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    Social and Economic Effects of the U.S. Food System

    Affected individuals fall into three groups: (1) people involved directly in agricultural food production (e.g., farmers); (2) people involved in the rest of the food system (e.g., processing, manufacturing, food service, and retailing); and (3) consumers. Food production, processing, and availability also can affect community-level measures, such as economic growth and social infrastructure.

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    A Framework for Assessing Effects of the Food System.

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    ContentsHardcopy Version at National Academies Press

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    5Social and Economic Effects of the U.S. Food System

    As with the environmental and health indicators discussed in earlier chapters, most social and economic outcomes reflect complex causal processes, and they can vary widely based on time period, spatial organization, market conditions, regulatory forces, and adaptive mechanisms of actors in the system. In this section, we outline major classes of social and economic effects that can be linked to characteristics of the U.S. food system and present summary information about the overall performance of the system. We focus on three broad classes of social and economic effects:

    Levels of income, wealth, and distributional equity;

    Broader indicators of quality of life, such as working conditions, job satisfaction, and freedom of choice to pursue taste and lifestyle preferences; and

    Associated impacts on worker health and well-being.

    Affected individuals fall into three groups: (1) people involved directly in agricultural food production (e.g., farmers); (2) people involved in the rest of the food system (e.g., processing, manufacturing, food service, and retailing); and (3) consumers. Food production, processing, and availability also can affect community-level measures, such as economic growth and social infrastructure.

    Although social and economic dimensions of effects are distinct, they are more closely interrelated than other dimensions. For this reason, we are presenting them in one chapter. This chapter begins with an overview of the social and economic impacts of the food system on key sectors of the food system. To discuss these impacts, select data sources and metrics are described. Tables B-1 through B-4 in Appendix B provide more details on these data sources. The committee has focused in this chapter on market-based economic effects, including measurable changes in the financial well-being of key actors in the food system and broader indicators of market performance by sector (e.g., output, efficiency), but it did not attempt to estimate non-market economic values for social impacts. However, a discussion of non-market valuation methods for environmental effects is included in Chapter 4. In addition, while the chapter identifies the importance of capturing differential impacts on distinct social groups (e.g., women, minorities, immigrants), the committee did not review the moral and ethical or legal aspects of different outcomes. Consideration of whether particular types of social and economic effects are better than others should be guided by the best available information about those effects and by the cultural, political, and ethical views of stakeholders and decision makers.

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    POTENTIAL SOCIAL AND ECONOMIC EFFECTS ON THE FOOD PRODUCTION SECTOR

    Income, Wealth, and Distributional Equity

    The food production sector includes farmers, ranchers, fishers, hired workers, their family members, and residents in the communities in which these individuals reside (primarily, but not exclusively, rural or small town). Occupations in this sector involve planting, caring for, and harvesting raw food items, livestock, and seafood (FCWA, 2012). About 40 percent of the U.S. land area is used for farming, with 2.1 million farm operations generating nearly $400 billion in sales (55 percent from crops and 45 percent from livestock) and more than $100 billion in net farm income in 2013 (ERS, 2014i; USDA, 2014b).

    Taken as a whole, the U.S. farm sector has experienced remarkable growth in output, rising by 2.5 times over the past 60 years (see Figure 5-1). More impressive is the fact that this growth in output has occurred with relatively little increase in the total combined use of factor inputs (capital, labor, purchased inputs) (Wang and Ball, 2014). The increase in output can be attributed mostly to an increase in the quality of labor, capital, and technology inputs. As a result the “factor productivity” (the amount of output per unit of input) of U.S. farming has grown by an average of 1.49 percent per year since 1948 (ERS, 2014a), although it has slowed noticeably during the past 20 years, declining to significantly less than 1 percent over the most recent decade. Declines in the rate of productivity increase have been linked to reductions in agricultural research investments (particularly by the public sector) and possible biological yield plateaus of major agricultural crops (Alston et al., 2009).

    FIGURE 5-1

    Indexes of total farm output, input use, and factor productivity in the United States, 1948-2011. SOURCES: ERS, 2014a; Wang and Ball, 2014.

    Interestingly, the mix of inputs used to produce growth in food output has changed dramatically since the mid-20th century (see Figure 5-2). Specifically, the use of labor has declined by nearly 80 percent, the use of capital inputs has remained roughly the same (a decrease of 12 percent), and the use of purchased variable inputs has more than doubled. The mix of capital inputs has also shifted, with land inputs slowly declining throughout the past 60 years but the importance of capital equipment growing rapidly through the 1970s, then declining in importance in the latter 20th century. Finally, the use of fertilizer accounts for a significant portion of the increased use of purchased inputs—growing nearly three-fold by the mid-1970s and then remaining at that level (with significant annual fluctuations) through 2011. It appears that the reduced impact in productivity growth from a decline in the use of labor and land inputs has been offset by the positive impact of increased use of other inputs (e.g., technology, computerization, fertilizer, pesticide).

    Source : www.ncbi.nlm.nih.gov

    Comparative Economic System Flashcards

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    A frozen foods company changes an ingredient to meet a new government standard. This is an example of

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    a) following a federal regulation.

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    Which is an example of regulation in the automobile industry?

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    A frozen foods company changes an ingredient to meet a new government standard. This is an example of

    a) following a federal regulation.

    Which is an example of regulation in the automobile industry?

    a) the creation of fuel-efficiency standards for cars

    In 1776, an economics book titled_______ was published to promote the concept of free enterprise.

    The Wealth of Nations

    Why does the US government create regulatory agencies? Check all that apply.

    1,4,5

    What is one downside to competition in a free-enterprise system?

    a) Consumers must be knowledgeable.

