Articles, Blog

(AV17506) The Economics of Sustainable Agriculture

I stood on a big flatbed truck and the
hot Sun with a microphone in my hand and I had 30 minutes and after 20 I couldn’t
get any audience reaction at all so I said well they’re bored so I’m gonna
give him a break and I left 10 minutes early and went to stand in line over
there to get a hotdog or something and somebody came up and said I’m I’m sure
what you’re saying was was very interesting but we couldn’t hear it your
microphone was turned off and I said why didn’t you tell me that all we didn’t
want to upset you so please upset me if you can’t hear
okay thanks a lot Grady to see everybody to come tonight I was expecting about 15
or 20 people and I’m quite taken by this I had a lot of people haven’t seen in a
while is John audio mic especially there just my wife Jane Jane dickerson is with
us tonight and I see Jerry and I’ve met Marth I haven’t met the rest of the
family but it’s really nice to meet you finally
this must be the rest hello there well thanks for the chance to be here I got a
great former student John Chisholm is somewhere out there with his wife Sharon
and I see Dennis is back there thanks a lot for coming I’m must I’ve heard there
wasn’t a lot to do on Sunday nights in Iowa but I suppose this will somehow
confirm that I also speak professionally a lot and I’ve been advised to say this
at every talk so I’m gonna go and say it anyway
my daughter is deaf and so in a house we speak sign language a lot and sometimes
I forget and just start signing and people and they don’t know that start
misinterpreting the gestures very awfully particularly the one for good
morning is always troublesome so if this gets out of hand and I start
signing it’s just ignore it whatever I’m saying is what I’m supposed to be saying
and that’s that I am I didn’t know what to do tonight I actually wrote up
something because you have to write up something for these things but it’s not
very long so what I’d like to do is read this little thing I wrote so
somebody else read it and then then I got some things I just like talked about
for a few minutes and then I’d like to hear what you have to say if that’ll
work out okay and we’ll still get out here at a reasonable hour for those of
you want to see the Celebrity Apprentice that’s cutting it close but we’ll do
what we can okay so the question I wanted to address is the one that is on
the flyer obviously it’s um why don’t we already have a sustainable agriculture
on a broad scale not and just not let’s forget all the barriers and everything
just why don’t we already have it we’ve been working at this a long time I’m I’m
getting tired some of you are why don’t we already have it and I’m going to say
a few things about farmers that actually contradict what Fred said and his
wonderful introduction then I’ll get back to contradicting myself at the end
so that’ll be it no here we go why is it been so difficult to bring
about sustainable agriculture on a large scale in the United States or for that
matter why don’t we already have an agricultural system that would better
fit most definitions of sustainable now judging by our university efforts
we’d have to answer both questions with something like we don’t yet know how to
do sustainable agriculture from this we assume that if we did agriculture would
then become more sustainable so in response my friends and agronomy animal
science and related fields such as the soil science I have to make sure I note
that one for Dennis’s sake busy themselves developing non-chemical weed
controls cover crops rotation schemes and hoop houses now another person
visiting our universities I might conclude that we have made relatively
little progress because farmers don’t know enough about sustainable practices
so we have our education and our outreach programs to show conventional
farmers the error of their waise there’s an implicit assumption
that wants farmers know more about sustainable practices they’ll adopt
those practices and finally my favorite my colleagues and agricultural economics
and myself included remind us that no farming system is going to be adopted if
it’s not profitable so we once in a while see a study that compares that
some sort of sustainable system to some sort of a conventional farm and might
even find that the sustainable farm is more profitable and course once that
happens everyone will adopt it at least in theory I’ve been observing and
studying agriculture I wrote for more than a quarter century which sounds bad
enough but then I got thinking my math was off actually it’s 35 years which is
really depressing and have it long last come to the conclusion that none of
these approaches will get us where we need to be
now surely there’s more to learn I think most of us would now agree that
perennials are better than annuals soil erosion is is a bad thing in factory
livestock operations have their drawbacks and surely there’s more to
teach but most farmers could learn about sustainable agriculture if they were so
inclined and furthermore we now and again find a sustainable farm that is as
profitable or even more so than those run by the more conventional neighbors
so once again why has it been so difficult to bring about sustainable
agriculture on a large scale United States or for that matter why don’t we
already have as an agricultural system that would fit better fit most
definitions of sustainable you notice I’m doing a great job of side stuffing
