Historical Economics of Beeswax and Honey

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Taxes and fees extra, see Mint Mobile for details. Last week, we made an episode about the bourbon industry. One thing we didn't get into is the fact that the consumption of alcohol generates what an economist would call negative externalities. This just means that something you do can impose a negative cost on Me. Like if you drink too much bourbon and then you get in your car and drive, you raise the risk for me and everybody else on the road. Economists have many examples of negative externalities, but positive externalities don't get as much airtime, which is a shame, because there are some good ones. Like Vacation? Vaccination? Also, honeybees. I'm serious. But when it comes to honeybees and especially the making of honey, all is not well. Honey is more popular than ever, but the industry is very lightly regulated, which makes it vulnerable to fraud. Honey has for years been one of the top three most frauded foods in the world. It's milk, olive oil, and honey So. What if the honey in your cupboard is not actually honey? Do you care you like the taste? Do you care if it's not authentic? It turns out that honey fraud has been around for centuries. People in Lisbon were fraudulently exporting Lisbon honey but calling it Porto honey. And what is happening with the bees? The adult bees actually disappeared. There weren't dead bees lying around the hive. and nobody knew what happened to them. If only we had an economist handy to help us understand the positive externalities of bees. Oh, wait. We do. Today on Free Economics Radio, my Free Economics friend and co-author Steve Levit is back in the host's chair. to explain the sticky economics of the honey bee industry. And that starts now. Uh This is Freekonomics Radio, the podcast that explores the hidden side of everything, with your guest host, Steve Levit. No Hi, I'm Steve Levitt. A few months ago, I got an email from a beekeeper. My name's Chris Hyatt with Hyatt Honey Company. My dad started our family business 58 years ago and I have four brothers and myself that we've taken it over and grown the business and We run about 18,000 hives between California, North Dakota, and Washington. I can remember in high school, I really did want to play baseball, and I couldn't because I had to put bees in and out of all in orchards all over Eastern Washington. And we were helping the family, and of course that paid for my college, and we employ 20, 30 people, and it's been a fun ride. These honeybees, you take care of them, they'll take care of you. Financially. But there are challenges. Past president of the American Honey Producers Association. Chris Hyatt has fought on behalf of beekeepers across the country. We have a lobbyist and we've tried to improve our industry, improve honey prices. try to get more research for why the bees are all dying for our national bee labs. Is there another industry where you have Such low prices for a a commodity that is in such demand. Now what made you think that I someone who has never thought about honey. We'll be able to help. Well, I I've listened to a lot of the episodes and I just thought, hey, economists, they would know or they're so well connected, I thought they might know of another industry that's having a similar problem that we have had. Commercial beekeepers we only produce about twenty percent to twenty five percent of what our nation needs for honey consumption. And twenty, thirty years ago it used to be the opposite. We used to produce 70, 75%. of all the honey consumed in the United States. You know, we're approaching seven hundred million pounds of honey consumed in the United States. Where it used to be three hundred and fifty million? price is not keeping pace, not even with a price twenty, thirty years ago. First, this really surprised me. total amount of honey consumed in the USA has roughly doubled since the year 2000. The retail price of honey has almost tripled Even when you account for inflation. So why is it that beekeepers are struggling? We can start to answer this question by looking at Hyatt's business. He runs one of the country's largest honey producing operations. Though there have been some technological advances over the course of Hyatt's life, the industry still requires a lot of labor. Both from the humans. And the bees. You need to apprentice with somebody, learn the B industry. You have to diagnose the high. That's all by hand. Manipulating the frames, pulling honeycomb out, looking for the queen, putting new queens in, medicating them, feeding them. And yes, there's forklift is in trucks. And my back is less sore than what it used to be. But a lot of it is still pretty old school. How many beastings do you get a day? Oh, I guess talk about every day. You said you'd 18,000 hives, is that right? Correct. How many B's is that total? In the summer, the average hive could be 40 to 50 to even 60,000 bees, but in the winter it goes down to 30, 20, even the smaller hive's 10,000 bees per hive. By my math, that works out to hype caring for roughly a billion bees during a busy summer. Bees don't just make honey. Mini bees in large commercial hives, they have a second critical job. pollinate crops on big commercial farms. Pollination season, Chris Hyatt has his hives loaded into semi-trucks and driven all across the United States. pollinate almonds in California, apples in Washington and We do a little bit of other things like cherries and plums and Capricots and blueberries and a little bit of kiwi. And then most of our honey production is in North Dakota. Yeah. look at it like livestock when you see those cattle trailers full of cattle. Same thing we throw about four to five hundred hives on a bed semi and we go four pallets tall. And every pallet has usually four hives. Pallet. and the forklift is loading it. And when you have