An Analysis of the Costs and Benefits to Consumers and Growers from the Consumption of Recommended Amounts and Types of Fruits

An Analysis of the Private Costs and Benefits to Consumers and Growers from Eating Recommended Amounts and Types of Fruits and Vegetables for Cancer Prevention

EXECUTIVE SUMMARY

This study examines the direct economic benefits and costs of Californian consumers adopting four alternative recommended diets: the very minimum 5-a-day recommendation for fruits and vegetables, the 5-a-day commodity sub-group recommendations for a cancer prevention diet, the 7-a-day minimum recommendation for men and active women, and the 7-a-day commodity sub-group recommendations for a cancer prevention diet. The study does not analyze the health consequences of these dietary changes, but focuses on the direct economic consequences from changes in quantities demanded and supplied, and on price responses. This study also examines how changes in fruit and vegetable consumption might affect the use of the land, labor, and water resources used in farm production.

Increased consumption of fruits and vegetables has been linked to a decrease in the risk of cancer. In a review of 196 epidemiology studies, scientists determined that the link between fruit and vegetable consumption, and a lower incidence of cancer was probable (WCRF and AIC 1997). In addition, convincing evidence exists linking the consumption of specific fruit and vegetable groups to a reduction in certain types of cancers. Therefore, the cancer risk reduction diet provides recommendations for the composition of fruit and vegetable consumption, as well as the total amount.

While the minimum recommendations for fruit and vegetable consumption in general are 2 fruit servings and 3 vegetable servings a day, the USDA minimum recommendations for men and active women are 3 fruit servings and 4 vegetable servings a day (McNamara et al. 1999). The more specific cancer prevention recommendations for the 5-a-day program for fruit are at least 1 serving from the citrus/berry/melon group and at least 1 additional serving of any fruit. For vegetables, the recommendations are at least 1 serving of dark colored vegetables, 1 serving of salad, 0.5 servings of a starchy vegetable, at least 0.5 servings of cruciferous vegetables, and 0.3 servings of tomato. The 7-a-day cancer prevention recommendations add an additional serving of any fruit and an additional 0.7 servings of any vegetable.

Despite the known benefits, many people do not eat recommended levels of fruits and vegetables. In some cases the difference between actual and recommended consumption is quite large. Based on data from the California Survey of Dietary Practices, the consumption of dark green and orange vegetables by people in low-income households would need to increase by 307 percent in order to achieve the recommended levels in the 7-a-day cancer prevention program.

The shift in quantity demanded toward more fruits and vegetables would be met through increases in supply of produce from several market channels. These include imports from other regions in the U.S. and other countries, and increased production within California. The ability of growers to increase production depends on the availability of resources, such as land, labor and other purchased inputs, at their disposal. An increase in the demand for fruits and vegetables affects prices, which in turn causes feedback effects on quantity demanded and supplied. To calculate the new prices and market supply a market model is developed that links supply and demand in the final market, to the supply and demand in the marketing sector, to grower production, to supply and demand in agricultural input markets.

Percentage Increase in Quantity Demanded Needed to Reach Each Recommended Level
	5-a-day		5-a-day cp^b		7-a-day		7-a-day cp
	Income Level ^a
	Low	High	Low	High	Low	High	Low	High
Citrus-Berry-Melon	8	7	35	32	62	60	92	87
Other Fruit	8	7	-10	-10	62	60	42	42
Starchy Vegetables	75	50	121	92	134	100	157	120
Salad	75	50	147	85	134	100	187	113
Other Vegetable	75	50	-30	-34	134	100	16	15
Tomatoes	75	50	19	6	134	100	39	21
Dark Green and Orange	75	50	250	226	134	100	307	275
Cruciferous	75	50	106	75	134	100	139	101
Potatoes	-67	-69	-59	-60	-56	-58	-52	-54
^aLow income is less than $15,000 a year. High income is equal to or greater than $15,000 a year. ^bAs noted in the text, the cp (cancer prevention) diet is more specific than the general fruit and vegetable recommendations.

Main Results

Even though the shift in quantity demanded by Californians is large in percentage terms, it is small relative to the total market for produce in the U.S., and smaller yet when the potential expansion of supply from imports is considered. Therefore, the implied changes in U.S. market prices are relatively small. This is because Californians only make up 12 percent of the total U.S. market, and when prices rise, there is a decrease in consumption by people in the rest of the U.S. Furthermore, slightly higher prices in the U.S. market attract additional imports. For commodities with a large share of market supply traded internationally, the ability to increase imports or decrease exports are a significant factor in keeping the change in market prices relatively low.

Consumers substitute away from the commodities with the greatest increase in prices, and into the commodities with the lowest increase in prices. This affects the projected changes in consumption patterns as people shift into eating better diets. Consumption of some items (grapefruit, bananas, pineapples, plums and prunes) is actually higher than the initial increase in demand for Californians and increases for people in the rest of the U.S., even though prices for those commodities are also higher. While the consumption of some items is higher, with higher prices for all fruits and vegetables, total fruit and vegetable consumption is slightly less than the recommended levels for Californians, and decreases for people living in the rest of the U.S.

