MEATONOMICS

How the Rigged Economics of Meat and Dairy Make You Consume Too Much-and How to Eat Better, Live Longer, and Spend Smarter

Red Wheel/Weiser, LLC

Contents

The Brave New World of Government Marketing

In his 1932 novel Brave New World, Aldous Huxley imagined a future in whichhumans exist solely to support the economy and are conditioned from birth to buythings. Government bureaucrats manipulate the sheep-like citizens with drugs andslogans to make them consume as much as possible. In Huxley's vision, 26th-centuryconsumers learn that "ending is better than mending" and "the morestitches, the less riches"—that is, buying new things is better than fixing oldones. But for US consumers, this eerie futuristic fantasy—with government usingmarketing slogans and other undue influence to drive consumption—has arrived afew centuries early. This chapter explores government marketing as a feature ofmeatonomics and considers its consequences for consumers.

Checkoff Programs: Unseen and Unknown, But Felt Everywhere

In the Brave New World of the 21st century—where big box stores and mega marketsdominate the landscape—our government uses innocuous-sounding "checkoff"programs to encourage us to buy more animal foods and other goods. Themechanism's name persists from a time when the assessments were voluntary andproducers willing to opt in participated by simply checking a box. Nowadays, theprograms are tax-like and mandatory, even though the benign checkoff monikerremains.

The way they work is simple: Congress slaps a small assessment (less than 1percent of wholesale price) on certain commodities, and the collected funds areused to pay for research and marketing programs that boost the goods' sales. Sowhen animal food producers collect $1 per head of cattle, $0.40 per $100 ofpork, or $0.15 per 100 pounds of dairy, they pass those funds on to nationalmarketing organizations. The proceeds are allocated among state and regionalindustry organizations throughout the country. There aren't many Boston TeaParty–like protests when it comes to making the payments—probably because mostconsumers don't know about checkoffs and most producers think their trade groupsput the money to good use. These trade groups don't equivocate much about whatthey do or why they exist. The Kentucky Cattlemen's Association, for example,keeps it simple, saying its business purpose is "Promotion of the beefindustry."

Although few Americans have heard of checkoff programs, we've all heard or seenthe catchy, feel-good slogans they've generated:

Beef. It's What's for Dinner.

Milk. It Does a Body Good.

Pork. The Other White Meat.

Written, spoken, or sung—and flashed across every medium, including print,radio, TV, and the Internet—these statements have bombarded American consumersfor decades. The echo of one particularly snappy jingle that went with aubiquitous 1990s commercial—"The Incredible, Edible Egg"—still rattles in mybrain. And while that phrase and many others predate social networking, theypersist because their sticky messaging fits in perfectly with today's meme-saturated,web-dominated world. Like an ink stamp, these messages imprintthemselves with authority on our subconscious and become part of our beliefsystem. What's for dinner? Without even knowing why, many think, Beef.

Across the board, animal food checkoff programs are remarkably effective atmaking us buy more than we would otherwise. According to the USDA, for eachdollar of checkoff funds spent promoting animal foods, "the return on investmentcan range as high as $18." The beef checkoff program raises sales by $5 percheckoff dollar spent. The pork checkoff program drives $14 in sales per dollarspent. While it may not boast a memorable motto, the lamb checkoff provides anunusually huge boost, driving additional sales of $38, or seven extra pounds oflamb, for each dollar spent on promotion. But the biggest winner might be thedairy industry, which recently boasted that over a year and a half, checkoffefforts contributed to more than 7 billion additional pounds of milk sold.That's an extra forty-seven servings of dairy per person in the United States—aboveand beyond the hundreds of servings we would have consumed anyway duringthe period. Clearly, milk is up to more than just doing a body good.

All told, these programs provide funding of $557 million yearly for animal foodproducers to promote their goods. This massive, government-mandated marketingbudget gives the meatonomic system something few other microeconomic systemshave: an exceedingly deep marketing war chest, deployed to boost sales of allgoods from all producers in the program. A few other commodities, like cottonand soybeans, have checkoff programs of their own. Yet in every other industry,except for those lucky enough to have a checkoff program, individualcorporations must fork out their own funds to increase sales rather than rely ongovernment programs to prop up their numbers. With meatonomics, on the otherhand, the effect of checkoff programs is that we all buy more of nearly everyconceivable animal food than we would otherwise. Like a diner with an insatiableappetite, the animal food industry relishes the higher sales that result. Dairypromoters brag that since their checkoff program started in 1983, annual percapita consumption of milk "has climbed 12 percent to 620 pounds."

