Government Policy

More Meddling in Markets or "The Problem of Too Many Balls in the Air" Revisited

     We have in the US energy policy regarding ethanol an illustration of the classic problem in economics which I like to call "too many balls in the air".  When it comes to economic thinking and analysis, individuals or groups with "skin in the game" tend to focus tightly on the single variable they want to improve (like the corn price in the case of ethanol) and fail to understand that markets are complex interactions of sometimes hundreds of linked transactions and markets all of which can and usually are affected by extra-market interventions to move the target variable.  There are economic models that can and do attempt to account for all of these impacts simulataneously and track the movement to a new equilibrium in all affected markets but they can be large and clumsy and not very good at tracking the short term movements to new long term equilibria.

The End of Obesity is Just Around the Corner

If you imagine in your mind, the irrigated agriculture of California you probably can see a large valve sticking out of the ground with a wheel on top situated in the middle of a massive field with deep furrows.  As the valve is turned, water gushes out into the furrows, flooding them to provide water for the crops.  Alternatively, you might see large water guns irrigating the fields with booming sprays similar to a lawn sprinkler on steriods.  The way of the future will require a much more efficient approach if water use to produce crops in California is to be sustained.  Intensive approaches to irrigation have been developed for use in very dry climates where evaporation is heavy and represents a large waste of what little available water is there.  In these methods, drip irrigation delivers water right to the root zone in buried or partially buried plastic pipes with small holes to meter out the water.  This almost eliminates evaporation waste and the delivery of water to

SwineCast 0386, Washington Viewpoint with Sara Wyant

SwineCast 0386 Show Notes:

  • Special presentation with Sara Wyant of Agri-Pulse.  Her take on new administration's ag viewpoint and impact on policies affecting our industry

Here is All You Need to Know About MCOOL

     According to the USDA talking points released yesterday (1/12/2009) regarding the final estimates for implementing country of origin labeling:

1. The first year implementation costs for directly affected firms is estimated to be 2.629 billion dollars.

2. Costs per firm are estimated to be $370 for each producer, $48,219 for intermediaries, and $254,685 for each retailer.

3. The estimated cost in higher food prices and reduced food production in the tenth year after implementation is 211.9 million dollars.

     Now for the benefits expected:

     "The expected benefits from the implementation of this rule are difficult to quantify.  The Agency's conclusion remains unchanged, which is that the economic benefits will be small and will accrue mainly to those consumers who desire country of origin information." 

Living in a World Where Everything is an Externality

     Nicholas Kristoff, an editorial writer for the NYT has recently written an opinion piece calling on President-elect Obama to take the bold step of changing the name of the Department of Agriculture to the Department of Food. 

     The main reason behind his recommendation is to unseat the powerful agri-business lobby from controlling government policy, that among other things has favored factory farms raising as many as 5,000 hogs and that these "large operations receive, in effect, a $24 subsidy for each hog raised. We face an obesity crisis and a budget crisis, and we subsidize bacon?"

SwineCast 0354 for November 7 2008

SwineCast 0354 Show Notes:

  • Special post-election insight on new administration's transition and impact on agriculture  

SwineCast 0270 for January 18 2008

SwineCast 0270 Show Notes:

  • Chavez ready to take over agriculture in VenezuelaWalking to Dinner in Banff
  • Rabobank's Fiona Boal looks at pork production outside North America
  • Canadians in Minnesota for Pork Congress.. next stop for delegation (and me) is Iowa Pork Congress. See you there?

What Your Tennis Shoes and Pigs Might Have in Common Some Day

     I am going to make this as painless as possible but here is something to think about on a cold winter night when you are losing money.

     Capitalism is thought by socialists to inevitably lead to a redistribtution of wealth which is unjust.  Namely, capitalism inevitably leads to a concentration of wealth in the hands of a very few, the owners of capital.  Labor inevitably gets the short end of the stick.  Capitalism cannot survive long-term because it will lead to such an unjust outcome that revolution will displace it.

     In the United States, the development of scale and mass production in the early 1900s is typified in the invention of the assembly line by Henry Ford (OK some dispute he actually invented it but bear with me).  The adoption of scale across many industries led to a tremendous accumulation of wealth in the hands of a few and the beginning of modern day concentration (fewer firms) was under way. 

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