a dead out, then you have a spare spot on the pallet you got to move and complete the pallets. So that's old fashioned work. It always makes the news when a semi tips over. Like last week there was one in San Antonio. And they always say four hundred fifty highs, which is actually so many million B's in it just for the scare factor and stuff. And roughly how many pounds of honey are you able to bring to market with all those bees? That's all weather dependent. Some years you can do 50 pounds and that's kind of a below average year. Some years 80. On a good year, we've done 100, 150. My dad way back when used to make two fifty, three hundred pound average in Alberta in the seventies before he started coming to North Dakota. So eighty per hive and you got eighteen thousand hive. So you're talking about Almost one point Five million pounds of honey? Yeah. If we're below a million pounds, we had a bad year. If we're above it, we had a pretty good year. You said your dad used to be able to get two hundred and something pounds of honey out of a hive in Alberta. What has changed, I would have thought the opposite would be true, right? With technology, we've learned a lot more about keeping bees healthy. You'd think that the yield per hive should have doubled or tripled, but what you just described is that it's maybe half of what it used to be. Why is that? Well, the habitat has changed. There's a lot less blossoms. Not less bloom. There's a lot of mom and pop dairies. that went out of business, so there's less alfalfa than there used to be. And there's less grassland where sometimes you can get sweet clover to grow just wild. So that's hurt and then the whole Varroa Mite problem. What does the mite do in the hive? So the Varola might it's very tiny. It's like half of a grain of rice. and they are feeding on the fat bodies. of these honey bees and them constantly feeding is weakening these honey bees so their longevity is less. They're not living forty days, 45 days. And then as they are biting and sucking, They are passing viruses. And the viruses are building up. Taking out these highs. You know, my dad in the sixties and said there was no Varroa might. Now we're treating four, five, six times a year. And the viruses are mutated and becoming worse and worse. So that's why we had record high lost last year for the nation. Along with habitat and pesticides. Some of the D D T and the organophosphates are gone, but There are a lot of the neonics and they persist longer, right? All these things are death by a thousand cuts. So these bees are not as strong as they used to be in the 80s. We rarely get swarms now 'cause highs are not as strong as they used to be. Interestingly, the gap Between And what's paid to the farmer. That's really grown a lot over time. Why do you think that is the case? I feel like just the cheap imports have taken the spot. of the lack of production that we can't keep up with. It's all about price point. We do know a lot of the honey market goes into the industrial grade. It's awesome that so many people want it in their cereal and their smoothies and Robotus and cough medicine and honey ham and everything. But most of the industrial market is cheap imports. General Mills used to have Florida Sue B honey, the biggest co op in the United States. Sue B owned by its members, but no and now it's Vietnam. And it's just sad. Way back in two thousand and one. Commerce department. included that China was dumping honey. on the US market at artificially low prices. So can you explain? being mean in this context because it's actually being used in a in economics textbooks. Well, I would define it as, you know, below cost of production. They were dumping it so cheap it was thirty, forty cents a pound coming in early two thousands. And you know, the American Beekeeper can compete at that level. That's like one tenth of the price that it would cost you to make a pound of honey is that right? Well, in two thousand one, of course, labor input costs were quite a bit less than they are today. That's still five or six times cheaper than you could have made it. Correct. What seems strange to an economist. be the motivation for a Chinese honey producer. To make a bunch of honey. And then sell it in the US way below the cost. of making the honey, that seems to fly in the face of what we think businesses should try to do. Well, because probably a lot of that had syrup mixed into it. So they were still making money and obviously it was profitable for them. even at that low a price, just w according to their business model. In academic economics, when we talk about dumping. It's a very strategic thing that a company will do to try to drive out their competition. kind of dumping that the Commerce Department was talking about was I think really something very different, which is Chinese Producers were calling something that was in a barrel honey, but really it was something really different than honey. So in two thousand and one when the Commerce Department decided that was their response. tariffs were levied on the Chinese producers. I can remember and I looked back at my dad's record, the price of honey more than doubled, like overnight. It went up to like a dollar forty, dollar fifty. And then the second year it went down ten, twenty cents, and the third year it went down a little bit. So it was temporary. I felt like that was more reflective of the true price of honey. course China found ways to tranship. through Vietnam and India, Taiwan and other countries. The honey in without tariffs or they would have a dummy company when customs would go collect the duties, there was nothing there. It was just a fake address and nothing. Can you s explain what does transshipping mean? So they would ship Chinese honey into the United States and fake the paperwork saying it's from Taiwan or India or Vietnam or Myanmar. We actually paid Georgetown Economics