Mike Callicrate | No-Bull Food News

courtesy of Tom Giessel

The Neutral

In talking with a man the other day,
About the perils in the farmers’ way,
Although he claims to know the farmers’ plight,
He said, “I’m neutral; I don’t like a fight.

A neutral is a man controlled by fear;
Is one who holds his own wellbeing dear;
Who dares not take a stand, bold, unafraid,
Because his courage can not make the grade

A man with guts will always make a choice;
And, right or wrong in choosing, will rejoice
In fighting for the things he thinks are right;
Nor heeds his bitter foe’s imposing might

A real He-Man will meet the stinging blow,
Launched at him by angry, spiteful foe,
And take it standing, ‘though he may be licked,
Instead of humbly waiting to be kicked

The foe may be a privileged wealth’s phalanx;
May be a smooth-tongued traitor in our ranks;
But all the fiends from hell will not alarm
The men who dare to fight for home and farm

The time is here when men who lead the way
To bring about a brighter, better day
For Agriculture, must stand up four square,
And face the opposition’s brazen glare

-A. M. Kinney

courtesy of Tom Giessel

To Abandon Our Farms?

Our good friend, J.D. Stols of Beattie, Kansas, sends us a clipping from a St. Joseph newspaper which throws some light on a situation which is confronting us as a nation of farmers and business men. “This article hits the nail on the head,” writes Mr. Stosz. “Just as Brother John Frost stated in last week’s Tax Relief Department article, at the present time the farmer pays taxes on his capital whether he receives an income or not.”

The clipping, which is dated at Urbana, Ill., and sent out by the United Press, follows:

A nation of abandoned farms with farm owners driven into tenantry unless the United States develops a healthier attitude towards agriculture was predicted today by Eugene Davenport, International far authority,, in an interview with the United Press.

Davenport, for twenty-seven years dean of the college of agriculture, University of Illinois, and former president of the college of agriculture at Sao Paulo, Brazil, declared no class of business is as sorely affected as farming. Furthermore, he said, agriculture is less able to take care of itself during boom times than any other business.

“Farming is a private business but agriculture is a national enterprise,” Davenport said, “because the farmer produces the food of all people and because he is in possession of the national estate.

“It is bad for society when any class is crowded to the wall, but it is doubly sad when that happens to the farming class. The first thing a farmer does is deny himself and his family everything except the bare necessities. That virtually removes some 6,000,000 families from the market and that is about where they are now.

“If the farmer permits his buildings and land to deteriorate he is depleting the national wealth as well as his own.”

There are several reasons, Davenport said, why the farmer cannot care for his interests efficiently in boom times “unless it be in the early days of a great war when food prices are abnormally high.”

“First of all,”, he said, “is the fact that food consumption is limited not only by the family income but by the capacity of the human stomach. This latter stubborn fact fixes an unpassable maximum to the price level of farm commodities outside of textiles.

“But the minimum may go much lower, for every food fad and very fashion that demands the slender figure reduces the farmer’s market. More persons than we realize are now living on half rations or even less. Hence the so-called surplus.

“The farmer’s great handicaps now are increased by the fact that he pays taxes on his capital whether he enjoys an income or not. The state is finding a surprising amount of land on its hands through delinquent taxes. Once off the land, how will society get the farmer back onto the public domain? And what will the state do with the land if it doesn’t get him back?

FOR IMMEDIATE RELEASE

April 25, 2019

Contact: Hannah Packman, 202.554.1600
hpackman@nfudc.org

Farmer’s Share of the Food Dollar Falls to All-Time Low

WASHINGTON – For every dollar American consumers spend on food, U.S. farmers and ranchers earn just 14.6 cents, according to a report recently released by the U.S. Department of Agriculture (USDA) Economic Research Service (ERS). This value marks a 17 percent decline since 2011 and the smallest portion of the American food dollar that farmers have received since the USDA began reporting these data in 1993. The remaining 85.4 cents cover off-farm costs, including processing, wholesaling, distribution, marketing, and retailing.

