Food Surplus During Covid-19

Lesser Known Sustainable Solutions to Food Surplus During Covid-19

When a country is simultaneously going hungry from a pandemic while its farmers are throwing away millions of pounds of fresh food, there is something grotesquely wrong. As a result of the Covid-19 pandemic, I see shortages of food at grocery stores, hear about long lines at food pantries, and read about communities in poverty going dangerously hungry.

And yet, because schools, restaurants, and other businesses have closed, farmers have very few people to sell their fresh food to, and without easy ways to resell to a new consumer base, they have destroyed their crops. David Yaffe-Bellany and Michael Corkery describe this issue in a recent New York Times article, “Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic” (2020). They write of the laws of supply and demand, the costs of trying to sell to new consumers, and farmers’ painful decisions to destroy their unsold food. While the issues addressed in the article are backed up with economic reasoning, Yaffe-Bellany and Corkery should give the environmental and long-term impacts of the food surplus more significance. If farmers prioritize investment in more sustainable production and receive more government support, then they can use this emergency as an opportunity to prepare for a more productive and preventative future while helping to lessen America’s hunger problem.

Many farmers are plowing over fields of ripe beans, smashing thousands of eggs, dumping tanks of milk into lagoons, and burying millions of pounds of onions into pits because of the laws of supply and demand.

Represented in Figure 1, the supply of fresh food, especially produce, milk, and eggs is very inelastic. Farmers must plant crops or raise livestock weeks in advance with the expectation that when they are full grown, the demand for the good has not changed. If a pandemic hits, not only will it take weeks to change supply, but farmers are hesitant to, because businesses could reopen in a few months and demand could rise again. The demand curve shifted to the left because schools and businesses are closed and no longer buying the food. Yaffe-Bellany and Corkery also note that people consume fewer vegetables at home than they would in a restaurant, which further decreases demand. Now, the equilibrium price and quantity have fallen, but the supply of food being produced is still at Q1, so there is a surplus in food that is the size of the distance between Q2 and Q1.

Farmers must also determine the costs of either transitioning their production (so they can continue selling their food) or destroying the surplus. Yaffe-Bellany and Corkery conclude that while many farmers tried to find homes for the surplus food, the costs of repackaging or transporting the food was too high. By using economic reasoning, this decision is understandable. Farmers find a profit maximizing quantity by comparing their marginal costs and marginal revenue. If they suddenly have to purchase new packaging (such as gallon jugs or small bags for grocery stores) or spend more per unit to transport food to pantries, then their marginal cost and average total cost per unit will rise, and they will likely be faced with negative profits. The article indirectly concludes that farmers have calculated that the costs of destroying their food is less than the costs of transitioning.

The cost of tossing food should be higher than the cost of transitioning because environmental and health externalities should be factored into decision making. When farmers weigh the costs of destroying their food, they are trying to save money for their business, since they simply may be unable to afford a storage refrigerator or a truck delivery service to save their food. This is understandable. However, what the farmers in this article do not weigh are the increased externalities that the decision to toss their food place on third parties. For example, when farmers dump milk into lagoons, they are polluting these natural ecosystems. When farmers destroy crops, they forgo the opportunity to provide a hungry family with food. In the long run, these decisions may be more costly for the government and for the country’s productivity. Now, more money will need to be spent to bring the lagoons back to health or save increased numbers of endangered species. Those who are malnourished will have more health problems, which costs the health system more. These individuals may become less productive in society, which decreases human capital and national growth. However, I do not believe that we should only burden struggling farmers with this task to save their food. With government support, collaboration between different industries, and increased awareness of the issue, farmers can receive the encouragement and resources they need to save their surplus crops.

The first possible solution to this surplus emergency is a subsidy. While the implementation of a subsidy would require help from the government, it is an attractive solution because it helps farmers sell their food and makes groceries more affordable for a consumer base that is largely facing financial hardships. As shown in Figure 1, this subsidy is an amount of money granted by the government to the farming industry that keeps prices low enough that more people can afford them. Without the subsidy, consumers would only demand equilibrium Quantity 2, but with the subsidy, the price consumers pay is lower, so now more are willing to pay, and they now demand equilibrium Quantity 3 = Quantity 1. Consumers now have a larger consumer surplus, since the area between the Demand 2 curve and the price increased from P2 to Pcons. Farmers also receive the amount of money that they would have normally gotten before the demand curve fell. One possible difficulty that subsidies may face is that the consumer base must be willing to purchase more produce, especially when they already eat fewer vegetables at home. However, if leaders incentivise consumers to buy this cheaper produce and encourage a healthier eating style at home, then this demand could be met.

