Tuesday, June 28, 2011
Do we get more energy out of ethanol than it takes to make it?
"Overall then, ethanol has made the transition from an energy sink, to a moderate net energy gain in the 1990s, to a substantial net energy gain in the present."
2008 Energy Balance for the Corn-Ethanol Industry. USDA
Monday, June 20, 2011
Friday, June 17, 2011
Regulating Commerce
Given the recent talk from the department of transportation regarding the possibility of requiring farmers and ranchers to have commercial drivers licenses, I thought I'd revisit some the flawed ideas related to the commerce clause. As it is, one of the regulator's primary concerns is if agricultural activity in this sense constitutes 'interstate commerce.'
In the case Wickard v. Filburn (1942) the Agricultural Adjustment Act (AAA) was found to be constitutional. This was on the basis that congress had a right to ‘regulate commerce.’
The power to ‘regulate commerce’ can be found article 1 Section 8 of the constitution. It is listed as one of the enumerated powers of the constitution:
‘To regulate Commerce with the foreign Nations, and among the several States, and with the Indian Tribes;’
In this case a farmer’s crop was being taxed because he produced more than was allowed under the AAA. His defense was that the federal government had no power or business telling him what he could grow on his private property in his state.
The court concluded that even though his crop was grown on his land in his state, it was possible that after he sold it, it could be marketed with grain harvested by other producers across the country. As a result this was considered ‘interstate commerce’ and could be regulated or taxed. The court did not give any more specific definition of ‘interstate commerce’ and set a precedent that if an activity could be considered ‘interstate commerce’ in theory, then it was subject to federal jurisdiction.
Was the court’s decision consistent with what was written in the constitution and our founder’s intentions? How broad did they interpret the power to regulate commerce?
What was meant by regulating congress among the several states?
In Federalist # 45 we read the following:
‘The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.’
‘The powers reserved to the several states will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people and the internal order, improvement, and prosperity of the state.’
It appears here that our founders never intended for the federal government to be very involved with business and agriculture in the states. The Wickard interpretation is very broad. It does not seem consistent with the idea that the powers of the federal government are few or defined. It is obvious that this decision is contrary to our founder’s idea of limited government.
If we read Federalist # 41, six powers of the federal government are identified and explained. Two of these described the federal government’s relationship with regard to interstate commerce.
‘Maintenance and Harmony and proper intercourse among the states.’
‘Restraint of the states from certain injurious acts.’
To put this in context, after the American Revolution, some of the states were imposing tariffs on each other. The purpose of the interstate commerce clause was to prevent these kinds of ‘injurious acts’ so that trade and ‘proper intercourse’ could take place between the states. The founders never intended that the federal government should have the power to control every aspect of trade that occurred in or even between the states.
Given this history and the state of fear that our founders had of a powerful government, they would have never ratified the constitution if they thought ‘to regulate commerce’ meant congress would have the power to intervene in private business based on nothing more than a theoretical connection to interstate commerce. Wickard v Filburn lead to a huge expansion of power unanticipated by our founders, and a transfer of power away from the people and states without their consent.The purpose of the constitution was to ensure that the government did very little without the consent of the governed. Court cases like these leave us defensless.
As quoted from Ayn Rand’s book Atlas Shrugged ‘ …the government’s plans cannot be held up by the matter of your consent.’
Re-printed from my AgWeb post: http://www.agweb.com/blog/Economic_Sense_190/Regulating_Commerce_Agricultural_History_18256/
In the case Wickard v. Filburn (1942) the Agricultural Adjustment Act (AAA) was found to be constitutional. This was on the basis that congress had a right to ‘regulate commerce.’
The power to ‘regulate commerce’ can be found article 1 Section 8 of the constitution. It is listed as one of the enumerated powers of the constitution:
‘To regulate Commerce with the foreign Nations, and among the several States, and with the Indian Tribes;’
In this case a farmer’s crop was being taxed because he produced more than was allowed under the AAA. His defense was that the federal government had no power or business telling him what he could grow on his private property in his state.
The court concluded that even though his crop was grown on his land in his state, it was possible that after he sold it, it could be marketed with grain harvested by other producers across the country. As a result this was considered ‘interstate commerce’ and could be regulated or taxed. The court did not give any more specific definition of ‘interstate commerce’ and set a precedent that if an activity could be considered ‘interstate commerce’ in theory, then it was subject to federal jurisdiction.
Was the court’s decision consistent with what was written in the constitution and our founder’s intentions? How broad did they interpret the power to regulate commerce?
What was meant by regulating congress among the several states?
In Federalist # 45 we read the following:
‘The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.’
‘The powers reserved to the several states will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people and the internal order, improvement, and prosperity of the state.’
It appears here that our founders never intended for the federal government to be very involved with business and agriculture in the states. The Wickard interpretation is very broad. It does not seem consistent with the idea that the powers of the federal government are few or defined. It is obvious that this decision is contrary to our founder’s idea of limited government.
If we read Federalist # 41, six powers of the federal government are identified and explained. Two of these described the federal government’s relationship with regard to interstate commerce.
‘Maintenance and Harmony and proper intercourse among the states.’
‘Restraint of the states from certain injurious acts.’
To put this in context, after the American Revolution, some of the states were imposing tariffs on each other. The purpose of the interstate commerce clause was to prevent these kinds of ‘injurious acts’ so that trade and ‘proper intercourse’ could take place between the states. The founders never intended that the federal government should have the power to control every aspect of trade that occurred in or even between the states.
Given this history and the state of fear that our founders had of a powerful government, they would have never ratified the constitution if they thought ‘to regulate commerce’ meant congress would have the power to intervene in private business based on nothing more than a theoretical connection to interstate commerce. Wickard v Filburn lead to a huge expansion of power unanticipated by our founders, and a transfer of power away from the people and states without their consent.The purpose of the constitution was to ensure that the government did very little without the consent of the governed. Court cases like these leave us defensless.
As quoted from Ayn Rand’s book Atlas Shrugged ‘ …the government’s plans cannot be held up by the matter of your consent.’
Re-printed from my AgWeb post: http://www.agweb.com/blog/Economic_Sense_190/Regulating_Commerce_Agricultural_History_18256/
Rand Paul's Pro Choice Agenda
Choice is fundamental in a free society, however, this most basic civil right is constant prey for special interests and power hungry politicians. This radio broadcast from AgriTalk with NCBA president Steve Foglesong pretty well sums up many of the major issues in agriculture and economic policy for that restrict our personal freedoms. As he says, GIPSA (new proposed rules) is another example of excessive government overreach, among other things including the takeover of the financial industry, the auto industry, as well as proposed regulations on dust and greenhouse gases, not to mention proposed tax increases on thousands of family farms and ranches (marginal tax rates are still set to increase in 2011). Add to that the attempt in the courts to ban sustainable choices in alfalfa and sugar beat (biotech) production earlier this year and coming legislation that will limit choices related to sustainable livestock production via pharmaceutical technologies.
Now, even more imperious, some in the department of transportation are investigating whether producers and farm workers should be required to have CDL (commercial drivers licenses) licenses to transport agricultural products or operate farm equipment. The basis is on another flawed interpretation of the commerce clause. This is ridiculous, what about kids and teenage employment? Labor and compliance costs would skyrocket. ITS NOT ABOUT SAFETY!!! Of course accidents happen, but the role of licensing in an economy in general is about power and control as opposed to virtue. The flawed assumption or justification is that licensing will make drivers safer or more responsible. I have a feeling that there are special interests behind this that could care less about your safety or civil right to choose.
As Steve Foglesong implied, this has to stop somewhere. We saw what happened to the financial and auto industry as a result of excessive intervention (via the social planning of money and interest) and obsessive attempts to micromanage our choices in housing and automobiles (via CAFE standards). (contrary to the misinformed opinion that it was lack of planning and regulation that caused the financial crisis). Do we really want to be bailing out the agriculture industry in a few years? While some may claim ag has a revolving bailout program in subsidies, we are currently spending less than 1/2 of 1 percent of the federal budget on farm programs. Continuing to micromanage our food and fiber system to the point of collapse would entail a lot larger sum (recall agriculture is a huge part of GDP and is responsible for about 1 in 6 jobs in the U.S.- in the end do we really want to be bailing out Wal-Mart or McDonalds?)
