FOOD PRICES AND ETHANOL

You may have heard the headlines about the resulting increase in food prices from demand for ethanol. There is actually much more to the story.

It is true that in this country, we eat corn, wheat, and soybeans. We may not directly consume them, but they are our staples. We used to devote about 60% of our corn crop to animal feed ( meat & milk consumption), 20% to exports, 15% to food byproducts and direct consumption, and the remainder for industrial uses and ethanol. Now almost 18% of our corn crop is being devoted to ethanol production. Of course this will put upward pressure on the price of corn. And as people divert acres away from wheat and soybeans it will put upward pressure on the prices of those commodities too. So it would seem palpable that food prices would follow the trend. They have to some degree.

According to a recent study :
Link
http://www.ethanolrfa.org/objects/documents/1157/food_price_analysis_-_urbanchuk.pdf

“Increasing petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices”

Compared to energy, even corn prices impact a much smaller segment of the food market. Advancements in genetics and technology are allowing producers to continue to meet our demands for both food and fuel with minimal impacts on price. This year the markets have responded via producers planting the largest corn crop since WWII. There are projections of a record crop of 11 billion bushels this fall.

I admit that much of this demand and the response to it stems partly from a 51-cents per gallon tax credit, and a 54-cents-a-gallon tariff on imported ethanol, and ethanol based oxygenate reqquirements for all gasoline. As I mentioned in a previous post, gasoline demand and production is based largeley on governent subsidies and regulations as well. The point is that the market is responding given the circumstances and the crisis is not what many are making it out to be.

WHEN SHOULD PERSONAL DECISIONS BECOME GOVERNMENT DECISIONS

WHEN SHOULD PERSONAL DECISIONS BECOME GOVERNMENT DECISIONS

According to many , the harms from cigarette smoke are well known and scientifically documented. Many on both sides of the issue have stated that they purposely avoid restaurants that allow smoking by eating elsewhere.

One might compare bans on smoking to restaurant inspections, bans on leaded paint, or drunk driving laws, all of which are implemented to protect the public from harm.
When should government get involved? One case is when individual decisions harm others without compensating them. This is what economists refer to as a ‘negative externality.’

In some cases, if individuals can come to an agreement on their own through property rights, exchanges, contracting, or some other type of arrangement, government intervention may not be necessary. However, in the case of drunk driving, it is not possible for other drivers to know who is intoxicated and who isn’t. No agreement can be made to avoid harm. In purchasing a home, one may not be able to contract for the effect of lead poisoning if they are unaware about the use of lead paint. When eating at a restaurant, it may not be possible to know if food was handled properly before eating. In these cases when there is both an information and bargaining problem, the theoretical argument for statutory action by government is often accepted.

When it comes to making an argument for implementing a smoking ban, two important questions should be asked. Is there sufficient information available so that when citizens enter a restaurant they can recognize the presence of harmful second hand smoke and understand the danger it poses? If so, does the market provide a way to easily avoid it? If you have trouble answering this, re-read the first paragraph.

FARM BILL: WHERE OUR ALLEGIANCES LIE III

A final excerpt from an e-mail I received encouraging me to oppose new farm bill legislation.

“When you think of family farmers, do you picture comedian David Letterman or former NBA star Scottie Pippen? How about billionaires like David Rockefeller and Microsoft co-founder Paul Allen?”

In a previous post I addressed the issue of the family farmer.

“Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.”
‘FARMERS’ MARKETS” March 23, see ‘agricultural economics’ label

Here are some additional key facts regarding farm programs:

1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.

2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.

One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.

In conclusion, to have a consistent position opposing the farm bill you have to be dedicated to embrace modern science and biotechnology and be opposed to creating market distortions.

FARM BILL: WHERE OUR ALLEGIANCES LIE II

Another note related the e-mail in opposition to the proposed farm bill.

“Moreover, by disproportionately subsidizing corn, wheat, and soy, the current Farm Bill encourages us to eat cheap, unhealthy, and fattening processed foods instead of fresh fruits and vegetables. As writer Michael Pollan puts it, "the reason the least healthful calories in the supermarket are the cheapest is that those are the ones the Farm Bill encourages farmers to grow."

It is true that many versions of farm programs reduce risk and increase the price farmers receive for their crops. This would have a supply effect making corn, wheat, soy, and meat products less expensive. However, commodity prices make up a very small proportion of the price we pay for food in the grocery store.

Farmers grow corn, wheat, and soybeans because they are food staples, not because congress legislates it via farm programs. Fruits and vegetables, which are not staples but make healthy supplements to our diets, will always be more expensive because they are riskier and more labor intensive among other things. Farm programs that encourage grain crop production have no effect on this.

With advanced genetics corn, wheat, and soybean products are actually becoming healthier and better for the environment. Vestive soybeans have healthier oils, low phytate corn reduces animal waste and groundwater pollution, Bt corn exhibits lower levels of carcinogenic mycotoxins.



SOURCES:
http://www.asas.org/midwestern/press/allee.html

http://www.plantbreeding.iastate.edu/lowlin.html

http://www.whybiotech.com/index.asp?id=1973\

FARM BILL: WHERE OUR ALLEGIANCES LIE

I received an email recently from someone opposed to the farm bill. Part of their critique was as follows:

“Amazingly, they're some of the people receiving your taxpayer dollars in the form of crop subsidies, which overwhelmingly benefit absentee landlords and big agribusiness at the expense of farmers in America and the developing world who are struggling to feed their families.Here’s one example: In West Africa, millions of desperately poor people farm cotton to make a living, often surviving on less than $1 a day. But our cotton subsidies make it more difficult for these farmers to survive by artificially lowering the price of cotton in violation of international agreements…..”

It is true that cotton subsidies may give our producers an advantage over poor farmers in less developed countries. I understand the author’s critique. On the positive side, advances in biotechnology have if not leveled the playing, certainly improved the standards of living, public health, and productivity for poor farmers.

If we are to believe that the farm bill will be detrimental to small farmers and the developing world, and oppose it on those grounds, then should we not favor a technology that benefits the 3rd world?

Ironically, I would bet that those opposed to the farm bill are also opposed to the promotion of GM (genetically modified) food crops in developing countries. Even people in developing countries that may complain about unfair trade often have their own ironic opinions related to this issue. Zambian President Levy Mwanawasa has been quoted making the statement that he "would rather let his people starve than eat anything 'toxic" - referring to biotech foods vs. conventional and organic. His, and other government’s antitrade policies are often cloaked in concern for ‘food safety’ and other rhetoric.

SOURCES:
"Acreage Under Bt Cotton Set to Increase: Study," Indo-Asian News Service

http://allafrica.com/stories/200706051019.html?viewall=1

SILENT SPRING, OR SILENT HERO?

Not only did Norman Borlaug won the Nobel Peace Prize, but now he has been awarded the Congressional Gold Medal.

Rachel Carson is often lauded as an environmental savior when Norman Borlaug has done so much more with hard science and made truly revolutionary accomplishments with regard to environmental sustainability. Yet, Silent Spring is more likely to make a college or high school course reading list than “The Man Who Fed the World: Nobel Peace Prize Laureate Norman Borlaug and his Battle to End World Hunger.”

Read more:

http://online.wsj.com/article/SB118461857225767963.html?mod=googlenews_wsj

TELEGRAM: BEEF, IT'S WHAT'S FOR DINNER

According to a recent article on the Telegraph (U.K.) eating beef produces more pollution than driving. It is stated that producing 2.2 lbs of beef generates as much greenhouse gas as a car traveling 50 mph for 155 miles. The article ends with a quote stating:

"Everybody is trying to come up with different ways to reduce carbon footprints, but one of the easiest things you can do is to stop eating meat."

link:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/19/nbeef119.xml


Should we really stop eating beef? It is a very nutritional part of many people’s diets and difficult to match. On average 20 of the 29 lean beef cuts have only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving. In additon beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.

Cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production.

Beef production per cow has increased about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. According to the data in the telegraph, for every cow that goes to slaugheter today vs. 30 years ago, increased efficiency in beef production is equivelant to removing from the highway 84 cars traveling 50 miles per hour for 155 miles. ( 185/ 2.2= 84)

Improvements in nutrition, genetics, and management will only improve the ‘environmental footprint’ of beef production. Beef production has never been greener.

Corn, Ethanol, Markets, and Diversity

http://www.csmonitor.com/2007/0521/p09s02-coop.html?page=1

I’ve recently commented on the above article from the CS monitor. It also contained an additional statement that I take issue with, at least theoretically.

"Any sort of shock to corn yields, such as drought, unseasonably hot weather, pests, or disease could send food prices into the stratosphere. Such concerns are more than theoretical. In 1970, an outbreak of a fungus destroyed 15 percent of the US corn crop.”