that definitions are sustainable I learned that the hard way I’m by several
years ago I had a student of a master student for a project interviewed every
faculty member in there in our College of Agriculture and asked him the
question of whether or not what they were doing fit the definition of
sustainable agriculture 173 said yes and one said no we couldn’t
figure out maybe he must understood the question and that was a very bad answer
but um solace noticed that’s that’s intentional I think would be closer to
answering these questions if we face the fact that farmers no longer sit in the
driver’s seat of our contemporary food system
we’re entirely too quick to say for example that we have problems with farm
chemicals because farmers use them not because farm chemical companies develop
manufacture and promote them clearly farmers are not the decision-makers in
poultry production much of hog production is due to contracting beyond
that the economic environment which farmers work is increasingly established
by agribusiness and retailers not by farmers that’s something I’m not happy
to say but I think if we thought about it most of us would maybe quietly not
our head up and down and I don’t like to use numbers and in the paper I point out
that’s a very strange trait for an economist to have but I’ve never liked
numbers but I’m going to make one quick exception here because it seems
appropriate that an economist would use some numbers in 2006 the farm products
that were actually grown and sold in the United States had a retail value of 880
1 billion dollars 881 billion the farm value those products was 164 billion so
those of you who are favor thinking quickly that’s 717 billion dollars that
was in after it left the farm now the 164 billion that was at the farm
that wasn’t all for the farmers there was actually 59 billion there for the
farmers came out as their income and 16 billion of that came from the government
so the input suppliers and the landlords like the processors and retailers
accounted for vastly more economic activity in the food system than did the
farmers let me put it even more and here comes a quiz I threatened
several the students over there with quizzes so I’ll just make it a pop quiz
in 2006 which was larger net farm income including all government payments or the
cost of the packaging that the food went into along the way what all them our
farmers made or the packaging for the food they made everyone there you go
there you go John moves to the head of the class actually the packaging was ten
billion dollars more than the net farm income including government payments in
2006 so we want to change the direction of an eight hundred eighty 1 billion
dollar food system and we looked at the fifty nine billion dollar component of
that system to make the change this flies in the face of the principal
lesson that tried to get across when I was teaching econ 101 and my glory days
for all those times of those students thirsting for knowledge that principle
was money talks if you can get that much across in a mere semester you’ve done
okay not only does money talk in our food
system more and more shouts it shouts when farm bills are discussed when
University Research Projects are established and when global policies are
determined the reason is the steady march of mergers and acquisitions
throughout agribusiness and retailing have left the remaining pliers very very
powerful it’s getting be a grim talking I have everybody leaving in a minute I
recently heard my friend Mary Hendrickson speak at a convention she
talked about how decision-making power has in large part left the farm sector
I’m not going to embarrass myself here by trying and failing to do justice to
what her what a presentation was it was about the levels of corporate
concentration once outside of the farming sector I’ll just say it was very
very convincing and we’ll leave it at that
um there’s anyone besides me heard Mary speak she does she does a great job I
think it’s pretty hard to go away from her
talk smiling very much not only is decision-making moved
outside the farming sector it has conformed to contemporary standards of
any corporate decision making that is quarterly profits now I for one am at a
complete loss to see how decision-makers with a 3-month planning horizon are
going to somehow stumble on a food system that is sustainable across
generations it might happen but it seemed like it would be unlikely now we
we implicitly acknowledge this when we say we’re going to somehow some way
we’re going to cook up a farm bill that leads us to sustainable agriculture and
this is the guy talking who wrote about farm bills forever and fancied himself
to be a farm policy specialist for a while we’ve been doing this for a long
time without success but at least that doesn’t cause us to give up I’m sure I’m
almost over in this room probably read the op-ed the 50-year farm bill that
West Jackson and Wendell Berry had in the New York Times is very well written
and for what little I know about the things that Dennis and them study it
seemed like the insights it offered were very appropriate but I think that was
offset my a rather naive appeal to what they called thoughtful farmers and
consumers everywhere to make this happen now that ignores the entire
decision-making process in the food system all of it
I mean thoughtful farmers and consumers I’m assuming I’m willing to assume all
farmers are thoughtful I’ve met very few that weren’t but that’s not it