Luckily, some in the senate are taking a stand against this affront on our personal freedoms and liberties. Particularly in the video, Senator Rand Paul from Kentucky has taken on the energy department's out of control mircomanaging of the simplest aspects of our daily lives
What's obvious is the emoting comeback we get from the energy department, vs. Senator Paul's cutting analytic approach based on fundamental economic principles. (see also The Misery of 1.6 Gallons and Ch. 3 and17 in Robert Murphy's Lessons for the Young Economist) We need more critical and analytical thinking like this in DC. The obvious flaw in the energy department's defense of limiting our choices in light bulbs or toilets is that 'consumers wouldn't make environmentally responsible choices without these restrictions.' Is that true in every case? Look again at agriculture. Noone is forcing producers to use green bio tech and pharmaceutical technologies in animal production, but farmers have adopted them hand over fist and nearly everything we find on the shelf (save the limited numbers of GMO free and organic products) is a biotech related product. The resulting improvements in biodiversity, reductions in toxic chemical use, and particularly greenhouse gas and water use reductions from these choices dwarf the impacts of light bulbs and toilets. Spontaneous order.
Wednesday, June 08, 2011
Working at the Fed
From: When a Nobel Prize Isn't Enough
"The Fed has to properly assess the nature of that unemployment to be able to lower it as much as possible while avoiding inflation. *If much of the unemployment is related to the business cycle — caused by a lack of adequate demand — the Fed can act to reduce it without touching off inflation*…...We need to preserve the independence of the Fed from efforts to politicize monetary policy"."
This line of thinking is what characterizes the Fed's activity in the 2000's leading up to the financial crisis and likely at least partly is contributing to our anemic recovery (and hopefully not setting the stage for a second dip). I'm not sure how the Fed can truly achieve political independence without relinquishing its very political mandate related to unemployment. While Diamond may have been qualified (a statement that Mankiw endorses) I'd prefer bringing back ThomasHoenig who's set to retire this year.
Sunday, June 05, 2011
Can we and should we really price carbon?
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Frederick Hayek
What some people think about climate economics:
What economists must do then is take consensus science into account, and approximate what the price of carbon should be to limit economic damages from CO2. This level will be achieved where the marginal cost of reducing carbon emissions is equal to the benefits of decreased damages from climate change in the future.
What some people believe to be the current state of the art of climate economics:
Nordhaus ( Using the DICE-2007 model, and based on the science of the IPCC Fourth Assessment Report) prices carbon at about $30/ ton, with the average person in the US generating about 5tons/yr, for a total of about $150/year, or .09 /gallon of gas and .01/kwh for electricity. However, the Stern Proposal(proposed by another economist in the U.K) estimates the damage from global warming to be closer to $300/ton carbon for the next two decades. In this case we are looking at increasing gas prices by about $1.20/gallon. (read more)
Discussion:
What some people think about climate economics:
What economists must do then is take consensus science into account, and approximate what the price of carbon should be to limit economic damages from CO2. This level will be achieved where the marginal cost of reducing carbon emissions is equal to the benefits of decreased damages from climate change in the future.
What some people believe to be the current state of the art of climate economics:
Nordhaus ( Using the DICE-2007 model, and based on the science of the IPCC Fourth Assessment Report) prices carbon at about $30/ ton, with the average person in the US generating about 5tons/yr, for a total of about $150/year, or .09 /gallon of gas and .01/kwh for electricity. However, the Stern Proposal(proposed by another economist in the U.K) estimates the damage from global warming to be closer to $300/ton carbon for the next two decades. In this case we are looking at increasing gas prices by about $1.20/gallon. (read more)
Discussion:
Let's ponder, who is right, and how can economics narrow the gap between these approaches?
Carbon Taxes
The idea of pricing carbon is that given the assumption that CO2 production has a negative impact on climate change and so many goods and services are carbon intensive, if we can put a price on carbon (paid by corporations that trade carbon permits or a carbon tax) to capture the value of the negative externality, this will 'trickle down' to the mirco level, such that when you buy an ice cream cone, gasoline, or a pencil, the impact of your choice on the climate will be captured in the price you pay for it. This is the climate change knowledge problem. We have to get the initial price of CO2 correct so that the 'trickle down' economics works at the micro level and we ward off catastrophic climate change.
The correct price for carbon will balance the marginal cost of reducing carbon emissions with benefits of decreased damages from climate change in the future. As Armstrong points out, there are few scientific forecasts related to these future damages. And technological change allows us to continually respond the volatile effects of climate change. Advances in biotechnology are allowing us to produce more climate resilient crops, all the while reducing our carbon footprint in agriculture. How can we incorporate this knowledge into our calculus? When it comes to the costs of reducing carbon emissions, it isn’t any easier. What are the opportunity costs of resources invested in emissions mitigation (voluntarily vs. those mandated or incentivised by government administered prices for carbon)?
Tradeable Permits
Some will argue that instead of a tax, you can get similar or superior results by defining property rights in the form of carbon credits or tradeable permits. Then markets can solve the information problem via the price mechanism that manifests in the trading of permits. The problem still stands. Someone has to initially assign some quantity of permits to 'polluters.' This quantity has to be based on some determination of an 'optimal' quantity of CO2 emissions. This also requires the information necessary for determining the marginal benefits and costs of each associated unit of CO2. The knowledge problem has not been solved, just reformulated in a way that is equivalently intractable for planners to solve. Unless planners get this quantity right, the price that 'trickles down' at the micro level for all goods and services will be too high or too low, based on the artificial scarcity or excess created by the planners’ miscalculation. The classic example of the Coase Theorem solves the externality of pollution of common property like a lake by clearly assigning property rights. The optimal level or quantity of pollution is a separate problem solved by the price mechanism via subsequent exchanges of property rights or contracting. In the case of CO2, the assignment of property rights and the optimal quantity of pollution both have to simultaneously be determined. You have to determine some initial quantity of pollution in order to create the permits (which a are then traded to establish a price).
From the Capitalism Today Blog at Western Kentucky University there was recently a discussion regarding macroeconomic equilibrium and the difficulties of knowing the micro-level equilibrium for something (seemingly) as simple as ice cream:
"They act as if not only there is equilibrium, but that they know where it is. If anyone knows exactly how many ice cream cones the US needs to produce tomorrow, please raise your hands. What no hands? No one can know the “appropriate” amount of ice cream cone production for today let alone for tomorrow. The $15 trillion US economy makes a lot more than just ice cream cones."
I think this analogy may also apply to pricing carbon. Ice cream comes in lots of varieties and flavors, produced and marketed various ways (natural, conventional, biotech, hormone free, organic, home made, store bought, ice cream trucks, retail outlets). Ice cream is pretty differentiated when you think about it. What about carbon? Noone knows how to set a 'national' or even a 'local' price for items as seemingly simple as ice cream or pencils, or the correct quantity that our complex world requires. Why do we expect carbon to be any different than ice cream or pencils? Even if economists like Nordhous and Stern were in agreement, their solutions would not sufficiently deal with climate change's knowledge problem.
Some will agree that planners are no match for markets in determining prices and quantities, but because we currently have no established property rights to the atmosphere there is no 'price' for carbon. As such, there are going to be consequences if we do nothing, and the next best solution is an attempt, even if not perfect, to price carbon because it is not considered in market transactions.
Is that really the next best solution and is it true that the price mechanism totally ignores CO2?
What is carbon really? 'Carbon' in an economy manifests itself in how we heat and cool our homes, how we manufacture goods and services, how we respond to emergencies, how we travel and transport goods, how we store and retrieve information. Leonard E. Read's essay I, Pencil demonstrates the complexity involved in an economy that thrives on disaggregated information and processes with numerous feedback loops and interactions. In a complex society, carbon is no different, and while it may not be explicitly and directly priced, it is hard to believe that its role is not part of the pool of knowledge characterized by the partial bits of information held by all individuals in society.
In fact, while politicians and special interests argue over the politically optimal arrangement of regulatory protections and subsidies to 'combat climate change' markets have responded in much more meaningful ways without any bureaucratically administered price of carbon or cap on CO2.