to do a study on it and Myanmar and Taiwan increased their honey production five hundred percent in one year. They had like a twenty year record of their honey production. And it went up by it's like physically impossible. That's how you trans ship. Still coming from China, but they were showing it was coming from other countries. Honey has for years been one of the top three most frauded foods in the world. There is economic motivated adulteration. We know that. There's syrups being added. Even Alibaba, that's the Amazon of China, they're openly advertising designer syrups saying mix this much with your honey to pass these certain tests to get into the United States. So we as commercial beekeepers, we're not saying ban all imports. We're saying if it's True honey, yes, it can come in, but the syrup, the sticky stuff. We wanna Level playing field. Is a level playing field. Possible? Fraud is intentional. You're dealing with an economic motive? And that's why it's so hard to eradicate. When you want to take on fraudsters? You need a lawyer. This guy. My name is Michael T Roberts. I am the Founding executive director of the Resnik. Center for Food Law and Policy at UCLA Law School in Los Angeles. I teach and write on Various subject matters related to food law and policy. And the area of food fraud has been a specific area of focus now for a number of years for me. How do you find your way to being an expert in food law? I was practicing law with a very good practice and a very good law firm, but I found myself Reaching my late thirties and I just felt like I needed something more creative. And ended up reading an article in the future of food that focused on Technology. It caught my attention because I grew up around food. My grandparents had a fruit and vegetable farm. That I worked on all my years. My father was a produce broker. Honestly, I just decided then I was gonna turn to food. And I ended up getting an advanced degree and then I went back as a professor. the University of Arkansas and headed up a National Agricultural Law Center. I taught a food law and policy class at the University of Arkansas. It was the first one to be taught in the country. And it just took off from there. Growing up you were around. farmers and y your dad was doing food products. Did you experience food fraud? Well I first experienced it on the farm, we would use pesticide in the orchards. Not a lot. You know, we were a small farm and almost everybody back then did. There was a group of folks that would buy the produce and they would label their produce no pesticides applied. I remember seeing their labeling and I thought that's not right. That was my first experience at seeing fraud up front. Roberts has worked on many different areas of food fraud, but one special focus of his has been adulterated honey. One of the big problems of adulterated honey is what's called immature Green. High moisture honey. You're actually harvesting the honey too early and it has a lot of moisture. But you want to get it to the market quickly. And so you get this green honey, immature honey. And then they use these vacuuming processes and they remove the moisture enough to sell it on the market? And then they use oftentimes what's called resin technology that was protected by the Chinese and that removes A lot of the color, the contaminants, the antibiotics. And other things that get into the honey. A lot of syrups are used to mix with the honey. Blend it to make it go further. So you get the syrupy mixture called syrup diluted honey. So it's a whole lot of different ways to um adulterate honey. And it's really hard to catch. If I go to the grocery store today. As an American shopper. What are the most commonly adulterated food products that I'm likely to be purchasing? Honey. Olive oil. Vinegars. I would also say vitamins. Even though I can't quantify that, that's just my own personal opinion. Some of this is really hard to quantify because It's hard to gather data on fraud. But anything that's a specialty good that's been imported and it has a large enough quantity. Has some fraud issues. The New York Attorney General's office years ago identified Fish is uh a product that's most susceptible to fraud. We have fun in my class at UCLA. We oftentimes do olive oil test tastings. We talk about Whether we care. Whether our sushi bar is mixing up species. These are all interesting questions 'cause prod is not necessarily a safety issue. Can be, but it's not necessarily. To understand what's happening in honey, it helps to look at another industry that's been fighting the same battle for decades. I consulted with the Italian government when they were trying to crack down on their olive oil fraud. Olive oil is a target because one, it's high value. Two, it's relatively easy to adulterate or mislabel. Three. Difficult for consumers and even regulators to verify without specialized testing. Those are the three reasons. High value Easy to adulterate. Difficult to verify. What do you adulterate olive oil with? You can blend cheaper refined seed oils like sunflower, soybean, palm with small amounts of real olive oil. And then you sell it as extra virgin or a hundred percent olive oil. You can manipulate the color, the flavor. How do you do that? What do they add for color? Yeah. I have to be careful 'cause I get beyond my expertise, which is in law. I just assume you know everything. I want my children to think that too, so let's not spoil that. Misperception. A lot of it's diluting and blending, and then you have to sometimes patch up the problems you create by blending, and that's when you manipulate colors and flavors. dyes and so forth to try to get the genuine olive oil. There was a popular brand of olive oil in the store and I was having lunch with a prospective student from my class. She told me she was a olive oil connoisseur and she loved olive oil. That's why she wanted