and then when you throw in we need a 50-year farm policy it begs the question
how decisions based on quarterly profit and loss statements will ever get us one
I just don’t see how that’s going to happen not that it wasn’t a good idea
and well-written but the question is how you going to do this there’s a good
reason why we don’t have 50-year farm bill not likely to get one any time
soon for as long as I can remember agribusiness has driven the farm fuck
the farm policy agenda John snicker was one of the people that
I know I’m rather well and he helped me um with the research on the book about
professor Cochran he was the Undersecretary of Agriculture in the
1960s and that was a time that something very important if you’re if you have if
you have a very small life anyway something very important happen we
switch from farm price supports keeping prices high to a system we’d let the
price fall very low and make up the difference with payments the farm
deficiency payment scheme was born then and then I I see that as kind of the
birth of the cheap food policy and a radical shift no one can think of it now
but some of you might remember in those days the idea of a farmer getting a
payment was nothing that they didn’t wanted to do this was they would rather
have the supported prices and john looked back on his experience he
actually wrote about it finally he told me about it but wouldn’t let me write
about it I thought that was pretty unfair he said the framework for the
deficiency payments was brought forward by a Cargill lobbyist and I’m quoting
now presented to the Secretary of Agriculture and was quickly adopted
influence of this type is alive and well in today’s Washington the best we can
hope for is so-called compromises that get us nowhere so what are we going to
do now I’m acknowledging the paper and will publicly do so here that economists
richly deserve their claim to the dismal science and so far I’ve laid solid claim
to my share of that more of a tradition but I don’t want to end that way however
thank you Oh audience a little bit more than that not much but a little bit more
yeah this is really going swimmingly isn’t it that’s right I already got the hard
tomatoes for the hard time as some of you know I what at Cochran I wrote about
has been a friend of mine for many many years he was the chief agricultural
economist under President Kennedy during the 1950’s he slowly came to the
conclusion that agriculture was best regarded as a public utility just kind
of an unusual way particularly the 1950s to be viewing anything but it’s a public
utility something he called far too important to be left to the whims of a
free market system now he was quickly branded a communist and run out and very
few people pursued the issue as much as they might otherwise have he certainly
didn’t but I’m gonna suggest maybe now be a good time to think about his idea a
little more I talked to him at lunch a couple days a couple of weeks ago and he
said well give it a shot because now we’re looking at this very question in a
much different arena and that’s banking the nation’s private banking system has
made such a mess of things that the world economy teeters on the brink of
collapse the United States is in process of doling out hundreds of billions of
dollars to prop up the system along the way people naturally ask isn’t there an
alternative to giving truckloads of cash to those who caused the problem to begin
with well that’s a reasonable question to ask and then Alan Greenspan our
famous former chair of the Fed he was this actually apparently happened he was
before a congressional committee a few months ago and he apologized for
believing that the free market system could bring us a banking system that
functioned now you know I’m a Catholic I go to church a lot it’d be like my
priest came in and said well all those prayers you’re wasting your time
you know this is Alan Greenspan apologizing for believing in the
free-market system that is that’s lightning level for us but we have a
grand dilemma if the market doesn’t work for banking it makes no sense to pour
more money into the broken system and I’ve heard very similar discussions
about our health care system I’m sure you have – not taking one side or
another but can you turn the healthcare system over to an unfettered free market
system and hope for the best in both cases people are thinking about
radically different systems for providing those services now during the
1950’s professor Cochran wrote his what I consider his masterpiece it’s a little
book called farm prices myth and reality and he made the case remember this was
in 1957-58 that the free market could not work for agriculture the would not
and could not again it was more than we could take at the time so we went right
back to basically what we’re doing with the banking system we poured more and
more money and tried to tack the occasional regulation on buy of a farm
bill so the thing would behave itself but I think we’ve got our own little
version of the banking system in agriculture a system that appears to me
to be getting less and less sustainable instead of more so now the alternative
view is the one that I’m a little hesitant myself to consider as I’ll talk
about in a minute but the one that seems to take us in a direction that will
result in progress what if professor Cochran was right all
those years ago what if our food system is so important