I think they want to make the point of how tight supply and demand conditions are and how easily we could see price spikes to ration shortages in case of a drought or some other disaster. (as a result of corn diverted to ethanol production)

But the point is that the corn blight of the 70's was the result of common male sterile inbreds being used to produce most of the hybrids grown then. This common genetic background made almost the entire corn crop susceptible. Most companies have learned their lesson and genetic diversity among corn hybrids has proliferated to meet diverse grower needs since then anyway. Between diversification in crops planted and the risk management tools available in the market, disasters like the corn blight in the 70’s are really much more theoretical than the CS Monitor implies.

OUR COMMONS, OUR CHOICE

“People like the freedom to choose their lifestyles, what they consume and when they consume it,” observes Attari. “However, the environment is a ‘commons’ that we share with other citizens of the world, and when individual choices start negatively impacting others, we need to understand how to change or alter those behaviors.” http://www.prism-magazine.org/apr07/tt_01.cfm


Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.

However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.

The literature referenced above may be broad, but it opens the door for many applications. It is certainly not as narrow and limited as the much older line of reasoning developed by Pigou, which advocates changing and altering behavior based on taxes or command and control governement regulations.

REFRENCES:

Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967

The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44

The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248

The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477

Benefits of Biotech in Africa

http://allafrica.com/stories/200706051019.html?viewall=1

great link on the benefits of biotech in Africa.

In addition to talking about the benefits of biotechnology in Africa, it makes the point that biotech crops are not as extreme as many of the foods that we have been eating for decades- including conventional and organic crops. Most all of the modern rice and wheat hybrids that we consume today have been developed using a process called Gamma Ray Mutation which involves using radiation to create desirable mutations in plants. These foods have never been tested for long-term health or environmental effects and have been accepted for decades by the general public and organic food consumers.

A recent article in the Economist reviews other techniques that use thermal neutrons, X-rays, or ethyl methane sulphonate, ( a harsh carcinogenic chemical) to accomplish the same end.

Zambian President Levy Mwanawasa is quoted making the statement that he "would rather let his people starve than eat anything 'toxic" referring to biotech food imports.

COLONY COLLAPSE DISORDER III

According to recent research published in the Proceedings of the National Academy of Sciences researchers have discovered another possible cause of CCD. This time it’s not mites but microorganisms from the small hive beetle, which has been introduced into the US and Europe from Africa.

"Beetles are scavengers and their job is to clean up. In the case of the small hive beetle, it uses a fungus to digest left-over pollen, from which it gets its nutrients. This fungus causes fermentation, in effect causing a change in the chemistry in the hives. Since bees are very sensitive to such variations, they eventually abandon the hives"- Dr Baldwyn Torto.

What is curious is that the beetle and the fungus it carries has no effect on African bee hives. African bees have some unknown mechanism for dealing with this.

"Knowing what allows African honeybees to survive attacks under the tough tropical conditions, and introducing these components into European honeybees, might be a step towards resolving the CCD," says Dr Torto.

Scientists may be able to identify a marker for these traits and develop a breeding program to incorporate this mechanism into our bees. If the mechanism is very specific, direct molecular genetic modification may be the solution. It might very well turn out that instead of being the cause, biotechnology will be the solution to CCD.


SOURCE: (PNAS, 4th May 2007)

http://www.pnas.org/cgi/content/abstract/0702813104v1

Master of Science in Agriculture (Bioscience Management Emphasis)

Master of Science in Agriculture (Ref.#052)

The Master's Degree is a general degree in agriculture and can be thesis or non-thesis depending on student goals. The degree is general by design which allows for maximum flexibility for each student. 

Emphasis in Bioscience Management

This is an interdisciplinary emphasis focused on the role of science in business and the role of business in science.  Course work includes statistical genetics and applied economics with applications to a variety of problems relevant to agriculture and life sciences. Applied problem solving projects and cooperative education serve to bridge the various disciplines associated with agriculture and life sciences. 

Applied Statistics and Experimental Design

AGRI 491G DATA ANALYSIS/INTERPRET 3


AGRI 590 EXPERIMENTAL DESIGN 3


Crop Science and Genetics

AGRI 528 POPULATION GENETICS 3

AGRO 414G CROP IMPROVEMENT 3

AGRI 475G SPECIALTY CROP PRODUCTION 3

AGRO 521 PASTURE MANAGEMENT 3

Agricultural and Applied Economics 

AGEC 463G AGRICULTURAL FINANCE 3

AGEC 468G WORLD FOOD DEVELOPMENT 3

Research Methods and Problems in Agriculture

AGRI 598 SEMINAR 3

Supervised Individual Study - Applied Problem Solving

 


AGRI 597 IND SPEC PROB/AGRIC: GAME THEORY/TRAIT RESISTANCE MGT 3


AGRI 597 IND SPEC PROB/AGRIC: ECONOMETRICS/BIOTECH PERCEPTIONS 3

Supervised Individual Study - Cooperative Education Experience 

 


AGRI 597 IND SPEC PROB/AGRIC: COOPERATIVE EDUC/SEED R&D  3




--------------------------

TOTAL CREDIT HOURS: 36

Supplemental M.B.A. Courses

ECON 502 APPLIED MICROECON THEORY 3

BA   505 ACCOUNTING 3

BA   519 ADVANCED MANAGERIAL FINANCE 3

THE TRAGEDY OF THE COMMONS

http://www.prism-magazine.org/apr07/tt_01.cfm

“People like the freedom to choose their lifestyles, what they consume and when they consume it,” observes Attari. “However, the environment is a ‘commons’ that we share with other citizens of the world, and when individual choices start negatively impacting others, we need to understand how to change or alter those behaviors.”

The phrase ‘tragedy of the commons’ was first used by Garret Hardin in a 1968 issue of Science.

To illustrate, in the case of cattle grazing on public land, it is in the interest of the cattle owner to place as many cattle as possible on the land. Of course too many cattle will result in erosion and deterioration in forage quality, but this cost is shared among all grazers. The grazer does not bear the full cost of grazing an additional animal, but receives the full benefit. Each grazer acting in his own interest results in the degradation of the ‘commons’ for everyone.

Whenever the cost of one’s behavior is not factored into a price at which this tradeoff can be valued, a commons problem exists. This tragedy is unnecessary, if we are willing to embrace legal systems that provide for property rights and free markets.


Many of the ‘commons’ problems that Hardin cites in his article such as polluting the commons with insecticides and fertilizer have much been mitigated with modern technology and markets. Many of my articles regarding free market agriculture and biotechnology explain how this has come about.

SOURCES: Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248

THE REAL PRICE AT THE PUMP

If you look at tax and program subsidies, defense of oil interests, environmental, and health costs, the real cost of gasoline may be much higher than just the price we pay at the pump. Some estimates of these external costs are between 20 and 70 cents more.

According to the center for technology assessment, about $9-18 billion dollars worth of tax breaks are provided for gasoline production and use. The defense department allots $55-$96 billion per year to protect petroleum resources across the globe.

I’m not necessarily advocating increasing the price at the pump by increasing gas taxes to reflect these costs. However, if these costs were factored into the price of gasoline, it appears that the gap between the real cost of ethanol and the real cost of gasoline would narrow significantly even after the subsidies to ethanol were removed.

Sources: Ethanol Today, August 2005
‘The Real Cost of Gas’ International Center for Technology Assessment 1998

COLONY COLLAPSE DISORDER II

If not biotech crops or industrial agriculture, then what could be causing CCD? There is plenty of research pointing to lots of other factors.

An entomologist at the University of West Virginia contends that the issue is mites. He has developed a product that consists of lemon grass and spearmint that seems to be protecting hives. Many studies suggest that a protozoan parasite called Nosema ceranae may be playing a role. Another team of scientists at Edgewood Chemical Biological Center and University of California San Francisco have identified a virus that may be responsible.

It is just too early to start pointing fingers at just one thing. If it turns our to be transgenic crops, then this will be the first negative impact ever cited! And of course, because transgenic crops are produced by making small precise changes in plants, they can likely be tweaked to alleviate the problem.

SOURCE: http://www.sciencedaily.com/releases/2007/05/070518144833.htm

MINIMUM WAGES- FOR WHO?

Are minimum wages really effective at alleviating poverty? A few weeks ago Walter Williams wrote a fact filled column regarding minimum wages. The facts reveal that minimum wage increases actually prove to be more beneficial to big business and the working middle class as opposed to the working poor.

http://jewishworldreview.com/cols/williams042606.asp

The following facts seem to shed light on many of the popular myths about why we should raise the minimum wage ( either at the state or federal level).

1) after 3 years 85% have found better paying jobs, or have recieved raises

2) only 5% of minumum wage earners are below the poverty line, while almost half have come from families earning $60,0000 or more per year.

3)80% of the people earning minimum wage have no dependents. They are either single, or a working couple with no kids. A vast number are aged 16-25.

Big business benefits because they are better able to manage the increased costs and disruptions to the labor market that result. Smaller businesses become less competitive. In the 90’s when we raised the minimum wage we saw an age of small towns becoming ghost towns while Wal-Mart dominated.