Net economic gains for California consumers are large, with the benefits coming through the assumed large increase in willingness to pay for the increased quantity demanded for fruits and vegetables. The table below shows that depending on the dietary scenario, the annual net benefits range from $14 billion to $49 billion. The main benefit is due simply to the assumption that consumers recognize the benefits of increasing their consumption of the specified fruits and vegetables, and adjust consumption accordingly. However, the increased consumption by Californians causes prices to rise, which imposes a cost on consumers. Annual consumer surplus for people in the rest of U.S. declines by $1.8 billion to $6.6 billion due to higher prices and lower consumption realized by this group. The calculation of the net benefits and losses to consumers also omits the benefits and losses from a change in consumption of other goods such as snack foods and other food items as Californians switch into eating more fruits and vegetables.

The gains to growers in California are $316 million to $836 million a year. Growers in the rest of the U.S. benefit by $144 million to $712 million a year. California growers benefit more under the cancer prevention scenarios because many of the crops that have the greatest increases in demand in the cancer prevention scenarios (lettuce, broccoli, processed tomatoes, etc.) are grown primarily in California.

The sum of net benefits to all consumers and growers in the U.S. ranges from $12 billion to $44 billion a year. This total recognizes that growers gain from higher prices, consumers in California gain from assumed benefits of increased consumption of a healthier diet, and consumers in the rest of the U.S. face losses due to higher prices. Additional results for consumers and growers when growers have more flexibility in adjusting to changes in prices are discussed in the text of the report.

Total Change in Surplus (in millions)
	5-a-day	5-a-day cp	7-a-day	7-a-day cp

California
Low-income consumers	2,083	2,258	5,858	4,785
High-income consumers	11,894	13,978	43,043	35,131
Growers	316	464	788	836
All	14,296	16,703	49,687	40,753

Rest of the U.S.
Low-income consumers	-233	-161	-674	-521
High-income consumers	-2,123	-1,615	-5,952	-4,713
Growers	144	152	712	606
All	-2,214	-1,624	-5,913	-4,629

Total
Low-income consumers	1,851	2,096	5,182	4,265
High-income consumers	9,772	12,367	37,090	30,418
Growers	460	619	1,498	1,442
All	12,080	15,080	43,773	36,124

INTRODUCTION

This study estimates the economic impact on producers and consumers in California, and in the rest of the U.S., from the increase in demand for fruits and vegetables that would have to occur in order for Californians to increase their intake of fruits and vegetables to meet recommendations for a cancer-prevention diet. That impact is measured in changes in the prices of fruits and vegetables, and quantities consumed and produced, that translate easily into net benefit measures. Consumers will pay higher prices for produce, but will of course benefit from healthier diets. This study estimates the effects on to consumers and producers from changes in prices and quantities, but the health-related benefits to consumers and to society from healthier diets are beyond the scope of the study.

Increased consumption of fruits and vegetables has been linked to a decrease in the risk of cancer. In a review of 196 epidemiology studies, scientists determined that the link between fruit and vegetable consumption and a lower incidence of cancer was probable (World Cancer Research Fund, 1997). In addition, convincing evidence exists linking the consumption of specific fruit and vegetable groups to reductions in certain types of cancers. For example, eating dark vegetables has been associated with a lower incidence of lung and stomach cancers (World Cancer Research Fund, 1997). Therefore, the cancer risk reduction diet provides recommendations for the composition of fruit and vegetable consumption, as well as the total level.

Four scenarios are developed in this study to meet different minimum targeted consumption levels. The first is a general 5-a-day recommendation, the second scenario is for more specific food subgroups within the 5-a-day recommendation, the third is a general 7-a-day recommendation, and the final scenario is for specific food subgroups within the 7-a-day recommendation. Because people with lower incomes eat fewer fruits and vegetables than do people with higher incomes, the change in eating habits and the associated benefits for individuals with lower incomes who move to a diet with more fruits and vegetables may be greater. Consequently, this study distinguishes between people living in lower income households (less than $15,000 a year) and people living in higher income households (more than $15,000 a year). That level of income seems to correspond to a shift in consumption patterns, representing a turning point in the number of servings consumed per day, as income rises.

A shift in consumption patterns to the recommended levels would cause the demand for fruits and vegetables to rise significantly, leading to higher prices and increased production, shifting the use of agricultural resources (such as land, labor, and water) into the production of those commodities, and benefiting the entire agricultural sector. Californians consume fruits and vegetables produced throughout the U.S. and in other countries. Thus, it follows that growers in both California and elsewhere benefit from the higher prices and increased production, even though only the demand by Californians is increasing, in the hypothetical scenario that we examine in this report.