Another creative solution that involves farmers’ flexibility and government support is to invest in technologies that make their food more shelf stable. Currently, interest rates are extremely low at .05% (FRED 2020), which means that more farmers should be able to start projects with a positive net present value. Dairy farmers, for example, can easily take out loans and invest in the ultra-high temperature technology to make their milk non refrigerated. Dairy farmers in Europe and South America have already made the transition, and their milk can be stored for up to six months (Robb 2014). The milk would be easier to transport and store in food pantries, which have been limited by their refrigerator storage capacity (Yaffe-Bellany and Corkery 2020). Even more, I’d imagine that shelf stable milk and eggs are wasted less in households and grocery stores (because it goes bad less frequently) which saves money and reduces the demand for high carbon-emitting cows.

Another under-considered solution to finding a home for this surplus food is for farmers to sell their wholesale produce and animal products directly to the public. This solution was not even considered in the article, but it has gained popularity among farmers in recent weeks. Wholesalers, looking for new consumers and ways to avoid firing their employees, began reselling their goods to families for extremely discounted prices (Valys 2020). With options ranging from pickup stations to home delivery, customers are finding that they prefer this method of shopping because it is less stressful and risky than a crowded grocery store. Some farmers are even avoiding firing their truck drivers by creating their own online and door-delivery program (Klein 2020) and many are finding the business model so promising that they are considering continuing this method of sales after the pandemic ends (Adams and Warerkar 2020). This solution avoids the need to repurpose plants to repackage food in smaller containers, lessens public food shortages, keeps farmers from going bankrupt, and rekindles an increasingly distancing relationship between the farmer and the consumer.

This painful and ironic problem of surplus amidst hunger exposes the real limitations of an unsustainable agricultural model. It is because farms are single-crop, so large scale, and receiving little help from the government, that makes it difficult for them to adapt quickly. However, there are creative solutions to this problem, such as implementing subsidies, going shelf-stable, selling wholesale to the public, and finding long-term benefits to donating surplus. If farmers are able to receive support in making long-term choices and investments, then they can reduce their food waste, help mitigate the impacts of the pandemic, and make their production more sustainable for years to come.

Works Cited

Adams, Erika, and Tanay Warerkar. “New Yorkers Can Now Buy Groceries from Michelin-Starred Restaurant Suppliers.” Eater NY, April 1, 2020. https://ny.eater.com/2020/4/1/21202010/nyc-restaurant-grocery-coronavirus-wholesale.

“Effective Federal Funds Rate.” FRED, May 1, 2020. https://fred.stlouisfed.org/series/FEDFUNDS.

Klein, Michael. “As Restaurants Idle, Food Distributors Now Sell High-Quality Meat and Produce Directly to Consumers.” The Philadelphia Inquirer, April 4, 2020. https://www.inquirer.com/health/coronavirus/coronavirus-food-buy-free-delivery-distributors-philadelphia-nj-restaurants-retail-20200331.html.

Robb, Alice. “Save the World: Buy This Weird Milk in a Box.” The New Republic, August 15, 2014. https://newrepublic.com/article/119086/europes-unrefrigerated-uht-milk-could-help-save-environment.

Valys, Phillip. “Fear in the Aisles: Amid Coronavirus, Shoppers Ditch Grocery Stores for South Florida Farms.” South Florida SunSentinel, April 2, 2020. https://www.sun-sentinel.com/coronavirus/fl-ne-coronavirus-grocery-store-paranoia-farms-20200402-5flvoviw25dr3b6fcrrokypa3a-story.html.

Yaffe-bellany, David, and Michael Corkery. “Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic.” The New York Times. The New York Times, April 11, 2020. https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html?action=click&module=Top%20Stories&pgtype=Homepage

This blog post was taken and edited from a school paper.