to take the class. I asked her what her favorite brand was, and she says, oh, I've tested all of them. This is the particular brand I'm most convinced is the best olive oil. It just so happened that I knew that that olive oil was like the worst brand on the market. And I didn't have the heart to tell her. Never tell a connoisseur that they have bad taste. There's a trick, though, for those people out there who want desperate to know the chances are olive oil may be adulterated. You look at the label. Olive oil products are required to show All of the countries of origin And I'm telling you, do not buy olive oil that comes from more than one country. Because you just increase your chances. It doesn't mean it's adulterated. But you increase your chances because the more it's blended, the more it's the chances of it being adulterated are greater. So if you have single source olive oil And it's hard to tell through tasting, because olive oil can taste differently depending on the region. You have more of a bite, for example, from northern Italy. And so sometimes the real bite people think, Wow, that's bad olive oil. It's it's shocking. But it's actually real olive oil. My students have never passed. The olive oil test in class. So in class we'll have three different olive oils. It used to be that I would call the Mondovi Center up at UC Davis, which specializes in olive oil and wine and I would ask them, what's the worst olive oil in the market? And they said, well, whatever you buy in the grocery store. So I would go to the store and I knew a couple of brands that were pretty poor, and I would pick those. And I'd bring one of them back to the class, and then I have like a medium An olive oil that was sometimes fraudulent. Not so bad. I'm then I have a really premium olive oil. Oftentimes I would bring it back from Italy myself and I knew what they were doing and it was great olive oil, or I would get it at a specialty store that started to pop up in LA in recent years. So those three choices And the students invariably would vote for the olive oil that was the what we call It's a adulterated olive oil as the favorite olive oil. Because they were accustomed to the taste. And that we'll lead to the conversation, okay, it's not a safety problem. It's a fraud problem, but do you care? You like the taste. Do you care if it's not authentic? The federal government does sometimes weigh in on the authenticity question. through what's called a standard of identity. Standard of identity in one word. It's a recipe. It helps identify what a product is. When we get into really complicated products, that becomes a complicated question. Standards of identity are really important because that's the benchmark by which we decide whether a food is authentic or not. They became very popular when we had the very first Food Act, the 1906 Pure Food and Drug Act, and then they became even more popular with the 1938 Federal Food and Drug and Cosmetic Act. All of these acts were passed in response to food safety problems. Or more broadly, food adulteration problems, which included both fraud and safety. So you had standards of identity being So say something like peanut butter. Peanut butter, there is a standard of identity. I don't know what it is, but If you don't mean it, you can't call your thing peanut butter. In fact, peanut butter killed making us standards. How so? Al Gore, vice president Bill Clinton was given the assignment to modernize government, to clean up bureaucracies, cut waste. And he encountered This long saga of the making of a peanut butter standard. Which led for over a decade. Years and years of arguing about what is peanut butter. You had congressional hearings on this. The FDA was tied up into knots over science. Question was, how many peanuts should have been peanut butter? And that was a really important economic question. That had a lot of cost implications. It dragged off for years and years and tons of money was spent. And Al Gore just wrote a scathing report about these peanut butter standards or a wasting time and money. It really caught a lot of attention and the FTA literally at that point stopped making standards. just wasn't worth the effort. It was too hard. Honey. has never had a standard of identity. in the United States. Why does that matter for American Honey producers. You want to take to the FDA honey that you don't consider to be real honey. And the FDA has to decide that based on what? Well, you don't have a standard of identity, so who's to say what honey is? When I talked earlier about these different indirect ways of manipulating honey. Do those take it out of the definition of honey? There are still some voluntary standards for honey. The scientific nonprofit US Pharmacopia has one. And the International Codex Elementarius has another. None of them are legally binding in the United States. One of the big reasons that tighter standards aren't in place is that adulterated honey isn't considered a food safety issue. compared to something like adulterated baby formula, it doesn't seem like such a big deal, right? It's not a matter of life and death. Where does Michael Roberts come down on that question? Well, it's a great question and this is something I love to pony up in my classes. And then I do my best not to answer the question, but here you are forcing me to answer the question I always ask. I've taken a lot of fraudulent food products to the FDA. And the first question invariably Is Is there a safety problem? And if you have an authenticity problem and you don't have an unsafe problem. then you're probably not gonna get much attention from regulators. So you can look at it that way and say, Yeah, okay, I can see uh that makes sense. If I'm eating Sushi and it's really tilapia disguised as tuna or whatever. It doesn't hurt me. That's fine. I'm enjoying the experience. Life is okay. There's all kinds of unintended