Agricultural Economist on Food Supply Chains, Price Controls, and Class Divides During COVID

Vance Crowe [00:00:01] As the crow flies on the Vance Crow podcast. Jason Lusk, welcome to the podcast.

Ag Economist Jayson Lusk [00:00:10] Hi, Vance. Thanks for having me on.

Vance Crowe [00:00:12] Excuse me, I should have said PhD. Dr. Emeritus, you are, you are a, a very important distinguish scholar in the world of agricultural economics, and I'm proud to have you on.

Ag Economist Jayson Lusk [00:00:25] Yeah, I, Jason's just fine.

Vance Crowe [00:00:28] So I wanna jump right into what's going on in the world because this is a rare moment that we have in that we are in the middle of gigantic change happening. For the first time, my mother-in-law went to the store and the first time in her lifetime, she's seeing that there are things that have not been delivered. They're gonna shut down the, the fish and meat section in our grocery store. There were produce that just wasn't available. It's the first time in her memory that that's ever happened. Certainly in mine it's April 8th, 2020. What is going on right now with the, with the supply chain for food in the United States?

Ag Economist Jayson Lusk [00:01:11] Well, it, it's a little bimodal, but in some ways we're getting a little more back to normal, at least on the grocery side. So we had this, you know, really big runup and stocking behavior that led to those empty aisles and empty shelves that your mother-in-law commented on. And I think it speaks a lot to how much we take for granted in our food supply chain that we just expect stuff to be there regardless of whether it's in season or, or what's happening. But, you know, so I think we had this, you know, really unprecedented period where consumers were buying much more than normal in grocery store settings. It led to stockouts, it led to run up in prices for a lot of food commodities. I think we're starting to kind level off of that a little bit. I mean, we,

Vance Crowe [00:01:53] We have to, oh, I'm saying this happened to my mother-in-law today.

Ag Economist Jayson Lusk [00:01:55] Today, okay. Yeah.

Vance Crowe [00:01:57] So at my local grocery store, there is, there is a lack of produce on the shelves and there is seafood counters being shut down. Yeah. So, I mean, I know the runup the toilet paper and all of those things, but I haven't been in a grocery store in over a month. But this is, you know, firsthand I've heard it. There, there are supply problems.

Ag Economist Jayson Lusk [00:02:18] Yeah. I, I don't disagree. And I, I won't say it's normal. I'm saying it's closer to normal than what we saw two weeks ago. And you know, I think we're certainly not in a situation where there's no food. It may be the kind of food I normally get, isn't there? Or ev you know, even in the, you know, the height I think of this stocking out period, people posting these pictures on, on social media and everything. Normally if you look in the background, there's like another shelf in the background that has something on it. It's just like, you know, we just we're so shocked it's out of bread, but there may be the gluten-free bread or the tortillas or whatever, you know. So I think, okay, so I think we're, there's been this temporary disruption that happened from, you know, restaurants not being open. There was a disruption in that supply chain trying to get things back into grocery stores. And I think some of that were better situated than we were a couple of weeks ago, where the vulnerabilities lie. I think, you know, we're kind of entering into a period where, you know, it's the potential shutdown or slow down of several of the food processing facilities. So there's several reports coming out in the last few days of meat processing facilities either shutting down or scaling back.

Vance Crowe [00:03:29] Which ones are you talking about specifically? There are a lot of cattle ranchers that listen to this show and they,

Ag Economist Jayson Lusk [00:03:35] There's a plant in beef processing plant in Pennsylvania. There's, I think JBS shut shut down one in Iowa. There was another one they shut down. So I haven't, I actually thought to myself this morning, I need, I need to be keeping a list of this. So I haven't done that yet. There's been at least three or four closures that I've seen.

Vance Crowe [00:03:50] I saw in the state of Nebraska, somebody was asking the governor to shut something down in, in JBS. Yeah. I, I mean, to me, shutting down the meat system in the US or any part of this processing, that's a scary thought. I don't think people realize that we have been able to fulfill the demand for beef for 40 years, 60 years with no hiccups, and then now we're gonna have one that, that means something real has happened.

Ag Economist Jayson Lusk [00:04:15] I agree. And I think that's, you know, that's one in the next, in a few, in the next coming weeks is where I think some of the vulnerabilities are because these processing plants are big. You know, any one of those plants might account for, you know, five, maybe even more percent of the total aggregate supply. So you shut one down, that's enough to cause disruptions in price spikes, spikes on the retail side, but also reductions in price for the, on the cattle side, which is very concerning for the folks there. So I think that's the thing I'm kind of keeping an eye out on for the next, you know, few days and weeks where, where I think there could be, you know, even more disruption than what we've seen at present.

Vance Crowe [00:04:56] Yeah, I, I was reading reports, Kevin Fulta, who was the former head of horticulture studies at the University of Florida, posting a link about hundreds of trucks which haul thousands, hundreds of thousands of pounds of fresh produce are not leaving Florida with all that produce. And it's being left to rot in the fields. And I don't think it takes that many truckloads to start having people feel that pinch in some way.

Ag Economist Jayson Lusk [00:05:21] I agree. I mean, I think it's really, you know, for somebody, like in my position right now, I'm hungry for data. You know, what, what can we learn about what's happening? And one of the big challenges is a lot of what we know about production ag production happens on a seasonal or annual basis from the USDA and it's often lagged by a month or weeks. So it's just not very helpful in this time. So, you know, one signal that's helpful sometimes to that you can look at our prices, prices are a signal of scarcity. And so that's why I've been paying a lot of attention to, you know, are we seeing prices increase in what,

Vance Crowe [00:05:56] I haven't seen that, what, what is going on? Yeah,

Ag Economist Jayson Lusk [00:05:59] Well, you know, it varies a lot. And I think that's why I kind of mentioned the re a little bit of a return to normal. If you look at meat prices, wholesale meat prices, which get reported on a much more frequent basis than retail. There was a big runup, you know, we saw, you know, maybe it depends on the commodity, but you know, big increases in wholesale meat prices. But then they started to fall about a week ago, and so they started coming back down. One that was really crazy was eggs. So like wholesale prices of eggs, you know, tripled basically. And really just today. And I looked and they've started to come down some. So the fact that these are coming down, I mean, that suggests to me that the, you know, there's a lot in inventory, there's stuff in cold storage and, you know, it doesn't mean it can't go back up again. But that's at least signaling to me that on the, just in terms of aggregate quantity supplied, we're, we're okay. But it's mu it's much harder. I haven't seen good data on say the fruits and vegetables and that and that. That's one, I think that they're maybe a little more vulnerable for a variety of reasons.

