Saturday, January 04, 2014

LETTERS: Farm Bureau speaks for farmers everywhere | Opinion | The Free Lance-Star | December 23rd, 2013

This farmer may not have ever read "The Use of Knowledge in Society" but they get it: 

"I know my farm much better than a bureaucrat trying to apply blanket solutions to thousands of farms that vary greatly in size, type, soil capacity and a hundred other ways. Voluntary practices, encouraged by some cost share and technical assistance have proved effective in reducing runoff from farms. Now much of that effort will be wasted in forms, paperwork, deciphering regulations and similar nonsense that fulfills some bureaucratic goal but doesn't help the bay at all."

Tuesday, December 17, 2013

Agritalk Discussion of the Impact of Biotechnology, Big Data, and Genomics on Seed Choice

On December 17th I was invited on AgriTalk with Mike Adams to discuss the impact of biotechnology on farmers' choices in seed options. Agricultural markets in the seed industry (as imperfect as they may be when we compare them to unrealistic and idealistic standards) function as they should by solving the knowledge problem related to seed choices and technology. This will only be enhanced with the convergence of big data, genomics, and biotechnology. That is truly the social function of markets and prices.  Even if a single corporation controlled all of the IP related to existing biotech traits, the disruptions of new technology, big data and genomics (applications like FieldScripts, ACRES, MyJohnDeere or the new concept Kinze planters that switch hybrids on the go etc.) will require the market to continue to offer a range of choices in seeds and genetics to tailor to each producer's circumstances of time and place. There are numerous margins that growers look at when optimizing their seed choices and it will require a number of firms and seed choices to meet these needs as the industry's focus moves from the farm and field level to the data gathered by the row foot with each pass over the field. The concerns related to monoculture and monopoly in the seed industry are largely overrated when these factors and trade offs are considered.

The audio is available in the archives (Dec 17) below via Farm Journal Media or iTunes (@33:00) (play in browser):  

See also: What does the Farmer Say About Seed Choices- Channeling Hayek.
Big Ag Meets Big Data: Part 1 & Part 2

Wednesday, December 11, 2013

What does the farmer say...about seed choices? (Channeling Hayek)

I recently came across the following article in the Huffington post: Do Farmers Have Choices? by Jenny Dewey Rohrich who also has a very nice blog replete with some very good ag photography. The article discusses seed and hybrid selection issues based on actual responses from real producers. The responses are what I expected, of course they have a choice and its a tough one!

I've seen the concern out there that many people think big agribusiness and biotech companies have a gun (figuratively) to growers heads when it comes to seed choices and that justifies government interventions like labeling, more regulation, or bans on GMOs . As this article states, seed choice is a very complicated decision that involves many variables and traits. From the article, one producer describes their decision process that involves comparisons of hundreds of varieties from hundreds of corporations and mom and pop seed companies:

"First we go through the list of potential seed candidates every year comparing conventional, GM, and hybrids. Then we compare yields, cost per acre to keep plants alive, and then we throw in the variables: drought, flood, extreme heat or cold, early frosts, and untimely rains during harvest."

 The choice of what crops we should grow, how they should be produced in terms of management practices and technology, and ultimately the variety of foods we choose to consume is an example of what economists refer to as the knowledge problem. While it might be possible to patent a given trait or hybrid, no one company can get too firm a grasp on this knowledge problem, regardless of their market share in the seed industry today. (not to mention, no government agency would have sufficient knowledge either). Given the vast array of considerations in seed choice and management practices, there is always going to be an incentive for some supplier to cater to the unique needs of individual producers, as advances in genomics and technology drive production not farm by farm or acre by acre but inch by inch. That's also why the market has driven companies to treat hybrid selection like a 'big data' problem and they are developing multivariate recommender systems as tools to assist in this (like ACRES and FieldScripts). The market's response to each individual producer's unique circumstances of time and place also ensures continued diversity of crop genetics planted. Referring to the great article Blake Hurst recently wrote in The American, the synergy between genomics, big data, and modern technology in agriculture is amazing!

Another great comment from a seed dealer in the article states "Seed companies, including ours, bring to market those varieties and traits that farmers want to buy" and the author's statement "Farmers drive the demand for the seed that is researched, bought, and sold" pins down exactly how agricultural markets in the seed industry function as they should by solving the knowledge problem related seed choices and technology. That is truly the social function of markets and prices, as imperfect as they may be when we compare them to unrealistic and idealistic standards. The concerns related to monoculture and monopoly in the seed industry are largely overrated when these factors and trade offs are considered.

