Meat(t1) = (grain(t0))^3

Lynne Kiesling

In a post about how reducing your meat consumption can help you manage food costs, Megan McArdle has the best quote I’ve seen thus far about the food chain:

Also, you may have noticed that meat is getting kind of pricey. Best bet is that it will go up before it goes down, since meat is essentially grain cubed, with a time lag.

UPDATE: As you can see from the comments, a better model is

Meat(t1) = (grain(t0))^3 + [grassfed_dummy(t0)) * (grass(t0) – (grain(t0))^3] + water(t0)


12 thoughts on “Meat(t1) = (grain(t0))^3

  1. Yessssss … that raises another interesting substitution question: what is the cross-price elasticity between grain-fed beef and grass-fed beef? Of course, if the truly binding constraint is land and not grain, then the price of both should rise, cet. par., and presumably the current price spread between them would persist. But if a grass/grain price differential narrows (assuming I am correct that Pgrassfed > Pgrainfed), then that’s consistent with grain scarcity being the issue.

    Interesting.

  2. Can the economists in the crowd explain why this type of argument is not laugh out loud ignorant given the massive size of farm subsidies??

    Especially given the fact we are getting ready to pass a 300 billion dollar farm bill that on one hand pays some people not to farm and the other hand pays different people to farm more.

    This is an especially aggravating topic for me because when I worked in habitat preservation I got tired of watching non subsidized, sustainable cattle ranches get plowed up and the native habitat destroyed. The sustainable, environmentally friendly grazing operation was then replaced with a highly subsidized, environmentally destructive, mono culture grain farm.

    Beet on the Brat

    the good news? A boneheaded proposal in the lousy $300 billion-plus farm bill seems to be holding up its passage. The bad news? We live in a country where anyone within barfing distance of power thinks that what the U.S. sugar industry needs is more protection

  3. Can the economists in the crowd explain why this type of argument is not laugh out loud ignorant given the massive size of farm subsidies??

    Especially given the fact we are getting ready to pass a 300 billion dollar farm bill that on one hand pays some people not to farm and the other hand pays different people to farm more.

    This is an especially aggravating topic for me because when I worked in habitat preservation I got tired of watching non subsidized, sustainable cattle ranches get plowed up and the native habitat destroyed. The sustainable, environmentally friendly grazing operation was then replaced with a highly subsidized, environmentally destructive, mono culture grain farm.

    Beet on the Brat

    the good news? A boneheaded proposal in the lousy $300 billion-plus farm bill seems to be holding up its passage. The bad news? We live in a country where anyone within barfing distance of power thinks that what the U.S. sugar industry needs is more protection

  4. TJIT,

    I think your problem is with the politics of the livestock industry, not with the meat production function … the economics are pretty straightforward. If we reduce our demand (as opposed to our quantity demanded) for meat, then we shift to a different equilibrium that involves using less grain, less water, and less land.

    Oooh, should put land in the production function …

  5. TJIT,

    I think your problem is with the politics of the livestock industry, not with the meat production function … the economics are pretty straightforward. If we reduce our demand (as opposed to our quantity demanded) for meat, then we shift to a different equilibrium that involves using less grain, less water, and less land.

    Oooh, should put land in the production function …

  6. Lynne,

    The problem with your argument is that it completely ignores the fact that the government pays people to produce grain.

    In other words grain production has been pretty effectively decoupled from market forces. The only working market signal was the government subsidy signal to grow more grain. This, predictably led to overproduction of grain.

    In fact many historical ag policies were designed to reduce the amount of suplus grain. Policies implemented to address the problem included set aside and diversion programs that payed farmers to destroy a percentage of their crops. There were also subsidies for grain storage costs including the construction of storage facilities to hold the surplus crops.

    I’m perplexed how it is possible to argue that meat production is driving grain production at the same time the government is busy implementing policies trying to reduce the grain surplus.

    There is clear historical evidence that reducing meat consumption will have zero impact on the amount of grain produced. Furthermore, attention focused on meat consumption distracts from the root economic cause of non sustainable farming, grain subsidies.

  7. Lynne,

    The problem with your argument is that it completely ignores the fact that the government pays people to produce grain.

    In other words grain production has been pretty effectively decoupled from market forces. The only working market signal was the government subsidy signal to grow more grain. This, predictably led to overproduction of grain.

    In fact many historical ag policies were designed to reduce the amount of suplus grain. Policies implemented to address the problem included set aside and diversion programs that payed farmers to destroy a percentage of their crops. There were also subsidies for grain storage costs including the construction of storage facilities to hold the surplus crops.

    I’m perplexed how it is possible to argue that meat production is driving grain production at the same time the government is busy implementing policies trying to reduce the grain surplus.

    There is clear historical evidence that reducing meat consumption will have zero impact on the amount of grain produced. Furthermore, attention focused on meat consumption distracts from the root economic cause of non sustainable farming, grain subsidies.

  8. There is at least one case were reducing meat consumption is clearly going to increase environmental destruction.

    Beef is different then other meats because so much of the animals lifetime calorie consumption is derived from grazing. Beef production provides a sustainable, habitat preserving, non – farming way to produce income from land.

    If beef consumption is decreased, and prices to the producer drop, the economics of the situation will drive the conversion of the land from grazing to farming.

    In other words reducing beef consumption in an effort to preserve the environment will actually provide economic incentive to destroy more intact habitat (grazing land) and convert it to subsidized grain production.

    End result, more grain, more water usage, and more land destruction.

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