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Small, organic farming isn't easy 

A new report from USDA-ERS on biotechnology (the summary: Genetically engineered (GE) crops (mainly corn, cotton, and soybeans) were planted on 169 million acres in 2013, about half of U.S. land used for crops. Their adoption has saved farmers time, reduced insecticide use, and enabled the use of less toxic herbicides. Research and development of new GE varieties continues to expand farmer choices.)

SB1000 would require all drinks sold in California stores made with added sweeteners equal to 75 or more calories per 12 ounces to carry warning labels on the front of cans and bottles.

Is it really possible that soda taxes have no dead weight loss.  This study seems to suggest so

State Egg Battles

The New York Times ran an article yesterday about the egg battle going on in California.

Here's the issue:

California voters set new standards for hen housing in 2008 when they approved a ballot measure that imposed more generous living conditions for egg layers in their state. When producers complained that the measure created a competitive disadvantage, the Legislature tacked on a law that mandated imported eggs be produced under the same standards.

It's the second action - the legislative prohibition against certain types of eggs coming into California - that has the attorney general of Missouri complaining about an interstate commerce clause violation.  California imports a little less than half the eggs it consumes from other states.  Missouri, in particular, supplies about 540 million eggs a year to California. Thus:

The Missouri attorney general has filed a lawsuit to block the California egg rules, and at least three other states are considering doing the same. The beef and pork lobbies are also lining up against the California rules in an effort to prevent any new restrictions on raising livestock.

The attorney general says: 

“I recognize that the California district courts and the Ninth Circuit have not been particularly friendly to this sort of assertion we’re making here, but I also have confidence that will not be the last word on this analysis,” he said. “The U.S. Supreme Court is unlikely to allow a state to put this type of trade barrier in place in the agricultural arena or any other arena.” 

The briefly article discussed the potential price impacts of the new standards for California citizens.  I wished it would have spend a bit more time talking about consumer demand for "cage free" eggs and the interplay between market outcomes and regulated outcomes.  

The market share for cage free eggs in California was only about 10% and yet Prop 2 (which essentially banned the cages) passed with 63% of the vote.  If the population of shoppers is the same as the population of voters (which it isn't), this would mean about 53% of Californians voted to ban a product they regularly buy.  This "vote-buy" gap is not well understood, and we're working on research now to get a better handle on why and under what conditions it emerges.  

What has caused the recent rise in commodity prices?

Brian Wright from UC Berkeley attempts to answer that question in a recent review article in the Journal of Economic Perspectives.  His provocative answer:

The rises in food prices since 2004 have generated huge wealth transfers to global landholders, agricultural input suppliers, and biofuels producers. The losers have been net consumers of food, including the large numbers of the world's poorest peoples.  The cause of this large global redistribution was no perfect storm.  Farm from being a natural catastrophe, it was the result of new policies to allow and require increased use of grain and oilseed for production of biofuels.  Leading this trend were wealthy countries, initially misinformed about the true global environmental and distributional implications. 

 

More on the dust bowl

I received several comments from folks about my post yesterday on the dust bowl - mostly with family stories about that time.  It is almost unfathomable what some of our grandparents went through.  How very lucky we are to live in today's day and age!

My colleague, Francis Epplin, followed up with a few additional insights that are worth sharing.  First, if you look at acres planted to all crops in Oklahoma (not just wheat in Cimarron County, which I showed in the previous post), it becomes clear that the early 1930s really was an extraordinary time in terms of land in production.

Oklahoma acres planted to crops, 1900-2012, USDA-NASS

Oklahoma acres planted to crops, 1900-2012, USDA-NASS

Francis also elaborated on changes in production practices and weed management.  He graciously agreed to let me share his thoughts:

Prior to WW II (and the development of chemical herbicides), crop production required tillage to prepare a seedbed and to manage weeds. Tillage occurred prior to planting in an attempt to control competition for water and other nutrients.  For summer crops such as cotton and corn, tillage occurred during the growing season. This wasn’t done for enjoyment.  These production practices were brought to the Midwest from Europe and to the Western Plains from Europe and the Midwest. 