Vance Crowe [00:07:02] Well, I I, I'm, I am gladed I guess to hear you say what you're saying. I was just talking with a woman on Sunday night whose family owns an egg facility outside of Syracuse, New York, and she said, you know, we have pallets and pallets and pallets of eggs. We were prepared for Easter, you know? Yeah. And this, this whole thing that was going to happen and now we can't get 'em out because of biohazard laws and we can't sell 'em into the community. And so we had a hyper efficient system with really good biosecurity and a lot of regulations that, that would normally allow the farmers sitting just outside in the countryside to get in and feed consumers. They're blocking people in some ways.

Ag Economist Jayson Lusk [00:07:46] Yeah. I think, you know, if, if prices continue to increase, you know, egg prices tripling, you know, you may see some civil deep disobedience out there, you know, some of these laws that make sense when times are normal and you have supply chains that are optimized for just in time delivery, they don't make as much sense. You know, some of these times you, you mentioned some egg laws, I think the, the eggs are regulated by the F-D-A-F-D-A, you know, was reconsidering, you know, some of its rules around, around reselling eggs, you know, and, and eggs that were destined to, you know, restaurants. You know, my understanding was they had some trouble turning around and selling those back to grocery stores because of some laws. And

Vance Crowe [00:08:24] Wouldn't that be nice if right now all those restaurants that are normally used to being a part of the supply chain, instead of putting food out the front, put it out the back and let people be cooking at home, that would be fantastic.

Ag Economist Jayson Lusk [00:08:36] I totally agree. And, you know, again, you know, all these are kind of anecdotal, but I've, you know, read a handful of these stories about restaurants in la their local governments, you know, saying, no, you need a, you need a, a, you know, a certificate or a, an approval to be able to sell, you know, take away food or you can't, you know, know sell prepackaged items directly to consumers. I mean, I think in this time, that's just nuts, you know? And I think most consumers realize it's nuts. And, you know, may, this may be one of those things that changes how we think about, you know, government regulations. It may shift all kinds of things about what we prioritize, that, you know, when everything, everything's fine and dandy, we can prioritize safety and like increasing amounts of safety.

Vance Crowe [00:09:20] Well, I'll give you one that people are gonna really be feeling right now. And I know because my wife and I had to have this discussion today when she looked at the expiration date on the food, right? We have put that in, so it is hyper secure so that like 0.0001 point percent of the problems don't happen. But now you're gonna have people looking at their stores and saying, I don't have a paycheck coming in. This is a a month, or, you know, over on this, can, can I eat it? And that's where you gotta ask yourself, how tight are regulations? How good are they?

Ag Economist Jayson Lusk [00:09:53] Oh, I agree. And most of those, like in the, you know, some of those sell by or used by dates are hyper conservative, you know, for a lot of 'em, you can, you can go past 'em. I, somebody's gonna sue me, you know, as soon as they get sick from eating them. But, but you know, again, in ti when things are good, you err on the side of caution often. But when things get a little tight, you know, other priorities take over. I, you know, I, I'd actually agreed to write an article about food waste many months before all this stuff happened. And so I finally had a few spare minutes given, you know, how all of our schedules have changed. And I sat down to write that article. I thought, you know, this whole topic just feels so different now for a variety of reasons. Both because on the one hand, consumers, when they got nervous, got a little panicked, boy, we stocked up, you know, and you look at the data on the increase of foot traffic to grocery stores that went through the roof. And so that, that told me, like in the moment people were like, forget food waste. I just wanna make sure I have food. That's like number one priority. And then like, carrying on to what you just mentioned, you know, to the extent times get really lean or there really is scarcity, you can, we don't need somebody nannying us and telling us to stop wasting food. We, we, we'll, we'll do it, you know, because it's a matter of eating and not eating.

Vance Crowe [00:11:13] Yeah. I mean, that's exactly right. My wife and I haven't let a piece of produce walk outta here in our garbage can since, since this stuff happened. Because if we have it and it's green, we're eating it.

Ag Economist Jayson Lusk [00:11:24] Yeah, no, I think that, I think that's, that's right. And so I think, I think it does show, you know, I'm an economist, so I'm, I'm biased and I see economics and everything, but I've always argued to people that food waste is an economic concept. It's not an accounting of, you know, how much did we produce versus how much did we, you know, eat. And that difference is, you know, food waste. But it's, it's a concept that varies by with incentives and people respond to those incentives.

Vance Crowe [00:11:54] Oh, that, that makes perfect sense. And when you don't, when it's not the nanny state in there involved, people end up figuring out the thing that's right for them that maximizes what they need. So speaking of maximization, I mean, I've started to have to come to terms with, I had, while working, you and I have met while I was working at Monsanto, we would occasionally go to places where you'd be speaking and I'd be there to look the World Food Prize, for example. Yeah. And I fell in love with large scale and efficient when I went to Monsanto, you know, I had come out, I could started as a person that felt like Monsanto's evil, big farming is destroying everything. And then I go in there and I discover, whoa, wait a second, I was wrong. Large industrial efficient farms are amazing. But then I think I took it a step too far because I now have the perception that I am damn glad that there are some people that are local and not selling only into the commodity systems.

