Category Archives: industrial agriculture

Food and Agricultural Images This Week February 16, 2015

People explore exhibits on opening day of the World Ag Expo on February 10, 2015 in Tulare, California. As California moves into its fourth year of historic drought that caused farmers to leave hundreds of thousands of acres of cropland fallow last year, forced some well water-dependent communities to go dry, stressed wildlife and heightened political tensions surrounding water issues, farmers are attending the largest ever World Ag Expo. The expo is the biggest of its kind, attracting an estimated 100,000 visitors from 70 countries to view cutting-edge agricultural technology and equipment at 1,500 exhibits spread across a 2.6 million-square-foot of exhibit area. It is held in one of the most important food producing areas of the nation. (Photo by David McNew/Getty Images)

U.S. Customs and Border Protection Agriculture Specialists inspect flowers for foreign pests or diseases in the LAN Cargo center at Miami International Airport February 10, 2015 in Miami, Florida. As Valentine’s Day approaches Miami International Airport sees their daily flower shipments quadruple to 22 million flowers per day. During the rest of the year MIA handles more than 90 percent of all flowers imported to the U.S. Most of the flowers come from South American growers. (Photo by Joe Raedle/Getty Images)

Protesting farmers with their tractors are blocked by police in the outskirtes of Warsaw on February 11, 2015 . Hundreds of Polish farmers are driving their tractors toward Warsaw, where their leaders are negotiating government compensation for crops destroyed by wild boar and profits undercut by Russia’s import ban. (Photo by JANEK SKARZYNSKI/AFP/Getty Images)

People walk past Bazas oxen prior to a presentation as part of a traditional festival, in the square outside the Cathedral in Bazas, southwestern France, on February 12, 2015. During the annual festivities, Bazas oxen, a type of ox which has existed since 1283, parade around town. (Photo by NICOLAS TUCAT/AFP/Getty Images)

Workers at the Maridaidi Farm in Naivasha, prepare roses which will be exported to Europe for Valentine’s Day on February 12, 2015. Kenya is the major provider of quality cut flowers to the EU with a market share of about 40%. Flower farmers are upbeat ahead of the Valentine’s Day and are projecting a rosy picture for the sector, despite the recent losses incurred during the Economic Partnership Agreement (EPA) impasse. (Photo by SIMON MAINA/AFP/Getty Images)

Cows graze on a pasture near the Trans-Canada Highway north of Calgary, Alberta on February 13,2015. The Canadian Food Inspection Agency (CFIA) confirmed February 13, 2015 that a case of mad cow disease has been found in Alberta, the first case in Canada since 2011. (Photo by JOE KLAMAR/AFP/Getty Images)

Dominique Macke, breeder of the French cow breed ‘Rouge Flamande’, walks with 4-year-old Filouse, the muse of the 2015 edition of the Paris International Agricultural Show, in Wemaers-Cappel, northern France, on February 13, 2015. (Photo by PHILIPPE HUGUEN/AFP/Getty Images)

French Agriculture minister and Government spokesperson Stephane Le Foll holds a sheep during a visit at a sheep and goat farm on February 13, 2015 in Sarolla-Carcopino, near Ajaccio, in the French Mediterranean island of Corsica. (Photo by PASCAL POCHARD-CASABIANCA/AFP/Getty Images)

Farmers gather around tractors during a demonstration to protest against the hardening and complexity of rules brought by the new Common Agricultural Policy (CAP) in front of the Departemental Direction of territories and sea in Arras, northern France, on February 13, 2015. (Photo by PHILIPPE HUGUEN/AFP/Getty Images)

A boy sells vegetables at a market of the town of Shebin Kanater in the area of Qalubiya, north of the Egyptian capital Cairo, on February 14, 2015. (Photo by MOHAMED EL-SHAHED/AFP/Getty Images)

A salesman arranges a pile of bacon at the annual Bacon festival on February 14, 2015, in the village of Kacarevo, 40 kilometers north of Belgrade. Since 1987 the traditional tourist and commercial manifestation called Slaninijada attracts the best manufacturers of bacon and sausage from Serbia and many tourist from Serbia and abroad. (Photo by ANDREJ ISAKOVIC/AFP/Getty Images)

Chefs prepare more than 80.000 ‘Tacos de Cochinita Pibil’ -Mexican traditional marinated pork tacos- in Guadalajara, Mexico on February 15, 2015. A 2.5 km-long taco line imposed a new Guinness record. (Photo by HECTOR GUERRERO/AFP/Getty Images)

Farmers Should be Protected During the Long Periods of Low Prices

This post is by Daryll E. Ray and Harwood D. Schaffer of the Agricultural Policy Analysis Center, University of Tennessee, in Knoxville. They write Policy Pennings, and I use their excellent analysis on this site from time to time.