National Farmers Union (NFU), which has advocated for family food producers’ social and economic welfare for more than a century, uses the annually calculated statistic as a barometer of the state of the farm economy. In response to the updated report, NFU President Roger Johnson released the following statement:

“Even though family farmers and ranchers are more productive today than they have ever been, they’re taking home a smaller and smaller portion of the American food dollar. This one data point doesn’t paint the full picture of the farm economy, but when considered in the context of depressed commodity prices, plummeting incomes, rising input costs, and deteriorating credit conditions, it is certainly clear that we are in the midst of an agricultural financial crisis.

“Conditions for farmers have been eroding since 2011, and there’s only so much longer they can hold on. Many have already made the heartbreaking decision to close up shop; in just the past five years, the United States lost upwards of 70,000 farm operations. As a country with a growing population and growing nutritional needs, we can’t afford to lose many more. We sincerely hope this startling report will open policy makers’ eyes to the financial challenges family farmers and ranchers endure on a daily basis and convince them to provide the support they so desperately need.”

Download NFU’s Farmer’s Share

What happened to the farm share of the food dollar?

The following quote is cut in stone above the main entrance to the USDA headquarters in Washington DC:

“THE HUSBANDMAN THAT LABORETH MUST BE THE FIRST PARTAKER OF THE FRUITS.” – SAINT PAUL

Thanks to agency capture and the monopoly power of Big Food, the husbandman is getting none of the fruits. Corporations steal the wealth of agriculture, leaving farmers and ranchers to eat their equity.

The Kansas Union Farmer: September 19, 1940

Farm Share of Food Dollar to New Low Mark

Income Gains Offset by Cut in Farm Purchasing Power Bacon to ’34 Level

The farmer’s share of the consumer’s food dollar is lower today, Farm Research finds, than before the first World war, and is in fact lower than at any time with the exception of the period of 1931-34. In June 1940, the latest date for which the U.S. Department of Agriculture series is available, the farmer’s share of the worker’s food dollar, figured on the basis of a food budget, comprising 58 representative items, was lower than in any recent year since 1934.

Farmer’s Share of Worker’s Dollar Spent for 58 Foods

1913                            53c

1935                            42

1936                            44

1937                            45

1938                            40

1939                            41

1940 (June)                 39

This increase in the share of the worker’s food dollar going to middlemen and processors is especially significant in connection with the problem of how farm income can be effectively increased. In recent years even when cash income from farm marketings has increased slightly, the farmer’s share of the consumer’s food dollar has continued its downward trend. And the ratio of prices received by farmers to prices paid by them, i.e. the buying power of the farm dollar, has declined.

Ratio of Prices Received by Farmers to Prices Paid – U.S.D.A.

1910-14                       100

1935                            36

1936                            92

1937                            93

1938                            78

1939                            77

1940 (June)                 77

To take certain food articles, then farmer’s share of the consumer’s pork dollar, in June 1940, was down to 51 percent, as compared with 59 percent in 1935, and 67 percent in 1937.

Forty-one percent of the dairy dollar went to farmers in June 1940, as compared with 45 percent in 1935, and 48 percent in 1937.

Only 53 percent of the egg dollar went to farmers in June 1940, though they received 66 percent in 1935 and 59 percent in 1937.

The farmer got only 36 percent of the white flour dollar in June 1940, as compared with 39 percent in 1935, and 52 percent in 1937.

Only 14 percent of white bread expenditures went to farmers in June 1940, as compared with 17 percent in 1935, and 20 percent in 1937.

Farmers got 47 percent of the navy bean dollar in June 1940, as compared with 55 percent in 1935, and 51 percent in 1937.

Fifty-seven percent of expenditures for white potatoes got to the farmers in June 1940, as compared with 42 percent in 1935 and 54 percent in 1937.

The year 1937 stands out in most of these comparisons as having afforded the farmer the largest share of the consumer’s food dollar in recent times. The income of workmen in industry also reached its post-depression peak in this same year. The buying power of the farm dollar had also reached its recent high.

by Harry Greene | April 11, 2019

Payments for ecosystem services have occurred. This is fantastic! But when we ask our aunt or a business to pay to offset their carbon footprint, they often look at us sideways. It makes them uneasy, and they can’t always explain why. Businesses, no matter how green their brand is, have a tendency to humor carbon payments and payments for ecosystem services. Often, they then go quiet or back-pedal. The private sector under-invests in ecosystem services, but let us not be sour about it: these people are acting rationally, and today we will explain their rationality.

