Sunday, March 27, 2011

Wilmeth's West

The Red Globe Lesson
The Idea of Robust Horizons
Government Suppresses the Unexpected
By Stephen L. Wilmeth

     A misconception has permeated the political environment surrounding agriculture.  For too long, a false economy has been operating.  The system exists in a fluctuating equilibrium that struggles to define those things that perpetuate real market conditions and those things that are influenced by government.  When the immensity of government is added to the equation, it is frightening to conceptualize what would happen if that component was removed.
     As an agriculturist who participated in cropping enterprises that had little to no governmental support and enterprises that have ties to governmental support, my personal history reflects much more positive results with the crops without governmental involvement.  That generalization spans not just returns on investments.  It includes turmoil and peace of mind.  Too often, the end result of dealing with government programs seems to prompt a strong desire to find a spigot of hot water in order to scrub your hands. 
     Through the years, windfall successes have tended to follow a common track.  They usually come into the field of view without fanfare or announcement.  They have also been associated with negative logic in that, given an opportunity to choose between options, the least likely tends to be the biggest success.
     Beware of Assumptions
     An example occurred on late summer day in 1983.  We had gathered at the packing shed to critique three new USDA experimental grape varieties.  On the table were clusters of Blush Seedless, Christmas Rose, and Red Globe.  The consensus among the experts was that only the Blush Seedless would find success.  It was seedless, it was a nice big grape, and it came at a good window of opportunity. 
     Preference number two was the Christmas Rose.  Although it was seeded, it was a striking grape with tough skin and a big cap stem that would allow long term storage.  It might be a good fall grape that could extend the market. 
     Finally, the Red Globe was discussed.  The consensus was that it would fail.  It was seeded, it had a very delicate skin, and the color was like a washed out, pale red that would catch nobody’s fancy.
     Real world events 
     The rest is history.  The market would demonstrate that our assessment was correct only in the case of Christmas Rose.  The Blush Seedless today exists only in foundation blocks and memory and the Red Globe is one of the most successful varieties in the western world.  Experts were totally wrong in how the market would assess and, ultimately, demand the least expected.  In a controlled governmental approach, that market development would never have occurred.
     In fact, other successes were similar.  Whether it was a varietal selection or a growing technique that multiplied production, the spark came from the least expected source or approach.  It came from a moment of insight while hands were still dirty, or some grower who had a single minded obsession over a period of years, or a discovery that came from somebody who didn’t have enough money to do something the way a governmental program demanded it be done!
     It is my belief that these successes have come under the influences of three things.  They are a robust environment for opportunity, the opportunity to assume risk, and enough allowances to act beyond collective constraints to do something nontraditionally.  In each case, it can be argued that governmental intrusion tends to suppress the outcome.
     Agriculture remains the glowing light on the hill, but it is troubled.  It is troubled in the sparse recruitment of next generation stewards, it is troubled by a relative absence of capital and research investment in some quarters, and it is troubled by a redoubling of constraints.  In our own local community, it is further impacted by a diminishing resource base . . . the expansion of residential development and the loss of economic and efficient blocks of land landlocked within a sea of federal holdings.
      Robust horizons must be the goal
      Our leadership must be very careful.  It is now very politically correct to take the stand on the side of preservation of farmland, but we must be wary of what actions are taken.  Any action that perpetuates or promotes traditional practices promises status quo, and in agriculture, status quo means lethargy and failure.  Only with channels of robust opportunities will our industry flourish.  Only with robust channels of opportunity will new production horizons be expanded.  Only with robust channels of opportunity will new stewards be recruited and welcomed into the industry.
     Regulations seem to beget regulations, and the more the subject is debated the more government grows and takes on an independence that suffocates the efforts that promise productive gains.  In my years of involvement, the most notable governmental contribution to any success was that cluster of grapes on the table that day in 1983.  If governmental actions can discover and perfect a succession of Red Globe table grapes, then there is mutual benefit.
     As for the rest, I am sorry . . . the hot water never seems hot enough.

Stephen L. Wilmeth is a rancher from southern New Mexico who farmed in California for many years.  “California agriculture is one of the most effective controls in limiting the expansion of farming in the warmer, lower latitudes.  The progressives who are giddy about saving the delta smelt need to be held accountable for their actions that will put pressure on a minimum of three or four lower latitude species.  If they are intent on saving the world, they had better lobby to return every acre ever farmed in California to full production . . . and make sure California farmers have the water to get it done.”     


Wilmeth is right on the issue of government involvement in farming, primarily through subsidies and regulations.

The feds subsidize crop production to the tune of between $10 billion and $30 billion per year, depending on market prices, disaster payments, etc. Then you add an additional $5 billion annually for statistics, research,  education and marketing support.

And the end result of all this expenditure?

This analysis sums it up nicely:
The extent of federal micromanagement of the agriculture sector is probably unique in American industry. In most industries, market prices balance supply and demand, profit levels signal investment opportunities, market downturns lead to cost cutting, and entrepreneurs innovate to provide better products at lower prices. All of those market mechanisms are blunted or nonexistent in government-controlled agriculture markets. As a result, federal agricultural policies produce substantial “deadweight losses” and reduced U.S. incomes.

Farm programs result in overproduction, overuse of marginal farmland, and land price inflation, which results from subsidies being capitalized into land values. Subsidy programs create less efficient planting, induce excess borrowing by farmers, cause insufficient attention to cost control, and result in less market innovation. And policies often work against the claimed goals of Congress. As an example, while members of Congress say that they support small farms, owners of large farms receive the largest subsidies, which has given them the financing they need to purchase smaller farms.23
Regulations?  Surely there aren't that many on agriculture.  Oh yes, there are mucho reg's.  In fact, in the fine print of  the Code of Federal Regulations there are 10,270 pages of them.  And that was in 2009 - no telling how many pages have been added since then.

Let's not forget USDA is the agency which provides food stamps to those who cannot afford food, while at the same time issuing import barriers and supply restriction programs to keep commodity prices up.

Government planning at it's best.

Robust horizons? Not while the feds infest our farming enterprises. All they produce is a robust bureaucracy.

1 comment:

Anonymous said...

I'm starting to look forward to this on Sunday mornings. I do think I like Wilmeth bettr when he is a bit meaner.