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August 2009 Archive for Economic Sense

RSS By: Matt Bogard, AgWeb.com

Matt's primary interest is in the biotech industry and ag policy.

Time for TIME to Get Real

Aug 25, 2009

By Matt Bogard

In a recent article in Time Magazine, ( Getting Real About the High Price of Cheap Food) I think that I have witnessed one of the worst pieces of pseudo science I've seen in a long time.

Isn't obesity the result of diet, genetics, and exercise? Personal choice and genetics are the drivers, not agricultural production practices as the author seems to claim. There are some other 'unbalanced' assertions made in the article as well:

'He's fed on American corn that was grown with the help of government subsidies and millions of tons of chemical fertilizer. '

From this statement one might think that 'subsidies' are leading farmers to produce corn instead of healthy apples and spinach. The reason we produce so much corn is not due to the subsidies, the reason we have the subsidies is that we produce so much corn ( and thus have strong lobbying arms for production and processing industries). Grains are a worldwide food staple. They would be produced with or without government programs.

A main assertion made in the article is that modern science based agriculture ( or 'industrial agriculture' if you prefer the more negative connotation) is leading to ever more use of ever more toxic chemicals and environmental degradation. On the contrary modern agriculture is becoming more sustainable every day. Biotechnology, a key factor in modern agriculture, is not mentioned at all in the entire article. The adoption of biotechnology has led to decreased levels of chemical applications and in some cases the elimination of certain pesticides completely. 1.04 million fewer pounds of insecticide are applied each year as a result of biotech Bt cotton alone. With Bt cotton, 4 million gallons of fuel and 93.7 million gallons of water are saved on the farm each year from fewer insecticide applications.In addition, Bt corn also has reduced levels of carcinogenic toxins produced by fumonisin . Last year, in Britain, two organic corn meal products were recalled because testing showed that they had unacceptably high levels of fumonisin. Roundup Ready technology has allowed for glyphosate herbicide to substitute for 7.2 million pounds of other chemicals that are more toxic and persistent in the environment.There are also economies of scope or synergies between sustainable production practices such as crop rotation and reduced or no tillage farming and biotech plantings. As a result biotechnology has also contributed to increased biodiversity among pest populations while maintaining yield gains. Further, with fewer chemical applications and less tillage, energy inputs to grain production are down, while yields continue to increase, reducing the overall environmental impact and carbon foot print. Between 1987 and 2007 energy use per unit of output for cotton, soybeans and corn has decreased  by nearly 40% . Irrigated water use per unit of output decreased by 20 percent . In addition there has been about a 30% decrease in carbon emissions per unit of output for corn, soybeans and cotton as well ( see here from Truth About Trade and Technology).  In addition to the lower carbon and water foot print, these practices have also decreased groundwater pollution.  The use of biotechnology in the livestock industry has demonstrated similar environmental gains. ( see here -from  Science Daily, here  from PG Economics,  here from the Journal  Science  for more examples. )


'The UCS estimates that about 70% of antimicrobial drugs used in America are given not to people but to animals, which means we're breeding more of those deadly organisms every day.'

This is meaningless. What matters is of the antimicrobials given to animals, what % actually target pathogens that affect humans. Resistance requires selection pressure, and if the majority of antimicrobials used in livestock production are not selecting against deadly pathogens, then the risks are overblown. What we have observed is that in countries where food grade antimicrobials used in livestock production have been more heavily regulated or banned, the resulting increase in livestock illness has lead to an increased use of antibiotics actually used in human medicine. This policy results in increased selection pressure for antibiotic resistance among pathogens dangerous to humans and should be avoided. The article also avoids to mention the environmental benefits of antimicrobials as well as the benefits of other pharmaceutical products such as growth enhancing hormones. On a pound for pound basis, reasearch indicats that beef produced using grain and growth hormones leads to a 40% reduction in greenhouse gas emissions and a  two-thirds reduction in land use vs. organic grass-fed beef.


'Worldwide, organic food — a sometimes slippery term but on the whole a practice more sustainable than conventional food '

There is little scientific consensus on this conclusion. There is certainly evidence to the contrary, and while there are very desirable qualities associated with organic food ( some of my favorite frozen foods are Amy's brand of organics) organic should not be sold as a panacea in contrast to modern agriculture. The fact that many organic producers are now (  see here from the Journal Science) considering adopting biotech options indicates that organic alone as it stands today is not a solution. Reduced yields ( see Science link)  as a result of organic practices imply a larger carbon footprint and decreased biodiversity compared to biotech crops. No where in the article did I find the author mention any of the downsides of organic production such as toxic biological controls( see  About.com) used in organic production including nicotine* sulfur, pyrethrum, neem, sabadilla, and rotenone*    that government regulators don’t even track data for.These can be just as persistent in the environment and detrimental to biological diversity as some conventional products. Nor does the author mention increased risks of E coli   contamination  (  Science).  Instead  the author of the Time piece attributes increased risks to conventional agriculture.

I agree that our food choices certainly have impacts on the environment. However, the impacts in the TIME article seem a little more exagerrated than the science supports. Regardless of anyone's opinion, food choices should remain just that,  'choices.' Nothing in my writing should be misconstrued to be anti-organic or taken to mean  that people should be stigmatized for 'eating for social justice.' This is fine as long as people don't  take thier religion  little too far and impose it on the rest of us through an act of congress. 


