gives a special appreciation for the Iftar.  I made it through the complete daily fast yesterday for the first time in my life.  My children, ages 8 and 10, chose to fast from noon until the evening dinner.  I am happy that they could participate in such an event.  Ramadan lasts this month until about September 10. 

Source: www.cuisineonline.pk (a Pakistani food site)

Agricultural experimentation

On my drive cross-country this week, I have enjoyed seeing a great diversity of agricultural research fields. 

For example, on Wednesday, I visited the Rodale Institute's experiment station near Kutztown, which has the longest running scientific experiment directly comparing organic to conventional production strategies on side-by-side plots.

Organically grown soybeans (just past the white post) and corn (behind) in the Farming Systems Trial at the Rodale Institute's experiment station near Kutztown, PA

Organic production preserves soil fertility naturally, without petroleum-intensive fertilizer, and it provides a great product for consumers worried about pesticide residue.  It has been especially successful in fruits, vegetables, and dairy products, now reaching mainstream markets across the country and the world.

At the same time, organic production is not costless.  The Rodale experiment acknowledges that the organic production strategy for corn and soybeans must accept some sacrifices, both agronomic (tolerating weed competition) and economic (planting the most lucrative cash crops in just selected years of a multi-year rotation).   Nevertheless, in addition to the other environmental and consumer benefits, the Rodale investigators argue that the organic strategy is economically competitive, overall, in part because of reduced chemical input costs.

For a contrast, on Thursday, I saw the historic Morrow plots at the University of Illinois at Urbana-Champaign, while visiting to give a seminar at the Department of Agricultural and Consumer Economics.

The historic Morrow plots, University of Illinois at Urbana-Champaign

  Here, the soybean fields maintain a more weedless aesthetic.

The Morrow plots (detail)

I crossed Iowa and eastern Nebraska Saturday on small rural highways, avoiding the interstate, marvelling at the oceans of cropland.

Farmland in western Iowa, August 2010

If it were true that these thousands of corn and soybean farmers could have profited equally well with certifiably organic production, but are too misguided by input suppliers realize their own economic interest, this truth would imply one of the greatest collective delusions in all of agricultural history.  I know organic advocates who believe this delusion has in fact happened, but I think that account somewhat misses the mark in describing where American agriculture goes most awry.

On Sunday, I climbed the stairs on a big combine with a large-scale corn and soybean farmer in southern Nebraska.  He explained how he plans his planting strategy on a laptop in his kitchen, including space for test plots of various seed varieties.  He downloads the plan to the GPS-linked "auto-steer" computer on his planter, which then lays down the seed destined for each row of field.  At harvest time, the combine, equipped with the same data, steers itself around the field with the farmer looking on from high in the cab, recording the productivity of each field and test plot.  Similarly, he carefully monitors water use for irrigation and allows part of his farm to be used for an agricultural experiment with low-irrigation corn.

To say that this farmer could have earned an equal profit from certifiably organic production is to say that he has misunderstood the economic incentives that are internal to his business.  I doubt it.  To me, the most interesting questions about his business relate to environmental consequences that an economist would call externalities, because the farmer's profits come in part at the expense of other people external to his business.  Would a different production strategy better protect the Ogallala aquifer, from which this Nebraska farmer draws his irrigation water?  (Farmers like the one I visited have greatly reduced their impact on water supplies, but withdrawals from the aquifer still exceed renewal from rainwater and snow runoff).  Would organic production of his consumer-grade and animal-feed-grade corn better protect consumers from pesticide residue, as proponents say?  Would higher fuel prices lead this farmer to lower fertilizer inputs and alter his capital-labor substitution in ways that reduced petroleum use and reduced his impact on climate change?  Would reform of federal ethanol policies alter prices of farm commodities and change the optimal use of his land from intensive corn production to more sustainable uses?  It is difficult to expect farmers themselves to sponsor research across this spectrum of questions, which could provide results both helpful and contrary to the farmers' own economic interests.

The impressive amount and variety of agricultural experimentation is one of the most striking things I have seen on this journey.  Reflecting on the Rodale experiment in particular, I am grateful that somebody other than input suppliers, and even other than farmers themselves, is carrying out this type of investigation.  To address externalities, it is essential to have research that, like Rodale's, is motivated by curiosity about consumer health and environmental protection.  To preserve blunt realism in research, it is essential to have experimentation by farmers themselves.  It has been fun to see both.