Ag Economist Jayson Lusk [00:12:50] Yeah. All things in moderation. Right. I, I, you know, I'm, I was, and probably am still very much of the perspective that you mentioned that you took on at Monsanto. And that is that I think that's an aspect of our food system that a lot of people take for granted that how efficient that we are at producing a lot of things. And, and I think in some ways we are more geo, you know, so this really gets to the question of resiliency and, and, you know, let's, let's, this is a total hypothetical. Let's imagine we could have, you know, some plant in the middle of the United States that was like the most efficient plant and we could just run all of our food through it and redistribute it out to the country. And let's just say that was the cheapest thing possible. You know, there'd be a lot of good good with that in the sense of, you know, maybe providing affordable food. But the downside is if you've got this one big, you know, center, you know, a tornado happens, a drought happens, or a disease like we're seeing now happens. So in that sense, that kind of system where you re you know, requires economies of scale to gain efficiency. And so you, you end up with, you know, a handful of very large facilities that does have a kind of vulnerability that, that we're sort of looking at right now. And I think it is moments like this that make, make me appreciate that more than I probably have in the fact now I, I will go on the other, I will argue the other side of this, I mean, I think one of the things we may see coming outta this are people gonna, are gonna be a lot more, I don't know what the right word is for it, populist nationalist with regard to their food, more interested in local, regional, and I, I think that's a, will be a natural reaction.

Ag Economist Jayson Lusk [00:14:33] One thing I would caution though is, you know, there, there are forms of a global food system that, that are resilient in a different dimension. So I just mentioned, you know, drought for example, if you rely on just produce grown in your area or region and there's a drought, you're screwed or a flood. So, you know, there are benefits to being linked in global markets that if things go bad where I'm at, I can go buy from the world market over here where, where times are good to help bail me out. So there, there are forms of resiliency and being interconnected in these global food markets. So I don't want to give that up either. But I think, you know, I don't, I wouldn't say it's changed my entire worldview, but I think, you know, on the margin it's made me certainly more appreciative of a different form of resiliency that you get through smaller, more heterogeneous operations operating in different areas.

Vance Crowe [00:15:21] Yeah. I, I I, this has been a one of those paradigm changing things for me, which I think is good because it's, it allows you to see the whole picture with a lot more fidelity.

Ag Economist Jayson Lusk [00:15:32] I think backyard chicken coop cells are gonna go through the roof in the next few weeks and months.

Vance Crowe [00:15:37] Yeah. But most of those people have never plucked a chicken before.

Ag Economist Jayson Lusk [00:15:40] No, I didn't say it's a good or bad thing. That's just a

Vance Crowe [00:15:42] Prediction. I mean, I think it'd be really, really nice to have eggs right now, right. For, for a few months. It'd be nice if that's all I had to do. But I've, I've killed my own chicken when I was living in Africa and plucked the feathers. And I can tell you that most of the meal, because I was not good at it, I spent pulling feathers out of my mouth. So like, you know, people have no idea a lot of them that they've never even seen the chicken with the feathers on it at all. So there's a, there's definitely a demand, a need for processors and th thank God they've been there.

Ag Economist Jayson Lusk [00:16:15] Well, and I do think, maybe, sorry to interrupt you here, but this gets back to a little bit of our discussion about regulatory barriers. And I, I do think in meat and animal produce, there's a lot of regulatory barriers that have prevented or, you know, it create high cost for small scale processors to operate. And a lot of that's around packing plant regulations and, and you know, they're there for food safety reasons, presumably. But I mean, even before this, I would say I was very much of the mindset that we ought to find ways to allow, you know, more vibrancy in this kinda local meat economy that is, is sort of trapped because of various state and federal regulatory problems that really create really high costs for small scale producers.

Vance Crowe [00:17:04] I, I just got done speaking with Matt Ridley, are you familiar with him? He wrote the Rational Optimist. Yeah. Yeah. So he was on this morning and I mean, he is the guy that opened my eyes to the way that large companies end up getting regulations put on them gladly. You know, go ahead, put, put more regulations on me and everybody else because it creates a moat that says then these small companies can't start. And that's when you have this government business relationship that's kind of uncomfortable. And this is the kind of situation where you could tear a lot of those walls down.

Ag Economist Jayson Lusk [00:17:34] I don't disagree. And I, I think you're right about a lot of that. I think often, you know, even for your former employer that you just mentioned, I, you know, my point of view has been not to get mad at them, but to make sure that there's, that it's easy for other companies to compete with them. And I think a natural tendency of anybody that's gotten big enough is to increase the cost of entry. And a big way to do that is increase regulatory cost. 'cause I, if I'm big, I can accord afford teams of lawyers to help me interpret all that. And it makes it really hard for the small person to enter. And so, you know, I think that that's, you know, an unfortunate reality of our, of our existence. And this may be hopefully one of those opportunities where we can help reduce some of those entry costs.

Vance Crowe [00:18:18] What do you think is going on in the minds of governments all over the world regarding their food security? Because we have a good, we've got a lot of meat, we've got a lot of grains. We, you know, and things could go really, really wrong here, but there are a lot of places they don't have this.

Ag Economist Jayson Lusk [00:18:33] Yeah, well I think they're thinking about, you know, food security, number one, do we have enough food to feed everybody? And you know, here in the US as you mentioned, we we're fortunate to be a net exporter of agricultural commodities. We send more food abroad than we import. And so just in terms of pounds of food, you know, we're in pretty good shape now. Do we have all the workers to get it to us? And the supply chain that's, you know, maybe a different question, but just in terms of total production, you know, we, we look like we're pretty good shape. But, so one of the things I see governments doing in different places around the world are stopping exports. You know, we're gonna not allow food to leave our country because they're wanting to protect their own, you know, food supply. You know, I I personally think I understand the motivation. I, I think in the long run, that's a mistake. First of all, it hurts your, your domestic producers. So it makes them less viable in the long run when they can't sell more broadly. But also it, it kind of gets, gets you in a potential situation where there's a lot of tit for tat well you sh you know, you're not gonna sell me this, I'm not gonna sell you that. And then we, we all kind of end up potentially in a, in a worse situation. Although, you know, in the moment I understand, you know, why, why people are doing it. So, so I think, you know, that's kind of, you know, nu number one priority though is do we have enough food? And I think, you know, I I've seen this conversation already happening in the UK largely because of Brexit, but around this, this thought that, you know, we, you know, there they actually import way more than they export. And you know, it talking about food as a national security issue.