As Dr. Don Boudreaux of George Mason University points out in a recent piece in the Wall Street Journal, in response to climate alarmists’ connecting violent storms and climate change (and obviously calling for centralized solutions to combat it): (read more)
"...because of modern industrial and technological advances—radar, stronger yet lighter building materials, more reliable electronic warning devices, and longer-lasting packaged foods—we are better protected from nature's fury today than at any other time in human history."
Perhaps the innovations in green technologies in agriculture provide the greatest example of mitigating climate change:
Total decreases in carbon dioxide as a result of using biotech crops was equivalent to removing 6 million cars from the road in 2007. The carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. For every 1 million cows, the reduction in global warming potential from rBST supplemented cows is equivalent to removing 400K cars from the roadways or planting 300 million trees. The use of grain and pharmaceutical technology in beef production has resulted in a nearly 40 percent reduction in greenhouse gases (GHGs) per pound of beef compared to grass feeding. Intensive agriculture has actually has a mitigating effect on climate change with a reduction of 68 kgC (249 kgCO2e) emissions relative to 1961 technology. (read more)
Conclusion:
We are not really sure how to price carbon, and what we observe in all of these instances is that despite the absence of a centrally planned price or quantity of carbon, people are making choices that optimize its use or production. A centralized approach to rationing carbon requires resources to be invested in two major ways: 1) lobbying lawmakers to tweak the proposed rules and regulations 2) complying with the burdens of a centrally planned price or quantity. Should we assume that the use of resources in this way have a higher valued use than mitigating climate change in other ways (like market driven investment in green technologies like biotech)? The best approach to dealing with climate change or any environmental problem may be to develop resilient market based economies that are able to invest in the technology necessary to adapt to ever changing resource constraints.
Some will agree that planners are no match for markets in determining prices and quantities, but because we currently have no established property rights to the atmosphere there is no 'price' for carbon. As such, there are going to be consequences if we do nothing, and the next best solution is an attempt, even if not perfect, to price carbon because it is not considered in market transactions.
Is that really the next best solution and is it true that the price mechanism totally ignores CO2?
What is carbon really? 'Carbon' in an economy manifests itself in how we heat and cool our homes, how we manufacture goods and services, how we respond to emergencies, how we travel and transport goods, how we store and retrieve information. Leonard E. Read's essay I, Pencil demonstrates the complexity involved in an economy that thrives on disaggregated information and processes with numerous feedback loops and interactions. In a complex society, carbon is no different, and while it may not be explicitly and directly priced, it is hard to believe that its role is not part of the pool of knowledge characterized by the partial bits of information held by all individuals in society.
In fact, while politicians and special interests argue over the politically optimal arrangement of regulatory protections and subsidies to 'combat climate change' markets have responded in much more meaningful ways without any bureaucratically administered price of carbon or cap on CO2.
As Dr. Don Boudreaux of George Mason University points out in a recent piece in the Wall Street Journal, in response to climate alarmists’ connecting violent storms and climate change (and obviously calling for centralized solutions to combat it): (read more)
"...because of modern industrial and technological advances—radar, stronger yet lighter building materials, more reliable electronic warning devices, and longer-lasting packaged foods—we are better protected from nature's fury today than at any other time in human history."
Perhaps the innovations in green technologies in agriculture provide the greatest example of mitigating climate change:
Total decreases in carbon dioxide as a result of using biotech crops was equivalent to removing 6 million cars from the road in 2007. The carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. For every 1 million cows, the reduction in global warming potential from rBST supplemented cows is equivalent to removing 400K cars from the roadways or planting 300 million trees. The use of grain and pharmaceutical technology in beef production has resulted in a nearly 40 percent reduction in greenhouse gases (GHGs) per pound of beef compared to grass feeding. Intensive agriculture has actually has a mitigating effect on climate change with a reduction of 68 kgC (249 kgCO2e) emissions relative to 1961 technology. (read more)
Conclusion:
We are not really sure how to price carbon, and what we observe in all of these instances is that despite the absence of a centrally planned price or quantity of carbon, people are making choices that optimize its use or production. A centralized approach to rationing carbon requires resources to be invested in two major ways: 1) lobbying lawmakers to tweak the proposed rules and regulations 2) complying with the burdens of a centrally planned price or quantity. Should we assume that the use of resources in this way have a higher valued use than mitigating climate change in other ways (like market driven investment in green technologies like biotech)? The best approach to dealing with climate change or any environmental problem may be to develop resilient market based economies that are able to invest in the technology necessary to adapt to ever changing resource constraints.
Friday, June 03, 2011
More on “Wanna Bet”
More on the details and reasoning behind Dr. Boudreaux's bet:
"My prediction is that, as long as ours remains a reasonably free-market economy – and, for all of its imperfections, I'm predicting that the U.S. economy will continue to be 'reasonably free market,' and one that, despite the absurd protectionist efforts of the likes of Sens. Sherrod Brown, Lindsey Graham, and Chuck Schumer, an economy increasingly and (hence) beneficially integrated in to the global economy – our increasing prosperity and the global-economy's innovation will make Americans increasingly safe from the worst effects of tornados, floods, and hurricanes.
By the way, not only will Americans become more protected from these weather events; peoples in other market-oriented societies will, too."
Thursday, June 02, 2011
Lessons for the Young Economist - Robert P. Murphy - Mises Institute
A great reference principles of economics text (no charge & available in several formats)
http://mises.org/resources/5706/Lessons-for-the-Young-Economist
Tuesday, May 31, 2011
On Twisters, Markets, & Climate Change
More Weather Deaths? Wanna Bet? -WSJ May 31,2011
...because of modern industrial and technological advances—radar, stronger yet lighter building materials, more reliable electronic warning devices, and longer-lasting packaged foods—we are better protected from nature's fury today than at any other time in human history.
While time and resources are wasted trying to *design* a pricing or regulatory framework (with all of the requisite handouts to corporate and special interests that killed Waxman-Markey) to combat climate change, the price mechanism seems to have the lead on actually dealing with it. Consider also that green technology breakthroughs in food production (like biotechnology and growth enhancing pharmaceuticals) and the consequent reductions in greenhouse gas emissions have dwarfed the impact of wind, solar, and hybrid cars. All without regulatory mandates or putting an official price on carbon. In fact, from a regulatory perspective, we've done much to limit these breakthroughs (for example recent restrictions on biotech alfalfa, sugar beets etc. while giving tax credits an subsidies to the former) likely accompanied by the applause of some of those most vocal about combating climate change.
...because of modern industrial and technological advances—radar, stronger yet lighter building materials, more reliable electronic warning devices, and longer-lasting packaged foods—we are better protected from nature's fury today than at any other time in human history.
While time and resources are wasted trying to *design* a pricing or regulatory framework (with all of the requisite handouts to corporate and special interests that killed Waxman-Markey) to combat climate change, the price mechanism seems to have the lead on actually dealing with it. Consider also that green technology breakthroughs in food production (like biotechnology and growth enhancing pharmaceuticals) and the consequent reductions in greenhouse gas emissions have dwarfed the impact of wind, solar, and hybrid cars. All without regulatory mandates or putting an official price on carbon. In fact, from a regulatory perspective, we've done much to limit these breakthroughs (for example recent restrictions on biotech alfalfa, sugar beets etc. while giving tax credits an subsidies to the former) likely accompanied by the applause of some of those most vocal about combating climate change.
Monday, May 30, 2011
President's Discussion of Farm Subsidies or The Combines Have Taken Over the Farm
Recently at a town hall the president responded to a 'vegetable' farmer's question (about the President's policy direction for farm programs):
'very profitable big combines are getting a lot of money from taxpayers’
The machines have taken over, combines have taken on a mind of their own and are keeping all of the farm subsidy money for themselves! But maybe the combines are our only hope for defending the planet from GMO zombie frankencrops! It is sad, but to some, these ideas aren't humor, sarcasm, or science fiction.
Seriously, I'm sure the combine statement was just another spoof. Just like President Bush and Sarah Palin or any politician in this age of multimedia, good luck with avoiding being caught on camera being human. Just hope the media is responsible and objective with the footage.
