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The Economics of the Meat Industry

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Meat has become a staple in the American diet, more so than ever before. In the US, meat consumption has increased by 380% in the last 60 years and other countries are following suit. Americans like to eat meat, and are second only to Australia in meat consumption per capita, outpacing most other developed countries by a significant margin (Ritchie, Roser, 2017) (Figure 1). Why then, is meat so prevalent on the American dinner table? Besides the cultural inertia ingrained in American society, meat has become increasingly affordable and accessible for the average person. People can purchase burgers or roasted chickens for pennies on the dollar because of government subsidies.

Subsidies are financial grants distributed by the government to private institutions and public entities to drive down costs, increase economic activity, and make certain industries more economically viable. Over 700 billion dollars (that’s more than a million dollars per minute) is given to farmers to help subsidize food; yet, less than 1% of that money is used to help the environment, while the majority of it goes to subsidize industries that promote deforestation and increased pollution (Carrington, 2019). Much of this money is used for direct meat production or for growing corn and soybean crops, which are primarily used for animal feed. In the US, 27% of crop calories are consumed directly while 67% is used to feed animals. Calorically, animals are prohibitively expensive as food–a hundred calories of grain produces as little as three calories of beef (Stevenson, 2015). According to the UK’s Department for Environment, Food, and Rural Affairs (DEFRA), 90% of the annual profits of farmers who graze livestock come from subsidies, as compared to the 10% for fruit farmers (Ed, 2020). This wide disparity leads to drastically higher prices for fruits and vegetables compared to meat in stores and restaurants.

In the US, $38 billion is spent on subsidizing meat (although the real number between crop, meat, dairy, business, and farmer subsidies may be in the hundreds of billions), while only 0.04%, or $17 million of that, is spent on subsidizing fruits and vegetables (Joshi et al., 2015). And while these agricultural subsidies help make food cheaper, there is a tradeoff. In 2018 and 2019, President Trump gave an additional $30 billion in subsidies in 2018 and 2019, yet cut the funding for food stamps and SNAP (Supplemental Nutrition Assistance Program) by $5 billion around the same time (Ed, 2020). While many who advocate for meat production cite its low cost for low-income households, it is an expensive and inefficient industry propped up by public taxpayer money. Experts state that the true cost of a hamburger may be closer to $40 and a steak at a restaurant would cost $200 without these subsidies (Joshi et al., 2015). [source]

May 6, 2022 8:35 pm

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