YOU ARE WHAT YOU EAT…The Impact of Private Industry and Government in the Nation’s Food Supply and Health

Objective: To understand the connection between private industry and government as it relates to food policy and consumption patterns.

DO NOW #1:

COPY DOWN VOCABULARY TERMS

• Commodities: goods (often agricultural products, and natural resources) for which little or no processing is involved, so there isn't a great deal of difference in the quality of the goods

• Determinants of Supply/Demand: factors other than price that affect the supply (or demand) of a product or service; factors might be change in the number of producers or change in consumer preferences or consumer spending power

• Fiscal Policy: government spending and taxing policies designed to create desired effects on the economy

• Incentive: a reward or benefit that motivates people to do something

• Scarcity: the condition that results from demand being greater than supply

• Subsidy: financial assistance (usually provided by the government) to targeted industries, companies, and individuals

• Surplus: the condition that results when supply is greater than demand

• Tariff: a tax on an imported good or service

DO NOW #2:

WHAT FACTORS INFLUENCE YOUR FAMILY’S CHOICES ABOUT WHAT TO EAT?

Possible Influences• Price • Convenience • What types of food are readily available • Taste preferences • Nutritional content • Habits • Cultural influences

Ask Yourself• Which foods are the most/least expensive today? • Which are made with ingredients subsidized by the

government? • How does this information relate to what the Gonzalez

family describes in the video?

THE GONZALEZ FAMILY & THE DOLLAR MENU $$Food Inc. 38:00min

WHAT’S WRONG WITH THIS CHARTNY Times: March 20, 2009

David Leonhardt

What do we see from this graph?• It’s a fairly striking pattern.

• Unhealthful foods, with the exceptions of cookies (the blue line), have gotten a lot cheaper.

• Relative to the price of everything else in the economy, sodas (the orange line) are 33 percent cheaper than they were in 1978.

• Butter (dark brown) is 29 percent cheaper. • Beer (gray) is 15 percent cheaper.

What do we see from this graph?• Fish (the yellow line), by contrast, is 2 percent more expensive. • Vegetables (purple) are 41 percent more expensive.• Fruits (green) are 46 percent more expensive.

What do we see from this graph?• The price of oranges(not shown in the chart), has more

than doubled, relative to everything else. • In 1978, a bag of oranges cost the same as one big bottle of soda.• Today that bag costs the same as three big bottles of soda.

WHAT IS RESPONSIBLE FOR THIS?

Agricultural Subsidy

An agricultural subsidy is a support payment that the federal government makes to farmers and large agribusiness companies

Agricultural Subsidy

Payments began during the Great Depression

The Agricultural Adjustment Act of 1933• Price of crops were falling drastically• Congress – with the backing of President Franklin Roosevelt –

passed legislation to help farmers.• Paid small farmers to take cropland out of rotation decreased supply

of selected crops increased their value.

Today• Today, payments continue for growers of certain

commodities:• Wheat• Corn• Rice• Soybeans• Cotton• Sugar

• The government also guarantees a basic price for these crops.• If the market price falls below a guaranteed “price floor,” the

government makes up the difference.

Reauthorizing the Farm Bill• As part of the Farm Bill that is typically reauthorized every

5 years, the subsidies and price guarantees are intended to:• Mitigate the effects of a disaster• Manage the supply of food

Mitigate the Effects of Disaster

Crop yields -- and farm revenues -- fluctuate based on weather conditions and the spread of certain plant diseases.

Proponents say that price supports and other subsidies help smooth out any losses farms may experience during lean (less productive) years.

Managing the Food Supply

By guaranteeing prices and managing how much of each crop is grown (or not grown), the government ensures a steady domestic supply of basic commodities for its citizens.

Proponents say this protects the United States against fluctuations and interruptions in the global food supply.

• http://www.npr.org/templates/story/story.php?storyId=15891678

• http://www.capitolnewsconnection.org/news/farm-aid-edge-presidents-budget

• http://www.youtube.com/watch?v=PFLu-G-zgCg

BUT THE PRACTICE OF GRANTING AGRICULTURAL SUBSIDIES IS COMPLEX AND CONTROVERSIAL.

Critics point to the following issues:• American agriculture has changed.• Subsidies can stifle competition.• Producers and consumers feel the pinch.• Subsidies drive production decisions.

American agriculture has changed.• In 1933, 6 million small farms were home to about 25

percent of the population. • Today, large corporate farms account for most crop

production. • Only 2 percent of the population lives on a farm.

• Rather than helping small farmers, the subsidies provide income to large businesses that have the collective power to lobby Congress and make campaign contributions.

Subsidies can stifle competition• Critics argue that the practice promotes poverty in nations

that grow important commodities but are unable to compete on price because of the subsidy. – For example, sugar is grown in some of the world's poorest

countries. They would benefit from exporting it to the United States. But the combination of a government subsidy for U.S. sugar growers and a tariff -- or fee -- on foreign sugar does not make that economically feasible.

Producers and consumers feel the pinch.• Subsidies can often have the effect of inflating the value

of a crop. • Using sugar as an example, Americans pay at least twice as much

for sugar than people in other countries do. • And companies that depend on sugar -- such as candy

manufacturers -- struggle to start or maintain their businesses in the United States.

Subsidies drive production decisions.• Currently, subsidies are available to producers of about a

dozen commodities. • This has the effect of encouraging the production -- or the non-

production -- of some crops that no longer have the same demand, such as tobacco.

• Subsidies are not available for what critics say are crops that would better benefit American health, such as certain fruits and vegetables.

NEVERTHELESS, THE PAYMENTS CONTINUE. IN THE 2008 FARM BILL, CONGRESS AUTHORIZED BILLIONS OF DOLLARS IN CROP SUBSIDIES.

CASE STUDY: SUGAR SUPPLY

Case Study: A “briefing”• Share your knowledge of:

• the current system of sugar subsidies; • how it protects U.S. sugar growers; • how it affects food manufacturers; and • how it affects the competitive playing field that helps keep

consumer prices in check.