Some of this dialogue on farm subsidies goes back to the largely under-analyzed mantra repeated over and over again that most farm subsidies go to the largest wealthiest farms. As I've pointed out before here, it's true that the bulk of money spent on farm policy (of that that doesn't go to other programs) goes to larger operations, but on a dollar for income basis it's the smaller farms that benefit the most. So, the income caps would ensure that only those farms that depend the most on the subsidies would get them. However, in terms of getting the most out of our tax dollars in terms, other data (as pointed out by economist Darren Hudson at Texas Tech)shows that larger farms produce more per dollar spent. If larger farms also adopt green technologies (like biotech and autosteer technology) at greater rates than smaller farms then it is possible that they are also more sustainable.
The other issue, how to limit subsidies to 'genuine family farms.' The terms 'family farm' and 'factory farm' are often used by activists in very manipulative and political way, divorced from any real objective definition. I'm optimistic that our policy makers are more shrewd and objective. Based on USDA numbers, 98% of all farms are family farms. There is no income cutoff. And, as this farmer points out in the Huffington Post, (also consistent with my data) it doesn't take but a few thousand acres to produce revenues near or above $1 million dollars and the land and capital necessary to for even these smaller grain farms could also put net worth into the millions (which is why the death tax disproportionately penalizes family farms so heavily). Even on the net, it would make sense to have a 'risk adjusted' net worth cutoff (since farming can be an extremely financially risky operation). Doing these things would probably put means adjusted cutoffs back in the range of the top 6% of family farms. (back to wealthy profitable combines)
Lower cutoffs would probably only have the effect of propping up hobby farms, or small vegetable farmers that produce for themselves or maybe a local farmers market. But that's a dramatic shift, and a change from subsidizing staples that feed the world to novelty crops that are nice to have. Perhaps that is the answer the farmer in the town hall was looking for.
In the grand scheme of things, what to spend on agriculture is really a philosophical 'size and scope of government' question anyway. The amounts being spent make little or no difference to the budget deficit (<.5%). Long gone are the days when we were plowing under crops and slaughtering livestock to deal with the surpluses. Because the payments make up such a small part of most farmers incomes, any disincentives have been overpowered by market driven Investments in green technologies and improved production practices that have reduced any negative environmental consequences pointed out by activists that want more intervention. Even in the area of ethanol, consumers are saving about $400 /yr even netting out energy differences from gasoline and we are now exporting to Brazil.
References:
Obama calls for "revamping" of farm support system, possible income caps for subsidies
http://www.cbsnews.com/8301-503544_162-20062208-503544.html
The Face of A Giant Agribusiness - The Huffington Post
http://www.huffingtonpost.com/noah-hultgren/face-of-a-giant-agribusin_b_861502.html
Agritalk- May 12, 2011
http://www.agritalk.com/podcast/?p=episode&name=2011-05-12_may_1211.mp3
'very profitable big combines are getting a lot of money from taxpayers’
The machines have taken over, combines have taken on a mind of their own and are keeping all of the farm subsidy money for themselves! But maybe the combines are our only hope for defending the planet from GMO zombie frankencrops! It is sad, but to some, these ideas aren't humor, sarcasm, or science fiction.
Seriously, I'm sure the combine statement was just another spoof. Just like President Bush and Sarah Palin or any politician in this age of multimedia, good luck with avoiding being caught on camera being human. Just hope the media is responsible and objective with the footage.
Some of this dialogue on farm subsidies goes back to the largely under-analyzed mantra repeated over and over again that most farm subsidies go to the largest wealthiest farms. As I've pointed out before here, it's true that the bulk of money spent on farm policy (of that that doesn't go to other programs) goes to larger operations, but on a dollar for income basis it's the smaller farms that benefit the most. So, the income caps would ensure that only those farms that depend the most on the subsidies would get them. However, in terms of getting the most out of our tax dollars in terms, other data (as pointed out by economist Darren Hudson at Texas Tech)shows that larger farms produce more per dollar spent. If larger farms also adopt green technologies (like biotech and autosteer technology) at greater rates than smaller farms then it is possible that they are also more sustainable.
The other issue, how to limit subsidies to 'genuine family farms.' The terms 'family farm' and 'factory farm' are often used by activists in very manipulative and political way, divorced from any real objective definition. I'm optimistic that our policy makers are more shrewd and objective. Based on USDA numbers, 98% of all farms are family farms. There is no income cutoff. And, as this farmer points out in the Huffington Post, (also consistent with my data) it doesn't take but a few thousand acres to produce revenues near or above $1 million dollars and the land and capital necessary to for even these smaller grain farms could also put net worth into the millions (which is why the death tax disproportionately penalizes family farms so heavily). Even on the net, it would make sense to have a 'risk adjusted' net worth cutoff (since farming can be an extremely financially risky operation). Doing these things would probably put means adjusted cutoffs back in the range of the top 6% of family farms. (back to wealthy profitable combines)
Lower cutoffs would probably only have the effect of propping up hobby farms, or small vegetable farmers that produce for themselves or maybe a local farmers market. But that's a dramatic shift, and a change from subsidizing staples that feed the world to novelty crops that are nice to have. Perhaps that is the answer the farmer in the town hall was looking for.
In the grand scheme of things, what to spend on agriculture is really a philosophical 'size and scope of government' question anyway. The amounts being spent make little or no difference to the budget deficit (<.5%). Long gone are the days when we were plowing under crops and slaughtering livestock to deal with the surpluses. Because the payments make up such a small part of most farmers incomes, any disincentives have been overpowered by market driven Investments in green technologies and improved production practices that have reduced any negative environmental consequences pointed out by activists that want more intervention. Even in the area of ethanol, consumers are saving about $400 /yr even netting out energy differences from gasoline and we are now exporting to Brazil.
References:
Obama calls for "revamping" of farm support system, possible income caps for subsidies
http://www.cbsnews.com/8301-503544_162-20062208-503544.html
The Face of A Giant Agribusiness - The Huffington Post
http://www.huffingtonpost.com/noah-hultgren/face-of-a-giant-agribusin_b_861502.html
Agritalk- May 12, 2011
http://www.agritalk.com/podcast/?p=episode&name=2011-05-12_may_1211.mp3
Wednesday, May 25, 2011
Jude Capper on Sustainable Beef
From a recent interview with food sustainability expert Dr. Jude Capper:
What is the environmental impact of beef grown on grass compared to conventional beef?
Dr. Capper – "Cows grow more slowly when grass is all they eat. If all of the beef in the U.S. were grass-fed we would need an additional 64.6 million cows in order to match the amount of beef produced in 2010. That would require an additional 131 million acres of land, which is about 75% of the state of Texas. That many cows would need an additional 1,700-billion liters of water, which amounts to the annual consumption of 46.3-million U.S. households. These cows would generate an additional 135 million tons of carbon which would be like adding 26.6 million cars to the road every year. So, in terms of land, energy, water, and carbon, grass-fed beef has a much larger environmental impact than conventional beef production."
Is it more natural for a cow to eat grass instead of corn?
Dr. Capper – "Cows probably did not eat corn 500 years ago. But does it matter if it's natural as long as it improves environmental impact, food safety, and beef affordability? Almost nothing we do today is 'natural' compared to 500 years ago. We have cars and airplanes. We have treatments for cancer and heart disease. Why is it that in every other business sector we celebrate increased efficiency and productivity thanks to new technology while when it comes to food some want it done the old-fashioned way?"
Read the entire interview:
Saturday, May 21, 2011
Time has come to end farm subsidies (or end small farms?)
"This is good news. Agricultural subsidies cost taxpayers more than $15 billion each year, and until those subsidies are eliminated, farming in America will never be sustainable." - Baltimore Sun, May 18, 2011.
I've seen similar numbers reported recently in the New York Times as well. Bear in mind, $15 billion sounds like a lot, but it amounts to less than 1/2 of 1% of total federal spending. The data also show that small farms depend more heavily on subsidies than larger farms (often misunderstood as 'big agribusiness' or 'industrial farms' ). Eliminating subsidies then, if anything would lead to more concentration in the industry and larger farms.
So in terms of financial sustainability, then yes the article would be correct on that point, as the smaller, less financially sustainable farms may go away. But what about environmental sustainability?