We’ll do this by examining a network of farmers in Brazil’s Atlantic Rainforest that went grass-fed and planted fruit trees. They made more money and produced more milk while providing ecosystem services. They saw an 18% IRR from açaí silvopasture. Coupled with an analysis of the economics of ecosystem services, there is much we can learn from them. Today we ask:

When and how will markets will pay for ecosystem services?

How should governments, NGOs, and brands intervene in this particular market failure?

What is Agroecology?

Agroecology hosts a myriad of definitions. Simply: it is agriculture that is ecologically and socially sound at its core. Let’s look at two examples:

1. A coffee growers cooperative in Nicaragua shortens their supply chain, sells direct-to-consumer, and distributes that value to its members. Member farmers plant shade trees on their farms to improve coffee quality while the timber serves as a savings account.
2. A grass-finished-beef farmer eliminates the need to buy hay after implementing holistic planned grazing. Her bottom line increases due to reducedcosts. She plants shade trees to protect the cattle from the hot sun. The cattle gain weight more quickly, and the timber serves as a savings account.

What are ecosystem services? Will the free market pay for them?

Ecosystem services are the many and varied benefits that a healthy and intact natural world provides us with: clean water, clean air, climate stabilization, and the control of disease. The catch is that even though ecosystem services are useful and valuable, purely-self-interested people won’t pay for them — and market economics, which is today’s lens, assumes that people act exclusively in their own self interest.

In economics jargon, ecosystem services are classified as a public good, because they are non-rival and non-excludable. A good is non-rival when use by one person does not inhibit another person from also using it: Jack and Jane don’t compete for the clean air that a forest provides. A good is non-excludable when if we pay for it, we cannot prevent those that haven’t paid for it from benefiting from it. Tax-paying Americans benefit from military protection, but they cannot exclude French tourists in Yellowstone National Park from benefiting from that same protection were a foreign power to attack the United States. This combination of non-rivalry and non-excludability creates the conditions under which purely self-interested people will not pay for ecosystem services. Consequently, a free market will not pay for ecosystem services, and they must enter the market by alternate means.

Farmers, like the rest of us, follow money, not rules.

A case study by Schmitt, Farley, Alarcon, Alvez, and Rebollar in the Atlantic rainforest of Santa Catarina shows how farmers increased both their net income and food production while increasing their farms’ ecosystem-service yields. Santa Catarina is an agricultural zone in Brazil’s Atlantic Rainforest Biome. The region has been 90% deforested for agriculture: landslides, flooding, and poor downstream water quality result. The Brazil Forestry Code legally mandates that 20% of the region must be forested, hilltops and slopes of over 45% must be permanently forested, and riverbanks must 100-foot forested buffers. However, these laws are poorly enforced, and farmers choose to follow a path to income rather than follow rules: returning this land to non-anthro forest would result in abject poverty. Here we examine how açaí agroforestry and grass-fed dairy lifted Brazilian farmers out of poverty and while making the environment better.

Agroecology brings ecosystem services into the market economy.

Agroecology brings self-interested consumers and land managers to make choices that inherently benefit the environment. Agroecological systems that mimic natural processes will yield ecosystem services at a profit.

In Santa Catarina, a network of 500 dairy farmers improved their grass management and planted fruit trees. Their localized water cycles improved, they sequestered carbon in their soils, and their incomes rose. Many farmers chose to plant açaí palm, which shows an 18% internal rate of return. This means that had the farmers taken on debt to finance their trees, an 18% interest rate would have made the investment worth zero dollars. Açaí fruit (ah-sigh-ee) is a berry that grows on palm trees. Folks make nutrient dense smoothies and smoothies-in-a-bowl with it.

Management Intensive Grazing involves managing grass-fed beef, dairy, and sheep herds to optimize for a plentiful and consistent supply of grass. In Santa Catarina, great grass availability resulted in consistent and increased farm income.