that it must be regarded as a public utility and what if the free-market
system simply does not work for sustainable agriculture I’m gonna say
that for sustainable agriculture not for all of Agriculture but for sustainable
agriculture now many serious thinkers consider
sustainable at the broad systems-level not as the
occasional island of sustainable farming in an ocean of conventional agriculture
professor Cochrane himself he’s such a thinker I’m happy to see a couple copies
of his book the curse of American agricultural abundance are over their
will was either 89 or 90 when he wrote that which just infuriates me because he
writes more than I do and he’s at an age where he likes to say it’s getting much
easier to meet younger women but uh but he applied this plan that he thought
converting the high plains cropland back to grass and grazing operations and by
transforming intensive cropping areas like the Corn Belt to diversified
farming areas they enough to read it it’s a long chapter but that’s the scale
at which he and I think probably West Jackson and Wendell Berry were thinking
when they write there’s something about some grand scale changes to our farming
system I don’t necessarily advocate professors of is that this thing stop
that I’m not necessarily advocating a professor Cochran’s approach but it does
illustrate the scale at which sustainable agriculture must be
accomplished to meet important goals you know this scale individual actions
guided by Adam Smith’s invisible hand will not likely be up to the task in
fact we may continue to get exactly what we’re getting now a food system that is
guided by powerful players outside of farmers and yet the principal means we
have chosen to advance sustainable agriculture production research farmer
education and studies of farm level profits all have this in common they
assume individual action will get us where we need to be and I disagree with
that as ambitious is the task of bringing about system level change might
seem it is in some ways no less ambitious than the rural electrification
or building the interstate highway system
these projects did not wait for and they didn’t ever not rely on individual
initiative however they were based on broad well focused collective action so
this brings me all the way back to the thoughtful farmers and consumers
everywhere that West Jackson and Wendell Berry appealed to in the article on farm
policy I agree these people are the ones most likely to guide us toward a
sustainable agriculture but they must have decision-making power if they are
to do so we cannot pretend that they do when they are mayor ants among elephants
in our food system rather we must contemplate an economic structure in
which they have real and substantial control so with that bright and happy
little note I’m going to bring out this other piece of paper here on the back of
my daughter’s birthday party invitation and I’m just talk about a couple of
things um first what I’ve talked about is only meant to apply to the notion of
a wide scale adoption of practices that we would consider to be sustainable not
about how to get this farm or that farm to do something and I’m not in any way
if it sounded that way saying that I do not support the work of the Leopold
Center or what I’ve done or anyone anybody else near has done i back when I
was a math major we used to talk about necessary and sufficient conditions I
think the research and the education and the outreach are necessary but I no
longer think they’re sufficient so what would be sufficient I still rely on well
Cochrane a fair amount for this but some background on what he was trying to do
in the 50s he did propose a system he wanted a system that would behave itself
not in the way we think of in sustainable agriculture but
did want the entire system to change his concerns and maybe some of you remember
this were overproduction and low prices and losing family farms those were the
things he was worried about because Rachel Carson hadn’t even written her
book yet so a lot of the things that we might be concerned about hadn’t really
evolved to the point of being at national discussion but farm policy
surely was far more discussed in those days you it was in the barber shop
many of the references I used in writing that book about him were from Time and
Life magazine and Look magazine and Reader’s Digest it was a big deal but he
wanted the food system to behave in a way that would not produce so much they
had to store it in movie theaters out in western Montana and it would have right
reasonable prices for farmers and would maintain family farm structure because
he was worried that of the family farms got too big got enormous size of the way
some have today that they would become monopolies and run up food prices that
was his concern now a lot of dairy farmers would tell you that we’re not
running up dairy prices right now but um those were his concerns and his solution
was a global solution that had nothing to do with individual initiative
remember he wanted to give every farm a quota kind of Canadian dairy style or
many European systems and that’s all you could produce and this would maintain
their size and it would maintain you know supply and demand such love we have
reasonable prices it would keep the weed out of the movie theaters it’d be off of
course it got destroyed the idea never got anywhere but that was a system’s
level approach to a problem that could not be solved I don’t think at an