A chart of OK crop acres from 1900 to 2012 [is above].  A lot more OK land was cropped (exposed to wind erosion) in 1930 than in 1900.  And, a lot more was exposed to erosion in 1935 than currently.  The corn and oats acres (in the early 1900s) were used to produce biofuel – feed for the horses.

Based on this chart, one of the culprits was probably cotton.  Cotton doesn't produce much residue.  The change in cotton acres prior to the dust bowl was to some extent price induced.  Nominal cotton prices increased from $0.074/lb in 1914 to $0.354/lb in 1919.  Wars mattered.  By 1931 it was less than $0.06/lb. (Of course, I cherry picked the years, but farmers did respond to incentives.) This level of commodity price variability predated public policy involvement in commodity prices. 

In the more arid regions wheat, also played a role because of the wheat-fallow system- one crop every two years.  After wheat was harvested in June the fields were tilled in an attempt to capture moisture for the next wheat crop which was planted 17 months later.  During these 17 months of fallow, tillage was conducted in an attempt to prevent weeds from becoming established and stealing moisture.  During this period the soil was extremely vulnerable to wind and water erosion. Note that the chart does not include these fallow acres.  We don’t have records as to how many acres were in fallow by year. In the late 20s early 30s, it could have been a million acres.   

As to why not a repeat of the dust bowl in 2011-2012? 

1.  In OK, many fewer acres are in crop production than was the case in 1930.  Millions of acres have been returned to grass (and/er Eastern red cedar).  Land owners discovered that a few $/ac from pasture was better than negative income from trying to grow crops on fragile land. 

2. We don’t have records, but few continue to practice the wheat-fallow system.  And, if they do, they don't till it, they would use chemical herbicides.

3.  Chemical herbicides have reduced the need for preplant and in-season tillage, enabling much more surface residue throughout the year.     

 

The Dust Bowl

I just finished the Worst Hard Time by Timothy Egan, published back in 2006, about the Dust Bowl.  

On several levels, I had a deep connection to the themes in the book.  I can recall stories from both my mother's and father's mothers (my grandmothers) about growing up in the dust bowl era in and around the regions Egan discusses in his book.  As a child I can remember going with my dad to a nearby shelter-belt (which I presume was part of Roosevelt's plan to avert the dust bowl, at least according to Egan) to chop wood for our fireplace.  

Egan repetitively makes the argument (with a tedium that bored me at times) that the the great plains should have never been plowed.  It should, in his assessment, have been left in natural grasses.  The dust bowl itself, in Egan's account, was a result of man's hubris that nature could be tamed.  

Egan's account paints both a cynical and overly-optimistic view of government.   On the one hand, the government partially caused the great plow up (citing mainly from government reports at the time):

"Mistaken public policies have been largely responsible for the situation," the report proclaimed.  Specifically, "a mistaken homesteading policy, the stimulation of war time demands which led to over cropping and over grazing, and encouragement of a system of agriculture which could not be both permanent and prosperous."  

...

"The settlers lacked both the knowledge and the incentive necessary to avoid these mistakes.  They were misled by those who should have been their natural guides.  The Federal homestead policy, which kept land allotments low and the requirement that a portion of each should be plowed, it now seems to have caused immeasurable harm.  The Homestead Act of 1862, limiting individual holding to 160 acres, was on the western plains almost an obligatory act of poverty."

On the other hand, Egan suggests the government-man Hugh Bennett's plans of contour plowing and grass-reseeding along with Roosevelt's plan of shelter-belts and farm price support policies saved the day.  