consequences. So what about the honest farmer, the producer of a food? And they can't compete. And so we're losing our domestic producers. Does that mean anything to us? Might That's a different issue, right? I wrote a piece about honey fraud from a different angle years ago, and I actually followed European thought on this. And that is that honey fraud actually can contribute to us losing our pollinator bees. And if that happens, we're all in trouble. There was a case study in Whole Foods, I believe, back on the east coast, where they took out all the food from their store. That was directly the result of bee pollination. And you almost emptied the store completely. Bees are imperative. We will die without pollinator bees. After the break, we've heard about the beekeepers. What about the bees? I'm Steve Levit. You're listening to Freeconomics Radio. We'll be right back. Economics Radio is sponsored by Mint Mobile. Stop overpaying for wireless just because that's how it's always been. Mint Mobile is here to rescue you with premium wireless plans starting at 15 bucks a month. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. 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That's grinola.ai slash freeconomics and get three months free with code freekonomics. We were talking about the unintended consequences of food fraud. So let's speak with an economist. Yeah, Wally Thurman is how I go. Walter Thurman appears on my articles, but call me Wally. I'm a professor emeritus of agricultural economics at North Carolina State University. And you were trained at the University of Chicago. It does seem appropriate. that a University of Chicago trained economist would be the authority on the economics of honeybees. Because it's not the typical thing you'd expect an economist to know about. And because there's so many aspects of the honeybee economics that are hard to make sense of. Unless you think hard about markets and how markets work. I'd agree totally with that. Biology of honeybees are fascinating to a lot of people. And the markets are even more fascinating 'cause they depend on the biology. And I would say that there's very little economic analysis of how pollination and honey get provided. How did you first get interested in the economics of honeybees? I'm an agricultural economist and uh continuing Same. of my research has been on the effects of farm subsidies. wide variety of US government subsidies to agriculture of all sorts, and I became intrigued in the early two thousands by the Honey Price Support Program. This seem to be sort of a garden variety. example of an agricultural Commodity being subsidized, there were interest groups, farmers who gained a lot from the activity and consumers And in the process of studying that I started to learn about pollination and the economics of bees. What bees do. Is as much provide pollination services. As provide honey, at least in terms of the economic value of what they do. So I started a multi year project of Getting to know entomologists and bee specialists. And just became fascinated by the movement of bee keepers while they're moving their bees around. Economists have been interested in one particular aspect of honeybees for a long time. I think it was back in the 1950s. the future Nobel Prize winner James Mead. highlighted a very economically unusual feature of the relationship between honey bees and apple orchards. Could you describe what makes that relationship of special interest to economists? Yeah, meat is the right one. He and Francis Bader later on, they said, Imagine that there's a beekeeper and the beekeeper's bees fly out every day. And they do two things. They bring back pollen from a nearby apple orchard. And they bring back nectar. And in the process of moving nectar around, they pollinate the apples. Meaning they increase the productivity of the apple orchard. But then they also bring back this valuable. Dilute sweetness from the nectar, which they produce honey from. So they're doing two economically useful things. One is produce apples and that benefits the apple grower. And the other is producing honey, which benefits the beekeeper. The interesting thing to Mead and others was that At least according to them. The beekeeper didn't really receive any payment. For increasing the output of apples. And the apple grower didn't receive any payment for increasing the production of honey by bees. And so here's the beekeeper and the orchard owner. Mutually benefiting each other. But they didn't get compensated for an important piece of what they did for the other. Therefore. Meads perspective and standard economics perspective. There's too little honey being produced, there's too little beekeeping. And there are too few apples being produced. In economic struggle, and that's what we call a positive externality. It's a kind of market failure. And that's really interesting to economists because Certainly see a lot of cases where we have negative externalities. But this idea of the positive externality We don't have so many examples of those. Yeah, positive externalities are a lot less common in economic thought and possibly in the actual world. So in this case there are two interesting things going on here. One is it is a positive externality. I mean, forget about the production of honey for a minute. If the bees visited the apples pollinate the apples increases the yield That's a positive benefit that the beekeeper, ostensibly, doesn't get paid for. Ostensibly. And the other interesting thing is it's reciprocal. Not only is the beekeeper benefiting The apple grower. But the apple grower by having this nectar source is benefiting the beekeeper. So this positive flow of externalities goes both ways. And that leads to this unambiguous theoretical conclusion that we should subsidize the production of apples and the keeping of bees. Okay, so let's go to negative