Wednesday, December 26, 2012

Chicken Coops as "Unsanitary Cities"

The NY Times reports that  innovative chicken raisers such as Scott Sechler are experimenting with mixing oregano oil into chicken feed in order to grow healthy chickens.  This "organic" substitute for antibiotics may reduce bacterial disease in the chickens.  Is this "treatment" effective?   This is why we have clinical trials to test this hypothesis.  While I am not trained as a Vet, I can imagine that when chickens live in extremely high population density that infectious disease is rampant.  Treating chickens with antibiotics helps to reduce this infectious disease risk but introduces other risks for the final consumers.

Take a look at this picture. It looks like a Freshman dorm.  The fascinating thing about "density" is that we are like Goldilocks.  We want high density because it conserves on transportation costs and wasted resources but we worry about the congestion and infection cost of density.   Vertical cities such as Singapore have shown that quality of life can be high in a dense city.  Extremely high real estate prices in Manhattan reveal that the rich are willing to live like chickens if the coop is nice.

The case or Mr. Sechler highlights an optimistic view of evolutionary capitalism.  His firm is aware that consumers are increasingly sophisticated about what chemicals are used to grow their food.  In a type of product differentiation, he has identified a new way to make an old product (the chicken) that minimizes the use of the antibiotics.  If organic chickens are labeled and if "organic chickens" sell for a price premium, then he will be rewarded for his efforts.  As the Chicken consumers become more educated about the consequences of consuming foods without antibiotics, there may be a growth in such demand and the entire industry's overall sustainability may become greener because of a demand side push.  This is a testable hypothesis.  The same logic holds in the case of California's Green Chemistry Initiative.   Competition and experimentation lowers the costs of achieving environmental objectives.  This is what I meant in my quote in the NY Times yesterday regarding AB32.