    Innovation allows producers to

    a) create goods that draw consumer attention.

    What kind of economy uses a free-enterprise system?

    c) a market economy

    Which situation is the best example of competition in an economic system?

    b) A small CD store slashed its prices to attract customers from a larger store that sells CDs and DVDs.

    What are aspects of a free-enterprise system? Check all that apply.

    3,4,5

    A restaurant that creates a new type of sandwich is using

    __________ as a method of competition.

    innovation

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    Economic Impact Analyses of FDA Regulations

    Economic Impact Analyses of FDA Regulations performed by the FDA Economics Staff

    Economic Impact Analyses of FDA Regulations

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    The Food and Drug Administration conducts economic analyses of all important proposed and final regulations. Each economic analysis includes an assessment of the costs, benefits, and cost-effectiveness of the action, as well as assessments of the costs, benefits and cost-effectiveness of the most promising alternative actions. The full economic impact analyses of significant FDA regulations are no longer (as of April 2012) published in the Federal Register but are available on this site.

    To compare the effects of proposed regulations with the effects of promising alternatives, we estimate both the incremental benefits and costs associated with increasing the stringency of regulation and the incremental foregone benefits and cost savings associated with decreasing the stringency of regulation.

    The information on incremental costs and benefits helps FDA management choose which controls to include and which to exclude when presented with the usual smorgasbord of ways to deal with a public health problem. The economic analysis may also point out ways to increase the cost-effectiveness of regulation. For example, the economic analysis may demonstrate that the incremental costs associated with a particular provision are very high, with little or no incremental public health effects. Identifying such provisions enables the FDA to revise proposed regulations in ways that substantially decrease costs without appreciably reducing public health benefits.

    Recent Regulatory Impact Analyses

    Recent Regulatory Impact Analyses 2022

    Medical Devices; Quality System Regulation Amendments (Proposed Rule) Preliminary Regulatory Impact Analysis - February 23, 2022

    National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers (Proposed Rule) - February 4, 2022

    Food Additives: Food Contact Substance Notification That Is No Longer Effective (Proposed Rule) Preliminary Regulatory Impact Analysis- January 26, 2022

    Medical Devices; Immunology and Microbiology Devices; Classification of Human Leukocyte, Neutrophil and Platelet Antigen and Antibody Tests (Proposed Rule) Preliminary Regulatory Impact Analysis- January 21, 2022

    Amendment to Add a New Method for the Analysis of Sulfites in Food (Final Rule) Final Regulatory Impact Analysis (FRIA)- January 18, 2022

    Revocation of the Human Tissue Intended for Transplantation Regulations and Human Dura Mater (Final Rule) Regulatory Impact Analysis- January 13, 2022

    French Dressing; Revocation of a Standard of Identity (Final Rule) Final Regulatory Impact Analysis (FRIA) - January 13, 2022

    Revised Procedures for the Announcement of Approvals and Denials of Premarket Approval Applications and Humanitarian Device Exemption Applications (Final Rule) Regulatory Impact Analysis- January 13, 2022

    2021

    Classification of Spinal Sphere Devices (Proposed Rule) - December 16, 2021

    Laboratory Accreditation for Analyses of Foods, Final Regulatory Impact Analysis - December 3, 2021

    Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption Relating to Agricultural Water (Proposed Rule) Preliminary Regulatory Impact Analysis - December 2, 2021

    OTC Hearing Aids (Proposed Rule)- October 20, 2021

    Medical Device De Novo Classification Process (Final Rule) - October 5, 2021

    Premarket Tobacco Product Applications and Recordkeeping Requirements (Final Rule) Regulatory Impact Analysis - October 5, 2021

    Content and Format of Substantial Equivalence Reports; Food and Drug Administration Actions on Substantial Equivalence Reports; Final Rule; Final Regulatory Impact Analysis - October 4, 2021

    Import Tolerances for Residues of Unapproved New Animal Drugs in Food (Final Rule) - September 21, 2021

    Regulations Regarding "Intended Uses" (Final Rule)- August 2, 2021

    2020

    Revocation of the Human Tissue Intended for Transplantation Regulations and Human Dura Mater (Proposed Rule) - December 21, 2020

    French Dressing; Proposed Revocation of a Standard of Identity (Proposed Rule) Preliminary Regulatory Impact Analysis (PRIA) - December 21, 2020

    Frozen Cherry Pie; Proposed Revocation of a Standard of Identity and a Standard of Quality (Proposed Rule) - December 18, 2020

    Importation of Prescription Drugs (Final Rule) - September 25, 2020

    Intended Uses (Proposed Rule) - September 23, 2020

    Requirements for Additional Traceability Records for Certain Foods (Proposed Rule) - September 23, 2020

    Revocation of the Test for Mycoplasma (Final Rule) - August 21, 2020

    Food Labeling; Gluten-Free Labeling of Fermented or Hydrolyzed Foods (Final Rule) - August 13, 2020

    Submission of Food and Drug Administration Import Data in the Automated Commercial Environment for Veterinary Devices (Proposed Rule) - August 3, 2020

    Postmarketing Safety Reports for Approved New Animal Drugs; Electronic Submission Requirements (Final Rule) - July 29, 2020

    Annual Summary Reporting Requirements Under the Right to Try Act (Proposed Rule) - July 24, 2020

    Tobacco Products; Required Warnings for Cigarette Packages and Advertisements (Final Rule) - March 18, 2020

    Banned Devices; Electrical Stimulation Devices for Self-Injurious or Aggressive Behavior (Final Rule) - March 6, 2020

    Definition of the Term “Biological Product” (Final Rule) - February 21, 2020

    Source : www.fda.gov

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