Many of the green technologies (herbicide and pest resistant GMO crops, pharmaceuticals) used by modern farmers dwarf the impact of other consumer green technologies like hybrid cars. Many of these are 'scale neutral' (for instance, the single largest growing demographic among GMO adoption is small farmers in developing countries) so eliminating small farms that use these technologies won't help with sustainability, given they have adopted these technologies. Other green technologies in agriculture include GPS and auto steer technology. Larger scale production is likely necessary to get the most (financially and environmentally) from these technologies.
Among those most lagging in green technology adoption are organic producers, which have zero tolerance for GMOs, (although fully embracing more volatile methods utilizing nuclear radiation to breed better plants)
However, even as the market for these products is greatly expanding, it makes up a very small proportion of the food we consume (largely supplementals like fruits and vegetables vs. the staple commodities that feed the world) making organic largely irrelevant to the overall conversation about sustainability in agriculture and subsidies. I'm not sure why the article even goes down this path.
Some are arguing for a compromise, capping subsidies based on income level. That may be a way to preserve smaller farms, but doesn't really make much difference in terms of government spending and likely won't matter much in terms of sustainability without knowing more about green technology adoption rates and productivity of smaller farms. Many of the arguments for ending farm subsidies based on spending, sustainability, nutrition etc. lack empirical support. Ultimately the argument about farm subsidies comes down to your view on the role of government.
Some are arguing for a compromise, capping subsidies based on income level. That may be a way to preserve smaller farms, but doesn't really make much difference in terms of government spending and likely won't matter much in terms of sustainability without knowing more about green technology adoption rates and productivity of smaller farms. Many of the arguments for ending farm subsidies based on spending, sustainability, nutrition etc. lack empirical support. Ultimately the argument about farm subsidies comes down to your view on the role of government.
As far as the article's comments on farming like our great grandparents, I'm not sure 26 bushels an acre, no matter what the method, is going to cut it these days.
#GMOs #Toxins and unborn babies... a deeper examination of the study. #science #communication #peerreview #fb - Consider Icarus...
A Very good piece by Dr. Cami Ryan:
http://doccami.posterous.com/gmos-toxins-and-unborn-babies-a-deeper-examin
http://doccami.posterous.com/gmos-toxins-and-unborn-babies-a-deeper-examin
May 20, 2011
"GM food toxins found in the blood of 93% of unborn babies"(see: http://www.independent.ie/lifestyle/parenting/toxic-pesticides-from-gm-food-crops-found-in-unborn-babies-2652995.html)
These headlines (or a version of it) are making their rounds in the media these days. They refer to a study done in Quebec. Aziz Aris and Samuel Leblanc claim to have detected herbicides and/or the insecticidal protein Cry1Ab in the blood of Canadian women, pregnant or not pregnant, and in umbilical cords. Their study / results were recently published in the journal Reproductive Toxicology (TITLE: "Maternal and fetal exposure to pesticides associated to Genetically Modified Foods in Eastern Townships of Quebec, Canada").
In April, I received an anonymous email from someone who challenged me on the results of this study (amongst other things…)
"While I can see the potential benefits of GMOs, I am uncomfortable with how readily pro-GMO scientists dismiss the gathering evidence of potential harmful impacts (such as the very recent study finding the BT toxin in mother's breast milk)."
My response was as follows – and points to problems with the methodological approach…
"I think that you are referring to the article by Aris etal and their study on the sera (blood) (as opposed to breast milk) that was published in a recent issue of Reproductive Technology (2011). I read the article and, quite frankly, have some questions regarding the methodology. First, there seems to be a lack of controls in the experimental approach. What are the serum levels of female organic farmers who spray Bt vs those conventional female farmers who plant Bt soy, corn and cotton? Bt is one of the most effective pesticides used in the organic industry and, generally, the number of applications is even higher in organic crops than in conventional/GE. What are serum levels of women who eat no corn or soy products and do not buy organic (having no exposure)? The lack of controls in this study is alarming and can account for false positives in results (I refer you to the paper in the J. Agric. Food Chem. 2005, 53, 1453-1456: "To avoid misinterpretation, samples tested positive for Cry1Ab protein by ELISA should be reassessed by another technique"). In my opinion, the Aris etal study is only moderately interesting and very, very incomplete."
As far as I can tell, there is a real problem with 'credibility' here. I question the peer review process. This is echoed in another response to this publication…
http://www.marcel-kuntz-ogm.fr/article-aris-72793155.html
So, how do we accomplish a balance between "expedited publication" (which, after the long-term, laborious research process, the researcher desires - the "reward") and "thorough, competent review"? (I review this a bit further in my blog entry:http://doccami.posterous.com/peer-review-peer-rejected-peer-review-academi )
Peer review, improperly executed, leads to devastating results. Take for example, the fallout from an article published in The Lancet in 1998 (later retracted) that claimed a connection between the MMR vaccine and Autism. These claims (based on a study that was improperly reviewed) rippled through media causing an uproar (fuelled by the celeb-fluence of Jenny McCarthy, I might add) which, ultimately, led to the reduction in numbers of childhood vaccinations (bringing with it a whole other set of problems).
Science is a good thing. But key to good science is a set of checks and balances that monitors and challenges results and ensures accountability in the process.
The peer review process... Maybe it needs to be 'peer reviewed'?
Friday, May 06, 2011
Gas Prices, Long Lines, Parachutes & Profits
Recently, from the New York Times:
"The crisis rolled on through the summer. Irrationality set in. All over the country, people wasted gallons of gas waiting in line for the gas they were afraid wouldn’t be there the next week. The crisis was the only news story anyone cared about. A protest outside Philadelphia turned violent. People stood guard beside their cars at night against thieves who siphoned out fuel."
From Atlas Shrugged:
“Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them….when money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips,and guns; or dollars.”
Recently, some clever bureucrats have gotten together to form a group known as the 'Oil and Gas Price Fraud Working Group.'
As quoted at the Knowledge Problem blog:
"And I would also note that one of the things the Attorney General task force will be looking at is coordinating with state attorneys general to make sure that we don’t have a what I’ve heard described as a “rockets-and-parachutes phenomenon,” where prices at the pump rocket up when oil prices rocket up, and yet they come down in a parachute fashion when oil prices go down. So we want to make sure that a drop in oil prices is appropriately reflected in a drop in gas prices at the pump."
and here:
"Contrary to public opinion and previous work suggesting that collusive behavior was the cause behind asymmetric pricing, this paper shows that it can well be the outcome of a competitive market"
Rockets and Feathers
Understanding Asymmetric Pricing
[Job Market Paper]
Mariano Tappata
UCLA
January 2006
Other references:
That ’70s Energy Crisis
By SUSAN STRAIGHT
Published: April 30, 2011
The New York Times
"The crisis rolled on through the summer. Irrationality set in. All over the country, people wasted gallons of gas waiting in line for the gas they were afraid wouldn’t be there the next week. The crisis was the only news story anyone cared about. A protest outside Philadelphia turned violent. People stood guard beside their cars at night against thieves who siphoned out fuel."
From Atlas Shrugged:
“Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them….when money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips,and guns; or dollars.”
Recently, some clever bureucrats have gotten together to form a group known as the 'Oil and Gas Price Fraud Working Group.'
As quoted at the Knowledge Problem blog:
"And I would also note that one of the things the Attorney General task force will be looking at is coordinating with state attorneys general to make sure that we don’t have a what I’ve heard described as a “rockets-and-parachutes phenomenon,” where prices at the pump rocket up when oil prices rocket up, and yet they come down in a parachute fashion when oil prices go down. So we want to make sure that a drop in oil prices is appropriately reflected in a drop in gas prices at the pump."
Based on what I just read in the NYT above, I hope these guys don't take themselves too seriously. Of course, many people get upset about things like Exxon's recent profits reports, but as economist Mark Perry point's out at Carpe Diem, revenue from gas taxes (based on recent numbers) is almost 7 times Exxon's profit on a per gallon basis. (and we still have budget deficits).
It turns out, that consumer behavior in a competitive market (not greedy gas station owners, speculators, or oil companies) explains the "rockets and parachutes" phenomonon.