MEXICAN CORN PRICES AND ETHANOL

http://www.csmonitor.com/2007/0521/p09s02-coop.html?page=1


In a recent Christian Science Monitor article, many good points were made about the effects of ethanol on corn prices. I’m not sure every point was on the mark however.

"..in Mexico, where corn is a staple food, the price of tortillas has skyrocketed because US corn has been diverted to ethanol production. "

It is my understanding that another major issue with tortilla prices (food grade white corn) is the lack of biotech varieties. There have not been enough biotech white corn varieties approved for human consumption, making these crops much more difficult and expensive to grow for our producers, so few are willing to grow it anyway. As a result, white corn accounts for less than 1% of US corn production, and already trades at a premium.

Further, even with NAFTA, there are trade barriers that prevent US corn producers from exporting white corn to Mexico. Even in the case of drought and severe shortage over- quota tariffs are quite steep.

Now I also understand that increased corn prices may be leading producers to destroy agave crops- used for tequila. Would the price of corn in Mexico be so high if they could relieve market pressure by importing ?

If ethanol has anything to do with the current plight of Mexican food prices, it is only adding to the misery created by previously existing anti-free trade policies.

COLONY COLLAPSE DISORDER

Before everyone jumps on the bandwagon of laying the blame for Colony Collapse Disorder (CCD) on modern agriculture and transgenic food, lets look at some recent research on the issue. From the University of Ilinois Extension service I found a great commentary on the likelihood of the much used Gaucho (imidacloprid) product being the culprit.

“However, even though imidacloprid is systemic and moves through the plant, it is known to not get into the flowers of a number of plants. With bees primarily visiting flowers, there are questions as to how the bees would pick up the imidacloprid. Another question is when the honey bees pick up the imidacloprid. Many imidacloprid-treated crops finish flowering by midsummer, allowing time for seed or fruit to be produced and ripen before frost. Honey bees tend to feed in late summer and fall on late-season flowers such as goldenrod and native asters. These plants tend to be most numerous in noncrop areas where insecticides are unlikely to be applied. If the bees died earlier in the season from visiting flowering crops, beekeepers surely would have noticed this when they collected honey from the hives.”

If you recall the refuted study that came from Cornell Univeristy a few years ago you will remember Bt genetics have already been prematurely blamed for killing monarch butterfly. Now some are suspecting that Bt corn is the culprit in CDD. Let’s see what the experts from the University of Maryland have to say:

“The endotoxins currently expressed in Bt corn (Cry1 types against caterpillars; Cry3 types against beetles) are not biologically active against hymenopteran insects such as the honey bee, nor do the CCD symptoms resemble those expected in Bt intoxicated organisms. Exposure is also very low because the expression of endotoxins in pollen is barely detectable in most Bt corn hybrids and corn does not produce nectar. For these reasons, bees are not commonly found foraging in corn fields.’

Note, imidacloprid is one of the safest products introduced in decades. To restrict its use would either mean a switch to more lethal chemistries or organic methods that also may have questionable effects on the environment- recall organic producers broadcast the Bt toxin over their crops and kill all insects whether they are pests or not. The environmental benefits from Bt genetics are numerous as indicated in many of my previous entries. Restricting its use would be detrimental to the environment and public health as well. Let’s get to the bottom of CCD instead of trying to push an anti biotech or anti-agricultural agenda.

SOURCES:Illinois Pesticide Review, http://www.pesticidesafety.uiuc.edu/newsletter/newsletter.htmlGALEN P. DIVELY.Extension Pest Management Specialist, University of Maryland http://www.americanfarm.com/TopStory5.01.07f.html

WHITE HOUSE MAKES THE CALL ON GAS PRICES

http://www.washingtontimes.com/business/20070524-121323-8807r.htm

As the Washington Times reports, yesterday the house passed a bill to make price gouging a federal crime. This is an example of 'doing something and accomplishing nothing.' The enforcement mechanisms would only kick in if there was a national emergency such as hurricane Katrina. Of course, during times like this ,that is when price rationing is most crucial. As I mentioned last year ( November 9, 2005-Gas Prices II-Unspoken Miracle), it was a miracle that we got through that crisis and were still able to find gas at the local station.

Correctly reasoning, the White House claimed this would "bring back long gas lines reminiscent of the 1970s." If you know your history and economics you will recall that those lines were created by governement regulation. They were not the direct result of an energy crisis. The Federal Trade Commission has found little evidence of price gouging and also testified against the legislation. President Bush vowed to veto the legilsation if it passes in the Senate.

GAS/TRAVEL IS STILL CHEAPER?

http://agoraphilia.blogspot.com/2007/05/affordability-of-gasoline-2-combustion.html

The above link should take you to a related intersting blog link that I found at the Knowledge Problem blog. We've all observed the tremendous increase in 'nominal' gas prices recently, and nominally they have reached an all time high. Adjusting for inflation, however, gas still is not as expensive as it was in the early 80's. If you look at the percentage of household income spent on transportation- miles traveled- ( a factor that even inflation adjustment does not account for) you will find that even for the lowest income earners, travel is still cheaper today than it was in 1981.

It is amazing what advances in technological progress and economic growth can do to cushion the effects of major problems. Although travel costs have not reached a historical peak, they may be on their way if increasing 'nominal' prices are any indication, and as I have said before, the problem deals mainly with the failure to increase refining capacity in over 30 years.

SHOULD SOMEBODY DO SOMETHING?

This excerpt by Tim Haab was taken from the environmental economics blog- see link under 'environmental blogs.'

"Supplies are decreasing--both temporarily through unexpected refinery shut-downs and permanently through stock depletion. Demand is increasing--both in the U.S. and worldwide. Both of these will cause gas prices to rise and that's good. If gas prices don't rise, we will consume gas even faster and run out sooner. "

He describes the situation well. But what should be done about it. Windfall profit taxes as some of our presidential candidates are proposing would only discourage more refining ( and may actually even discourage investment in alterantive fuels). Setting price caps would counter the rationing effect of prices, and generate longer lines, violence, or closed gas stations like in the 70's. In the short run, the only relief for consumers that makes sense is repealing gas taxes. In the long run we have to focus on decreasing demand- via alternatives- and we should focus on increasing supply by buidling more refineries.

WAL-MART- ORGANIC COTTON?

I recently watched an infomercial featuring Wal-Mart and the contributions that it is making to society. This was obviously a corporate produced marketing film, but it did point out many good things about Wal-Mart that were true. I do have an issue with one aspect dealing with sustainability.

Apparently in some stores Wal-Mart is introducing lines of clothing produced from Organic Cotton. From the corporate web site:

“So, we expanded our organic practice to include select bath, bed and baby products. From just these few orders in a limited number of stores, the Organic Exchange has informed us we will have saved 50,000 – 60,000 lbs of pesticides, herbicides and synthetic fertilizers and other chemicals from being used, and have become the largest single purchaser of 100% organic cotton products in the world.”

Unfortunately, Wal-Mart does not have all the facts about agricultural sustainability. They may have saved 50,000-60,00 pounds of synthetic pesticides, but what about the toxic biological controls used in organic production such as pyrethrum, neem, sabadilla, and rotenone that government regulators don’t even track data for. In citing this data, is Wal-Mart comparing only conventional cotton to organic? What about the environmentally superior biotech varieties of Bt and Roundup Ready cotton?

All of the advantages that Wal-Mart is seeking to exploit from organic food are available via biotech cotton. As noted in previous biotech entries there are many advantages to these technologies in relation to environmental sustainability that organic production cannot provide. ( See 7 reasons why you should support GM food, May1, 2007, Bt Cotton & Environmental Health, or click on biotech label at the end of this entry). While organic product promotion is most likely just a marketing and PR ploy by Wal-Mart, and involves just a limited array of the products they have to offer, they are now the single largest purchaser of 100% organic cotton products.

As a result, because Wal-Mart deals in such large volume, Wal-Mart may be doing more harm than good when it comes to the environment in their decision to buy and sell organic.

Master of Science in Agriculture (Ref.#052)

The Master's Degree is a general degree in agriculture and can be thesis or non-thesis depending on student goals. The degree is general by design which allows for maximum flexibility for each student. 

Emphasis in Biometry(Applied Statistics)

As defined by R.A. Fisher “Biometry, the active pursuit of biological knowledge by quantitative methods” is the application of statistical and quantitative methods to problems in agriculture and life sciences.

This is an interdisciplinary emphasis, combining formal course work with applied problem solving projects and cooperative education. Course work includes statistical inference and experimental design with applications to a variety of problems relevant to agriculture and life sciences.

