Agriculture, what is it?
Agriculture is the science, art and practice of Food and Livestock cultivation.
It’s an easily exploited system as the property rights are private (land owners may pollute if they believe it to be beneficial for their farm, sorry neighbors), and an animals rights are non-existent (no unsafe working condition lawsuits for Babe).
Here are a few of the common externalities involved with agriculture:
• Animal Abuse
• Greenhouse Gas Emissions
• Fertilizer & Pesticide Pollution
• Microorganism Depletion
• Soil Degradation
Fast Food and Agriculture
One Burger to Rule Them All
When it comes to Fast Food, it’s all about standardization.
Back when Fast Food was booming in the 50’s and 60’s, it was all about that “hot off the grill” square patty from Wendy’s, the perfectly cooked 11 herbs and spices chicken from KFC, and the 15 cent burger from McDonald’s.
It’s easy to take for granted the shape and consistency of a patty, a chicken breast that’s always cooked to perfection, or a burger costing just 15 cents (about half the price of burgers at regular diners back then).
Nestled between the cost of that perfectly shaped patty and it’s externalities are the root issues behind consumption, External Costs. These are costs avoided by a producer or consumer and instead externalized onto someone — or thing — else.
It looks like this: Internal Costs + External Costs = True Social Cost
• Internal Costs would be things like the corn feed, labor, and equipment.
• External Costs would be things like grass feed, extra land for grazing, and crop rotation.
Imagine it costs a farm $1,000 extra to feed their cows a natural grass diet instead of corn. If they sold 1,000 pounds of meat to a restaurant (and they only sold 1 pound burgers), the price at the register would be $1 higher than the corn fed option.
External Cost -> Externality
When these costs are externalized, we see the resulting externality. That looks like this:
Internal Costs = Price at Register
↳ Externalized Cost → Externality
This $1 cost could have paid for grass feed. It could have paid for more land to set up regenerative farming, which in turn allowed grazing and crop rotation, which in turn boosted their soil quality.
Instead, the animals ate unhealthy diets and were kept in cages. They used government subsidized, monocropped corn which led to extremely poor soil quality.
The burger may have looked $1 cheaper on the menu as these costs were initially footed by the animals and our soil (seen as externalities), but eventually society pays the bill in things like rising healthcare premiums (from an unhealthy population) and clean water alternatives (from increased pollution and sedimentation in our streams and rivers).
*This is where the “Don’t tread on me” philosophy breaks down. Nearly everything we buy has an unpaid external cost that “treads on” someone — or thing — else.
Here are some common External Costs avoided in our agricultural system and their resulting Externalities
• Land for Grazing
• Natural Diet
• Habitat Cleaning
• Pollution Controls
• Additional Waste Management
• Disease Treatment (E-Coli, MRSA, salmonella)
• No Till Seed Drill
• Diesel Emissions
• Carbon Sequestration
If you’d like to learn more about Externalities and External Costs, check out the following link
According to a report by Nielsen, 66% of consumers say they’re willing to pay more for sustainable. And while that is fantastic news, it is also a perfect time for corporate sharks to start flooding the waters.
Terms like “Cruelty-free,” Eco-friendly,”, “Wild-caught”, etc become all the rage. But when you learn that most of these terms are nothing more than marketing fluff, playing your part can start to seem a bit more difficult.
“Cruelty-free” for example, as per the FDA – “The unrestricted use of these phrases by cosmetic companies is possible because there are no legal definitions for these terms.”
Tying It Together
So how can someone with little money or political influence make an impact on a system run by the almighty dollar?
Let’s tie it all together.
From “natural” to “Certified Humane”, “free-range” to “pasture-raised”, it’s difficult to tell which labels are legit and which are marketing fluff.
What is for certain is that the massive growth and use of these terms means that our conscious consumption and “voting with our dollar” is working.
Here are a few of the more legit labels.
• Certified Humane
• Animal Welfare Approved
When it’s impossible to tell the difference between legit and fluff, you’d expect the government to help out.
Here are some of the organizations making sure our leaders do just that.
• Mercy for Animals
• A Greener World
• Humane Farm Animal Care
It’s in a corporation’s best interest to avoid all the external costs they can. More money for them and more “affordable” products for us. But as we’ve just learned, these costs don’t just disappear.
It’s also in their interest to use labels that sell product, whether that’s for the benefit of society or their bottom line.
That’s where it’s our government’s job to step in. With proper regulation, they can force producers to pay for their external costs and use proper labels.
Here are a few ways our government does that.
• Pigouvian Tax
• The Animal Welfare Act
• The PACT
• The Endangered Species Act
Imagine a world in which you send your spare change from that box of “Certified Humane” burgers to Mercy for Animals.
Mercy for Animals uses your spare change to advocate in government for more defined label requirements.
The government then passes a bill requiring strict definitions for terms like “free-range” and “pasture-raised”.
Now, the next time you go to the store, you can be sure that the product you’re buying meets your standards. You are purchasing a product in which the external costs are paid for and the externalities you care about most are mitigated.