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Driving Growth and Innovation in the  Food Industry: Lessons from the Automobile Industry’s CAFE Standards

Driving Growth and Innovation in the Food Industry: Lessons from the Automobile Industry’s CAFE Standards

Hank Cardello

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Poor dietary patterns are the leading cause of noncommunicable disease in the U.S., and they are creating a significant burden on the economy and on quality of life. Diet-related disease is having a large impact on health outcomes among children and adults, leading to increasing healthcare costs, which has led to a focus on regulatory measures to curb the rising tide. Regulation has largely focused on the U.S. food system, as it provides low-cost, calorie-dense foods, which have been linked to a substantial increase in calories in the food supply and excessive calorie consumption.

Substandard eating habits are linked to a number of health conditions, such as diabetes and obesity. Diabetes rates in the U.S. have more than tripled since 1970, and nearly 40 percent of adults are categorized as having obesity. The cost to the healthcare system is significant, and a myriad of health issues are linked to its pervasive spread in the country. Particularly concerning are increasing obesity rates among children, amidst continued public health interventions at the local, state, and national levels.

Public health officials continue to advocate for additional regulation to shift dietary patterns. Policy efforts have ranged from voluntary commitments by the food industry to government-driven regulations such as taxes on sugar-sweetened beverages and package-labeling provisions. Most of the government regulatory approaches to date have been piecemeal, typically led by local government bodies and focusing on a specific type of food or beverage for taxation, or tending to address a particular component, such as food package labeling. For example, Berkeley, CA passed a sugar-sweetened beverage tax in 2014, and the FDA has mandated changes to food labels to increase transparency about calories and added sugars.

This paper seeks to open the discussion on a broader policy approach to reduce excessive consumption of calories, sugars, saturated fats, and sodium, which are linked to conditions such as diabetes, obesity, cardiovascular disease, and certain cancers. It will do this by exploring Corporate Average Fuel Economy (CAFE) standards, an automobile industry “cap and trade” regulatory model.

The government has used CAFE standards as a rubric to effect reductions in automobile fuel consumption and greenhouse gas (GHG) emissions. Congress first established these standards in 1975 in response to the 1973 Arab oil embargo, and they have evolved to include a variety of measures that ultimately seek to increase the fuel economy of America’s vehicle fleet, cut fuel emissions, and reduce U.S. oil consumption. While many economists and policy advocates agree that increasing fuel economy—how far a person can travel on a gallon of fuel—does not address these issues in totality, there is no question that these regulatory standards have led to a significant industry change.

After a brief examination of current food regulatory policy, this paper will explore the CAFE standards as a federally driven regulatory approach to impact the broader public good. After reviewing the evolution of standards over the past few decades and assessing their impact on public health and business outcomes, we will cite lessons from this model for the food industry and evaluate the potential benefits of the standards. This will include an objective dissection of the pros and cons of the CAFE model and an evaluation of how to apply the lessons learned to the food environment. Specifically, we will examine the impact of CAFE standards on auto industry innovation and competitiveness. The goal of this paper is to spur dialogue and action to create collective impact across multiple food industry sectors so that manufacturers, restaurants, retailers, and others will see the opportunities in improving their product lines and marketing practices.

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