Update Aug 24, 2010.  The Nebraska grower with whom I visited adds by email:

"One comment about under groundwater. Rain, runoff, and snow melt replenish the underground water levels. Cylindrical rainfall and snow melt recharge underground levels, and over many years, the water levels have hardly changed over the past 40 years. We in production Ag do not want to be labeled as depleting underground water levels. We are conservationists that are protecting the natural resources we use for future generations.

"As for organic farming, that is a speciality market. I am feeding over 125 people as a producer, and that number continues to increase. Yields with organic farming are lower, so decisions to grow organic are not for all producers.

"I am very passionate about what I do and how I do it."

Beginning with the bees

Nobody knows exactly what is wrong with the bees.

Since 2006, beekeepers have been reporting the loss of 30% - 90% of bees in many hives, with no clear cause.  The syndrome has been labeled Colony Collapse Disorder. 

My father-in-law, who has raised honey for many years in Carlisle, MA, had several recent years with no honey production. 

The book A Spring Without Bees (Lyons Press, 2009) focuses on harm from pesticides.  The USDA's Agricultural Research Service lists a wide variety of possible causes, but it too worries considerably about pesticides as a possible cause: "Pesticides may be having unexpected negative effects on honey bees."

Because bees provide essential pollination services to U.S. agriculture, ARS sounds very concerned about consequences:

While CCD has created a very serious problem for beekeepers and could threaten the pollination industry if it becomes more widespread, fortunately there were enough bees to supply all the needed pollination this past spring. But we cannot wait to see if CCD becomes an agricultural crisis to do the needed research into the cause and treatment for CCD.

This year, happily, my father-in-law at last has two hives in production (the two on the right in the photograph above), still far below his best years.  I asked him if this meant things were looking up for U.S. beekeeping.  He responded dryly, "I haven't heard that they are."

Note: I'm moving to California for a sabbatical year at UC Davis.  This morning, I took my family to the airport and then departed from my wife's parents home for the drive west.  Along the way, for the next ten days, I will visit and occasionally report on sights and people relevant to U.S. food policy.  A beekeeper in Carlisle is a beginning.

My Conestoga wagon.

Is Child Nutrition Reauthorization moving or stalling?

Senate Majority Leader Harry Reid (D-NV) and Senator Blanche Lincoln (D-AR) this week said they wanted lawmakers to approve a bill reauthorizing child nutrition programs before the August recess. 

U.S. Food Policy's coverage this Spring noted that the Lincoln bill is less ambitious than legislation the White House had proposed earlier.  For example, the Senate bill includes just six cents per meal increase in the federal reimbursement to local programs for providing a school lunch.  Yet, even this weaker and politically more palatable child nutrition reauthorization failed to make the list of three bills highlighted as priorities by leading Democratic legislators, which probably made advocates wonder if any child nutrition legislation would pass at all.

Legislation to reauthorize child nutrition programs for five more years has passed out of committee in both the House (.pdf) and Senate (.pdf).  The Food Research and Action Center is encouraging support for the House bill.  Margo Wootan of the Center for Science in the Public Interest wrote that the House bill "hopefully give a nudge to the Senate to pass its child nutrition bill."  The next few days will show if this hoped-for nudge actually comes to pass.

A fine line: nutrient content claims and health claims

Kellogg can no longer use this marketing strategy (see Time Magazine in June). 

In federal government lingo, the image above is a "health claim" or "function claim" with insufficient evidence.

But the company will still use this strategy (see Marion Nestle and Food Navigator this week). 

In federal government lingo, this is a "nutrient content claim." For official purposes, everybody agrees to pretend that the word "antioxidants!" has no more health implications or evidence requirements than does the word "crunchy!" The only legal issue is whether the manufacturer actually has added in the claimed antioxidants.

If you are convinced that this distinction between health claims and content claims succeeds in protecting consumers from misleading marketing, you will be reassured that somebody out there is watching that line like a tennis referee.  Everybody else may want to continue to be skeptical of health-related packaged food marketing claims across the board.