The comments made in the Huffington post article are based on a survey of farmers. Its likely not scientific, and my comments above are based on my own industry knowledge and personal experiences from past years working as a crop consultant as well as a few producers I know. I'd be curious to know what the mindset of a larger number of producers is on this issue.

See also my previous posts:  Big Ag Meets Big Data Part1 & Part 2 and  Monsanto Antitrust Case

Friday, December 06, 2013

Our Stake in GHG Emissions

I recently saw this tweet (which I'll keep anonymous out of respect of the author):

"We all cause greenhouse gases to be released into the sky; but most of us do not have special interest in continuing to do so"

I'm not sure that is true. Of course, it's true we don't all have special interests in the context of a team of lobbyists and a corporate rent seeking apparatus. But we all do have an interest in GHGs being released into the sky. We all enjoy refrigeration, air conditioning, transportation, fire, police, and rescue services, as well as telecommunications, personal computing, smartphones, iPads, google wickipedia, Instagram etc. Access to all of these goods and services at affordable prices involve trade offs related to GHG emissions and we all have direct interests in their continual release into the atmosphere, and indirect but strong interests in the 'special' interests that work to keep that path as clear and unobstructed as possible.

Thursday, November 28, 2013

A Note on Information Asymmetry (Cafe Hayek Reblog)

A nice quote.

"Perhaps the greatest information asymmetry of all is the stark difference between the enormously deep, rich, and personal knowledge that each individual has of himself or herself and the necessarily sparse and inadequate knowledge that government officials have of each of the individuals over whom they are empowered to rule"

In the comments, the discussion turns to GMO labeling, for which this readily applies.

Wednesday, September 18, 2013

Positive Externalities of Biotech Bt Traits on Non-Biotech Crops and Non Target Insects

The following articles highlight positive externalities associated with Bt corn and cotton production :

Communal Benefits of Transgenic Corn. Bruce E. Tabashnik  Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864

 "Bt corn planted near non-Bt corn can provide the unmodified plants with indirect protection from pests"

Areawide Suppression of European Corn Borer with Bt Maize Reaps Savings to Non-Bt Maize Growers. Science 8 October 2010:Vol. 330. no. 6001, pp. 222 - 225 DOI: 10.1126/science.1190242W. D. Hutchison,1,* E. C. Burkness,1 P. D. Mitchell,2 R. D. Moon,1 T. W. Leslie,3 S. J. Fleischer,4 M. Abrahamson,5 K. L. Hamilton,6 K. L. Steffey,7, M. E. Gray,7 R. L. Hellmich,8 L. V. Kaster,9 T. E. Hunt,10 R. J. Wright,11 K. Pecinovsky,12 T. L. Rabaey,13 B. R. Flood,14 E. S. Raun15,

"Cumulative benefits over 14 years are an estimated $3.2 billion for maize growers in Illinois, Minnesota, and Wisconsin, with more than $2.4 billion of this total accruing to non-Bt maize growers."

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates.Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva Science 8 June 2007: Vol. 316. no. 5830, pp. 1475 – 1477

Wednesday, September 04, 2013

The Economics of Local Food

I am very excited to see that on September 11,2013 the WKU  BB&T Center for the Study of Capitalism is hosting Pierre Desrochers (also a Mercatus Institute Fellow), co-author of The Locavore’s Dilemma: In Praise of the 10,000-Mile Diet.

Pierre Desrochers discusses his book here at this Cato book forum. 

I've written about local food before at my Economics Principles and Applications blog, but I thought I'd re post here. (also see more recent local food and sustainability related posts here.)

”It is a maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” - The Wealth of Nations

This is tied to the concept of comparative advantage and gains from specialization and trade, which lead to an increase in the size of the ‘economic pie’ which can be used to make everyone better off. Modern food supply chains, made possible by companies such as Cargill, ADM, and retailers like Wal-Mart, have helped to reduce our impact on the environment.

Below are some excerpts of articles related to local food:

The Inefficiency of Local Food
 Steve Sexton

Forsaking comparative advantage in agriculture by localizing means it will take more inputs to grow a given quantity of food, including more land and more chemicals—all of which come at a cost of carbon emissions.....In order to maintain current output levels for 40 major field crops and vegetables, a locavore-like production system would require an additional 60 million acres of cropland, 2.7 million tons more fertilizer, and 50 million pounds more chemicals. The land-use changes and increases in demand for carbon-intensive inputs would have profound impacts on the carbon footprint of our food, destroy habitat and worsen environmental pollution.