individual level the individual action made that problem worse you know
everybody is striving to grow some more because the prices are too low but that
was that’s what he was up to banking is as a different flavor to it
than what he was trying to do because the banks
we are bankrupt I mean you have to do something there and it has to be of a
certain type of action that seems like of putting money in the question is when
you put money in are you going to have any ownership you’re going to have seats
on the board or not that might be a place where the thoughtful farmers and
consumers would come into this system in the way that perhaps thoughtful
money users would come into the banking system you buy seats on the board of
this now that’s something of course that I’m it’s hard to imagine how that would
work into into the system that we have in farming because agribusiness is by
and large not bankrupt matter of fact not even close in many cases as I look
at the profit and loss statements recently I’m I’m thinking about Walmart
seem to be doing rather well I’m thinking Dean food since I work in a
dairy a lot dairy industry a lot is certainly doesn’t appear to be hurting
Cargill seems to be making it okay so we have a different situation there and
then I think of the health care system how can we make that change on
individual initiative how could we with research and education of consumers and
the occasional cost study of this versus that to come out with a policy where the
program is not invested in so heavily in the insurance companies it’s not likely
to happen so this kind of where I sit with this thing right now I would very
much like to see Wes and Wendell mean we’ll have their visions out in an
environment where those where those visions had a chance of happening I’d
like all of you to have a chance where the visions you have have a chance of
happening on a broad scale broad enough to make the difference in the indicators
we look at and I spent the last several years
thinking about this so many years in fact this is a little awkward I was
looking through my files yesterday and I realized that I am nine years ago at a
small conference in Ohio gave a paper with this same title that’s awkward so
cause some librarian a headache anyway but I’m that’s kind of where I am with
this right now and I hope this is at least not a total waste your time listen
to me Yammer about this because I’m there’s a lot of things we could talk
about in sustainable agriculture that are hopeful and it make more sense than
what I’m talking about but I don’t see the way to move us out of the banking
mess out of the healthcare mess or out of an agricultural system that’s not
going the way we want to see it with only the approaches we’re taking with
only the approaches we’re taking I just can’t see it not because I haven’t
thought about it or looked at it and I’m sure some of you and here might have a
better idea how we can do that but the progress is very slow if Minnesota is to
sustainable agriculture has a little course in sustainable agriculture I
always like to go in lecture once or twice and we always go visit a farm and
for the last 10 years it’s been the same farm and now it’s that’s a nice farm to
visit but think of what’s happened in conventional agriculture during the same
amount of time how quickly biotechnology was adopted the change is not
necessarily in the direction we want some of us but how to make that happen
on the level that many of us talk about it it’s something that these are the
thoughts I have but none of them are easy so I was hoping that maybe one or
two of you would have a comment or something that we could talk about a
little bit maybe see if this makes any more sense anybody right I mean I tried to point out in
here that I don’t have a lot of confidence and I’m in traditional farm
policy for the reasons that John is talking about that when when you allow
certain players in the system to become so large they can focus money better
than can many many small players just the way it is and when all that money
gets focused that usually gets focused on the interest to whoever has that
money and so the system becomes rather sustaining in a way that may be
unsustainable I’m yeah momentum yeah lots of inertia because I’m struck
by I’m whether or not you agree with what he’s trying to do the way President
Obama is trying to make some fundamental changes in the system he’s not making
small little steps he’s saying this requires a de lor what just a sea change
in a sea of money I mean we’re talking trillions here in a budget to do things
like knock the system off its center long enough where it would go somewhere
else I suspect that the change that we want would involve some of that and that
of course didn’t come out of Department of Agriculture or anywhere else that
came out of an election to elect particularly from a viewpoint of a
person who grew up in Florida a very unlikely candidate in a very visionary
candidate who was willing to try something like that but he’s doing it I
think based on broad public support not on special interest support of any type
I can see right now so it may take something like that again the thoughtful
farmers and consumers if they go through a political way of doing this that might
be the way to go somebody else please yeah please have we had a sustainable system before
and is there one anywhere in the world in the few times I’ve been to Europe