'Rockets and Parachutes (or feathers) and research here:
ASYMMETRIC PRICE ADJUSTMENT AND CONSUMER SEARCH:
AN EXAMINATION OF THE RETAIL GASOLINE MARKET
MATTHEW LEWIS
Department of Economics
The Ohio State University
(forthcoming Summer 2011 Journal of Economics and Management Strategy)
"The model predicts that consumers search less when prices are falling. This reduced search results in higher profit margins and a slower price response to cost changes than when margins are low and prices are increasing."(forthcoming Summer 2011 Journal of Economics and Management Strategy)
and here:
"Contrary to public opinion and previous work suggesting that collusive behavior was the cause behind asymmetric pricing, this paper shows that it can well be the outcome of a competitive market"
Rockets and Feathers
Understanding Asymmetric Pricing
[Job Market Paper]
Mariano Tappata
UCLA
January 2006
Other references:
That ’70s Energy Crisis
By SUSAN STRAIGHT
Published: April 30, 2011
The New York Times
Tuesday, April 26, 2011
Earth Day: In celebration of affluent middle class fetishes?
Last Friday was earth day, and across the country I can guarantee a lot of attention was given to eating sustainably, with a focus on local,natural,and organic food. I doubt much emphasis was given to the sustainability of modern food supply chains made possible by large agribusinesses like Cargill, ADM, or Wal-Mart, or the positive environmental impact of biotechnology. As economist Don Boudreaux at Cafe Hayek states regarding sustainability:
"No word currently in vogue among Very Smart and Oh-So-Concerned People smuggles in more mistaken presumptions wrapped in a sentiment that no one in his or her right mind can disagree with than “sustainability.”
Let's look at these presumptions about sustainable agriculture.
Eating Local
One presumption is that eating local implies that food has to travel less, and as a result leads to less energy use. However, this precludes the notion that modern food supply chains and their efficiencies can actually be close competitors to, if not exceed local food in their greenness. As pointed out here in National Geographic (citing this research Environ. Sci. Technol. 2008, 42, 3508–3513) here from the USDA, and here from UC Davis, local foods are often not as energy or climate friendly as those we get from more industrial sources.
Eating Natural
Natural food often implies grass fed, hormone and antibiotic free livestock. However, there are many reasons that corn, hormones, and antibiotics can add a little green to your plate. Based on research from the Leopold Center for Sustainable Agriculture Alex and Dennis Avery (in The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production, Center for Global Food Issues) found that grain feeding in combination with growth enhancing pharmaceuticals results in nearly a 40% reduction in greenhouse gas emissions compared to natural grass fed livestock. This is corroborated by research from Jude Capper, which found that for every 1 million dairy cows utilizing the hormone rbST, the annual decrease in global warming potential is equivalent to removing 400 thousand cars from the road annually.
Organic
Organic foods have particular restrictions related to biotechnology- essentially zero tolerance on GMO ingredients. This is a major drawback to trying to 'go green' on an all organic diet. According to research from the USDA, biotechnology has led to large reductions (and in some cases total elimination) of many toxic chemicals. According to research from PG Economics, in 2009 alone, greenhouse gas reductions associated with biotechnology were equivalent to removing 7.8 million cars from the road.
Of course, there is nothing wrong with local, organic, or natural food. I am a regular consumer of certain local and organic brands, and frequent places like Trader Joe's fairly often (despite the nearest location is 70 miles away). The problem is, that local, organic, and natural have become almost like a fetish to many sustainability enthusiasts, and this distraction has kept many well intending environmentalists (and the media and perhaps even some educators) from noticing the drastic improvements in the sustainability of modern agriculture. As a result many of earth day celebrations have become occasions for indulging in these affluent middle class fetishes at the expense of exploring a greener world of possibilities offered by modern agriculture.
"No word currently in vogue among Very Smart and Oh-So-Concerned People smuggles in more mistaken presumptions wrapped in a sentiment that no one in his or her right mind can disagree with than “sustainability.”
Let's look at these presumptions about sustainable agriculture.
Eating Local
One presumption is that eating local implies that food has to travel less, and as a result leads to less energy use. However, this precludes the notion that modern food supply chains and their efficiencies can actually be close competitors to, if not exceed local food in their greenness. As pointed out here in National Geographic (citing this research Environ. Sci. Technol. 2008, 42, 3508–3513) here from the USDA, and here from UC Davis, local foods are often not as energy or climate friendly as those we get from more industrial sources.
Eating Natural
Natural food often implies grass fed, hormone and antibiotic free livestock. However, there are many reasons that corn, hormones, and antibiotics can add a little green to your plate. Based on research from the Leopold Center for Sustainable Agriculture Alex and Dennis Avery (in The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production, Center for Global Food Issues) found that grain feeding in combination with growth enhancing pharmaceuticals results in nearly a 40% reduction in greenhouse gas emissions compared to natural grass fed livestock. This is corroborated by research from Jude Capper, which found that for every 1 million dairy cows utilizing the hormone rbST, the annual decrease in global warming potential is equivalent to removing 400 thousand cars from the road annually.
Organic
Organic foods have particular restrictions related to biotechnology- essentially zero tolerance on GMO ingredients. This is a major drawback to trying to 'go green' on an all organic diet. According to research from the USDA, biotechnology has led to large reductions (and in some cases total elimination) of many toxic chemicals. According to research from PG Economics, in 2009 alone, greenhouse gas reductions associated with biotechnology were equivalent to removing 7.8 million cars from the road.
Of course, there is nothing wrong with local, organic, or natural food. I am a regular consumer of certain local and organic brands, and frequent places like Trader Joe's fairly often (despite the nearest location is 70 miles away). The problem is, that local, organic, and natural have become almost like a fetish to many sustainability enthusiasts, and this distraction has kept many well intending environmentalists (and the media and perhaps even some educators) from noticing the drastic improvements in the sustainability of modern agriculture. As a result many of earth day celebrations have become occasions for indulging in these affluent middle class fetishes at the expense of exploring a greener world of possibilities offered by modern agriculture.
Thursday, April 21, 2011
Constrained Capitalism? Not
From the Guardian and you can find an article entitled "Arguments for Constrained Capitalism in Asia."
And we wonder where people get ideas, like ending our addiction to economic growth.
The article is very thought provoking, but I'm not sure the author truly understands economics, prices, or capitalism, or they are confusing their terms.
They advocate "constrained capitalism – which limits the use of natural resources and inhibits the behavior of consumers" and state that "Governments need to tell their people that they can't have everything"
Prices, interest rates, profits, property rights, torts- all the things that make up a system of capitalism, by definition, work to limit the use of natural resources and constrain the behavior of consumers. They serve as reminders that we can't have everything and that our choices always involve trade offs. Often times, it is the intent of government policy to override these constraints, sending the false signal that yes you can have everything. (i.e. socially planned interest rates and the excess that lead up to the financial crisis that reminded us, no you can't have everything and prices matter). Prices reflect information related to scarcity and the knowledge and preferences of multitudes (billions) of individuals, and force each of us (consumers and businesses), with nearly every decision we make, to consider the impacts of our choices on others and the environment. There are of course instances when we think that prices don't capture the full impact of our behavior (externalities- see Hardin, Coase, Demsetz) but many times over the answer isn't less reliance on market forces, but more. Paul Ehrlich and Jared Diamond have tried to make similar arguments related to 'constrained capitalism' and economic growth, but technological change and economic growth have undermined their claims time and time again.
"investment in rural areas to improve sustainable farming methods and raise farming incomes."
This is one area, perhaps, where I agree, but modern agriculture in general (with GM foods, the application of genomics, proteomics, and pharmaceutical technologies in livestock production, GPS, modern intricate supply chains) is an example of an industry that has drastically reduced its environmental impact, mostly as a result of voluntary decisions by farmers on a global scale to adopt these practices. Investment in these green technologies has paid off. How much of it is due to government sponsored R&D I'm not sure.
"He uses a telling fact: 2.2 billion Asians now have mobile phones, but far fewer have access to drinking water or toilets."
Access to potable water is perhaps one of the areas where increased reliance on markets and the price mechanism could offer the greatest improvement.
"The problem is not about needing more technology but about restructuring an economic system to meet human needs."