Ag Economist Jayson Lusk [00:20:06] And I, I know that's, that's one of the arguments producers will make, farmers will make for various forms of farm protections and subsidies is a national security argument. You know, without calling it good or bad, I suspect that argument will be more persuasive in the coming months.

Vance Crowe [00:20:22] You know, I, I was watching on Facebook just this, I, I barely have any time for anything, but when I do, I wanna know, Twitter tells me what are the people that I follow thinking about. So that's like a much more concentrated thing. But then Facebook drops me into networks of people I'm friends with, but not necessarily people that I pay attention to what their news is or what they, what they are thinking about. And I saw this thread on people complaining that they're running out of coffee at their houses and they don't want to go to the store. So they're stuck at what they can get delivered. And the delivery cost for a giant bag of coffee went from $35 to $65. And wow. They said like, you know, this is outrageous. There's a, there's a special place in hell special for price gougers during a thing like this. And that got me thinking like, I think we're in a precarious position because most people don't understand economics. So if you don't think that there is something that changes price other than people are greedy, you can have real revolutions in, in a, in a community.

Ag Economist Jayson Lusk [00:21:26] Yeah. I don't disagree. And I've, you know, I, I use my social media in a similar way that you, you do Twitter is, is where I go to see the news and kind of analysis and Facebook is where I go see real people, the real people I know, you know, who are not economists or, you know, followers of ag markets. And Yeah, I, you know, I think, again, I don't know that populism is the right word, but, you know, calls for price controls, calls for, you know, among, you know, farmers that aren't getting prices they think they deserve, you know, for the government to step in and, you know, take over various segments and, and regulate. I, you know, I think there's gonna be a lot of those kind of calls. So, you know, I, I kind of bristle at a lot of that and I, I, you know, and I understand

Vance Crowe [00:22:12] Bristle, I mean this is like, this is literally a change to our, to our nation. This is like when you invoke the, what was it, the American defense, whatever the act is where now you start saying you guys produce this and you guys produce that untold of chaos is being thrown into the market. Who knows, maybe GM is needed to have the drive terrains to make the ambulances run. Maybe they shouldn't be producing ventilators. Like you start getting central control, things get outta control, then they need to control more. It's not a good thing.

Ag Economist Jayson Lusk [00:22:44] Yeah, that's right. It feeds upon itself. And you know, I will say, you know, this I think will maybe sound a little heartless, you know, but I think it is true that, you know, when we see these price increases, sometimes it's hard to know what's gouging and what's not. But at least, you know, in a lot of cases that price increase is actually what you want to see because that increasing price is, is the signal to other sellers and producers to realize, oh, I need to figure out, I can deliver coffee for much cheaper than 60 bucks a, you know, a delivery. And if, if you don't, if we don't have these prices signaling those things to us, we don't know that there are opportunities. And those opportunities is what brings that price back down. That

Vance Crowe [00:23:29] Is amazing. That's exactly right. It's the, it's when you see a price that's too high, somebody is abdicating a responsibility, you could get in there and fill that in some way that's faster you will.

Ag Economist Jayson Lusk [00:23:40] Yep. Yeah, I, I agree. And then, but if you just say, okay, we're just gonna cap these prices. You can't sell eggs for more than whatever, $5 a dozen or something. You know, what, what are egg producers gonna do? Let's say, you know, they're gonna say, well, okay, maybe I'll idle a plant. Maybe I don't need to work that hard at trying to get workers to come in here and work overtime. You know, it, it is that very price signal that provides the incentive for correcting the problem. That that's not to say some people don't screw some other people over when they, when they, you know, in times of need. And I think that's sort of the distinction between what we want the market to happen and what do I do as a good individual person. And if I'm, you know, taking a advantage of somebody that doesn't have any other options and I'm ex essentially exploiting them, you know, I think on a individual level we can say that's, that's, you know, make judgment calls about when that sort of doesn't look right.

Vance Crowe [00:24:33] Doesn't even, even that like, because I was gonna say, yeah, you know, reputations are probably a lot more important in today's day and age than when you were selling Uncle Sam's old timey tooth remedy because you could just go on to the next town. Well now you can't do it. But the flip side of that is the mob then controls the narrative on who's okay to talk to and who's not who did something bad, and who is somebody that's unfair versus somebody saying, Hey, I don't need to get out my expense sheet to show you what all this costs me to get this to you. I'm just saying that's what it costs. So if somebody can do better, fine, but this is what I can deliver it for and if you knock, knock me out, it's gonna get more expensive.

Ag Economist Jayson Lusk [00:25:12] I, you know, I've, I've talked to several people in the grocery industry who are concerned 'cause they're facing increasing prices for the products they're having to buy, but they don't wanna look like they're price gouging. And so, you know, they're looking for either somebody else to blame or just eat the cost be, and it's exactly re related to the reputational concerns you mentioned. You know, you don't want to be the person that says, you know, look at what, you know, price chopper's doing or whatever, you know, insert whatever store you want to. And so they, they are, you know, consciously aware of that. So much so that they dampen some of those price fluctuations that we see because they, you know, they don't, they don't want to be seen as gouging consumers either.

Vance Crowe [00:25:57] I, I'm, I'm really very concerned about how when things start to get shut down, how much harder it is to bring them back onto the system. Like, you know, you're watching, we were talking before about restaurants being able to sell things out the back door instead of the front. Well, if you turn off a dairy plant, because 30% of the milk was going to restaurants. I, there's a, a guy named Dwayne Faber, d Faber 84 on Twitter, and he talks all about like, you know, you can't just flip the, the processing from delivering to restaurants to delivering to grocery stores. So you have all this milk that's not being used, they gotta dump it. If you make it so they can't dump it, that they have to use it, then they'll kill cows, right? Like,

Ag Economist Jayson Lusk [00:26:42] Yeah.