I’ve been impressed that they have taken more of a broad scale approach to this
than we have and it’s it’s easy to talk with people like Professor Cochrane you
know he’s in his 90s about what is like and his boy at all the farms are
diversified and this that and the other but I think the type of system that that
Wendell and Wes and them write about I don’t think we’ve had before I think
that’s um that’s more of a science base you know this these are the outcomes we
want this is what it would take to get it I used to teach a course in the
history of a US Agriculture something I knew nothing about so I got somebody
else to help me teach it but I’m it struck me you know with very low
technology all of the prairies were broken that’s pretty remarkable you know
that with virtually no technology were able to basically undo the entire
Prairie system so that there have been these kind of things throughout history
but the one that starts with a vision and say here’s what we ought to be so
now let’s go get there I I haven’t seen that one yet anything else yes or John
hi the carbon sequestration and the
cap-and-trade when I was teaching economics we use that as an example of
something that might work and it did work in the classroom what I’m what I’m
worried about and I just read a ami Guptill is a as a
real sociologist I think she’s still in New York I just met her once or twice
but she was participating in a project that I’m Leopold Center actually helped
well she’s written an article on the conventional ization of organic dairy
that’s um an interesting article and argues that it’s very easy for things
that look good and BR sustainable to be reduced to a set of rules which can then
be are a set of programs which can then be manipulated in such a way as they
move away from their intent I’m sure there’s a lot of discussion among you
folks even about whether when the Organic Standards moving into USDA was
that a good thing or a bad thing because now we can have discussions on exactly
how much pasture does it take where before we had people who came into this
farming out of a different ethic and that would not have come up within their
way of thinking that we could have a 6,000 cow organic dairy that wouldn’t be
part of it but now we have people gaming the system so I’m worried about these
regulation based approaches only because they can be gamed so easily and moved
aside I’d rather see it have a little more oomph to it than that what else can
I say that would destroy anybody else’s hopes here
there was one other question over here I thought go in the back yes sir the question is I’m with the public see
sustainable agriculture is more acceptable if we could somehow stem the
tide of advertising basically by large agribusiness and the flow of money into
universities the advertising there’s no counterbalancing advertising
unfortunately it’s not just in sustainable agriculture in many ways you
know that once you funnel enough money I’ve always been struck by in Minnesota
maybe I’m here in Iowa too there’s a series of ads on how happy the cows are
in California I’ve been I work a lot in California dairy and there does cows
aren’t smiling you put 12,000 I’m on a feedlot and they’re not smiling anywhere
I can see but that cow that jumps over the fence and runs off to California is
on a huge wide pasture full of flowers and it’s hopping around just like you
would think at California cow would do until you’ve seen one and but that you
can do if you have a lot of money there’s not enough there’s not an
offsetting sum of money that would that would show another California cow being
unhappy but I don’t know how much that influences the public though um I
suspect the public would like us more sustainable agriculture you know I mean
how many times are gonna get poisoned by peanut butter before you just soon have
something else but the decision making is not there and it’s now with the
farmers that’s the problem and so that’s the question I’m coming about how do you
do that the flow of money into universities um I’ve always been thought
it was awful because I didn’t get any of it well there you go that’s right as long
as it except for Wallace’s yeah yeah that would be the exception but these
are the kind of things that no these are very sensible questions because what do
you do to get sustainable agriculture to the way to the level president obama has
gotten fixing the economy in to some extent revising the healthcare system
some people think he’s not going far enough and everything but he’s certainly
making a shot at it on a level that is not happening in sustainable agriculture
right now but maybe the level at which it has to happen for us to break through
and have the system we’d like to have so yes sir well I would I would say Florida
but clearly we need examples of what we’d like to see I mean you know the you
have to you know what you’ve done I think has been particularly helpful in
showing the public what could be but that’s different than taking it to the
grand scale no I’m I’m hoping that that you’ll stay out of town for a little
while more but uh but no I didn’t mean to imply that at all and as I said I
hope I haven’t implied that everything has been done has been wrong I’m just
trying to say everything had been done has not been enough because we it’s so
easy to to focus on things that are familiar and things that seem beautiful it’s so easy to focus on things that
we’ve done before and that are familiar you know another variety of grass