Today’s writing by Harwood and Schaffer tells us that long periods of low prices which don’t cover crop inputs historically can last a very long time and thus they need greater policy support. (My impression is that the latest farm bill supports farmers better during periods of low prices – readers in the know are encouraged to weigh in to help enlighten us.) Beyond that issue we should perhaps be asking ourselves instead why our policy covers these monoculture crops so heavily in the first place, when the end result is always overproduction.—Kay M.

Commodity policy choice: Treat the symptoms or address the cause of low crop prices

When it comes to developing policy prescriptions to deal with the dynamic of long periods of low prices interrupted by much shorter periods of high prices, two approaches are possible: one approach provides symptomatic relief and the other treats the cause of low crop prices. One must choose one approach or the other.

If policy analysts develop and policymakers adopt public policies that treat the proximate cause of low prices—the presence of a supply that exceeds demand—there is no need for symptomatic relief. On the other hand, providing symptomatic relief (to short term price disturbances when prices are high and little relief when prices are low) ultimately becomes very expensive and risks losing public support for agricultural programs when farmers need them the most.

For many years, agricultural economists understood that agriculture was different from many other sectors of the economy in that an oversupply of grain and oilseeds and the ensuing low prices did not bring about a timely self-correction in agricultural markets. Low crop prices did not cure low crop prices within a reasonable time frame.

In other sectors of the economy, low prices cause suppliers to reduce their production of the item in excess supply and consumers to increase their purchases. The result is that supply and demand come back into balance at a profitable price level quite quickly. This timely self-correction does not occur in agricultural commodity markets.

Because they understood the dynamics of the market, policy analysts worked to develop policies that would isolate a portion of the supply from the marketplace, bringing about a balance between supply and demand and the return of prices that kept producers in business. To keep from accumulating ever-larger isolated stocks, policies were also developed to reduce production to allow demand to catch up with production.

Understandably, farmers were often frustrated with these policies. And from the perspective of an individual farm operation this made sense. If they had been allowed to produce more they could have earned more, they reasoned. And that is true for an individual farm. But when all farms seek to increase production, the result is an oversupply that drives prices downward for everyone, and the size of the decline in prices is greater than the increase in production.

In recent years, policy makers and many agricultural economists have simply chosen to ignore these dynamics and instead argue against policies that manage supply. In place of traditional supply management policies, they have advocated for policies that use crop insurance to protect farmers against variations in prices—symptomatic relief.

The problem is that these policies only work well when prices are at or above the cost of production. If prices remain low for an extended period of time, farmers end up paying premiums for policies that do not even cover the cost of production.

We understand that farmers do not want to hear this kind of analysis; they would rather hear about booming export demand, a growing ethanol demand, and a new “price floor.” When we are invited to speak to farm groups, producers come up afterwards and emphatically say, “I don’t like what you are telling me!” and then they continue, “But I needed to hear that.” When prices were high, many economists were telling farmers that there was a new price floor undergirded by increased input costs.

During this period, we continued to tell farmers about the low prices that would come when the yearly increases in ethanol demand began to stagnate and supply continued to increase. We cautioned farmers to put some of the increased profits in the bank instead of buying lots of new machinery and driving up the price of land. Today, some of those who talked only about high prices and a new plateau are saying to farmers, “I hope you put some money away during the good times.” Good advice, but a couple years late.

The trend in recent decades is toward policies that tend to provide producers with little income support when prices are low for an extended period of time. As a result, the associated costs of maintaining a vibrant agriculture can actually be more costly to U.S. taxpayers through emergency programs/payments. Failing that the results could be devastating to a large swath of farmers. For farmers in less developed countries, lower prices have severe consequences. When prices are low in countries where agriculture is a large portion of the economy, the impact on the economy is severe.

The challenge of policy analysis is not to design public policies that make the good times even better; rather it is to have policies in place to help protect farmers during the long periods of low prices. Over the last century, the periods of low prices have been much longer than the boom times.

Photo: FlickrCC by Rae Allen, c.1958.

The Amazing Radish as Cover Crop

This is a delightful short video featuring Dr. Joel Gruver from Western Illinois University and his study of precision cover crops, especially the radish. It describes the amazing ability of this radish to attract nitrogen, potassium, and other nutrients to the row crop area where it is planted. Since it breaks down quickly after the temperature freezes, it makes quick compost in the fields, too.

To learn much, much more about advantages from using the radish as a cover crop, I recommend this, featuring more information by Dr. Gruver:

Radishes – A New Cover Crop for Organic Farming Systems