Vance Crowe [00:26:42] And things are gonna get super wobbly here. How much time can elapse before we don't start seeing those kind of things wildly shoot into the system?

Ag Economist Jayson Lusk [00:26:52] Yeah, I mean it's, it's heartbreaking to see those pictures of, of dairy producers having to dump their milk out and, you know, we, we could talk about the reasons for it, but whatever the reasons, it is heartbreaking and people aren't gonna just sit there and keep doing it. So, you know, either you're right, either gonna get rid of cows or they're gonna, you know, try to find markets for those, you know, there, there was a point in time where we, we had a lot more integrated, you know, we have a lot more specialized operations now than we had in the past, you know, with much more diversified operations. You know, you normally have a few dairy cows, you had extra milk, you'd feed it to the hogs or whatever, something that goes on now. But, you know, if this keeps going, either you get rid of those cows or you try to, you know, find a neighbor that can make use of that in a way that you didn't before. And, you know, how how long does it take? I don't, you know, I don't know. You know, it depends on how precarious the position is for either one of those dairy producers and how long these things going. And I think that's, you know, this is the word everybody's using, but it's, there's just, it's just because it's true. And that is uncertainty. You know, if we knew this was gonna last for two more weeks and we go back to normal, okay, I, I can live in that environment, but this fact that we don't know, it makes it really, really hard to plan. And so you got, everybody's having to make their own individual judgment about do I kill these cows? Do I try to strike an agreement with my hog farmer neighbor? Even if it's illegal right now, they're gonna, you know, we're gonna practice a little civil disobedience 'cause this is a stupid law in the moment, you know? And some of that is gonna go off on a one, you know, individual level basis. And then you're right.

Ag Economist Jayson Lusk [00:28:24] And then, and then what happens? So we go, some of that we go a little longer, we reduce our inventory. Now you got plants that can operate at full capacity, even if you go back to, you know, whatever normal was, which means they're not as efficient, they can't be as cost effective. And, you know, so,

Vance Crowe [00:28:40] And on top of this, the people that are going into grocery stores or wherever to buy things have less money because they're not working.

Ag Economist Jayson Lusk [00:28:49] Yeah. You know, I think, so I, I don't want to be overly pessimistic for the ag sector here, but you know, often I've heard it said that agriculture is countercyclical to the overall economy. So during the last, you know, great recession, it was a time when we actually had big run up in ag commodity prices for entirely different reasons. But I don't, I'm not, it's not so sure clear to me that that's gonna happen this time around that, you know, consumers are gonna have less disposable income, you know, at least in the last recession they didn't eat out as much. They're not, you know, they're not gonna, you know, often meet in animal product items or more expensive. So that's something that people tend to cut back on. So I think that's gonna trickle back to the farm level, particularly if you have some of these other disruptions where you talk about where we, we reduce capacity. You know, I, I don't, you know, I don't wanna be overly pessimistic, but it, it, I'd say it's, it's, you know, it is a little concerning for the, the few weeks and months ahead.

Vance Crowe [00:29:47] I think we're gonna see a big upswing in raw materials being delivered to the grocery store as opposed to highly processed food put towards convenience. Convenience has been because we didn't have any time now, right now people have time. And I would imagine that some of the habits that are coming in right now, which go along with eating more frugally, right? Because you're not paying for somebody else to do the processing. I would imagine you'll see staples have some value there, but if you're dumping that out of the highly processed foods, I don't know.

Ag Economist Jayson Lusk [00:30:21] Yeah.

Vance Crowe [00:30:21] That's hard to readjust. Well, and

Ag Economist Jayson Lusk [00:30:23] That's right. And you think about, you know, why, why is a lot of dairy being dumped? One of the reasons is there's less cheese moving in, you know, in every pound of cheese you buy, I don't know how many gallons of milk, but it's a lot. And so that, you know, cheese is essentially processing milk and it uses a lot of milk, so a lot of milk gets used up. So you think about just like you mentioned, processing, we, we, you know, if you buy those raw ingredients yourself, you know, maybe you don't need as much of it as going into some of the, you know, more processed foods. But I, I don't know, I think it could go both ways. I mean, I think that's one of the research questions I have is what happened to the healthiness or health fullness of people's diets right after this? I think it could go both ways. I think in the short run, people bought a lot of processed stuff. You know, you can't buy ramen noodles right now. My my two teenage boys keep asking me, dad, why, you know, why did you buy ramen noodles? So there, there are none like in the grocery store. And, and so, 'cause people want that highly shelf stable kind of processed food they can have around for a while, but the longer, but people are also sitting at home, they're maybe picking up some cooking skills they didn't have before. We're figuring out how to use other stuff. So as this thing goes on a little longer, you know, you know, the phenomenon you just described could play itself out a little more.

Vance Crowe [00:31:36] So my dad used to watch this investment show, and at the, you know, at some point he would always ask them, all right, what are you holding for investments right now? I think for an Ag economist, it is completely fair for me to say, what are you stocked up on in your house right now? What, what are, how, how long can you go? And what foods did you choose to put there?

Ag Economist Jayson Lusk [00:31:58] Oh goodness. Honestly, we haven't changed a lot of our eating habits. And part of it is our, you know, most of what we would normally buy has been available in, in our local grocery stores. So it, it hasn't changed a lot. Now, what, what I will say is from a, for a variety of reasons, we had a bunch of meat that was in a freezer we had, that hadn't been eaten in a long time. And, and partly because my wife had to go deal with a family health issue on her side of the family. So she's the one that's often adverse to eating that, you know, meat that's been in the freezer for six months. So when it was just me and my kids, we, we went, we went through a lot of that, you know, for about two weeks.

Vance Crowe [00:32:38] Okay.

Ag Economist Jayson Lusk [00:32:40] And so that we did eat a lot more. I, in fact, one of my sons said, I said, I think we're gonna have steaks tonight. He said, dad, we just, again, like, we just had that, I was like, you're spoiled. You know, like, who says that? So we, we did run through a lot of that. We, you know, we are, because my kids are home at lunch now in our, in at breakfast. Normally they're off at school or they'll go out and eat at lunch. They've got teenagers so they can go off campus and eat. But I will say, you know, boxes of cereal, milk and then again, ramen noodles, you know, craft noodles, those are what my boys want at lunchtime. And so, you know, not the healthiest option, but that's, that's what my teenagers want. So we're moving through that at a much faster rate than we normally do.