another cost study these are things we know how to do and by gosh we just get
enough of them everybody’s gonna see and so far they haven’t and meanwhile we go
from an organic dairy industry that’s almost completely cooperative and
organic valley to one that is now less than a third is cooperative and over two
thirds is owned by proprietary processors and
only two of those really and this is the so called progress we’ve made in the
last five or six years it happens very quickly so how do we how do we do that
but it’s no less daunting now than what Obama is up to if he’s gonna get
insurance companies backed out of the healthcare system
I mean we got an easy task compared to that let’s face it this is this is
trivial compared to what he’s trying to do but look at how he’s trying to do it
and I think that’s the way this is going to have to happen yeah yes sir right right well we put me in a very awkward
position because my wife likes to garden and I don’t so but I’m I mean clearly
fred was talking about this over dinner you know that clearly that level of
awareness at the White House would make a lot of difference it seems like and
apparently Michelle Obama is going to actually go ahead and do this that’s
gonna help a lot I’m still not seeing that translating into vast seas of
perennial grasses on land that should never have been cropped I’m still not
seeing that part of it I’m seeing a lot of awareness of healthy food I’m seeing
a lot of local I’m seeing a lot of good things come out of that mm-hmm right you
know exactly how that gets rid of the dead zone I don’t know just yet but I
mean it certainly is a very positive thing there’s no doubt about that and it
would be wonderful to see and it may be the spark that gets everybody thinking
well the president likes that we ought to get him to try this that would be
great because somehow another he decided that the health care system need
repairing and I’m not sure it’s any worse off than some of the problems we
have in agriculture I mean the health care system gonna be taken care of
people who ate the peanut butter you know why not just fix the peanut butter
I don’t know I’m concerned about that since my
relatives live in George but um you know that’s a big deal yeah one peanut butter
plant go out and people around the country or you know having all sorts of
problems that require health care system it’s not there to serve them because
they may have lost their health insurance this is kind of rough okay
yeah sure right yeah this is why a few friends who read
this written vies me not to use that term I did it anyway dang it see their
question is exactly the heart of the matter it’s what do what is a public
utility and how would it work in agriculture because she is the example
for those who couldn’t hear very well of the local water system in town it might
very well be a public utility for a while the telephone company was the
garbage collection sometimes that way in in a pure high church economics when
you’re teaching econ 101 a public utility is something where it where one
provider is the only thing that makes sense because of the economies of scale
you can’t have three or four water systems or you can’t have four people
putting all the transmission lines for the phone and competing who’s got the
best transmission lines one has to do it but once you realize that you can’t let
that one just run while because then you got an uncontrolled monopoly that will
gouge everybody so then then you have a case that even economists agree requires
regulation now whether or not it’s publicly owned that’s a whole different
story a lot of public utilities aren’t a lot of utilities aren’t publicly owned
they’re simply regulated that’s why in Minnesota we have a public services
commission and you probably have a similar thing here that regulates those
private operations that have monopoly power because of the nature of the beast
and that’s one way to look at it but when we look at how we’re approaching
healthcare for example that may go single-payer and that single-payer may
be a private company or may be a government operation it may be Medicare
but it may be some variation on what we have right now that’s more heavily
regulated or behaves itself differently which is where I think Obama is heading
with a healthcare thing right now much to the chagrin of more of left-leaning
Democrats right now so um but there’s a lot a lot of territory in this and when
you say public utility you should not they
immediately a government-owned enterprise I don’t think that’s where it
would go but that’s when you use that word well use the word public utility in
this sense something that is too valuable or too important to be left to
an unregulated market system and he thought unregulated market systems were
a very good thing most of the time he just didn’t think it applied to the food
system so then what do you do right in the middle of his discussing this he
became a communist in the eyes of those who didn’t like him and he had leave
Washington and it was such a tough decision that he just didn’t pursue it
oh hi right the suggestion was we wear I don’t
think of public utility we think of the nonprofit sector as a model for the food
system many of farmers would say well we’re nonprofit anyway but um but that
also I think has a lot of Merit again is just looking for a different yeah but um
you know if we look at the entire food system has run that way I mean hospitals