Of the 500 farmers that implemented Management-Intensive Grazing:

• 91% increased their herd size without an increase in inputs.
• 90% increased total yield per cow and total revenue
• 49% decreased labor inputs; 27% increased
• 98% said that the investment was generating the desired returns
• 85% said that the project improved their quality of life

Environmental effects of Management-Intensive Grazing included:

• 85% claimed that the soil was moister during droughts
• Total vegetation coverage increased from 2% to 72%
• 85% of farmers noticed an improvement in soil quality

These results are consistent with cold climate crops. Blackcurrants are the açaí of the north, and management-intensive grazing amounts to well-managed grass-fed beef and dairy.

Are more Farmers doing this?

Management-Intensive Grazing has a relatively low financial barrier to entry for those already managing livestock. Well-managed organic or 100% grass-fed dairy farms and grass-fed beef farms use the technique.

Even if financial returns from integrated tree-crop systems greatly exceed those of conventional agriculture, tree-crop adoption is stymied by lack of access to capital and the time-lag to yield. Interest rates in Brazil often exceed 40%, and trees take a few years to produce food and break even. This is consistent with barriers to adoption in the United States. Low-interest convertible debt or equity financing will provide avenues to adoption.

The investments needed to develop and market agroecological goods and services are often well-suited to public investment. By way of well-managed tree crops and grass-fed livestock, the free market will yield ecosystem services as positive externalities. But what role should governments and municipalities play? What role should NGOs, and forward-thinking brands play?

What role should governments, NGOs and brands play?

A single buyer is well-suited to structure payments for ecosystem services. Direct payments for ecosystem services must be a non-competitive, non-market transfer of value from the beneficiaries to the providers: from those downstream, to those upstream. This involves collective, non free-market land use decisions.

How can we successfully capture revenue from those who benefit from ecosystem services, and how can we dispurse payments to those who provide them? Two ways to do this are public investment and monopsonistic purchasing. A monopoly is a single supplier, whereas a monopsony is a single buyer.

Governments can invest in public investment, such as ports, as opposed to private goods, such as fertilizer. Doing so can increase agricultural output by up to 40% and significantly increase rural income. Australian agroforester Rowan Reid, in his book Heartwood, provides two avenues for public, NGO, or brand-driven investment that fit this narrative:

• First, actors can develop the physical and legal infrastructure required to support the industry, such as port facilities for exports, and enabling legislation. An example of this would be public or private investment in ecologically-sound growth markets. A municipality could kick-start a grass-fed dairy cooperative off the ground. A brand could spur latent demand for organic blackcurrants.
• Second, these actors can build the capacity of farmers, and those that service the sector, so that they are able to make better decisions. We would do well to enable farmers to outsource a portion of their R&D at no cost.

A monopsony circumvents competition.

A monopsony is a single buyer of a good or service. Monopsony is a condition of non-competitivity in which secondary actors cannot undermine an entity’s buyer power. A single buyer can drive prices down with its bargaining power: were a mining town to have a single employer, that firm could suppress wages. Alternatively, this single buyer can keep prices high.

In the lens of ecosystem services, non-competition will be favorable when this single buyer aggregates these benefits. While individual farmers may not use their scarce resources to plant trees to improve downstream water quality, a water treatment plant that is downstream may pay all upstream farmers to plant trees to filter the water if doing so is less expensive than spending money on treatment plant infrastructure.

We Americans need not look abroad to find a tangible example. New York City’s municipal water system is the nation’s largest. With $426 million, New York will continue their direct investment in the ecosystem services that provide clean drinking water. $180 million will go toward reducing pollution from working farms and managed forests, $150 million will combat eroding riverbanks, and $96 million will preserve land from development. This is in contrast to the $200 million that the municipality will spend to maintain and upgrade wastewater treatment plants.

Piecing together what we now know: the $180 million allotted to working farms should go toward investments that spur practices that will help farmers make more money. Working these leverage points will create vibrant ecosystems and rural prosperity. However these incentives manifest, they must be sufficient for farmers to adopt ecologically-sound practices. Nominal, insufficient investment is insulting and useless to farmers.

Few have a deeper understanding of ag and food issues, and no one matches Alan Guebert’s ability to explain.