Applied Statistics and Experimental Design

AGRI 491G DATA ANALYSIS/INTERPRET 3

AGRI 590 EXPERIMENTAL DESIGN 3


Problems and Research Methods in Agriculture

AGRI 598 SEMINAR 3

Statistical Genetics

AGRI 528 POPULATION GENETICS 3

AGRO 414G CROP IMPROVEMENT 3

Supervised Individual Study - Applications

 

AGRI 597 IND SPEC PROB/AGRIC: GAME THEORY/TRAIT RESISTANCE MGT 3


AGRI 597 IND SPEC PROB/AGRIC: ECONOMETRICS/BIOTECH PERCEPTIONS 3

Supervised Individual Study - Cooperative Education Experience


AGRI 597 IND SPEC PROB/AGRIC: COOP EDUC  3

Agriculture Electives

AGRI 475G SPECIALTY CROP PRODUCTION 3
AGRO 521 PASTURE MANAGEMENT 3

AGEC 463G AGRICULTURAL FINANCE 3
AGEC 468G WORLD FOOD DEVELOPMENT 3

TOTAL HRS: 36 

ECONOMIES OF SCOPE IN BEEF AND ETHANOL PRODUCTION?

In a previous entry I noted that research seems to be mixed with regards to the energy balance of ethanol production. That may turn out to be dependent on the layout and location of the particular facility with relation to the users of by-products.

Currently in Meade Nebraska an ethanol plant has started production in conjunction with a cattle feedlot. In this operation 30,000 head of cattle will supply manure that will be used to create methane gas via an anaerobic digester.
Methane is 21 times more powerful than CO2 when it comes to heating the atmosphere. So instead of being released into the atmosphere this gas will be used to operate the ethanol plant instead of using natural gas. The residual of the grain used for ethanol would then be used as cattle feed and the residual from the manure digestion could be used as fertilizer for the supplying corn crop. All of this implies less petroleum use in ethanol production, swaying the energy balance to the positive, and perhaps indicating economies of scope in corn, beef and ethanol production.


SOURCES:
http://www.epa.gov/methane/scientific.html
www.iowafarmertoday.com

ETHANOL AND ENERGY BALANCE

According to David Pimental of Cornell University, the production of ethanol requires almost 30% more energy to produce than it provides as a fuel. Another study from UC Berkeley concluded that ethanol is less fossil fuel intensive that gasoling production, but has greenhouse emisisions similar to gasoline. Finally a researcher at MIT reports a slight advantage for gasoline, but one that can easily be overcome via technological breakthroughs in the near future. According to research from a Proceedings of the National Academy of Sciences study ethanol yields 25% more energy than the energy invested in its production, whereas biodiesel yields 93% more.


So it seems the jury is still out on the energy balance of ethanol, with a slight advantage on the positive side.

SOURCES:
http://environment.newscientist.com/
Natural Resources Research, vol 14 p65
Science, vol 311 p 506
Tiffany Goode, MIT (Graduate Student)
PNAS July 25, 2006 vol. 103 no. 30

BEEF PRODUCTION NOT ALL WET

The latest publication of BG-Green-Zine ( a local mag about making Bowling Green more sustainable) just reported that it takes 5200 gallons of water to produce 1 lb of beef, and encouraged a reduction in ( at least factory farmed) beef. It encouraged the use of organic, family farmed, local beef. This was among a number of tips for every day conservation. No evidence was offered that would indicate less water use in the case of organic or local beef production, so I’m not sure why it would be superior with regards to water usage.

Green-Zine is not the first to cite the 5200 gallon figure. Many groups have used it, making such claims as people consume enough beef to float a battleship in terms of the associated water input required to produce it. I did find a 1978 study on my own that corroborated the 5200 figure, but also found studies with numbers 2500, 840, and UC Davis research citing 441 gallons of water per pound of beef. The NCBA ‘National Cattleman’s Beef Association lists 435 gallons as the official estimate. (one group criticized this research because one of the researchers wore a cowboy hat-indicating industry connections). As indicated in my previous entries on beef, beef production is more environmentally friendly than ever before.( see 'beef ' label at end) If it is true in 1978 that it required 5200 gallons of water to produce 1 pound of beef, then in a worse case scenario where it would require 2500 gallons of water, beef production is about 200% more water-use-efficient than 28 years ago. If the NCBA figures are correct, then beef production is 12 times more water efficient than 28 years ago.

These numbers should only improve with the introduction biotech feed crops that are more drought tolerant and require less water. I doubt that the improvements in organic production will keep pace with the recent advancements we’ve seen. So, if there ever was a time to eat beef, now is it! The environmental foot print is smaller than ever.

7 reasons why you should support the production of genetically modified food:

1) Safer Chemical Use than Conventional Synthetic and Organic Biological Controls
2) Improved Soil Conservation
3) Improved Nutrient Profiles
4) Carbons Sequestration - Carbon Credits
5) Improved Biodiversity
6) Decreased Dependence on Fossil Fuel
7) Reduces Greenhouse Gas Emissions

Explanatory Notes:
Roundup Ready technology has allowed for glyphosate herbicide to substitute for 7.2 million pounds of other chemicals that are more toxic and persistent in the environment. Bt expressed in plants is much safer than organic broadcast Bt, sulfur, copper, or conventional synthetics. Bt and glyphosate resistant varieties make strip tillage, no- till, and reduced tillage practices, as well as crop rotation more viable and profitable. These practices improve soil conservation, require less fossil fuel use, reduce greenhouse gas production, and complement carbon sequestration efforts as opposed to tillage practices of organic and conventional agriculture. By using safer more precise chemicals combined with better genetics, crop yields are optimized disturbing less land and maintaining more diversity among both pest and non pest populations. The complementary relationship between reduced tillage, carbon sequestration, and the ability to produce carbon credits is certainly something to consider if we are to ever implement Kyoto style emissions standards.
--------------------------------------
Sources:
Agricultural Outlook ERS/USDA Aug 2000
Leonard, Roger, LSU Agricultural Center and Dr. Ronald Smith, Auburn University.
Nelson, Gerald C. “Genetically Modified Organisms in Agriculture: Economics and Politics.” San Diego Academic Press 2001. Preston, Christopher. “Peer Reviewed Publications on the Safety of GM Foods. Results of a search of the PubMed database for publications on feeding studies for GM crops.” Senior Lecturer in Weed Management,

Massachusetts v. EPA

The recent Massachusetts v. EPA decision concluded that the EPA has authority to regulate CO2 emissions. It is now up to the EPA to determine if there is truly a link (empirical vs. theoretical) between anthropogenic CO2 and global warming. It also must determine if the problem is serious enough to devote its resources to developing standards for CO2 emissions.

Some are urging congress to pass legislation to reduce CO2 emissions by 80% by 2050. A first step could involve corporate average fuel economy (CAFE) standards. How many lives are worth how many tons of CO2 reduction? The National Academy of Sciences 2001 report on CAFE standards estimates that the lethal impact of CAFE related changes in automobile designs results in the loss of 1300-2600 lives per year. Ford's share of the blame for the Explorer/Firestone debacle can largely be linked to CAFE related factors. Amendments to the Clean Air Act brought us the poisonous oxygenate-groundwater pollutant MTBE. These are just some instances of what could result from an overzealous reaction.

Legislated CO2 reductions that slow economic growth would disproportionately affect low-income people. This legislation also has the potential to create ‘rent seeking’ opportunities for big business. Enron was a top corporate supporter for the adoption of the Kyoto Treaty because of the expected profits that would result. When California was developing regulations for reformulated gasoline, Unocal influenced the legislation to mirror some of its own refining patents.

Instead mandating the pollution of our groundwater with energy additives, increasing the fatality rate in automobile accidents, or creating profit opportunities for big business, perhaps a better approach for dealing with climate change or any environmental problem is to develop resilient market based economies that are able to invest in the technology necessary to adapt to ever changing resource constraints.

BIOTECH CROPS AND GREEN PRODUCTION

Advances in biotechnology have made new industrial biotech processes possible. They allow the use of renewable resources for ingredients which decrease costs and the impact on the environment. They often also reduce the use of petroleum-based energy sources, cut greenhouse gas emissions and even reduce water use.

Bio-based enzymes and polymers derived from GM plants lower the amount of green house gasses emitted and release fewer toxic chemicals into the air and water. The resulting products are more durable and often biodegradable.

SOURCE: Farm Industry News Feb 1, 2007

TYPE II ERROR BIAS IN GOVERNMENT DECISION MAKING: THE CASE OF KATRINA*

Type II error bias is not limited to just the FDA. In the April 2006 journal Public Choice Russel Sobell and Peter Leeson explain that type II error bias played a role in the delayed response of the federal government after hurricane Katrina.

Let’s say our government leader finds them self in the following predicament. After the destruction and the levees have broken someone has to make the decision to send in relief workers. However there are risks. Disease infested water, collapsing buildings and roads, roaming bandits, toxic chemical exposure etc. If our leader sends in workers and they meet a terrible fate, the consequences are on his shoulders. Later the media would hang him over sending our brave heroes in harms way.