externalities, because we have a lot of those in the world and economists think we understand them. So examples would be the Pollution from factories. The stench from pig farms, traffic jams on the roads because too many people are trying to drive to work. Secondhand smoke. It goes on and on and on. Okay. So when there is a negative externality associated with an activity, then economists worry that the free market provides too much of that activity, right? The pig farmer, the polluting factory, they aren't responsible for the full damages of their pollution. And they don't factor those costs into their decisions about how much to produce and so they make too much. So negative externalities are a problem. How do economists try to fix that problem? Well going back even earlier than Meade, famous British economist AC Pagou. So you tax those activities that generate negative externalities. Do you have too much smoke coming out of a factory? factory owner is senseless to the harm that the factory's doing, so you tax them That would be a pretty standard economic prescription for the problem. That's a way of internalizing the externality, making the producer That. into account. If a negative externality leads to a market failure where there's too much production and then you tax it. something with a positive externality would stand to reason that with the free market. There are. too few bees around and maybe too few apple orchards. And that's what James Mead conjectured. But then in nineteen seventy three Steven Chung gathered some data. Didn't seem to be true. the story about reciprocal positive externalities really rests on these two parties. not being able to influence each other, not being able to transact with each other, and maybe not even being aware of each other. What Chung found was that if you go to rural Washington State towns and open the yellow pages of the phone book, you would find advertisements for pollination services from beekeepers. So not only did apple growers and other farmers know about beekeepers in the area. They could call them up and pay them a certain amount per colony to come over and pollinate their crops. I would say this was Chung's Uh huh moment was There were transactions going on. So At least to him. There it was a prima facie case that Some of this positive externality was being internalized. It's interesting because as you pointed out, there are reciprocal benefits. The bees are helping the apple orchard and the apple orchard is helping the beekeeper to have more honey and better tasting honey. So it's not actually completely obvious ex ante. which way the payments should go. You could imagine that maybe the beekeepers would have to pay the owners of the apple orchards or vice versa. So why do you think it turned out It's the apple farmers who are paying the beekeepers. Well that's a great question, and if you fast forward to the modern beekeeping industry and m modern commercial practices. Bees are moved around, they're migratory. That is not by means of their flight, but beekeepers move them around in trucks and there are times of the year When Bees are placed on crops like almonds. where the demand for pollination services is very high. And the pollination fees run from farmers to bees. There are other times of the year in late summer. Where beekeepers will sometimes pay landowners for the privilege of putting their bees on the farmer's land because the land is such good honey forage. So it can and does go both ways. And from an economist perspective. Determines. Which way the flow of money goes. It's seasonal to start with. And I'll use almonds as the example because almonds are very early Blooming crop. Right now it's February. beekeepers from all over the country are moving their bees into almond orchards in California. Pretty soon, by the end of February, ninety percent of every bee in the lower forty eight states is going to be in California pollinating almonds. And so there's a huge demand. For pollination services, almond is a valuable crop. And at the same time. Almonds themselves don't provide good honey forage. So in that instance It's pretty clear that if you're going to get bees in the almond orchards you need to pay them because they're not getting much honey out of the deal. And they have to travel all across the country to get there. Vast majority of the world's almonds are grown in California. And all those almonds need to be pollinated in a narrow window of about three weeks in late February and early March. This almond pollination event and the subsequent pollinations around the country are so important to beekeepers that they've changed the economics of the industry. This again is Chris Hyatt, professional beekeeper and pest president of the Americers Association. It's tough keeping hives alive and there's not much incentive with the price. A lot of people are chasing pollination versus going to the Midwest. They'd stay in the South. Just wait for another pollination event. Price of honey is so terrible. What share of your annual revenue? From Pollinating the almonds. Versus selling honey. We are still like sixty forty honey to pollination. But if it's a drought in North Dakota and there's not much rain. Her honey production is down. It's happened several times that pollination is more than honey income. Back in 2006, a new phenomenon in the beekeeping industry started making waves. It was referred to as colony collapse disorder. This again is economist Wally Thurman. If you look back in the historical record, bees have been around in North America for centuries, even though they're not native to North America. So beekeepers have dealt with any bee diseases for a long time. And you can go back into the Be keeping trade publications and see discussion of viruses and diseases and Chemicals used to treat them. Something did happen in the winter of two thousand six, two thousand seven that