Vance Crowe [00:33:23] I think there is a huge divide, and I don't know if you ever saw Charles Murray wrote a book called Coming Apart, are you familiar with this

Ag Economist Jayson Lusk [00:33:30] Book? Yep, I read that. Yep. And

Vance Crowe [00:33:32] I think there is a huge difference between what's going on in the middle, middle, upper class houses across America versus what's going on with everybody else. Like if you went to college and you have a white collar job that you were able to move it and you're, you're kind of working, maybe you're working like, you know, four hours a day you're doing telecommuting, you realize there's not that much going on with your job. You can take care of your kids and do these things. You still got a paycheck coming in.

Ag Economist Jayson Lusk [00:33:57] Yeah.

Vance Crowe [00:33:58] But there are a lot of people that, that is not the case. And they are looking at their family and they're saying, is it better for me to go out and be an Instacart worker or deliver for Amazon and potentially bring this back for my family? Or is it better that I stay home? And there's a lot of economics going on right now in the different classes, and I think the upper classes could be completely unaware of what's going on with the people that are poor.

Ag Economist Jayson Lusk [00:34:26] I agree 100%. I'd say even in my, you know, small world of, you know, academics and, you know, stuff I'm involved with, I'd say it's even bimodal in that world in a sense of, you know, my schedule is probably busier than it, than it normally is, and it's normally pretty packed. And that's because people want me to go talk on the news. I've gotta, you know, manage faculty that are teaching classes and all the problems we have with moving that online, you know, so my like busyness has increased at the same time. Like, you know, I know a lot of my colleagues are, you know, they don't have anything to do, you know, or it's unclear what they should do, or they have kids they gotta take care of. I mean, I'm fortunate my kids are old enough, they can kind of take care of themselves. But you know, I've been on lots of conference calls where, you know, people's kids will run up in their lap and I think it's kind of nice, you know, to kind of normalize a little more of that. But these things would've been, seemed totally uncouth even a month ago, are just totally normal. You know, I've seen more people seal ceiling fans and a workout clothes in the last, you know, three weeks than I've seen in a really long time. But you're, but you're right. You know, back to your point, you know, I, I hope my universities operate, I suspect we'll take a budget cut because, you know, incomes aren't gonna come in, but I suspect I'll get paid. But that's not what a lot of other people are seeing in this runup that we saw in unemployment. Unemployment filings was just incredibly unprecedented. I don't know if you saw the front page of the New York Times that had, you know, this long time series of unemployment filings, you know, going back, you know, even, you know, decades, you know, it kind of bumped around.

Ag Economist Jayson Lusk [00:36:00] And then this, you know, last week there was such a, they put this graph on the bottom of the page and the spike was so large, you know, it went up the entire page of the, of the front page, you know, just to show like how out of proportion the number of unemployment filings was relative to what we, you know, have expected to see. And so that's what's happening to a lot of people. And you know, again on it, you know, just speaking frankly, that's a world, you know, I'm not living in, it's hard for me to relate to that one at the moment, even though I can try to empathize. So, you know, what those people are experiencing and going through, it's, it's, you know, it's gotta be gut wrenching and heart wrenching, and it's gotta translate into what they buy for food and what they eat.

Vance Crowe [00:36:42] And there are a lot of people right now that are really busy, like you said, where they're making more money if they're in an entrepreneurial situation, and then you think about the person that, you know, they don't have an education and they don't have a way to get around. They have to take public transport, and you're seeing people that are well fed and warm in their houses, or cool as it as it were, it was 80 degrees yesterday, but, and they're calling for mass transit to be shut down or for any type of gathering or for, or to really limit the number of workers that can be in one place. And it's a really tough balance because we know that if you wanna contain this, you have to have really strict measures. But at the same time, you're talking about people that can't miss a paycheck, and if they do, they, they have to default on debt or they have to default on rent, or they have to default on getting things done they need to get done.

Ag Economist Jayson Lusk [00:37:37] Yeah. And the, and you know, to your point, the people deciding those things are not always the same people living through those circumstances. And, and so, I mean it's, I guess it's sort of been one of my hobby horses over the last, you know, seven or eight years is this sort of elitism that exists sometimes in our food system that the people who make the decisions about what's culturally appropriate to eat and whatever else are, and that can influence our food politics and food dialogue are often have very different set of preferences than folks that are on the lower end of the socioeconomic spectrum. They're spending a lot, you know, much higher percentage of their income on food. And this is another form of that. You know, I think that's just being manifested in a slightly different way. So I think, I think it is, you know, a challenge for all of us and to, you know, to just try to have a little bit of empathy and a little bit of understanding about, you know, people that are different than us.

Vance Crowe [00:38:33] Yeah. I, I wonder when unemployment doesn't match up with the, with the amount of money that people get and they have to start going to food banks, you know, as that number increases, then the level of tension in a given society increases. So I hope that those numbers can come back, but the only way that happens is if we get the economy started. And, and right now we've made the choice that the health is more important than the economy, but we better recognize that these people aren't bad people if they start pushing back on these regulations. They're just trying to figure out their way in this world.

Ag Economist Jayson Lusk [00:39:10] Yeah. I think it'll be interesting, fascinating to watch how the narratives emerge as we, you know, came outta this. You think about the last recession, you know, i, i, I don't know that it was entirely true, but the narrative that came out of it was, this is the fault of Wall Street and big banks, you know, it kind of gave rise to this occupy Wall Street movement, which had, you know, a number of implications and repercussions. And I think it'll be interesting to see what is the narrative that comes outta this? Who's at fault? Who took advantage of people who benefited from the government's, you know, bailouts and stimulus? And, and I can see, you know, on, on my social media and reading the news, you know, even with the, the latest, you know, I don't know what we call this thing, it's not stimulus, but this cares bill that was passed. You know, who, who's benefiting from that? You know, and is it the everyday person or not? And people are fighting for the narrative on, on that. So I think people need, need to be very cautious of those things because, you know, we, you don't wanna end up in a world where it creates a unstable society or where your, your vested interests is no longer with the status quo, but in some, something a little more revolutionary, I think that's, that's when things can get really bad.