Given limited information, here is the model in the context of hypothesis testing:

Ho: X= Xo ‘it is too harmful to send in relief ASAP’
Ha: X= Xa: ‘the harm is trivial, and justified to send in relief ASAP’


Type I Error: sending relief workers into unnecessary danger

If on the other hand, our government official decides to wait, until he has better information he could avoid this. The consequences may be the lives of hurricane victims, but the blame can be shared with nature.

Type II Error: Over cautiousness that prevents a quick response by relief authorities

In general this is one of the explanations given in the Public Choice article explaining the federal government’s response to Hurricane Katrina. It is also one of the reasons in general that many of our leaders at the federal, state, local, levels fail to make timely decisions or provide leadership when needed.

TYPE II ERROR BIAS: THE FDA

Let’s assume that FDA researchers are reviewing a drug for possible approval. They are reviewing results and data from clinical trials etc. Of course there are some side effects , but only from a small percentage of the samples. Let’s look at a model of their decision making process in the context of hypothesis testing. Let’s assume:

Ho: X = Xo ‘drug is harmful’
Ha: X = Xa ‘drug is safe’

If the decision makers make the mistake of releasing a harmful drug, the consequences would be easily identifiable, and could be visibly traced to their decision. They would want to avoid this at all cost. In essence, they want to avoid making a type I error.

Type I Error: = releasing a harmful drug

From my previous discussion on hypothesis testing, we know that to decrease the probability of committing a type I error, we choose an alpha level that is lower. In a t-test, if we are really afraid of making a type I error, we might set alpha ( the significance level) at .05, .01, or to go overboard.001 etc.

As previously discussed, setting alpha lower and lower increases beta, or the probability of committing a type II error. Recall, a type II error is accepting a false Ho. In this case that would be equivalent to falsely concluding that the ‘drug is harmful’ when it could actually be released and improve the lives of millions.

Type II error bias = over precaution; setting alpha so low, or setting the standard of proof so high as to almost always reject Ho, and biasing the decision in such a way that the probability of a type two error (beta) is greatly increased.

As a result of type II error bias, many life improving drugs never make it to the market.

TRICKLEDOWN TAXES

This is in response to the article in the Daily News ‘New tax OKed on first reading’

http://bgdailynews.com/articles/2007/03/14/local_news/news/news3.txt

How much of the money in the county budget shortfall is related to illegal immigrants, or refugees that are brought into the county? If either of these are reasons contributing to our budget shortfall then we have a serious case of unfunded mandates.

First, is it not the job of the federal government to control immigration? Truly, illegal immigration is only a problem if it contributes to increased levels of crime strains both federal and local resources, in cases like we may have now with Warren County. If the federal government cannot resolve the illegal immigration problem, why should we have to pay for it locally?

Even with legal immigrants that are refugees, why should we have to pay for federal programs that are unconstitutional?

In 1794 Congress appropriated $15,000 for relief of French refugees. James Madison objected stating "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

Have we amended the constitution since 1794 to allow for this? If this is something that the people of the United States would like to do, then I do not have as much of a problem with it. It is in fact a very charitable act. But, it must be done with our consent. In this case, expanding the role of government beyond the powers specifically enumerated in the constitution requires consent in the form of a constitutional amendment. That requires a vote of two-thirds of both the House of Representatives and the Senate, followed by a ratification of three-fourths of the state legislatures.
This may seem like a very drawn out process, but is was designed by our founders to ensure the ‘consent of the governed.’ According to economist Walter E. Williams of George Mason University, two-thirds of federal spending has by-passed these criteria for consent. It is what economist Thomas Sowell has coined ‘the quiet repeal of the American Revolution’ in his book ‘The Quest for Cosmic Justice.’

So now, we are paying higher taxes at the federal level without our consent. As a result of these federal programs and failure to secure our borders we are having resource problems at the local level. Is that why they are proposing a tax on insurance premiums? Is this a ‘trickle down’ effect? Are these ‘trickle down tax increases’?

TYPE I AND TYPE II ERRORS

In an experimental setting where a statistical test of a hypothesis is conducted one may either reject the null hypothesis ‘Ho’, or fail to reject Ho. Let’s assume that the true population parameter we are testing is X. Our null hypothesis may be Ho: X=Xo.

The probability of rejecting the null hypothesis when it is true can be defined by:

Alpha = P (reject Ho X = Xo)

Rejecting the null hypothesis when it is actually true is referred to in statistics as a type I error. Therefore alpha is the probability of ‘committing’ a type 1 error. In a basic statistics, when you conduct a basic t- test ( i.e. reject Ho if t > t-critical) at the 5% level of significance, you are establishing a 5% chance of committing a type one error.

Of course, you may fail to reject Ho, or loosely speaking ‘accept’ Ho.

The probability of ‘accepting’ Ho when it is false can be defined by:

Beta = P (accept Ho X = Xa)

Speaking heuristically, accepting a false Ho is referred to as a type II error. Beta is therefore the probability of committing a type 2 error.

It turns out, that as you increase the significance level of a test ( by making alpha lower and decreasing the probability of a type I error), the probability of a type II error (beta) increases. This is the theoretical basis for ‘type II error bias.’

GOVERNMENT DECISION MAKING AND TYPE II ERROR BIAS

It has long been affirmed by economists that the FDA’s drug approval process suffers from type II error bias. This results in fewer drugs coming to the market that could improve the well being of millions. In the April 2006 journal Public Choice Russel Sobell and Peter Leeson explain that type II error bias played a role in the delayed response of the federal government after hurricane Katrina. In the next few posts I plan to explain type I and type II errors, and type II error bias in government decision making.

Bt COTTON AND ENVIRONMENTAL HEALTH

Because Bt cotton and Bt corn provide pest protection in the plant( a gene is expressed that is toxic to lepidoptera species of insects) there is no need for the less effective broad spectrum application of insecticides. As a result only insects that feed directly on the plant are affected. This is a great stride in protecting diversity and beneficial insect populations. In addition it reduces worker exposure to pesticides (with regards to both conventional and organic production). For example, in China, 400-500 deaths per year are attributed to pesticide poisoning. Since the introduction of Bt crops in China, pesticide applications have decreased by 75%.

The Bt plant genetics essentially displace the manufactured synthetics. According to research from Dr. Roger Leonard at the LSU Agricultural center and Dr. Ronald Smith at Auburn University, 1.04 million fewer pounds of insecticide are applied each year as a result of the reliance on Bt genetics in cotton alone. As a result about 2 million gallons of fuel are saved each year from decreased manufacturing and distribution of chemical pesticides. In addition, 2.41 million gallons of fuel and 93.7 million gallons of water are saved on the farm from fewer insecticide applications.

Sources: Dr. Roger Leonard, LSU Agricultural Center. Dr. Ronald Smith, Auburn University. Gregory Conko “The Benefits of Biotech” Regulation Spring 2003.
Gerald C. Nelson Genetically Modified Organisms in Agriculture: Economics and Politics San Diego Academic Press 2001.

ECONOMISTS VS CLIMATOLOGISTS

When an economist is asked about a policy such as increasing the minimum wage, he is able to abstract from mathematical models and explain to the laymen the potential effects. In addition, in explaining these effects, he will often introduce contradictory models and discuss their strengths and weaknesses. In many cases he has empirical evidence to offer to support his theoretical analysis. While an economist may make what appears to be a one sided argument, he is often able to offer reasons why competing theories are off base.

It does not appear to me that climatologists are able to do this. At least not as presented in the media. Climate models are no more complex than an economists comparative statics, differential equations, or econometrics. The media certainly expounds on the facts that global temperatures have risen by about 1 degree since the early 19th century, and that CO2 emissions have at the same time increased 30%. Immediately man's connection to global warming is made, and with a few quotes from the IPCC, the prestige of science is granted to movies such as "An Inconvenient Truth" and "The Day After Tomorrow." You seldom hear about competing ideas. When you hear about a skeptic, they are immediately discredited and lumped in with Holocaust deniers ( which is the same as resorting to personal attacks vs. arguing facts).

QUOTES

These are some great quotes from our founding fathers. I obtained them from the website of economist Walter E. Williams of George Mason University.

In 1794, when Congress appropriated $15,000 for relief of French refugees who fled from insurrection in San Domingo to Baltimore and Philadelphia, James Madison stood on the floor of the House to object saying, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." -- James Madison, 4 Annals of congress 179 (1794)

"Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated." --Thomas Jefferson, Letter to Albert Gallatin, 1817

"Whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force."-- Thomas Jefferson, Draft Kentucky Resolutions, 1798. The Writings of Thomas Jefferson, (Memorial Edition) Lipscomb and Bergh, editors, ME 17:380

"I cannot find any authority in the Constitution for public charity. [To approve the measure] would be contrary to the letter and spirit of the Constitution and subversive to the whole theory upon which the Union of these States is founded." -- President Franklin Pierce's 1854 veto of a measure to help the mentally ill.