Previous evaluations of the societal benefits of eating more fruits and vegetables have focused on the reductions in health-care expenditures from a reduction in chronic diseases associated with poor diets, including but not limited to some cancers, diabetes, and heart disease. We take it as a given that healthier diets are desirable, and identify the extent to which agricultural producers benefit from such an outcome. This study represents the first attempt to address the effect on growers who could expect to gain from such an increase. Such a benefit to producers might justify additional public sector investment in promoting healthier diets. Much like the situation with generic advertising of specific commodities, individual producers and even entire industries have limited incentives to invest in promoting healthier diets; there is an underinvestment in promoting such messages by industry, since producers capture only a portion of the benefits to society.

Without an increase in consumer incomes, increasing the consumption of fruits and vegetables means decreasing the consumption of at least one other product, whether a less healthy food or any other item. The effect of such a compensating reduction in other purchases, in the absence of any change in total spending by consumers, is beyond the scope of the present study, which considers only fruits and vegetables. Consumer benefits are therefore complicated by uncertainty over both the dollar value of health benefits and the nature of adjustments in other spending. However, we report partial effects on consumer benefits, based on the fruit and vegetable markets.

FRUIT AND VEGETABLE RECOMMENDATIONS

The USDA’s minimum recommendations for fruit and vegetable general consumption for everyone are 5 servings of fruits and vegetables a day, with 2 servings as fruit and 3 as vegetables (Table 1) (USDA & USDHHS 1996; Young and Kantor 1999). Because some fruits and vegetables are higher in the nutrients and phytochemicals that appear to reduce the risk of cancer, minimum recommendations for specific subgroups were expanded on by the Cancer Prevention and Nutrition Services (CPNS) unit of the California Department of Health Services (CDHS), based on a wide body of literature (see, for example, World Cancer Research Fund, 1997).

Table 1. Fruit and Vegetable Recommendations
		5-a-day	5-a-day cancer prevention	7-a-day	7-a-day cancer prevention

Fruit		2		3
	Citrus/berry/melon		1		1
	Any fruit		1		2


Vegetable		3		4
	Starchy		0.5		0.5
	Salad Greens		1		1
	Cruciferous		0.5		0.5
	Tomato		0.3		0.3
	Dark Green and Orange		1		1
	Any vegetable		0		0.7

The more specific 5-a-day cancer prevention recommendations for fruit are at least 1 serving from the citrus/berry/melon group and at least 1 additional serving of any fruit. For vegetables, the recommendations are at least 1 serving of dark colored (dark green and deep orange) vegetables, 1 serving of salad, 0.5 servings of a starchy vegetable, at least 0.5 servings of cruciferous vegetables, and 0.3 servings of tomato (Table 1). These recommendations put the consumption of vegetables slightly higher than the 3 a day minimum.

While the minimum target for the general population is 5 servings of fruits and vegetables a day, the USDA’s minimum recommendations for most men and active women are 3 fruit servings and 4 vegetable servings a day (McNamara et al. 1999; USDA & USDHH 2000) (Table 1). The more specific cancer-prevention recommendations for fruit are at least 1 serving from the citrus/berry/melon group and at least 2 additional servings of any fruit. For vegetables, the recommendations are at least 1 serving of dark colored (dark green and deep orange) vegetables, 1 serving of salad, 0.5 servings of a starchy vegetable, at least 0.5 servings of cruciferous vegetables, 0.3 servings of tomato, and 0.7 additional servings of any vegetable (CPNS 2002) (Table 1).

Despite the known benefits, many people do not eat the recommended levels of fruits and vegetables. National surveys indicate that, on average, adults consume 3.9 servings a day, excluding potatoes consumed as french fries or chips (McNamara et al. 1999; Tippett and Cleveland 1999). In some cases, the gap between average and recommended consumption is quite large. For instance, McNamara et al. (1999) estimate that adult per capita consumption of dark vegetables would need to increase by over 300 percent to meet the 1 serving a day recommendation.

People in households that earn less than $15,000 a year average even fewer servings per day than do people in higher income households. Based on the California Survey of Dietary Practices (CSDP), average consumption for low-income consumers is 1.850 servings a day for fruit and 1.874 a day for vegetables (Table 2). Higher income consumers eat slightly more fruits and vegetables. Average consumption by high-income consumers is 1.875 servings of fruit a day and 2.191 servings of vegetables (Table 2). Fruit consumption would need to increase by 62 percent for low-income consumers and by 60 percent for high-income consumers to achieve the 3-a-day recommendation. Vegetable consumption would need to increase by 134 percent for low-income consumers, but just under 100 percent for high-income consumers, for these groups to reach the recommended 4-a-day target.

Table 2. Current Servings per Day Consumed in California by Household Income^a
		Lower Income	Higher Income	Difference
Food Category		(<15,000)	(≥15,000)

Fruit		1.850	1.870	0.019
	Citrus/berry/melon	0.741	0.758	0.017
	Other Fruit	1.109	1.112	0.003

Vegetable		1.874	2.191	0.317
	Starchy	0.227	0.261	0.035
	Salad	0.406	0.540