Vance Crowe [00:40:25] So changing subjects, but it's something I'm interested in hearing your thoughts on. You are aware of how many different kinds of regulations have either been pushed for or have actually happened regarding climate change and the humanity toward humane treatment towards animals ever increasing desires or demands for care and saying the farmer can't make the right choices. We need to set these rules up. I have heard a hypothesis that in a lot of ways these types of pressure are what have kept us from being able to get protein into various communities. And in places like China, if you don't have access to livestock and domesticated protein, you're gonna get it through a wild system. Would you agree that you could at least draw that, that kind of jump? And how would you set up a test to figure out if the push that people were making for climate change could actually have the knock on effect of creating these scenarios for protein markets that, that bring us coronavirus?

Ag Economist Jayson Lusk [00:41:24] Yeah, boy, that's a really interesting connection. And y you know, this, so I'm sidestep of your question and answering a different one, which is what good politicians do. I'm not a politician, but they, you know, one thing speaking of China that had happened here recently is they had this big African swine fever problem, you know, it resulted in, you know, over half of their hog supply herd getting killed, which is more pigs than we have in all of the United States. And it's a big run up in prices for pork there. Now to, to what extent, getting back to the thing that you just mentioned, to what extent did that lead people to substitute towards some of these wilder alternatives? You know, I, I don't know, but it can't, the effect can't be zero. People weren't eating pork. They still wanna get protein somewhere. Where's it, where's it gonna come from? And, and so I think that phenomenon is real. I think,

Vance Crowe [00:42:17] And, and the, the Chinese government, they know that people need access to protein. They're not, they're, that's not lost on them. So it's not like they were saying, oh, we didn't know that these wet markets were going on. They were saying, Hey, we allow this because we know that in order to keep our, our, our civilization happy and us in power, we gotta do that.

Ag Economist Jayson Lusk [00:42:39] I, I agree. And I think, you know, this is going kind of counter trend to the discussion we talked about. I think, you know, a lot of folks were prognosticating that after, after that a African swine fever one, you know, China still had a, a product, you know, pork production system where a lot of pork production was happening. Very small, almost think backyard kind of operations, which is where a lot of this disease spread. And you know, I don't know if many of the folks that listen to your podcasts have tried to get on a commercial hog farm in the US It's hard 'cause a lot of biosecurity protocols, you can't do it.

Vance Crowe [00:43:10] Yeah. I've only been on the Fair Oaks farm when I've never, I've never been to a, a full farm and I grew up in Eureka, Illinois, so they were, they were everywhere around my house.

Ag Economist Jayson Lusk [00:43:18] Yeah. And so, you know, you know, the, before a lot of this, and this kind of goes opposite of this, you know, move towards more local, but I think the large, large thought is what's gonna happen in China is you're gonna have a big large scale consolidation, you know, after all this and trying to get rid of all this really small backyard sort of stuff. And, you know, whether that still happens or not, you know, kind of remains to be seen. But, you know,

Vance Crowe [00:43:43] Has China recovered from the African swine fever? It's out of the news, but I didn't, it's not like they came up with a vaccine.

Ag Economist Jayson Lusk [00:43:50] To be honest, I haven't paid as much attention to it the last couple of months because of all other news events. I, you know, I think the worst of it seemed to have been over and, you know, in terms of prices, they were starting to kind of come back down, although they were also importing a lot more, we had this trade war going on and they were starting to import, you know, more, more pork from the US and other places. So, but I don't know that it was completely, completely went away. But the short answer is I'm not entirely sure where the status of that is. But yeah, to your point, you know what, it's probably not the things that capture the news on the increase the cost of, of meat at the moment. You know, a lot of stuff about climate change is sort of proposed, people arguing about what should happen, you know, but there are a lot of regulations around, you know, environmental protection, CAFOs, some of that kinda stuff. And I, I'm not trying to say they're bad laws, but they do increase the price of, of, you know, of meat. And then a lot of the food safety regulations we see in meat processing facilities that affect the cost of meat. That's, that's where a lot of the regulatory costs come in at the moment. And, but you know, to the same extent if, if you had a, a packing plant and you're, you're devoting increasing por portions of your production capacity to these various certification programs that are promising higher animal welfare or higher whatever, that, that is impacting the cost of the system.

Vance Crowe [00:45:15] Yeah, that's right. And I, I think everybody comes at these things with a, with good intention. I don't, I don't, I think people come to it and they say the meat has the potential to really make a lot of people sick, so we wanna make sure that we do this right and we have it by the book and we, you know, I know the people at nami, they, they are good people working hard, right?

Ag Economist Jayson Lusk [00:45:37] Yeah.

Vance Crowe [00:45:37] But you can imagine situations where these regulations end up making it a lot harder around, around the world. And so what does a country do if they realize we don't have enough food right now?

Ag Economist Jayson Lusk [00:45:52] Well, you know, you, you can't produce food overnight. And I think that's one of the things that's tied up in all this. I think people forget when they talk about food supply seasonal, you know, so a lot of the food we had ready to go in the market this month, it was produced before. If it's a grain or, you know, rice or wheat or corn, it was produced last summer in the winter. So, you know, agricultural is seasonal, so you can't just generate more food overnight. So you really do, if you don't have enough enough now, you know, your option is to try to find somebody else to sell it to you. And that's trade that's trying to, to buy off of world markets, you know, on least some of the ag you know, ag commodity side of things. I mean, wheat prices have kind of come up a, a fair amount in the, the last, you know, few weeks. But corn and soybeans still, you know, by historical standards are pretty low at the moment. Now you're not gonna eat field corn, but, but you can process it into starch and, you know, flour and tortillas and some other things. So, so that's, you know, kind of one of your market, you know, options, you know, other things, well, I

Vance Crowe [00:46:54] Mean, has the, has the ethanol plant shut down start to affect the price of corn? So for people that don't know The, right now, there are ethanol plants that the value of create the, the amount they can sell ethanol for is so little because the Saudis drop the oil prices, there's this big price war. So regular just crude oil is much cheaper. So when you shut down those ethanol plants, it knocks out a huge amount of feed that goes into the beef cattle market. And in particular protein they need to, they, they, if you're gonna get cows to put on big muscle, they have to be eating protein, which you get from the ethanol plants. And that's been wiped outta the market.