Some say checkoff programs have been unfairly linked to government and areactually just the tools of good old-fashioned capitalism. They argue thesecheckoff arrangements involve only private firms who pool advertising monieswithout government participation, and their mission and methods are no differentfrom those of any private advertiser. However, the US Supreme Court decisivelyrejected this position in a 2005 case involving the beef checkoff. In Johanns v.Livestock Marketing Association, beef industry participants who disagreed withthe message of the latest beef campaign claimed that being forced to fund itviolated their right of free speech. The Supreme Court disagreed, holding themessage was actually government speech (a form of speech the government can makeothers support). The court said:

The message set out in the beef promotions is from beginning to end the messageestablished by the Federal Government.... Congress and the Secretary [of theUSDA] have set out the overarching message and some of its elements, and theyhave left the development of the remaining details to an entity whose membersare answerable to the Secretary (and in some cases appointed by him as well).

Moreover, the record demonstrates that the Secretary exercises final approvalauthority over every word used in every promotional campaign. All proposedpromotional messages are reviewed by [USDA] Department officials both forsubstance and for wording, and some proposals are rejected or rewritten by theDepartment.... Nor is the Secretary's role limited to final approval orrejection: Officials of the Department also attend and participate in the openmeetings at which proposals are developed.

This crystal-clear language from the highest court in the land leaves littledoubt that the beef checkoff program, and the messages it generates, are theproduct of the federal government. Simple logic shows that other animal foodcheckoff programs, which were established by Congress in the same way and aresimilarly administered by the USDA, are equally the mouthpieces of the federalgovernment. So when one of these organizations speaks—regardless of the productit's hawking—it may say it's the National Pork Board, but the background soundsyou're hearing are the imposing bass tones of the US government.

In fact, the government's continued regulatory involvement is a necessarycomponent for mandatory checkoffs to remain legally and operationally viable. IfCongress simply created a checkoff program and then stepped aside to letindustry run it, the First Amendment's free speech protections would likelyprevent the industry majority from bullying dissenters into participating in itsmessage. Under those circumstances, forget the government speech exception: itwouldn't apply and individual participants could opt out. The result would be acheckoff program that is in fact optional, not mandatory.

Why does that matter? Because such a scenario would likely undercut the force ofthe messaging. As research on optional checkoffs shows, economic free riders—thosegroup members who opt out of paying for all the snazzy commercials butstill enjoy their benefits—significantly lower the effectiveness of suchprograms. Ultimately, a lack of government involvement would likely lead tothe decline—or maybe the end—of checkoffs.

Checking Out Checkoffs

Few people have heard of checkoffs, and fewer still have considered theireffects. Yet these programs have a number of important consequences, some goodand some bad, that merit attention. First and foremost, checkoffs stimulate theeconomy. By boosting sales, checkoffs create jobs and drive spending. As theUSDA puts it, "The fundamental goal of every checkoff program is to increasecommodity demand, which increases the potential long-term economic growth of allsectors of the industry and the communities in which they operate."

With a few calculations, we can estimate the overall economic effect ofcheckoffs. It's a full-fledged bonanza: As table 1.1 shows, the USDA's figuresfor return on investment from checkoff funds suggest that checkoffs boost salesof animal foods by about $4.6 billion. There's also a multiplier effectrelated to this sales increase: checkoffs create new jobs, and that in turnincreases spending. Applying the typical multiplier used by researchers (0.77)to the sales total yields $8.2 billion in total economic stimulus related toanimal food checkoffs. Not bad, but what about the other side of the ledger?

For starters, animal food production generates large external costs—expensesthat producers impose on society instead of paying themselves. In the book'ssecond half, we'll see that for each $1 of animal food sold at retail, theindustry generates about $1.70 in external costs. Applying this ratio to the$4.6 billion sales figure reveals that checkoffs generate roughly $7.8 billionin external costs not reflected in the retail prices of the goods they promote.That's nearly equal to the economic activity they generate. As with many of theinteresting equations that meatonomics presents, the $64,000 question is whetherthe trade-off is worth it.

Checkoffs, moreover, cause us to buy more animal foods than we would otherwise.Yet judging from the data, Americans already eat plenty of these foods and don'tneed more. Teenagers, for example, consume 78 percent more saturated fat and 48percent more cholesterol—both linked primarily or exclusively to animal foods—thangovernment guidelines recommend. One in three US teenagers is obese oroverweight, triple the rate in 1963, and a growing number have diabetes or highblood pressure—diseases directly linked to meat and dairy consumption andformerly seen only rarely before adulthood.

Nevertheless, the USDA keeps urging these kids to eat more of the very foodsthat help make them fat and unhealthy. The huge milk promotion Fuel Up to Play60, for instance, enjoys more than $50 million yearly in government-mandatedfunding and reaches 36 million students in seventy thousand schools. Andcheckoff funding helped the Dairy Board team with Domino's Pizza to offer pizzasin two thousand US schools. Yet it's not just kids who overindulge; as table2.1 in chapter 2 shows, adult Americans also routinely consume more animal foodsthan the USDA recommends.