Economics and capitalism are all about meeting human needs. There are cases, where according to the article, it may seem that capitalism has not favored nations or peoples that are less than well off, but take the case of Egypt for example, or the many countries in Latin American. As Hernando DeSoto has pointed out, they suffer from a lack of markets and capitalism as opposed to suffering from markets and capitalism. In a market system, if needs are not met, then competition drives profits down. If needs are met with great difficulty or under constraints of scarcity (as the article in the Guardian implies), then prices and profits will reflect that.
"There is no future unless we constrain human behaviour, how you do that is the question of our time"
That is the question of all time, and the subject of economics, which is the study of people's choices and how they are made compatible. Understanding economics and the nature of the price mechanism and spontaneous order provides the analytical framework for addressing so many of the concerns of this article.
References:
Science 13 December 1968:
Vol. 162 no. 3859 pp. 1243-1248
DOI: 10.1126/science.162.3859.1243
The Tragedy of the Commons
Garrett Hardin
The Problem of Social Cost
R. H. Coase
Journal of Law and Economics
Vol. 3, (Oct., 1960), pp. 1-44
Published by: The University of Chicago Press
Article Stable URL: http://www.jstor.org/stable/724810
Toward a Theory of Property Rights
Harold Demsetz
The American Economic Review, Vol. 57, No. 2, Papers and Proceedings of the Seventy-ninth
Annual Meeting of the American Economic Association. (May, 1967), pp. 347-359.
Thursday, April 14, 2011
Facts for Ag Fact Friday
Today is Ag Fact Friday, so here are 10 facts about modern sustainable agricultrue.
Dairy & Livestock Production
#1 The carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. For every 1 million cows, the reduction in global warming potential from rBST supplemented cows is equivalent to removing 400K cars from the roadways or planting 300 million trees.
#2 Transportation accounts for at least 26% of total anthropogenic GHG emissions compared to roughly 5.8% for all of agriculture & less than 3% associated with livestock production in the U.S.
#3 The use of grain and pharmaceutical technology in beef production has resulted in a nearly 40 percent reduction in greenhouse gases (GHGs) per pound of beef compared to grass feeding.
#4 Bans on feed grade sub- therapeutic antibiotics in European countries lead to increased reliance on therapeutic antibiotics important to human health.
Crop Production
#5 Biotechnology improves insect biodiversity, crop plant diversity, and has lower levels of carcinogens than conventional and organic corn.
#6 The use of biotech Roundup resistant crops has led to reduced herbicide use and allowed roundup to replace other herbicides that were up to 17 times more toxic.
#7 Total decreases in carbon dioxide as a result of using biotech crops was equivalent to removing 6 million cars from the road in 2007. (that’s a lot more than the # of hybrid cars sold in 2007)
Modern Agriculture in General
#8 Rather than having a negative impact on climate change, intensive agriculture has actually has a mitigating effect on climate change with a reduction of 68 kgC (249 kgCO2e) emissions relative to 1961 technology.
#9 Small farms actually benefit more from subsidy programs than large scale farms, despite the relative shares of total subsidies paid. The impacts of subsidies on food choices have not contributed to the obesity epidemic.
#10 Local food production can actually be more energy intensive than modern efficient supply chains. On average, fuel use per cwt for local food production is about 2.18 gallons vs. .69 and 1.92 for intermediate and traditional supply chains for beef production.
References:
The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science,Capper, J. L., Cady, R. A., Bauman, D. E. 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
San Diego Center for Molecular Agriculture: Foods from Genetically Modified Crops
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
Comparison of Fumonisin Concentrations in Kernels of Transgenic Bt Maize Hybrids and Nontransgenic Hybrids. Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Indirect Reduction of Ear Molds and Associated Mycotoxins in Bacillus thuringiensis Corn Under Controlled and Open Field Conditions: Utility and Limitations. Dowd, J. Economic Entomology. 93 1669-1679 2000.
"Why Spurning Biotech Food Has Become a Liability.'' Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Genetically Engineered Crops: Has Adoption Reduced Pesticide Use? Agricultural Outlook ERS/USDA Aug 2000
GM crops: global socio-economic and environmental impacts 1996- 2007. Brookes & Barfoot PG Economics report
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production. By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Lessons from the Danish Ban on Feed Grade Antibiotics. Dermot J. Hayes and Helen H. Jenson. Choices 3Q. 2003. American Agricultural Economics Association.
Does Local Production Improve Environmental and Health Outcomes. Steven Sexton. Agricultural and Resource Economics Update, Vol 13 No 2 Nov/Dec 2009. University of California.
Communal Benefits of Transgenic Corn. Bruce E. Tabashnik Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864
Farm Subsidies and Obesity in the United States. Julian M. Alston, Daniel A. Sumner, and Stephen A. Vosti. Agricultural Resource Economics Update V. 11 no. Nov/Dec 007 U.C. Davis
Greenhouse gas mitigation by agricultural intensification Jennifer A. Burneya,Steven J. Davisc, and David B. Lobella.PNAS June 29, 2010 vol. 107 no. 26 12052-12057
Clearing the Air: Livestock's Contribution to Climate ChangeMaurice E. Pitesky*, Kimberly R. Stackhouse† and Frank M. MitloehnerAdvances in Agronomy Volume 103, 2009, Pages 1-40
Comparing the Structure, Size, and Performance of Local and Mainstream FoodSupply ChainsRobert P. King, Michael S. Hand, Gigi DiGiacomo,Kate Clancy, Miguel I. Gómez, Shermain D. Hardesty,Larry Lev, and Edward W. McLaughlin Economic Research Report Number 99 June 2010
The environmental impact of recombinant bovine somatotropin (rbST) use in dairy production Judith L. Capper,* Euridice Castañeda-Gutiérrez,*† Roger A. Cady,‡ and Dale E. Bauman* Proc Natl Acad Sci U S A. 2008 July 15; 105(28): 9668–9673
USDA Report- Government Payments and the Farm Sector: Who Benefits and How Much?
http://www.ers.usda.gov/Briefing/FarmPolicy/gov-pay.htm
USDA Report-Farm Income and Costs: Farms Receiving Government Payments
http://www.ers.usda.gov/Briefing/FarmIncome/govtpaybyfarmtype.htm
Dairy & Livestock Production
#1 The carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. For every 1 million cows, the reduction in global warming potential from rBST supplemented cows is equivalent to removing 400K cars from the roadways or planting 300 million trees.
#2 Transportation accounts for at least 26% of total anthropogenic GHG emissions compared to roughly 5.8% for all of agriculture & less than 3% associated with livestock production in the U.S.
#3 The use of grain and pharmaceutical technology in beef production has resulted in a nearly 40 percent reduction in greenhouse gases (GHGs) per pound of beef compared to grass feeding.
#4 Bans on feed grade sub- therapeutic antibiotics in European countries lead to increased reliance on therapeutic antibiotics important to human health.
Crop Production
#5 Biotechnology improves insect biodiversity, crop plant diversity, and has lower levels of carcinogens than conventional and organic corn.
#6 The use of biotech Roundup resistant crops has led to reduced herbicide use and allowed roundup to replace other herbicides that were up to 17 times more toxic.
#7 Total decreases in carbon dioxide as a result of using biotech crops was equivalent to removing 6 million cars from the road in 2007. (that’s a lot more than the # of hybrid cars sold in 2007)
Modern Agriculture in General
#8 Rather than having a negative impact on climate change, intensive agriculture has actually has a mitigating effect on climate change with a reduction of 68 kgC (249 kgCO2e) emissions relative to 1961 technology.
#9 Small farms actually benefit more from subsidy programs than large scale farms, despite the relative shares of total subsidies paid. The impacts of subsidies on food choices have not contributed to the obesity epidemic.
#10 Local food production can actually be more energy intensive than modern efficient supply chains. On average, fuel use per cwt for local food production is about 2.18 gallons vs. .69 and 1.92 for intermediate and traditional supply chains for beef production.
References:
The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science,Capper, J. L., Cady, R. A., Bauman, D. E. 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
San Diego Center for Molecular Agriculture: Foods from Genetically Modified Crops
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
Comparison of Fumonisin Concentrations in Kernels of Transgenic Bt Maize Hybrids and Nontransgenic Hybrids. Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Indirect Reduction of Ear Molds and Associated Mycotoxins in Bacillus thuringiensis Corn Under Controlled and Open Field Conditions: Utility and Limitations. Dowd, J. Economic Entomology. 93 1669-1679 2000.