came to be known as Colony Collapse Disorder C C D. It was a sudden odd disappearance of the adult bees from colonies all over the country. One beekeeper first discovered it in Florida, but pretty soon there were reports from all over and it was an epidemic. key symptom of colony collapse disorder is that the adult bees actually disappeared. There weren't dead bees lying around the hive. And nobody knew what happened to them and to this day I think it's not well explained. And how prevalent was this in Winters of two thousand six and two thousand seven? Well I think if you go back and look at surveys of beekeepers, what you can say is that an overwinter mortality rate of about fifteen percent that would have been the norm prior to two thousand six and seven. doubled to an overwinter mortality rate of thirty percent. And so as a researcher you heard about this colony collapse disorder. And it caught your attention. And what did you find when you looked at the data? Well my colleagues Randy Rucker and Mike Burgut and I were studying other aspects of the bee industry at the time and we heard about colony collapse disorder and thought oh my goodness. This is catastrophic. We should see. increases in the prices of pollination services, in the prices of honey, reduction in bee colonies. And when we started to look at the data. disentangle effects from trends. There's no effect. What do you mean by no effect? The U S Department of Agriculture takes a survey every year. Of how many bees there are in the United States. How many bee colonies? Now this is not an easy number to estimate. Bees move around, how do you count 'em? When do you count them? But there are censuses. Well, just a few years after two thousand six. There were more bee colonies in the United States than there were prior to colony collapse disorder. So while it was true that overwinter mortality rates Double. Due to this C C D effect. the measured number of bee colonies didn't change a bit and in fact increased a little bit. How do you make sense of that? That seems contrary to normal intuition. Yeah, it does. And a couple of reasons. One is an insect colony of thirty thousand bees. produced in pretty short order. So if a beekeeper finds that a colony has failed and he needs to replace the bees in the spring, There are ways that he can create a whole new colony of bees in as little as six weeks. And beekeepers Have over decades and centuries developed methods of managing bees that allow them to produce new colonies quickly. It's called splitting hives. You have one dies and you split the healthy hive and you place its occupants into the dead hive, you feed them appropriately. And you take care of them and then a month or two later you've got two healthy colonies of bees again. Nothing happened. But one thing changed right? The fees that were being paid The almond growers. Beekeepers. Those went way up, right? That's right. You didn't see evidence of colony collapse disorder in colony numbers, in the price of honey. Price of Queen Bees almost nowhere except in early season pollination fees paid by Almond growers and a few other growers of similarly early blooming crops. And the early blooming is the key here. You have to get your bees out of their winter torpor. and get them back to full strength to provide that pollination. And There's so many bees required to pollinate almonds at such an early time of year. that all these replacement methods to replace dead colonies due to C C D really have to be put on steroids early in the season. some expense to get the pollinating bees out to the almond orchards. So there was a spike. And there continues to be high fees paid for early season rental abuse for pollination. The almond growers need just about every bee in America to come to California and pollinate the orchards. Bees. the almond industry would collapse. And unlike with honey, where Chinese bees can do the same job as American bees. too far for these foreign bees to travel. The almond industry needs a thriving American bee population. What does that mean in terms of economics? It means that ultimately it is the almond producers who are hurt the most by cheap foreign honey. Usually when the price of honey falls, lots of beekeepers would go out of business. But the almond industry can't let that happen. They have to raise pollination fees enough to keep the beekeepers afloat. If you're an almond producer, that gives you a strong incentive to find ways to grow almonds that don't depend on bees. What does this mean for the future of beekeeping? Maybe the answer is in the past. Like 700 years in the past. That's coming up. Free economics radio is sponsored by Audi. We all know that feeling. A change of plans, an unexpected curve, a new opportunity. Instead of overthinking, what if you just said yes? With the all new Audi Q3, the answer is easy. The Q3 is made for the yes life. power and room to handle whatever pops up. Yes to adventure, yes to escape, yes to right now. Because saying yes without hesitation, that's real luxury. The all-new Audi Q3, made for the yes life. Lear more at AudiUSA.com. Freaking numbers 3D is sponsored by Adobe Acrobat. We've all been there, your team's feedback is scattered across emails, chats, and sticky notes. It's a mess. But PDF spaces in Adobe Acrobat gives you one collaborative workspace to streamline every file and comment. So if you need six departments to finally agree on a proposal, do that with Acrobat. Need to turn a mountain of feedback into one plan of action? Do that with Acrobat. Want to stop searching for files and finally get everyone on the same page? Do that. Do that. Do that with Acrobat. Learn more at Adobe.com slash do that with Acrobat. What does it mean to live a rich life? It means brave first leaps, tearful goodbyes, and everything in between. With over 100 years' experience navigating the ups and downs of the market and of