John Phipps on Crop Insurance and Market Distortion

Have I said recently I hadn't noticed much concern about WTO rules vis a vis the next farm bill?  Seems to me in past cycles it was a top concern.  Indeed the delinking of payments and current plantings in the Freedom to Farm of 1996 was, I think, a big issue, at least for those who weren't bewitched by the dream of getting government out of agriculture.

John Phipps reports here the Brazilians are taking the position that crop insurance is market distorting. You'll remember they've already won a WTO case against our upland cotton program.

NASCOE Versus Crop Insurance

NASCOE has asked Congress to de-privatize crop insurance according to DTN's Jerry Hagstrom.  DTN editorial opposes.

Some random comments:

I didn't see this position on the NASCOE site until I doublechecked and found this consultants report.  Don't understand why the report was dated in September but, unless I have been missing it consistently, which is possible, not posted until recently. The report seems impressive enough (that's what consultants do--impress) that it should be up front in NASCOE's pitch. The DTN editorial rightly says this is FSA trying to preserve jobs, but without mention of the data in the report.  If NASCOE is serious they should be highlighting the dollar savings in short talking points.

Having gone through the process of parallel sales and servicing of CAT policies in 1994-6, I've some wisdom thoughts to offer. I think we ended up doing a pretty good job with CAT and I think GAO was reasonably positive about our work, though that may be an old man's rosy memories.  But the point is it was a real battle of sweat and tears to get to where we ended up.  There was a very big learning curve.  It's easy to assume crop insurance is simple, just another program to administer.  But it's not, particularly because the differences are subtle.  I've posted before about the different acreage reporting dates of ASCS/FSA and RMA--there's good reasons for many of them, reasons which someone raised in the crop insurance world understands automatically (as regards crop insurance) and someone raised in the FSA world understands automatically (as regards farm programs). 

I've posted before about the 80/20 rules: it's those subtle differences and the odd-ball (to an FSA person) crops which would cause 80 percent of the work.  

So I'd fault the consultants for not recognizing transition costs and learning curves, which would be major.   If Congress really wanted to explore saving a billion or so (which I doubt they will--just look at the map of crop insurance agents in the report and remember those people have influence) I'd suggest they haul some branch chiefs and division directors from FSA and RMA up before their committees to thrash out the proposal.

I was struck by the statement in the report that most crop insurance acreage reports are rekeyings from FSA acreage reports.  By now I would have hoped that offices could have been working directly from GIS-based reports, but I guess not.

Opting Out and Rational Decisionmaking

Here's an interesting post, on a book which argues that some blacks in higher education end up going away from STEM and towards the softer side.

, according to the 2000 Census, the top 20 white-collar careers among both black and white employees include elementary and secondary education as well as registered nursing. But break it down further and you’ll find that white people hold proportionately more high-status positions: lawyers, physicians, surgeons, chief executives and financial, general and operations managers. Black employees, in contrast, trend toward “service-oriented, racialized jobs” including counselors, education administrators, preschool and kindergarten teachers and community and social service specialists. Taken together, the differences in employment result in: chief executives being the fifth most common white-collar occupation among whites, but 35th among blacks; lawyers being 10th among whites but 27th among blacks; and physicians being 19th among whites but 31st among blacks.

Read more: http://www.insidehighered.com/news/2011/12/02/new-book-says-elite-black-students-dont-try-high-paying-jobs#ixzz1lowMKYaL
Inside Higher Ed

I'd argue a part, perhaps a small part, but a part of this is a rational choice based maximizing one's assets.  Since this is a touchy subject, let me use myself as an example.  As a farm boy I could bring some intangibles to some jobs, and not to others. I tried to play this card when interviewing for college: when asked what I could contribute to Harvard I argued they didn't have many farm boys in the student body.  Unfortunately, my argument from diversity fell flat and they rejected me.  But my background was an asset in my work for USDA.  It wouldn't have been an asset had I gone into math or science, or even computer programming.

I think much the same applies to the occupations above: the jobs may be "racialized" (not sure what that means but it sounds bad) but when you think about it, on the average most blacks will have had more experience dealing with more different people than most whites. More experience usually translates into more capable.

As I said, this may be a small part, but it makes sense to me.

