Post Raisin -- Not the Cereal

The Washington Post has a Style piece on the raisin farmer in California who's violating the terms of the raisin marketing agreement and won an interim victory at the Supreme Court this term.

I don't know enough about this marketing agreement, or the other agreements, to be comfortable in any detailed commentary on the case.

What I do know is this:  agricultural producers in the 1930's had very little power in the market--they had to accept whatever prices the buyers would offer.  The perception then was the imbalance in pricing power between producers and buyers resulted in an unstable market, with wide swings in price as producers over-produced in response to good products, creating surpluses.  Because the demand for food is usually inelastic, it takes a big drop in prices to clear the market of surpluses.  

Hence the cartelization of commodity producers, whether tobacco producers in the 1930s, or oil producers in the 1970's.  In the area of fruit and vegetables the cartels took the form of marketing agreements.  (I'm in danger of confusing marketing agreements with research and promotion agreements, which try to increase demand without controlling supply.  Both types may be initially approved by producer referendums.)

IMHO the question today is whether there are other mechanisms available to producers?  For example, the price of eggs went up and down rapidly in the 1940's and 50's, reflecting the same sort of free market mechanics.  My mother got very disgusted with those farmers who'd expand production when the price was high, knowing the sure result would be low prices a year later.  (She didn't believe in following self-interest; one should look out for the greater good.)

But unlike Canada (I think) the US never had an egg cartel.  And what happened?  Contract growers happened.  Big companies contracted with growers to produce eggs and poultry as innovation paved the way for 100,000 chicken houses.   That process of consolidation meant lots of small poultry producers went out of business, but those who remained faced much less risk because the industry was vertically integrated. 

That's happened in other areas, but mechanisms like futures and forward contracting seem also to have played a part, not to mention crop insurance.  If we were re-creating the raisin industry from scratch, would we have a marketing agreement, or some other mechanism to reduce price risk?

Puffing Agriculture Just a Tad

From the Farm Bureau's New York website:

"Agriculture is New York‘s most important industry. The farm economy generated $4.45 billion in 2008."  It goes on to cite New York's 35,000 farms

From this site

New York's gross state product in 2001 was $826.5 billion, 2nd only to California, to which financial services contributed $282.9 billion; general services, $190.2 billion; trade, $103.5 billion; government, $81.2 billion; manufacturing, $77.7 billion; transportation and public utilities, $59.3 billion, and construction, $17.4 billion. The public sector in 2001 constituted 9.8% of gross state product, tied with New Jersey for the 5th-lowest percent among the states where the average was 12%.

Best Practices, Reinvented

I am reading a biography of Seaman Knapp, sometimes called the father of the extension service.

One of the big problems in agriculture around 1900 was dissemination.  Researchers at the experiment stations and people in the field had identified ways to grow more and better plants and animals, but they couldn't convince farmers to change their habits and adopt new methods.

The description was reminiscent of the "best practices" fad in the 1990's: the idea that business consultants could identify what the best organizations were doing and then inject them into other organizations.

Lots of reasons why the idea doesn't work nearly as well as it ought to.  For one thing, a "best practice" identified by an outsider is likely to oversimplify, to miss some features of the organization's culture which are critical to success.  And importing a "best practice" under the auspices of some high-paid outsider is likely to raise the hackles (does anyone these days know what a "hackle" is) of the people who've been doing the work, in their minds pretty successfully.

[Updated: see this Technology Review post on why Silicon Valley can't be duplicated.]

The Modern Sisyphus or Diogenes

In the Sisyphus myth, the king was fated to roll a stone uphill forever, each only to see it roll back down.  That was my first thought in considering the blog The Daily Howler, written by Bob Somerby.

Mr. Somerby seems always to be disappointed by the truthfulness of media, particularly mainstream media.  The "always" brought Sisyphus to mind, but then I see the king's offense against the gods was to be deceitful and to try to outwit Zeus himself.  So that doesn't work particularly well.

So then I thought of Diogenes, who supposedly wandered the world with lamp in hand, looking for and not finding an honest man.  Maybe that's closer; Mr. Somerby is our modern Diogenes.  Perhaps fitting, since Diogenes was a Cynic.

Or maybe we're fellows under the skin, both nitpickers supreme. 

Anyhow, I recommend occasional dips in the blog, though perhaps Mr. Somerby is wandering the blogosphere with lamp in hand, searching for and not finding the Art of Brevity.

Taxing CRP Payments

The title of this post at Sustainable Ag,  U.S. Tax Court: Federal Self-Employment Tax Applies to Non-Farmer’s CRP Payment,pretty well describes the content.

 It interests me because it involves determining that the owner of land in CRP is not automatically in the business of farming (assuming I understand it correctly).  The theory seems to be that while the owner is being compensated for activities required by the CRP contract, that's not farming but a business.

The EU, Payment Limits, Conservation, and WTO

One of the features of "Freedom to Farm", the 1996 direct payments program, was that it complied with WTO restrictions, meaning basically it didn't affect what crops were grown or not grown.  Regardless of what the farmer did, she was guaranteed the payment as long as she didn't sell the land for a suburban development.   The vision at that time, the height of the Washington consensus,  was that the world was gradually moving away from government subsidies and intervention in agricultural affairs.  Oxfam and other international groups beat the U.S. around the head and shoulders for the distortions introduced by our farm programs, particularly the adverse effects of the cotton program on Third World cotton producers.  But 17 years have passed since that law was enacted and the climate of opinion in the world has changed.  It looks as if we'll replace the direct payments program with crop insurance subsidies without much concern for WTO rules, even though the subsidies obviously affect what's planted.   Has the Great Recession created more tolerance for government intervention, more economic nationalism?

This BBC piece (hat tip John Phipps) shows some of the factors also affecting the EU's redo of their farm policy.

The Importance of What's Underneath

MIT's Technology Review reports on research explaining "fairy circles"., at least those in grassland mostly in South Africa.  It seems it's caused by competition among plant roots.

RSS Feeds and GMO Technology

Just trying to get ready for the end of Google Reader, meaning I'm looking at some stuff which has remained unread. 

Predictably some of the food movement have attacked the award of the prize to Monsanto scientist, claiming that the technology doesn't increase food supply or help with nutritious or sustainable food.  Accepting that position for sake of argument, genetic modification will still prove its worth, as in this case of obtaining resistance to wheat rust.

Good Sentence of the Week

" Biting people is hard, and people tend to notice when you try it."

From Ezra Klein's review of World War Z--interesting in the parallels of zombies to viruses and werewolves to sex.

The Box and CubeSats

There's a good book on the development of containers, as in container ships, which by permitting the a standardization of the loading and unloading of ships greatly reduced costs and permitted global supply chains.  It's called "The Box"

And here's an interesting piece on a plan for a fleet of small satellites to take photos of the earth  It seems they're going to use CubeSats, which is a standardized module for launching scientific instruments into space. Apparently the concept is on its way to being as important for science as the container is for transportation.