life. Your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, member SIPC. We've been talking about the uncertain future of the beekeeping industry. But let's take a minute to think about the industry's past. If you think about that absolute darkness that must have fallen. on people in the Middle Ages. And then to walk into a church. and to have it glowing ablaze with all of these candles. And the sweet smell. from the beeswax, the experience of being in that kind of light. Must have been really extraordinary. Alex Deposnik is a historian at King's College London. Who studies the economics of beekeeping in the Middle Ages? In her research, she found that medieval beekeepers faced the same fundamental problem that Chris Hyatt faces today. a market for the product that kept getting undercut by forces outside their control. I started my research. Looking at Medieval peasants? and especially very poor peasants. And one of the big questions that we have about very poor peasants and the population generally of medieval England before the Black Death. Is how did so many people live off of so little given what we know about medieval agriculture? Something that I saw being mentioned in passing was beekeeping. I am not a beekeeper. So I did wonder. Did people just keep bees? Was that a lucrative business? How would you keep a bee in England? It's very cold and rainy here. It was very cold and rainy in the Middle Ages, too. It turns out that people could and did keep bees all over medieval Europe. However even back then The market was vulnerable to fraud. We have a really nice example from fourteen fifty nine where the parliament in Lisbon is dealing with complaints from merchants who are Trading honey. the merchants from Porto who are saying People in Lisbon were fraudulently exporting Lisbon honey but calling it porto honey. Today. Beekeepers are honey producers and professional pollinators. Back then, the biggest job was something else entirely. In the Middle Ages and certainly in Christian Europe, the main point of keeping honey bees was for the wax that they produced. The wax has lots of different purposes, but the main purpose to which it was put was for Christian religious observance in the Latin West. Do you have a sense of Share of a church's budget would go to Wax? After the expenses for the actual building? Biggest expense year on year. was for beeswax. This huge demand for wax supported a thriving medieval beekeeping industry. Then like so many things in the medieval period. that changed with the Protestant Reformation. All of this use of candles is very much associated with the institution of the Catholic Church. One of the many things that Martin Luther and others disagreed with was all of that external ornamentation. And so As places become Protestant, They start to use wax candles much less frequently. And we can see that really nicely. Illustrated In England We have an injunction in fifteen thirty eight. forbade the use of wax and wax candles. Except for the wax that was used on the altar and the candles that were on the screen that separates the altar from the rest of the church. The effect. was to really very, very severely limit The use of Candle wax in medieval churches. The data bear that out. So if we can put the cost of wax into perspective. If we express it as an agricultural laborer's wage. Then we would say that the price of a pound of wax fell From just over five days' work in thirteen hundred. to just two and a half days by thirteen fifty four. Then it falls even further so that by fifteen forty four, so after the Reformation. It's less than one day's labor to be able to afford that same pound of wax. Not long after the price of wax collapsed, beekeepers got hit with another devastating shock. With the opening of sugar plantations in the Americas. Europeans suddenly had access to cheap and plentiful sugar? First time. Honey lost his spot as a major sweetener. This is the sort of double whammy that modern beekeepers will face. If the almond industry finds a way to lessen its dependents on bees for pollination. Trend that has already started. In California, there are self-pollinating and self-fertile almond trees that have been introduced to orchards across the region. For exactly that purpose. And I don't think there's anything beekeepers can do to fight that trend. Ultimately, if beekeepers want to survive be by finding ways to stop adulterated honey from coming into the country. How will they do that? Question to Michael Roberts, the food law and policy expert at UCLA. We have to have consumer protection laws that are more stringent? Contract remedies? In other words. We m have to make certain people in the supply chain responsible. And if they're responsible, they're gonna make sure everybody else is responsible as well. And we have to have Calibrated criminal enforcement. I really think that without that we're not gonna see much change. And it is criminal. It's intentional. It's fraud. There's a lot of cooperation that has to take place and there's not one entity that's gonna solve this problem. It has to be a coordinated effort. And that gets us back to that basic question. Who would care about food fraud? It seems like it really like so many things it comes down to incentives. The agencies you're talking about. just in many ways don't have that strong an incentive. to deal with this problem because it isn't a life and death problem. And ultimately I think the strongest argument is the argument you made about the honeybees for the entire food chain, right? The positive externalities that are associated The honey. And again, that creates a real problem because even the honey producers themselves anything like the full economic benefit of the activity they're doing. So they don't have the resources or the incentives to go out and fight. And making it even more complicated is I suspect that many US food producers