Don't Grow Old: Nature Conservancy and Climate Change Denial

I was amused to find two age-related posts in my Grist feed: one reports that the Nature Conservancy's members are old and gray, which causes concern; the other reports that climate change deniers are old and gray, which causes pleasure.

The mantra of my household is: don't grow old.

Those Destructive Government Employees

Did you hear that Obama shot off a cannon in the State Dining Room?  Not content with destroying our free enterprise system, he's now intent on destroying the White House so Mitt can't take it over.

People Leave the Country: 1920's {corrected]

I knew the 1920's were not good for US farmers, but I was totally floored by the economic history piece on 1920's which included this graph: 20 million people left the farm in the 1920's.

[Correction: Note the different scales on the left (population) and right (employment), so the decline in population is about 1.5 million, not 20 million. I thank the author, Gene Smiley, for pointing out my mistake.}

Job Openings: French Hermits

Dirk Beauregarde reports the French church has openings for hermits.

Civil Servants: Pay and Expectations

The Post reported this morning on an investigation in DC of people who drew unemployment insurance while employed by the District.  Apparently particularly for intermittent employees, the pattern was when they got paid by the District they failed to report the fact back to the unemployment people.

My immediate response was drastic, jail 'em.  Maybe that's because I think highly of public service, so feel let down when civil servants screw up. Then I thought: if civil servants should be models, isn't that a basis for paying them more? (Think of the public school teacher in a small town in the old days.) But then the prestige of the job is additional compensation.

Bottom line: I'm confused and don't know what I think.

Blast from the Past

Hat tip Grist: Bloomberg reports on the big planting plans for 2012, including this quote

“There is unlikely to be any ground that won’t be planted this year,” said Todd Wachtel, a 40 year-old who farms about 5,700 acres in Altamont, Illinois, and plans to expand his corn fields by 21 percent when seeding begins in early April. “Farmers know that they have to plant more when prices are high because they may not last.”

Of course, if every farmer plants more when the prices are high she guarantees the prices will fall.  It's called the law of supply and demand. Farm programs used to have a supply management feature, which enabled farmers to act as a cartel.  Without government intervention, there's no way for an individual farmer to have the market power to adjust supply.  The only alternative to such intervention is for the industry to restructure itself with vertical integration, meaning a handful of companies acquire power over the supply chain and thereby can informally coordinate supply and prices.   That's what's happened in the US to poultry, eggs, and hogs, and most recently with tobacco.

If corn prices are going to drop in 2012, what happens to the cash rent leases and the mortgaged land sales?  The only thing keeping us from repeating the crash of the early 80's is the fact farmers aren't nearly as indebted now as then.

How Far to an FSA Office?

Via Farm Policy, Senator Grassley has written USDA about the possible closures of FSA offices in Iowa.  He goes so far as to challenge the 20 mile distance, pointing out that a couple of the offices are actually at least 23 miles away from another FSA office by road.  

In a way this sort of letter is the obverse of earmarks; it's the elected representative using his local knowledge, or rather channeling the local knowledge of his constituents, to affect the decision-making of a bureaucracy.  I think we'd all agree this is useful, even though some of us may oppose earmarks.

On a lighter note, I was remembering Roy "T" Cozart, an official in ASCS in the 1970's/80's.  He was, I believe, CED of Deaf Smith County, Texas (pronounced "deef" and named after the scout first into the Alamo after the killing stopped).  Maybe it was that county, maybe another, but he delighted in mockery and one thing he'd mock was Easterners and the way he'd mock was to describe how long it would take to drive his county, hours and hours at least as I remember it.

Maybe he was pulling my leg, because with the magic of Wikipedia I can find that Deaf Smith county is just about 1500 square miles, meaning it's a rectangle roughly 30 by 50 miles.  In the Texas panhandle it wouldn't have taken long to drive, so maybe Roy was reminiscing about his days as district director in middle Texas. For comparison, Linn County in Iowa is about 750 square miles.

Sen. Grassley's constituents face a round trip drive of 25 miles to the FSA office, maybe 35-40 minutes assuming Iowa roads are straight.  In Texas one assumes the distance would be double or triple that.  And if you want to talk about Montana: the counties mostly range from 2000 to 5000 square miles.

What's my point? The distance parameter is arbitrary.  No corporation, no Walmart or Subway, would allocate their stores the way the US government allocates its offices.