are run that way many times there are some very large enterprises that I run
that way some of the Beus is and some not but that’s another way the the best
I could hope for tonight is that people would start asking questions like that
you know what would be another way that we could do this other than a lightly
regulated free market system and I do think it is lightly regulated in spite
of protests of the contrary that when it fails we put money into it because it is
starting to fail on a fairly large scale John I think I’m right that some of the
largest pork processors now and meat processor in pretty tough shape and that
goes beyond the farm sector now and is the lack of credit starts bouncing
around the processors and as the market share of the very largest retailers –
tends to increase and force prices down there’s gonna be a lot of turmoil in the
food system that’s not that’s not just the farmers and what are we going to do
about that are we going to just keep propping it up or will we have the
opportunity what’s that saying never you know every crisis an opportunity is I’m
trying like that but will we have an opportunity in the middle of the mess
we’re going through to be thinking about something else rather than keep trying
whatever we got let’s keep the thing limping along let’s go down to that
peanut plant and get them dead rats out of there and that’s our solution or are
we gonna have maybe a little more localized system or something where if
it does get out of hand doesn’t get out of hand fifty states
away those would be the kind of opportunities I think we’ll have in the
next five years but we won’t be able to take advantage of them if we’re not
asking the right question so hence my tiny little contribution so sure you know only worse right well I wouldn’t have one in the in
the sense we have one now you know that’s what I’m trying to think of what
would we have instead because everything you’ve said and for those who can’t hear
he’s talking about the payments that we make to farmers often wind up in someone
else’s pocket not directly but as as you give more money to a farmer all of a
sudden the price for land the price for seed the price for fertilizer the price
for a new tractor everything tends to track it up and then when the farm price
falls back down those prices stay up and so the farmer has really hit harder than
if they did just stayed low and many people argue just just get rid of them I
think that’s pretty draconian given how things sit right now without something
else to put in its place that would make some sense um but this is uh even
professor Cochran finally in 1980s wrote a paper said get rid of all these
payments it’s in that put him in bed with with people he never thought he
would be seeing eye to eye with but it has been a huge problem but I think
anytime you try to fix a broken system by throwing money at it and I bet we’re
gonna see this with banking I’d bet dollars to don’t we’re gonna see this
with banking and you know people complain about a twenty billion dollar a
year farm program man that’s in the footnotes of what we’re spending to get
the banks back on but we’re giving it right back to the same people who caused
the problem and it’s a nice business to be in yeah I’d take my share of that well we don’t know because we’ve had
eight years with no antitrust what’s going to be you know it hasn’t come up
really in the new administration I expect it would be very very difficult
to break up any of the large companies from either and let’s not just say
agribusiness let’s say retailing you know have even more power I think I
think going in there and breaking those up is going to be very very difficult
some other strategy might make more sense it might talk with farmers on
market power this comes up all the time is it better to have farmers work
together and get powerful or is it better to have someone else outside come
in and and reduce the power everywhere else some in there I say I don’t like to
see farmers as helpless you know I like to see them and be powerful and match
that power but um that that’s one of the stickiest questions of all once things
become concentrated to a huge degree what can you do other than perhaps it
was your question I believe about the public utilities that now if they’re
going to function at that scale they’re allowed to function that scale but the
rules under which they operate become different because they have sort of a
public utility kind of look to them right now that is this we haven’t seen
before we didn’t used to have a Deans food every town had a Creamery well in
our town doesn’t have a cream here if they do they’re owned by the same
company and that’s the catch once they get that big what do you do and backing
them off might be very difficult yeah and what impact with regulations we
have here on the yeah yeah no there’s nothing that I’m saying here that was
meant to be a quick fix or or you know here’s what we ought to do I’m just
thinking that if we don’t if we’re not thinking this way in the next five years
we’re gonna miss some opportunities that don’t come along just everyday so maybe
I’ll let it go with that but thank you very much you know this is a great honor
to be here I have to say not just everyday somebody asked me to give an
invited lecture like this and actually have people show up for it that’s
amazing so I thank you again for the chance and
Fred for the great introduction

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