"Why Spurning Biotech Food Has Become a Liability.'' Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Genetically Engineered Crops: Has Adoption Reduced Pesticide Use? Agricultural Outlook ERS/USDA Aug 2000
GM crops: global socio-economic and environmental impacts 1996- 2007. Brookes & Barfoot PG Economics report
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production. By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Lessons from the Danish Ban on Feed Grade Antibiotics. Dermot J. Hayes and Helen H. Jenson. Choices 3Q. 2003. American Agricultural Economics Association.
Does Local Production Improve Environmental and Health Outcomes. Steven Sexton. Agricultural and Resource Economics Update, Vol 13 No 2 Nov/Dec 2009. University of California.
Communal Benefits of Transgenic Corn. Bruce E. Tabashnik Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864
Farm Subsidies and Obesity in the United States. Julian M. Alston, Daniel A. Sumner, and Stephen A. Vosti. Agricultural Resource Economics Update V. 11 no. Nov/Dec 007 U.C. Davis
Greenhouse gas mitigation by agricultural intensification Jennifer A. Burneya,Steven J. Davisc, and David B. Lobella.PNAS June 29, 2010 vol. 107 no. 26 12052-12057
Clearing the Air: Livestock's Contribution to Climate ChangeMaurice E. Pitesky*, Kimberly R. Stackhouse† and Frank M. MitloehnerAdvances in Agronomy Volume 103, 2009, Pages 1-40
Comparing the Structure, Size, and Performance of Local and Mainstream FoodSupply ChainsRobert P. King, Michael S. Hand, Gigi DiGiacomo,Kate Clancy, Miguel I. Gómez, Shermain D. Hardesty,Larry Lev, and Edward W. McLaughlin Economic Research Report Number 99 June 2010
The environmental impact of recombinant bovine somatotropin (rbST) use in dairy production Judith L. Capper,* Euridice Castañeda-Gutiérrez,*† Roger A. Cady,‡ and Dale E. Bauman* Proc Natl Acad Sci U S A. 2008 July 15; 105(28): 9668–9673
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http://www.ers.usda.gov/Briefing/FarmPolicy/gov-pay.htm
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http://www.ers.usda.gov/Briefing/FarmIncome/govtpaybyfarmtype.htm
Saturday, April 09, 2011
EWG Headine: A Bailout for Corporate Agriculture?
Previously I found an article published by the EWG regarding the role of women in agriculture, that I found somewhat misleading. Recently, I ran across a piece by the EWG titled 'Government's Continued Bailout of Corporate Agriculture' which, in addition to the title, made some pretty bold and possibly misleading statements. I'm not saying this is intentional on the part of EWG, but these statements could easily be misinterpreted.
From 1995-2009 the largest and wealthiest top 10 percent of farm program recipients received 74 percent of all farm subsidies
This is true, but it could give the false perception that farm subsidies benefit large farms perhaps at the expense of smaller farms, but I addressed this before in another post Do Farm Subsidies Benefit the Largest Farms the Most?
It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.
EWG does admit that they favor subsidies going to smaller and midsize farms, where they have the biggest impact on operating budgets. Another quote:
The vast majority of farm subsidies go to raw material for our industrialized food system, not the foods we actually eat. Even less money goes to support the production of the fruits and vegetables that are the foundation of a healthy diet.
This couldn't be further from the truth. It is true, as I discussed above, that most of the subsidies go to commodities, but it isn't true that they don't contribute to the production of foods that we actually eat. In fact, as Michael Pollan has brilliantly stated:
From 1995-2009 the largest and wealthiest top 10 percent of farm program recipients received 74 percent of all farm subsidies
This is true, but it could give the false perception that farm subsidies benefit large farms perhaps at the expense of smaller farms, but I addressed this before in another post Do Farm Subsidies Benefit the Largest Farms the Most?
It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.
EWG does admit that they favor subsidies going to smaller and midsize farms, where they have the biggest impact on operating budgets. Another quote:
The vast majority of farm subsidies go to raw material for our industrialized food system, not the foods we actually eat. Even less money goes to support the production of the fruits and vegetables that are the foundation of a healthy diet.
This couldn't be further from the truth. It is true, as I discussed above, that most of the subsidies go to commodities, but it isn't true that they don't contribute to the production of foods that we actually eat. In fact, as Michael Pollan has brilliantly stated:
"What I keep finding in case after case, if you follow the food back to the farm — if you follow the nutrients, if you follow the carbon — you end up in a corn field in Iowa, over and over and over again." -Michael Pollan
As I've pointed out many times before, it is a miracle that modern sustainable agriculture can feed so many people in so many ways, with just a few common staple crops, and do it sustainably!
The EWG quote also could give some people the perception that healthy supplements in our diets, like fruits and vegetables, are more expensive than processed foods containing corn and soybeans because corn and soybeans are subsidized more heavily than fruits and vegetables. Again, this couldn't be further than the truth. The agronomics, labor, risk, economies of scale, and capital costs associated with fruit and vegetable production make those crops much more expensive than commodities, and have a much larger role on their prices than subsidies. Eliminating commodity programs would have an insignificant impact at the retail level, and the subsides required to make fruits and vegetables more affordable would dwarf what we are currently spending on commodties.
Finally, while this corporate giveaway has gone on unabated, conservation continues to be shortchanged.
While this may be true, in terms of the allocation of funds, conservation and sustainability in terms of on the farm practices isn't shortchanged in the least. Market forces have overcome subsidy related distortions and led producers and agribusinesses to focus heavily on green technologies including herbicide and pest resistance, water use efficiency, fuel efficiency etc. Again, all the practices that make modern agriculture, sustainable agriculture.
Text Mining Tweets About Factory Farms
On another blog last year I noted the how those in the agriculture industry were benefiting from the use of social media. (like the Yellow Tail and Pilot Travel incidences). While social media has allowed farmers to organize and communicate about their industry, it also provides a rich data source for measuring sentiment or perceptions about their industry. Companies are finding that by mining text from web pages, comments, blogs, and social media, they can get measure consumer perceptions almost as well or better than they can through explicit surveys. These powerful analytics could be very beneficial to those in the ag industry or agvocacy groups.
After a week as SAS Gobal Forum, I've been pretty excited about some of the text mining presentations that I got to see. After getting home I found a tweet from @imusicmash sharing a post from the Heuristic Andrew blog that shared text mining code from R. (although SAS has some pretty powerful text mining tools, I don’t have access to them for personal blogging purposes) Anyway, I thought I’d take a stab at mining tweets related to ‘factory farms’ using open source R.
I extracted about 2000 tweets containing the term ‘factory farms’ and produced the following cluster analysis on the text:
This seems to give an idea about the content of conversations regarding ‘factory farms.’ Some of these appear to center around gmo foods and Monsanto. This already informs me of misperceptions about ‘factory farms’ and biotechnology. Should people tend to associate these terms when 98% of farms are family farms and most of them raise biotech corn and soybeans?
It seems there are separate clusters of conversations, some related to Monsanto and gmo’s, others related to food and livestock production in general.
It also appears that the topic of ‘factory farms’ is often discussed by the #agchat group, and other food and animal related issues.
I also ran some correlations, or ‘word associations.’ Terms that tend to be used in association with ‘factory farms’ include hens, debeaked,suffering, cruelty,secretive, excess. All of these terms tend to be related to livestock production, and seem to have negative sentment. Words correlated with family farms are more neutral, hauled, Missouri, beans, peas, operated, battling. Terms associated with ‘gmo’ include ban, irreversible, killing. Interesting the term ‘sustainable’ brought up neutral terms. It doesn’t appear, at least from this sample, that sustainable agriculture is associated with biotechnology, at least in the context of tweets related to ‘factory farms.’ Again, to me this speaks more about misperceptions related to modern sustainable agriculture.
Of course, this is just a first jab at this, I’m no expert in text analytics, and I had to rely on my subjective interpretation to some extent. And, obviously, I have not discovered anything that most people in the ag industry don’t already know. However, more sophisticated analysis is possible and could be more revealing than the example I just gave. I truly believe that text analytics can be a powerful tool for the ag industry and agvocation in the future.
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