Weird Science

With annual promotional funds of $389 million, the dairy industry enjoys nearlythree times the checkoff spending of all fruit and vegetable producers combined(not to mention a marketing budget that would be the envy of many a Hollywoodstudio). To look at it another way, dairy spends more on advertising in oneweek than the blueberry, mango, watermelon, and mushroom industries spendtogether in a year. Under federal law, checkoff funds are intended to be usedfor both promotion and research. Thus, the National Dairy Council, the largestof dairy's many checkoff-funded arms, boasts that it "partners with topuniversities and other research facilities across the United States to supportnutrition research efforts." Dairy research, funded by at least $58 millionyearly, is largely focused on finding ways to convince consumers that dairy ishealthy.

Since industry-funded research might be suspect, dairy takes steps to ensure itsresearch appears unbiased. For scientific credibility, research must bepublished in a respected, peer-reviewed journal. But here's the rub: theNational Dairy Council ensures access to such journals, and the benevolence oftheir editorial boards, by donating cash to a number of nutritionalorganizations. These include the American Society for Nutrition (whose othercorporate sponsors include Dannon and McDonald's) and the Academy of Nutritionand Dietetics (brought to you by the National Cattlemen's Beef Association).Both organizations publish prestigious research journals.

The "best source for the most accurate, credible and timely food and nutritioninformation," boasts the website of the Academy of Nutrition and Dietetics. Butwhat's left unsaid is the Academy, formerly known as the American DieteticAssociation (ADA), has a particularly cozy relationship with dairy. As theworld's largest organization of food and nutrition professionals, with overseventy thousand members, it's easy to see how food industry players can benefitfrom access to this influential group. This begs the question, just how accurateand credible is the organization's nutrition advice?

In a 2007 press release discussing a major increase in the size of the NationalDairy Council's funding commitment, the ADA said the sponsorship arrangementgave dairy producers "prominent access to key influencers, thought leaders anddecision-makers in the food and nutrition marketplace." The release went on toillustrate, with candor, how the relationship benefits the Dairy Council. Onequid pro quo of past sponsorship apparently included the ADA's endorsement ofthe Dairy Council's "3-A-Day of Dairy" campaign, which educates consumers andhealth professionals about the nutrition and health benefits of consuming threeservings of fat-free or low-fat milk, cheese and yogurt a day." The ADArelease didn't disclose the extent of the Dairy Council's generosity, butjudging from the size of other contributions from animal food producers tononprofits, it's safe to assume it wasn't insignificant. The National Livestockand Meat Board, for example, gave $189,000 in one year to the American HeartAssociation.

Dairy also seeks to extend its scientific influence by installing its people onboards, committees, and editorial panels of nutritional organizations and theirjournals. One of these people is Gregory Miller, who serves in multiplecapacities—president of the Dairy Research Institute, executive vice presidentof the Dairy Council, and committee chair for the American Society forNutrition.

Miller and I spoke about dairy research. Among other things, I was curious aboutstudies that have looked at industry influence in the scientific process. Thesestudies find that industry-funded research is up to four times more likely toreach conclusions favorable to the sponsor than unfavorable. In one of thesestudies, researchers found that "systematic bias favors products which are madeby the company funding the research."

According to Miller, the dairy industry provides a sort of public servicethrough its support of nutrition research. "With government funding continuingto shrink," Miller told me, "industry has a responsibility to help fund some ofthe research that needs to be done out there." In light of such apparentlyselfless motives, who could accuse the dairy industry of bias? Furthermore,Miller assured me dairy research is not biased, twice using the Fox News slogan"fair and balanced" to drive home the point.

But what about the study that found industry-supported research is four timesmore likely to reach conclusions favorable to its sponsor? "That study design issomewhat flawed," Miller told me. "I would take it with a grain of salt."

Miller sent me a number of published articles from industry-funded research.These studies have titles like "Dairy Calcium Intake, Serum Vitamin D, andSuccessful Weight Loss" and, even catchier, "Drinking Flavored or Plain Milk isPositively Associated with Nutrient Intake and Is Not Associated with AdverseEffects on Weight Status in US Children and Adolescents." For anyone interestedin just how fair and balanced this research is, a look at one study isenlightening.

In 2010, researcher Patty Siri-Tarino of the Children's Hospital OaklandResearch Institute and three colleagues published an article that foundconsumption of saturated fat does not cause heart disease. This article'ssurprising conclusion runs contrary to a significant and consistent line ofpublished research that finds exactly the opposite—that dietary saturated fatcauses heart disease. Not surprisingly, the news that eating fat doesn't leadto heart disease hit the blogs like celebrity wedding gossip. The animal foodindustry now trumpets the Siri-Tarino study as one of several said to debunk the"myth" that saturated fat is unhealthy.