Ask an Agricultural Economist

The Freakonomics Blog at the New York Times has an interesting Q&A (based on reader-submitted questions) with an agricultural economist here, primarily focusing on agricultural subsidies. He touches on a variety of subjects that have been discussed in various threads on LTH, including the amount of increases in food prices attributable to biofuel policies, the effects of sugar tariffs, whether agricultural subsidies contribute to obesity and a number of other interesting topics.

An excerpt:

Q: How much would a gallon of milk cost tomorrow, in Chicago, if the dairy subsidies were eliminated today?

A: These days the trade barriers that raise the overall price of dairy products are no longer binding. The government does run a pricing scheme that inflates the price of drinking milk (and reduced the price of cheese and other processed products). The net effect on a gallon of milk at retail in the Chicago market is probably in the range of 20 cents or so. Joe Balagtas has looked at that question and one place to see some of his work is here.

Edited to correct typo.

Thanks for posting this, an interesting read.

I enjoyed reading his posts and appreciate that he takes a balanced approach to discussing each issue.

The impact of ethanol on food prices is a dynamic event. Studies are rolling out by the week which counter some of the points that he makes. However, there is no question that food companies like Kraft and Sara Lee are using the issue to justify price increases that are generating higher profits.

auxen1 wrote:I enjoyed reading his posts and appreciate that he takes a balanced approach to discussing each issue.

The impact of ethanol on food prices is a dynamic event. Studies are rolling out by the week which counter some of the points that he makes. However, there is no question that food companies like Kraft and Sara Lee are using the issue to justify price increases that are generating higher profits.

Could you refer us to some of those studies?

The Farm Foundation has issued a report in the last couple of weeks. USDA has commented on its assessment of the factors behind rising food prices. Kraft Foods commissioned one which I read about in the NYT....don't think that it's public.