"I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit."-- President Grover Cleveland vetoing a bill for charity relief (18 Congressional Record 1875 [1877]

ADVANCES IN BEEF PRODUCTION: HUMAN AND ENVIRONENTAL HEALTH

Since I’ve covered some of the major objections to beef production ( hormones, feeding grain to cattle(see “ETHANOL AND CORN FOR FOOD ”), and antibiotic use) I’m ready to talk about the health and environmental benefits that consumers have derived from the scientific advances in beef production.

In 1990, there were only 9 cuts of beef that could be classified as ‘lean’ (< 10 grams of fat/serving). Now there are 29 cuts, including the tenderloin, sirloin, and 95% lean ground beef.
These cuts have less than 10 grams of total fat, 4.5 grams or less of saturated fat and less than 95 milligrams of cholesterol per 3-ounce serving. On average 20 of the 29 lean beef cuts have, only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving.

I read this info from the National Cattlemans Beef Association web site, and thought to myself is this really true. All it took was one trip to Kroger’s meat section and some packaged beef/chicken comparisons and I was convinced. The media, past experience, and general consumer ignorance made me think that beef was an unhealthy product in general. I could not have been more wrong ( but I liked it anyway). In additon. beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.
In addition, the advances in nutrition, management, and genetics has made beef more productive. Beef production per cow has increased from about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. More food per pound of grain equates to a lesser impact on the environment.

HORMONE FREE BEEF

There is no such thing as hormone free beef. Conventionally produced beef with hormone (estrogen) implants contains about 1.9 nano-grams of estrogen per 3 oz serving of beef. Even organic ‘hormone free’ beef contains 1.6 nano-grams of estrogen per 3-oz serving.

This is just over a difference of ½ of a nano-gram. These amounts are enough to provide improved feed efficiency in beef production, but too little to have any response in the human body.


In contrast, a 3-oz serving of soybean oil contains 168,000,000 nano-grams of estrogen. The average human produces about 136,000 nano-grams of estrogen on a daily basis.

These claims are is just another example of a marketing strategy for ‘natural’ and ‘organic’ production.

It is also an example of food fears born out of politics and rhetoric vs. science.

SOURCES: Sources: Food and Drug Administration; Hoffman and Evers; Scanga et al.; FSIS-USDA; Dr. Harlan Ritchie, Michigan State University

ETHANOL AND CORN FOR FOOD

Should we be concerned that demand for corn for ethanol will lead to increased prices of corn based food products for consumers?

I'm more concerned with the corn used for animal feed vs. human consumption (as in Corn Chips). Corn raised for direct human consumption is a very small part of the total market for corn. It's production and cost functions are quite different from other types of corn. The different types of corn are not likely close substitutes in production. (even soybeans and corn for feed are likely better substitutes) I'm not sure if most corn producers grow more or less corn for human consumption based on demands for ethanol or livestock feed since it's not the same corn (this is also a strong rebuttal to those who laud the comment 'eat a steak starve an African').

Although I agree if corn for ethanol and animal feed becomes profitable enough, some producers may retool and switch to producing commodity grade corn, causing increased price pressures in the food markets as indicated in the previous post.
But for now I think we'll see greater ramifications from the livestock markets and meat prices. We'll see more corn acres grown at the expense of soybeans, driving up their prices as well.

From the livestock producer's perspective, a good policy question would be, why should government be legislatively creating demand for ethanol and creating a boom market for one industry segment, while increasing the costs (in corn and feed prices) in another. Of course there is debate and on going research being done related to how this is actually going to affect livestock producers.

BEEF: ANTIBIOTICS OR ANTI-SCIENCE?

Marketing Myth: Overzealous use of antibiotics in beef production is contributing to resistance to antibiotics essential to human health.

This line of thinking is leading many to advocate possibly ‘outlawing’ the use of feed grade antibiotics. Demonstrable rates of gain can be made by adding low levels of antibiotics to feed rations. These antibiotics are not the same drugs used to fight infection in humans.

Most antibiotics used in the livestock industry are used for treating, controlling, and preventing disease. Only 13% are used to improve nutritional efficiency and enhance growth. Despite fears related to antibiotic use in livestock and resistance in humans, no scientific link has been found.

In fact the health consequences of reducing antibiotic use in animals could have far more serious implications. This may sound counter intuitive to what’s reported in the media. However, in Denmark where some feed grade antibiotics have been banned, an increased reliance on therapeutic usage (30%) has resulted because of the increase in animal sickness. The same thing happened in Sweden as well. Let it be known that this increase represents increased of drugs that happen to be vital for human health.

Even after reviewing the science behind feed grade antibiotics, if consumers still want ‘antibiotic free’ beef, there is certainly a market for it. However, politicians and activists should not make political ‘hay’ from these interests by promoting feeding regulations that endanger the health of consumers as a whole.

PORK: MARKET INCENTIVES FOR A BETTER ENVIRONMENT

If you read my previous entry you might say OK, so what about the environment? What good does it do to provide consumers with healthy food if it leads to an unhealthy environment?

Well the same trend in technological advancement that is leading to healthier pork products are also leading to cleaner, ‘greener’ production practices. Simply, improved nutrition and swine genetics means better nutrient utilization and basically less ‘potent’ excrement. With more nutrients being absorbed and utilized by the livestock we have fewer making it into streams and water sources. This results in less pollution

Examples include corn with altered amino acid profiles, energy content, and available phosphorus levels. NutriDense corn developed by ExSeed Genetics is a prime example. Other companies such as Monsanto and Pioneer Hi-Bred are also developing similar products. Rations have even been developed to help manage odor control.

The bottom line is that better nutrition and genetics that leads to improved feed efficiency and rate of gain means less impact on the environment per pound of food produced. The truth is that laws mandating healthier food choices did not bring about these advancements. They were brought about by consumer demands and the profit incentives associated with meeting those demands.

PORK: MARKET INCENTIVES FOR BETTER HEALTH

McDonalds has been in the news lately for its unhealthy menu. People like to blame unrestrained capitalism for the poor choices people make in their diet and the widespread availability of unhealthy food. However, we must recognize that there are many positive, healthy, and environmentally friendly trends that are also consumer and profit driven.

In order to compete with the poultry industry, and its perceived leaner and healthier food products, the pork industry has been campaigning for over a decade to respond to consumer demands for healthier food choices i.e. the campaign slogan ‘Pork: the other white meat.’ Due to advances in feed technology, management, and swine genetics, the pork industry has been able to improve their products to meet these demands. It is now possible to choose pork over chicken and not have to compromise on fat intake. Pork loin now has less fat than an equal serving of chicken breast.

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THE REAL THANKSGIVING ( FROM NOV'05)

Thanksgiving was not about the Pilgrims embracing diversity and thanking the Indians (otherwise known as Native Americans) for helping them survive. The celebration was about thanking God for the abundance which ultimately resulted from a move away from socialism ( imposed on them by the Colony’s Sponsors) to free market capitalism.

As governor William Bradford commented on the dreadful conditions of 1622:

" . . . the young men . . . did repine that they should spend their time and strength to work for other men's wives and children without any recompense. The strong . . . had not more in division . . . than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labors and victuals, clothes, etc . . . thought it some indignity and disrespect unto them. And the men's wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc., they deemed it a kind of slavery, neither could many husbands well brook it.""For this community of property (so far as it went) was found to breed much confusion and discontentment and retard much employment that would have been to their benefit and comfort . . . all being to have alike, and all to do alike . . . if it did not cut off those relations that God hath set amongst men, yet it did at least much diminish and take off the mutual respects that should be preserved amongst them."

In the Spring of 1623, they moved away from Socialism and embraced the incentives of Private Property and Capitalism:

"All their victuals were spent . . . no supply was heard of, neither knew they when they might expect any. So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length . . . the Governor (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. . . . And so assigned to every family a parcel of land . . . "

"This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn, which before would allege weakness and inability, whom to have compelled would have been thought great tyranny and oppression."

Thanksgiving is therefore about freedom, private property and the unrestrained ability to worship and show thanksgiving.

A RELIGIOUS THANKSGIVING

(reprint from Nov '06)
George Washington certainly felt that the celebration of Thanksgiving could not be divorced from any religious connotation, as indicated in the following Thanksgiving Day proclamation:

"It is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favors."

Although certainly not as revered as the Birth of Christ, it is as much a religious holiday as Christmas, Easter or Passover. Unfortunately this aspect of Thanksgiving has been downplayed in our schools and replaced with teachings about tolerance and ethnic diversity. They have been so successful at this there is no wonder that when it comes time to talk about Thanksgiving in the classroom, virtually no one opposes. This is because the celebration has become completely divorced from its true meaning, and hence is uncontroversial to the secularists.

They have not been so successful with Christmas, however the attempts to divorce this holiday from all historical meaning are well underway. We are seeing 'Christmas' replaced with 'Holiday.' It is done in the name of tolerance and diversity awareness.

It was in 1789 that George Washington gave the above Thanksgiving Day Proclamation. By 1989 its celebration has already lost much of its true meaning as taught in the schools and celebrated by many. I wonder what will be the fate of Christmas in the year 2089?