I'm not so sure.  It is tough to separate compelling journalistic story from data-driven explanations.  My own  sense coming into the book is that much of the land I grew up around, which falls within the area Egan draws around the dust bowl era, is as plowed up as it ever has been.  The data would seem to support that too.  I dug up USDA data on the number of acres planted to wheat in Cimarron Co, OK (which is where Boise City is located - one of the spots featured in Egan's book).

wheatacres.JPG

While there was indeed a big plow-up just prior to the dust bowl (which occurred in the 1930s), we can see that we've had just as much land in wheat production in the late 1940s and almost as much in the late 1970s.  To the extent that the same is true in other regions and with other crops, it doesn't seem that replanting back to grass is THE explanation (although it might have played some role on more erodible lands in other areas).

A better question.

In the past several years, we've had severe droughts in the great plains similar to the one in the 1930's.  Why no repeat of the dust bowl?  

Egan asks a similar question, and he points mainly to the aforementioned government policies. He also gives the impression in the end that big corporate agribusinesses have taken over this land (which is largely false; there are fewer farmers today and those farmers are indeed bigger, but they are family farms; moreover his statements on this topic are somewhat ironic given the aforementioned quote that larger farm sizes were needed to avoid poverty).  As indicated in the graph above, I don't think the full answer can be that the land has reverted back to idyllic native grasses.  

My sense is that it is mainly a result of two factors: better farming technologies/practices and irrigation.  To be fair, Egan points to these as potential answers too.  Many of the people who moved out to farm the great plains had no prior farming experience.  Its no wonder they adopted some practices that were doomed for failure (I'm sure I'd have done the same thing; I'd hate to think what would happen if I were forced to try to make a living at farming today!)  Knowledge and experience matter.  And sometimes it takes really bad consequences to teach us to do things differently.

On the issue of irrigation, there was an interesting paper (earlier ungated version here) that recently appeared in the American Economic Journal: Applied Economics by Richard Hornbeck and Pinar Keskin.  They write:   

Agriculture on the American Plains has been constrained historically by water scarcity. Post-WWII technologies enabled farmers over the Ogallala aquifer to extract groundwater for large-scale irrigation. Comparing counties over the Ogallala with nearby similar counties, groundwater access increased agricultural land values and initially reduced the impact of droughts. Over time, land use adjusted toward water intensive crops and drought sensitivity increased. Viewed differently, farmers in nearby water-scarce areas maintained lower value drought-resistant practices that fully mitigate naturally higher drought sensitivity. The evolving impact of the Ogallala illustrates the importance of water for agricultural production, but also the large scope for agricultural adaptation to groundwater and drought.

Ultimately, we may never know the ultimate causes and consequences of the dust bowl.  It seemed to arise from a unique combination of an adverse turn in weather/climate, poor farming practices, poor economic conditions (the Dust bowl and the Great Depression occurred at the same time - how's that for bad luck!), unscrupulous land salesmen, and bad government policies.  The consequences, it seems, were long lasting.

Hornbeck has another 2012 paper (earlier ungated version) specifically on the dust bowl in the American Economic Review related to how long the impacts of the dust bowl were felt.  He wrote:

The 1930s American Dust Bowl imposed substantial agricultural costs in more eroded Plains counties, relative to less-eroded Plains counties. From 1930 to 1940,
more-eroded counties experienced large and permanent relative declines in agricultural land values: the per acre value of farmland declined by 30 percent in high erosion counties and declined by 17 percent in medium-erosion counties, relative to changes in low-erosion counties. 

and

The Dust Bowl provides a detailed context in which to examine economic adjustment to a permanent change in environmental conditions. The Great Depression may have slowed adjustment by limiting access to capital or outside employment opportunities. Agricultural adjustment continued to be slow, however, through the 1940s and 1950s. Further research on historical shocks may help understand what conditions facilitate long-run economic adjustment. The experience of the American Dust Bowl highlights that agricultural costs from environmental destruction need not be mitigated mostly by agricultural adjustments, and that economic adjustment may require a substantial relative decline in population.