Week 2: Agriculture October 6, 2010

Option 1: Food Inc.

What is the “pastoral fantasy” and why do food markers promote it?
The idea of having every food product available for consumption whenever needed, even out of season. Changing the food to make it easier to produce. Food markers promote it because they are making so much money on selling food this way. The food is produced with chemicals and alterations that are controlled by companies.

How does the food industry increase the productivity of labor, and what are the consequences for wage and job quality?
They use large warehouses and chemicals to change the production of food. They are no longer working directly with farmers, and are hiding the true story of the production of these foods. It has large consequences on wages and job quality because the farmers are not working with organic food anymore and are being paid minimally so that the large corporations can make more.

A monopsony is a market in which there is one large buyer. How does the existence of monopsonies in the food industry (i.e. McDonalds) effect the diversity and quality of food markets?
Because of this monopsonies workers are trained to do one thing, they can pay low wage and easily replaceable. The food was inexpensive and easily produced which made it into a monopsonies. It being the largest purchaser of ground beef they get to control the taste of the ground beef, thus they control the food system and the quality of the product.

How has the market share of top beef produces changed in the last 40 years? What does this suggest about the cost structure for the industry?
There have never been companies that have controlled this much of the market years ago. This results in those companies changing the product and those who grow/responsible for the product. The cost structure of the industry is set by those companies because they are the biggest buyer of the product and buy in large amounts.

What is the primary advantage to mass producing food?
Mass producing food is easier and can be responsible for one sole product and process. Also when you are the sole mass producer of a product all the buyers come to you to purchase it and you know that you are not in much of a competition but can set the price because there is no one else providing the product.

Why does the US have laws regarding the humane treatment of animals?
Because in our society now treatment of animals for consumption is in inhumane. Farmers and companies are doing this for mass production and do not care about the treatment of the animals. Setting regulations and laws for the treatment is in an effort to help those animals and those who are in the care of the animals. But it needs to be stepped up to ensure that the consumers of the product are going to be ok and that the animals are not cruelly treated in this process.

How does breading for rapid growth effect the wellbeing of chickens?
The chickens are injected or given hormones to enlarge their breast to meet the preference of white meat. This affects the chickens because they grow at a rapid rate and can not fully mature before they are taken to the factories.

In addition to low wages, why might producers prefer illegal immigrant workers over citizens?
Because they do not let the stereotype of the work affect them when they are looking for work in general and a way to provide for their family. With illegal immigrants they do not have to worry about the hazards of the chemicals and hormones affecting the workers because the workers can not sue the company because they are illegally in the country. The farmers will use this to their advantage.

Why does the government promote the production of corn?
Because almost all products in the supermarket and products that are produced contain corn or soy bean. You can do multiple things with corn, in addition to feeding it to animals. Now it is used to feed fish in fish farms.

How does the overproduction of corn affect the market price of beef?
Because corn is so cheap and used as food for animals the price of beef is driven down because the feed is cheaper. And the reason for feeding them corn is because it is really cheap and it makes them fat.

Why are food born illness outbreaks like e-coli growing in geographic size and number of people affected?
It is an outbreak because of the food that is feed to the animals, also when the animals are standing ankle deep in their manure and the disease can pass quickly and it not addressed because it goes so quickly to the slaughter house.

Why do the FDA and other regulatory agencies appear ineffective at reducing food born illnesses?
Because of the rate of production and technology of food production it can not keep up with the regulations needed. Now that there are only 13 slaughter houses, there are multiple cows in one meat patty increasing the chance of transferring diseases.

What market mechanism gives produces incentive to provide safe food?
When food is not safe the market can stop, the demand for the product will decrease dramatically and find another substitutes for the product. Also during this time when people are extremely concerned with the production of food and getting sick.

Without searching on the internet, list all the brand names you can think of that have produced contaminated food.
Jack in the box and the spinach outbreak

Why are processed calories (fast food, junk food, TV dinners, ect) cheaper than unprocessed calories (vegetables)?
The production of processed food is easier than unprocessed although the food is not changed.

Some unprocesses calories, such as potatoes and beans, are cheap. Why are low income people unlikely to purchase these foods?
Because these unprocessed foods are not as filling as the others and can get more food such as fast food then those.

In what ways is diabetes a result of rational choice? How could it be explained as an irrational choice (not optimal?)
Diabetes can result from high levels of high blood sugar, which can be a result from having foods that are high in sugars and these foods typically are processed foods. Some argue that it is a rational choice because people should know that these foods cause this disease, but others say that consumers are not aware of the effects of these processed food problems and the issues and disease that could be bring along with them.

How does distancing management decisions from the product process effect the outcomes for society?
Having distance between the management decisions and the product process effects society because it develops a disconnect and allows different ideas,thought, and processes to occur. The decision makers can make changes or decisions with out involving the process’ opinions or thoughts to come into account or vise versa.

How does transparency change the behavior of firms?
If the decisions are made public for the firms it could cause a reaction from consumers to the firms. If firms are making unethical decisions and consumers know about it, it could cause the firms to fail. It could also promote and establish other firms who are making ethical decisions.

Economists tend to criticize labor unions for increasing wages above equilibrium levels. Higher wages lead to lower production and fewer jobs. When might unions be beneficial for society?
Unions can help societies when firms are paying below equilibrium and are focusing more on the firm rather than the employees. For society union firms provide that assistance when firms only care about making a profit and not their employees.

Why do producers prefer regular daily deportations of illegal immigrants over occasional large raids?
Because then they are only loosing a couple of workers and still can continue the to produce their product. But when its large raids they could potentially loose all workers and would have to stop production.

Should producers bear responsibility for attracting illegal immigrants?
Yes, I believe that they are the ones searching for the cheap workers and not having to deal with unions or potential law suits from harms that can happen during production. When producers want employees like this and attract employees like this, I feel that they should be held responsible because they are trying to cheat the system in multiple different forms.

How does growth in production affect the objectives of firm decision makers?
When there is a dramatic growth of production decisions makers have to figure out a method to adjust to this production growth. Are they going to high more workers, expand, or remain the same and try to remain at the same production level. Decision makers also have to think about the effects that it would have on the firm and its employees and what best suites both of them while providing to their consumers.

How does the acquisition of a firm by a conglomerate affect the firm’s objective function?

Patent laws are one method of creating property rights for public goods. What tradeoff does society face when shift production of public goods from public to private groups? (For example, when seed breeding switches from land grant universities to companies like Monsanto.)
Society no longer can really determine what is happening to the product, because of the production is now under private groups. The private groups now do not have to turn in their records.

Why is it useful for the government to give industry executives powerful regulatory positions?
Government then can hold the executives the responsibility for the production that occurs under them. The more regulation that occurred in these positions the better it would be for outside consumers and producers.

What are veggie libel laws?
Laws that prohibit and limit the disparagement of food. It allows producers to more easily sue critiques of the food. Including publishing a photo of food operations.

What are cheeseburger laws?
Makes it very difficult to sue the companies against these laws and the firms that produce the food, and the protection that they have under the veggie libel laws.

What can cause volatility in the price of food?
Production cost increasing, supply increase or decrease, natural disaster, disease, health information, etc.

How do volatile prices affect low income food producers?
If it strings to far from what is normal and acceptable for consumers and producers it could harm both sides. If it volatiles to high from the norm low income food producers would not be able to compete with other companies, because of the price of the product.

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