Ag Economist Jayson Lusk [00:47:31] No, that that's, that's right. And, and you see it reflected in corn prices. I mean, they've really taken quite a hit over the last month or so. So you know, that that's not good for corn farmers, but it does have beneficial impacts on the rest of food, the food system in, in terms of making that food more available, you know, to feed livestock or to go into other, you know, kind of process food items. So, you know, I'm not really answering the question you ask, which is, if you're a country that doesn't have enough food, what can you do? You know, trade is one, and, and sometimes trade does involve barriers in trying to negotiate with other countries so that, you know, that is something that one could do. Transportation and storage is, is another thing as well. You know, we have lots of food in storage here in the us. A lot of it is in, I would say virtually all of it is in commercial storage. So private storage. So it's big companies, if it's grain, a DM, Cargill, Bunge, you know, these kinds of companies, they're storing it strategically because if they think prices are gonna increase in the future, gonna hold onto it now, try to sell it later in the future. And, but there are countries around the world that do have strategic stockpiles of food. So, you know, they could pull some of those out. We were talking about China, they had a, a strategic stockpile of pork that they, they did release some when it got to near the Chinese New Year. And so some countries around the world do have inventories of food that, that they could release, that could help dampen the pressure.

Ag Economist Jayson Lusk [00:49:02] But, you know, at the moment, world food prices are pr, are, are affordable. And we talked about dumping milk. I mean, milk's not easily transportable, but there, you know, there is food out there. And so I think a lot of it is just trying to get it to where it needs to go.

Vance Crowe [00:49:16] Well, I think that's a pretty hopeful mesh like that. That's good. I'm, I'm glad you think that because I, in my limited understanding of the food system, we're in a very precarious place. So I keep my eye on it, on it very closely, but I, I realize that we probably have some shock room in there and we can absorb quite a bit.

Ag Economist Jayson Lusk [00:49:35] Yeah, I mean, I think both things can happen at the same time. I mean, again, I mentioned kind of price as a signal of scarcity. The, and so, you know, a lot of my comments are reflecting the fact, fact that at least on commodity side prices are still pretty low. At the same time though, so not to contradict myself, but some of that's also related, if there are disruption disruptions in the food processing side of things, that, you know, if you can't process food that's gonna, you're gonna, you're gonna lower the demand for those raw agricultural commodities. So commodity prices can stay low. So it is possible to have a world in which commodity prices are low and retail food prices are high. If the processing sector, it is not operating very well. And I know this was happening in the, in the beef industry for the last several weeks. You know, cattle producers are really upset 'cause, you know, wholesale prices were increasing, cattle prices were falling, you know, and that on the surface of it doesn't look fair. And I'm not gonna weigh in on the, on, you know, whether there was, you know, anti-competitive prac practices. But what I can say is that in some cases it's, that's just economics at work. That, that, you know, so you can end up with these situations where you have a lot of these raw commodities that are cheap, but retail food, that's expensive. And maybe that gets us to the world that you mentioned, where if that's true, people are gonna wanna buy a lot more raw commodities and deal with those raw food stuffs.

Vance Crowe [00:50:56] Well, who knows what's gonna happen. But we are watching history unfold. So if people wanted to read more about your background, like the stuff that you're into, I didn't, I did a terrible job introducing you. You are, you're at the university, you're at Purdue, right?

Ag Economist Jayson Lusk [00:51:11] Yeah, Purdue University. I'm the head of the agricultural economics department. So I blog under my name. So I've got a, a funny name, Jason with A-Y-J-A-Y-S-O-N-L-U-S k.com. And so I'll normally, you know, about once a week have something to say there. I write lots of academic papers, which probably aren't that relevant to your audience, but before this had written several popular books about food and agriculture. But, you know, I think one of the things, you know, last week, I think even on my blog, I tried to put up links to things my, my colleagues have been doing both here at Purdue and across the country. And I've been really proud, I think of the response, at least of my academic colleagues trying to at least get out whatever information we have to try to help understand what's happening, whether it's in cattle markets or retail food markets, food supply chains. So I mean, it's, you know, we're not producing more food, but we're at least trying to understand what's happening and see if there are problems we can't help, help understand and solve. And, and I look around at my university and see a variety of initiatives from engineering where people are trying to print 3D face masks to, I know we've got a group here on campus that's trying to figure out if they can set up online markets to get some of this maybe food that's in these more regional food systems, but they've lost their restaurant establishments. Can we create online marketplaces where consumers can find that?

Vance Crowe [00:52:30] Hell yeah. That's fantastic.

Ag Economist Jayson Lusk [00:52:32] So I think that's been kind of heartening to me to say, you know, people are really trying to step up in whatever talents we have trying to apply it to this problem.

Vance Crowe [00:52:41] Well, this sounds fantastic and I'm glad to hear that you guys are contributing and becoming essential in your own way. I mean, that's really what we all have to do.

Ag Economist Jayson Lusk [00:52:49] Yeah.

Vance Crowe [00:52:50] Thank you so much for joining me, and we will catch up again later, maybe in a couple weeks, we'll have some more to talk about.

Ag Economist Jayson Lusk [00:52:57] Oh, I hope so. I've, I've listened to several of your podcasts, so I'm, I'm happy to actually be a guest.

Vance Crowe [00:53:02] Good to see you, Jason.

Ag Economist Jayson Lusk [00:53:03] All right. Thanks.