WHAT'S SO GREAT ABOUT AMERICA

In the book "What's So Great About America" Dinesh D'Souza points out that the three truly western institutions of science, democracy, and capitalism are responsible for the hegemony of western culture.

This blog primarily has a focus on science and economics (in sorts a study of capitalism), which certainly are influenced by government. In light of this and the upcoming Thanksgiving Day holiday (which is a celebration of the triumph of providence, capitalism, and agriculture) the next few series of entries will carry this theme- taking a brief rest of the previous focus on organic foods.

STEM CELL SCIENCE

With approaching elections, debates about embryonic stem cell research have been given lots of attention. While issues of ethics have been brought up, weighing the destruction of embryos against possible medical breakthroughs, no one seems to have given much attention to related advancements in stem cell science.

Recently, a team of researchers at Advanced Cell Technology reported in the journal Nature that they have been able to remove singe cells from human blastomeres (cell groupings that result from mitotic divisions of the embryo) and coax these cells into forming embryonic stem cells with no harm to the embryo. If this procedure can be replicated successfully, then one side of the ethics argument may become irrelevant.

A QUIET REPEAL

A colleague, who certainly carries views of the more liberal and left wing flavor commented on how out of bounds our state’s concealed carry laws were. He certainly is of the opinion that these laws do more to endanger the populace than protect it. He criticized the politician who introduced the bill. The politician I’m sure took the opposite view.

Both individuals are confused about where they should focus their criticisms. The 2nd amendment of the constitution makes clear that all people are to have an unfettered right to bear arms, with no exceptions mentioned regarding concealment or otherwise.

While the politician may have felt that he won a victory for the 2nd amendment, the fact that a bill had to be introduced at all is testament of our government not recognizing protected constitutional rights. He should have taken his passion to the Supreme Court, who should simply side on the basis of a literal interpretation of the constitution. My colleague, while disgusted with the politician, should realize that his true focus should be on amending the constitution to restrict the use of guns.

Of course, to the disgust of all of us, this is not likely to happen. It is in the best interest of each legislature to push through every bill necessary to maintain power, and our courts do not have a reputation of standing in the way. This process has been coined ‘ the quiet repeal of the American Revolution’ by economist Thomas Sowell in his book ‘The Quest for Cosmic Justice.’

Why is this relevant to this blog? This blog is devoted to science and economics, and both are heavily influenced by the way we are governed. In fact, many of the things that I have written about are in response to potential governmental and political behaviors.

QUOTES

"Would I prefer that the world was nothing but organic agriculture? Yes. But on the other hand GM crops have a much higher yield per acre and use less pesticides."
-Leslie Hoffman, Director, Earth Pledge

" Over the next 10 years. I predict the mainstream of the environmental movement will reverse its opinion and activism in four major areas: population growth, urbanization, genetically engineered foods, and nuclear power."
-Founder, The Whole Earth Catalog

"You couldn't feed more than 4 billion people on an all organic diet."
-Norman Borlaug, Winner, Nobel Prize for accomplishments in agricultural advances benefiting the 3rd world.

ORGANIC FACADE

While organic foods provide us with a sense of nostalgia for 19th century agriculture, its claims of safety, sustainability, and ‘greenness’ can be distracting. Case in point, the recent recall of E. coli infested spinach, traced to a major organic producer, Earthbound farms. According to the Center for Global Food issues, organic foods are 8 times more likely to be recalled than conventional food. Although organic food makes up less than 1% of diets in the US, it accounts for 8% of all food E coli cases.

According to a University of Minnesota study, researchers determined that produce grown with manure aged 6-12 months was actually 19 times more likely to be contaminated with E. coli than foods grown with manure aged more than a year. USDA organic rules allow manure to be applied after just 3 days of composting—right up to harvest time and raw manure can be applied until 90 to120 days prior to harvest in most cases.

It’s true that conventionally growers may also use manure as part of their fertility program, but in a recent study published in the Journal of Food Protection, organic produce was 6 times more likely to be contaminated with E. coli than conventional produce. Conventional growers always have the option of reducing manure use and supplementing with synthetic alternatives that offer the same nutritional value with less risk and increasingly less damage to the environment as genetics and technology improve.
Perhaps that’s why the founder of The Whole Earth Catalog believes the environmental movement will soon reverse its trend of aversion to GM foods.

ROUNDUP READY GM & ENVIRONMENTAL HEALTH

Roundup Ready technology (GM) has allowed for 5.4 million pounds of glyphosate herbicide to substitute for 7.2 million pounds of other chemistries (ex: imazethapyr,pendimethalin,trifluralin ). What are the public health implications of this?

Let’s look at the properties of these chemicals as they relate to environmental health.

PERSITENCE: Roundup (glyphosate) has a half-life of 47 days vs. the much longer periods of those chemicals it has displaced.

TOXICIY: The chemistries roundup has displaced are 3-16 times more toxic.

So we have a GM crop that enables producers to use chemicals that are less toxic and less persistent in the environment than conventional crop production systems.

Perhaps this is why 73% of consumers say they are willing to accept GM products because of their potential for improving safety and environmental impact.

Source: Agricultural Outlook ERS/USDA Aug 2000

GREEN GOUGING

Many pundits try to characterize global warming as a golem created by greedy corporations. Much environmental policy is developed under this guise. Unfortunaltey, giving the federal government the power to regulate commerce in the name of soaking the rich leads to ‘rent seeking’ that in the end benefits large corporations and hurts the poor. In the name of ‘green’ and responsible refining, Unical successfully lobbied for tight restrictions on refining in California during the 90's. Once the standards were passed it was revealed that noone could refine gas and remain compliant without violating Unical’s patented refining technology. This resulted in windfall profits for Unical, restricted gasoline supplies, and higher prices at the pump.

Restrictive environmental laws that decrease the incentive for oil exploration, the building of refineries, and expanding our electrical grid all lead to ( at least to some degree) increased market power for incumbent corporations. If anyone complains about ‘price gouging’ and ‘abnormal profits’, these are the polices that help make it possible.

Free markets, growth, and investment are perhaps the best solutions for achieving energy stability that is in the interest of everyone as opposed to just politicians and big business.

GLOBAL WARMING POLICIES

Just as many of the models that are predicated on anthropogenic global warming are built on poor assumptions, many of the policies proposed to mitigate the effects of global warming are also based on bad assumptions.

It is assumed that the benefits we will reap from ‘preventing’ global warming will outweigh the costs of the polices themselves. If it were possible to stop global warming via human oriented policies this might be true in theory. Because human influence on the climate is likely trivial, policies that try to subvert human behavior to prevent global warming are not likely to be successful. Once this is realized, the costs to economic growth and human welfare really stand out.

According to a researcher at Wesleyan University, stabilizing emissions at 1990 levels could reduce US per capital growth by 5% per year. ( an entry on the importance of economic growth soon to follow). The infrastructure problems that currently are causing high gas prices would only be exasperated by piling on more regulations that can only restrict supply and exasperate the problem. While research and development of alternative energy sources may be a better alternative, technology development and adoption is made possible in conjunction with investment and economic growth. Policies that impede this in the name of preventing global warming will certainly minimize private sector incentives in this area despite any funding from government.

The best solution for dealing with climate change is to develop resilient economies that are able to invest in the technology necessary to adapt to ever chaining resource constraints.

GLOBAL WARMING: MODELING FARCE

Many of the projections that the media, rock stars, and grant greedy academics are using to build a ‘consensus’ on human influenced (lets call it anthropogenic global warming) global warming are based on mathematical models. As a student of economics I have a great appreciation of mathematical models. They are very compact and precise ways to express ideas with logical consistency. However, they are not necessarily scientific, and like any logical argument, they are only as good as their assumptions.

Many of the models that ‘predict’ or ‘explain’ anthropogenic global warming include parameters that are essentially assumptions about which we have little firm data to be certain about. These include the effects of cloud formations, precipitation, the role of oceans, and the sun.

Inherent in almost all dialogue and reporting about what these models imply is the assumption that human behavior is a large contributor to global warming. Although the climate has been warming over the last century, most of the warming occurred before 1940 (when temperatures in the arctic were actually just as warm or warmer than they are today). This was in the very early stages of modern industrialization and hence human production of greenhouse gases and CO2 on a large scale. This assumption about human influence is not supported by any empirical evidence, despite its widespread use as anecdotal support for what is implied by mathematical models.

WHAT'S UNNATURAL ABOUT GM

According to the European Union, food classified as GM contains genetic material that has been altered in a way that does not occur naturally by mating or recombination.

Their premise is that it is not natural to take genes from one organism and implant them in another. What are we talking about when we say 'genes'? Heuristically speaking, genes consist of a specific sequence of DNA base sequences (guanine,cytosine,adenine,and thymine) that lead to the expression of traits.