It’s not even clear local production reduces carbon emissions from transportation. The Harvard economist Ed Glaeser estimates that carbon emissions from transportation don’t decline in a locavore future because local farms reduce population density as potential homes are displaced by community gardens. Less-dense cities mean more driving and more carbon emissions. Transportation only accounts for 11 percent of the carbon embodied in food anyway, according to a 2008 study by researchers at Carnegie Mellon; 83 percent comes from production.

The locavore’s dilemma 
Urban farms do more harm than good to the environment

Edward L. Glaeser
Berkeley graduate student Steven Sexton estimates that an American switch to more local corn production would require 35 percent more fertilizer and 22.8 percent more energy....But the most important environmental cost of metropolitan agriculture is that lower density levels mean more driving. Today, about 250 million Americans live on the 60 million acres of this country that are urban — which is about four people per acre....If halving densities also doubled distance to the metropolitan area center, this would add an extra 44 gallons of gas annually. Together, the increased gas consumption from moving less than a tenth of agricultural farmland into metropolitan areas would generate an extra 1.77 tons of carbon dioxide per year, which is 1.77 times the greenhouse gases produced by all food transportation and almost four and a half times the carbon emissions associated with food delivery.

From Marginal Revolution: Food Miles

"How far your food travels matters a lot less than what kind of food it is, or how it was produced. According to a recent study out of Carnegie Mellon University, the distance traveled by the average American’s dinner rose about 25 percent from 1997 to 2004, due to increasing global trade. But carbon emissions from food transport saw only a 5 percent bump, thanks to the efficiencies of vast cargo container ships. Should we minimize our “music miles” and boycott bands on tour?"

Eating Local and Climate Change link from National Geographic ("Eating Local" Has Little Effect on Warming, Study Says. Mason Inman  National Geographic News April 22, 2008)

"Being a "locavore" and eating foods grown near where you live may not help the environment as much as you might think, according a new study.When it comes to global warming, focusing simply on where food comes from will make only a small difference, the study's authors say."

Cited research: Environ. Sci. Technol. 2008, 42, 3508–3513

"Despite significant recent public concern and media attention to the environmental impacts of food, few studies in the United States have systematically compared the life-cycle greenhouse gas (GHG) emissions associated with food production against long-distance distribution, aka “food-miles.” We find that although food is transported long distances in general (1640 km delivery and 6760 km life-cycle supply chain on average) the GHG emissions associated with food are dominated by the production phase, contributing 83% of the average U.S. household’s 8.1 t CO2e/yr footprint for food consumption. Transportation as a whole represents only 11% of life-cycle GHG emissions, and final delivery from producer to retail contributes only 4%. Different food groups exhibit a large range in GHG intensity;on average,redmeat is around 150% more GHG intensive than chicken or fish. Thus, we suggest that dietary shift can be a more effective means of lowering an average household’s food-related climate footprint than “buying local.”

Although the authors above seem to suggest dietary shifts away from meat consumption, it is important to not forget the huge strides in sustainability that are occuring in the livestock industry that is largely technology driven and a major reason that conventional modern food supply chains are in fact more sustainable.

See beef and livestock related citations in the post Sustainable Agriculture Bibliography  and the accompanying video for more details.

See also:

Food miles, Kowalski's and that steak on your plate
MPR News

"That steak you bought at the farmers' market from the family operation down the road might have taken more fuel to get to you than the rib-eye from a steer slaughtered in Kansas."

Read the article here.

The actual research is here.

Comparing the Structure, Size, and Performance of Local and Mainstream Food
Supply Chains

USDA Economic
Number 99
June 2010

"Transportation fuel use is more closely related to supply chain structure and size than to the distance food products travel. Products in local supply chains travel fewer miles from farms to consumers, but fuel use per unit of product in local chains can be greater than in the corresponding mainstream chains. In these cases, greater fuel efficiency per unit of product is achieved with larger loads and logistical efficiencies that outweigh longer distances."

See also this entry from the EconLog blog:

 The Locavore's Dilemma: Why Pineapples Shouldn't Be Grown in North Dakota

In this post four arguments related to local food are discussed:
1: Buying Local Foods is Good for the Local Economy
2: Buying Local Foods Is Good for the Environment
3: Local is Fresher and Tastier
4: Local Food is Healthier and Should be Served in School

The authors conclude:

"Economists are a diverse bunch, but we have a few core principles, two of which are that there is a balance of payments and that there are gains from trade. These universal principles are as timeless as the law of gravity. If politicians and activists proposed to suspend belief in gravity, physicists would not cower. They would resolutely defend reality. So should we."