 References:


Science 31 May 2002:
Vol. 296. no. 5573, pp. 1694 - 1697
DOI: 10.1126/science.1071148

Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.

Dowd, p.J. Economic Entomology. 93 1669-1679 2000.

Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.

Agricultural Outlook ERS/USDA Aug 2006.

Science 8 June 2007:
Vol. 316. no. 5830, pp. 1475 - 1477
DOI: 10.1126/science.1139208

Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781

Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992)
‘‘Diversity of United States Hybrid Maize Germplasm as Revealed by
Restriction Fragment Length Polymorphisms.’’ Crop Science 32: 598–604

International Journal of Food Microbiology
Volume 120, Issue 3, 15 December 2007, Pages 296-302

Natures Toxic Tools. Alex Avery. Centre for Global Food Issues.

*Nicotine, one of the more toxic organic insecticides, has a rat LD50 (lethal dose in 50% of animals tested)of 55mg/kg. The newest synthetic insecticide, imidacloprid, has a rat LD50 of 425mg/kg, making imidacloprid nearly 10 times less toxic than nicotine. Rotenone has an LD50 of 60-1500 mg/kg and is more acutely toxic than Malathion or Sevin. Cats are highly susceptible to pyrethrum.


The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production
By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.

Picking Winners and Losers

Aug 15, 2009
By Matt Bogard

In my last post I hinted at the fact that environmental policies like the proposed Clean Water Restoration Act may do more harm than good. In past posts I've warned how the increased levels of government intervention could lead to the same problems in agricultrue as we have seen in the Auto Industry.  Recently, in a post on the AgWeb blog Sound Off Scott Ruppert provides a great example of what can happen:

"Meanwhile, the hardworking ranchers of the San Joaquin Valley that are personally vested in their own form of environmental conservation watch as their livelihoods are being stolen from under their noses by a feckless bunch of experts, extremists, bureaucrats, and a judge named Wanger. As if the destroyed families and industry in the Central Valley were not enough, it only takes a little common sense to realize there are other unintended consequences that arise from such regulatory overreach. Consider that if food is not produced in the Central Valley, there are other places around the globe eager to provide America with its food supply; China, for instance. Wait until the extremists get a load of how they grow their crops in the shadow of the Great Wall. Produce from California, home to the most environmentally friendly growing practices in the world, will be replaced by tomatoes grown in sludge, sprayed with deadly pesticides, and then shipped thousands of miles to our markets...hmmm, wonder what that carbon footprint looks like. "

Governments allocate resources in a fundamentally different way than free individuals behaving cooperatively in voluntary exchange via market capitalism. Individuals acting in their own interest results in a spontanous order guided by prices which reflect tradeoffs based on the knowledge and preferences of millions of individuals. Governments allocate resources based on the limited knowledge and preferences of a few voters, elected officials, or appointed bureaucrats. The fundamental problem facing government is that it never has enough information ( or incentives) to carry out plans effectively. As Economist F.A. Hayek (1945) said:

'the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess'

We must also recognize that there is a moral difference between the two processes as well. With government, resources are coercively taken from one individual and given to another. Through the voting and legislative process, government picks winners and losers ( this would not be so bad if we limited government to a few basic functions but becomes problematic with greater intrusion into our lives). Markets do not pick winners and losers. For voluntary exchange to take place, all parties must gain.  Again, as F.A. Hayek (1973)noted :

'the particulars of a spontaneous order cannot be just or unjust'

Certainly there are situations where government has a role in our lives. Our founders outlined many of these in the constitution and explained them well in the federalist papers. While government may provide a necessary mechanism to achieve certain societal goals, we must also be aware of it's weaknesses and its threats.

We should especially be on guard when we hear political leaders justifying some policy or condemning capitalism because the current system has 'benefited the wealthy and well-connected at the expense of the vast majority of Americans.' They are likely staking the deck to take what you have and give it to someone else, or pass some law that benefits a corporate competitor over your small business in the name of some lofty social goal, or they may be compromising your ability to make a living to satisfy some special interest. Ironically, the effect of their policy will likely be to benefit the wealthy and well connected and will likely be at the expense of the majority of Americans.

References:

F.A. Hayek.The Use of Knowledge in Society. American Economic Review (1945)
F.A. Hayek. The Mirage of Social Justice (1973)



Clean Water Restorarion Act

Aug 08, 2009
By Matt Bogard

The Clean Water Restoration Act ( see a recent and related Agweb News Headline here) attempts to remove the requirement that bodies of water be ‘navigable’ to be federally regulated. Unfortunately, many don’t think critically about environmental problems. As economist F.A. Hayek has pointed out to us, the requisite knowledge for solving many of our problems seldom presents itself in complete integrated form. Instead, it is dispersed among multitudes of individuals and circumstances.

Technology has allowed for many environmental problems in Agriculture to be internalized. The use of global positioning systems and biotechnology are examples of how markets have utilized the dispersed knowledge of individuals acting in their own interest to help mitigate environmental problems.

Family farms make up 98% of all farms, and small farms account for 70% of farm real estate. These operations will be affected most by this legislation. They currently manage the resources that would fall under the jurisdiction of the Clean Water Act should the CWRA pass. These producers have specialized knowledge with regards to producing food in an environmentally sustainable manner. If the CWRA is passed, it could substitute the limited knowledge of a few government experts for the well-coordinated knowledge and experience of multitudes of farmers. Is there any reason for us to believe that this would necessarily be better for the environment?
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