With traditional plant breeding, we develop plants with superior arrangements of DNA base sequences via the transfer of thousands of genes from one plant to another. These arrangements represent drastic changes in plant characteristics that would not have occurred naturally. (for example, modern corn scantly resembles its ancestor teosinte) Since the 1960's scientists have also been engaged in what is referred to as mutation breeding. In this procedure plant cells are attacked with gamma rays inducing ‘unnatural’ new combinations of DNA base sequences. Much of the pasta consumed in the world today is derived from wheat developed via mutation breeding. These changes to plant DNA are much more extreme than what molecular biologists are doing in the laboratory today.

Unlike traditional plant breeding methods, the laboratory techniques of molecular biology that are used to create ‘transgenic’ or GM plants induce very specific and precise changes in plants. The rearrangement of DNA base sequences is known and controllable. While these combinations would not have occurred naturally, the base sequences are common to all organisms and are as natural as can be. One could argue that the risk associated with these modern techniques is much less than with traditional crop improvement methods.

FALSE DICHOTOMIES

The debate over president Bush's possible veto of legislation regarding federal funding of stem cell research has been falsely characterized as a conflict between those who are ‘pro science’ and those who are ‘religious’ and ethics centered.

In this case it is the position of the media and other critics is that we should divorce ethics from science with regards to public policy. Science is a pure and objective standard upon which public policy decisions should be based, while ethics (especially Judao-Christian ethics) are equated with irrational biases and ignorance.

This hypocrisy, inconsistency, and intellectual dishonesty becomes apparent when the debate shifts from stem cell research to genetically modified foods. In this case science is equated with corporate greed and exploitation. It follows that science has been corrupted by the profit motive and is no longer objective, so we must rely on ethics or theories of environmental justice and social justice to guide our decisions.

Scientific solutions to problems always have implications for human welfare. It follows that in every case questions of ethics (often influenced by religious beliefs) arise. An honest media will portray these issues as two separate debates and steer away from the false dichotomy of science vs. ethics. One debate should be framed in terms of empirical facts regarding the soundness of the science involved. The other should encompass ethical considerations whether they involve theories of social justice, religion, or normative economics. It is irresponsible for the media, academia, or politicians to choose sides in a debate and then present it as a contest between enlightened scientists and religious nuts.

BIOTECH SAFETY

Why are groups like CSPI and Green Peace so opposed to transgenic crops? Perhaps the most egregious perception that they try to perpetuate among the public is that GM crops are unsafe. We have been consuming foods derived from what most people consider to be GM crops(GM referring to gene-spliced or transgenic crops in laymen's terms) for over 10 years without any adverse effects to human health. Currently more than 70% of the products we find on the grocery store shelves are derived from GM crops. 90% of all enzymes used in large scale food processing result from using gene spliced microorganisms. Most people fear the laboratory techniques involved in producing GM foods. What we must remember is that the same free market incentives and regulatory system that has ensured that our water and air have been clean (with improving numbers) over the last 30 years provide no exception with regards to biotechnology.

We have more than a 40 year track record for safety with regards to more drastic crop improvement techniques such as chromosome doubling and mutation breeding. Some believe that we have taken our concern for safety too far, leading to hampered long term advancements in public health.

BETTER LIVING VIA BIOTECH

CSPI and groups like them are very hypocritical to go after agribusiness the way they have KFC. Our food would be much healthier if these groups did not instill fear and ignorance in the population regarding transgenic/GM foods. Just as GM crops with altered fatty acid profiles can provide healthier cooking oils there are GM potatoes that have altered protein solids that absorb less saturated fat during cooking. McDonalds refuses to use these potatoes because of the GM factor.

Transgenic/GM crops must go through multiple layers of testing before they can be approved for production and especially for human consumption. This costs millions of dollars, and creates a barrier to entry for new biotech startups and universities- all of which could be producing the science necessary for improved and sustainable healthy living.

The same regulatory agencies involved in ensuring that our food is free from pathogens, allergenic, mad cow disease, and that our medicines are safe as well- are responsible for the safety of biotech crops. The opportunity cost to our health and the world that we are bearing in the name of 'safety' in nutrition is huge.

BETTER LIVING VIA LITIGATION

The Center for Science in the Public Interest is after KFC for using hydrogenated oils in their food products (resulting in trans-fatty acids). Hydrogenation makes polyunsaturated fatty acids ( like linoleic acid) more stable food ingredient.

Of course the resulting trans-fatty acids are unhealthy. And of course CSPI is once again behind on their awareness of the current state of science and technology. "The beans are already in the ground." Low-lin beans that is. PioneerHi-Bred International, Inc( a subsidiary of DuPont) is now marketing and farmers are now planting soybeans with altered fatty acid profiles with lower levels of linoleic fatty acids that obviate the need for hydrogenation.

In a few years time, with more genetic and supply chain improvements they will likely be the norm for food ingredients. This is the market's response to both consumer desires and the uncertainty created by frivolous litigators like CSPI. Why waste everyone's time and money with a long drawn out lawsuit, or worse a government intervention, when we have the technology and incentives to correct the problems through institutions and forces already in place.

Of course the low-lin trait is stacked with other positive environmental health traits like glyphosate resistance. (i.e. Genetically Modified), which I am sure CSPI or other anti science and anti freedom gainsayers will oppose.

TEACHING THE WRONG LESSON

Currently there is a school in Pennsylvania that is entertaining making it against the rules for parents to have lunch with their kids on the school premises if they bring in unhealthy fast food.

Of course, their logic is that schools should teach students to live healthy lifestyles and make healthy choices. But this is not what is being taught by example. By example, this ruling would be showing children that the state defines what a good choice is and has the power to ensure that we make that choice. It teaches that experts are better able to decide what is better for the lowly pedestrian subject who claims ownership to his own body. (and by extension his family and property)

This approach would however work better teaching a subject like mathematics. Even though math is a very important subject, in my high school they did not force everyone to learn algebra. Instead they re-invented pre-college mathematics through storytelling and arts and crafts. How can we give students a free hand to make their own choices about the correct answer to a math problem through creative writing( which many modern high school math courses emphasize opinion over fact as mine did), and then act like tyrants when it comes to personal choices where opinion actually matters.

The role of the school in this matter should be EDUCATION. Teach mandatory courses about nutrition and the possible consequences of lifestyle choices. Maintain a mandatory year-round physical education curriculum. Let the life they live be the final exam.

Oil Profits

According to Energy Secretary Samuel Bodman, oil and gas prices have increased because supply has been unable to keep up with demand. He also said that it might take a couple of years before they can close the gap. He has sighted increased worldwide demand, Middle East instability, and environmental compliance as chief reasons for the shortfall.

Ultimately these firms need to invest in increasing their capacity. The high costs of environmental compliance have reduced profitability and have acted as barriers to entry, resulting in decreased supply, competition and higher prices.

Now both republicans and democrats have entertained the idea of ‘recapturing’ big profits by windfall profit taxes or repealing tax credits for ‘big oil.’ Part of their rationale is that oil companies have done nothing to ‘earn’ these profits and therefore do not ‘deserve’ them.

They forget the role of profits is not only to reward those producers who do the best job filling our most urgent needs, but they also have an essential role in directing resources to where they are in need most. And to relieve the oil markets we need those profits to encourage investment, competition, and ultimately increased supply of oil and gas. Recently Shell has proposed plans to build the biggest refinery in the US.

The idea that oil companies have done nothing to ‘earn’ high profits is farce. It is fuel that makes it possible to get our food safely to the table, provide medical care, deliver goods and services, and exercise our greatest freedom to come and go as we please. By definition profits represent the net contribution a firm makes to society. When it comes to energy, oil companies have a lot to contribute.

Smoking Ban - Cat’s Paw (University of Kentucky)

If individuals do not want to be exposed to cigarette smoke, then they have the choice not to patronize places that allow smoking. This is no different than avoiding hard rock concerts if you don't want to expose yourself to the potential threat of wild fans, possible fights, bottle throwing etc.

If workers don't want to be exposed to cigarette smoke, then they can choose other work. This is no different than avoiding other hazardous jobs in agriculture, mining, or high rise construction.

If consumers and workers are willing to bear these costs at first and if the choices of FREE individuals (the market) dictate then smoke free facilities will arise to meet their needs. We have already seen this with restaurants like McDonalds and many other family restaurants.

With each choice there is a cost that must be borne by the consumer or worker. They may have to choose a different restaurant or job. . The effort to ban smoking is a pusillanimous attempt by such interested parties to force others to bear these costs, and to get quick results overnight. Also if you assume that the air in the restaurant that you own is part of the bundle of property rights associated with owning the establishment, then such a ban on smoking should be considered a "taking" of this property. The owners of these establishments should be compensated for the loss of property rights and financial damages that result.

If our own well being and safety in such small matters are reason enough for such an intrusion on our liberty, then such government policies will not stop with cigarettes. They are only the most obvious starting place. Fast foods, buffets, baking goods, and genetically modified foods could be next.

As Thomas Jefferson said long ago: “The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite.”