Only Corn

I’ll trade you sheep for wheat.

I’ve been reading about different crop rotations including winter wheat lately and have noticed research coming out of ISU and USDA’s National Soil Tilth Lab in Iowa on subjects like adding red clover and cereal grains to the typical corn-soybean rotation.

I would think that this type of research on more diverse rotations like wheat-clover-corn-soybeans would spill over into the local area.

“Now for the but … If you plant corn on corn on corn on corn (you get the idea) you are going to have some serious soil nutrient problems.”

That’s a fact.

I planted corn on corn in my big garden, when I had a big garden, a few years back. The soil is marginal here, but my garden spot was good.

Corn on corn was a bad idea, and my garden was a disaster. I tried to go all organic on it for several years in a row, and did okay, until my last year, which was an agricultural flop.

Since US Farm Report’s commentator said that the ‘spats between big production folks and agrarian farmers ought to come to an end’, how would the differences between big farm, small farm, commodity farm, agrarian farm, or sustainable farm be most easily explained?

Wouldn’t the definitions vary depending on where in the world the farm was located?

Regardless of the definitions, getting more attention from the USDA doesn’t sound like it would be that helpful to anybody, big or small.

“To expand out, there aren’t any countries left that do not have a directed farm economy. “

Not true. New Zealand completely eliminated farm subsidies in the early 80s. Their sole farm support programs are now in the form of research. New Zealand’s farm programs resemble what ours would have been like back in the late 1800s — that is, extremely minimal. Some basic research and that’s it.

I’ve written about the history of the USDA here: fa-rm.org.

Food safety regulations and farm “support” programs did not originate until 40-70 years after the inception of the USDA. Wonder how humans survived all that time without their regular doses of government bailout crack. 🙂

In my study of the matter I’ve come to the conclusion that the USDA needs to be eliminated, not reformed. That sounds radical, but somehow this country survived for about 80 years without a USDA and if our founding fathers could see what this agency has turned into they would roll over in their graves if they could. Eliminating it could really be simple though it would upset a lot of people.

First, eliminate the School Lunch Program and Food Stamps, a massive 2/3 of the Farm Bill budget (up from just 1/2 of the budget 20 years ago!). Parents and caregivers should feed their kids with their own earnings. If they can’t, that’s where charity comes in, and Americans are a very charitable people — so long as they remain free and uncoerced by the government through burdensome wealth-redistributing taxes.

2) Phase out commodity crop subsidies, roughly 1/3 of the budget. Actually this was the plan under Bush’s Freedom to Farm Act and then he caved. So it’s not as if it hasn’t been in the works before to eliminate subsidies. We need to try again.

3) When we are done eliminating 1) and 2), we have a whopping 5% of the USDA budget allocated to food regulatory concerns and research. Phase these out by replacing USDA inspection with private certification. I drink raw milk and have been drinking it for a whole year. I get it from a farm that has it independently tested for pathogens. Sounds radical maybe but I haven’t died yet and I could never go back to milk bought in a store. It is amazingly delicious and government agencies have no right to conduct a war on this product and the health of the American people, as their are now doing. Don’t think private inspection can ensure a safe food supply? Creekstone Farms wants to test for mad cow and the USDA won’t let it. Sounds like a broken agency to me.

Certain necessary parts of the agency could be redirected to customs (which would make safety assessment of the importation of various plant and animal stocks much more objective and less subject to special interest pressure).

What about research? Well, a good deal of USDA research has been marvelously successful, but imagine how much more successful private funding would be. Private companies certainly wouldn’t be pouring millions of dollars into research for unprofitable ethanol from corn (cellulosic, maybe).

We have a marvelous, nearly 30 year case study in almost completely free market (i.e. undirected) farm economics and the message from farmers “down under” is quite clear: get off the subsidy gravy train ASAP. Only 1% of farmers lost their farms. The wine industry started and completely took off without any government help whatsoever. The market for lamb is spectacular. All the dire predictions that NZ’s farming industry would collapse never came true. In fact, it is thriving as never before.

Americans should pay heed. We don’t need to reform the USDA. We need to eliminate it.

Monica,

Great stuff.

I largely agree with your comments, and find them encouraging.

Keep in mind, however, that I didn’t say that all countries have farm subsidies, I said all have a directed farm economy. I’m encouraged that New Zealand has no subsidies, and from what you posted, they might actually not have a directed farm economy. We’ll have to rely on more input from you on that.

But, I suspect they have some sort of directed farm economy. If, for example, they encourage, or prohibit one type of farming over another (such as allowing, or prohibiting, corporations to farm) it’s a directed farm economy.

I’d like to see what you wrote about done here, but in order to work here, we’d have to go one more step. We allow corporations to farm, and we allow corporations to be involved in processing farm goods. Corporations (as we know, from the Latin “corpus” meaning body) are a “person” in the yes of the law. As long as that is allowed to occur, it will be largely impossible to return to generalized “family” farming. Corporations, by their very nature, allow huge scale, which is something we have to contend with here. I’d guess that this isn’t the case in New Zealand, as it’s smaller land mass and population makes corporate farming, and all that goes with it, less attractive.

Still, you brought up some excellent points, and I stand corrected. I’d like to stand encouraged too, but I’m afraid that to do something like that here would require a huge reform on how Americans view and treat corporations, which seems very unlikely.

From what I’ve read, New Zealand exports the vast majority (up to 90%) of its agricultural output, and is based on a system of grazing that is similar to management intensive grazing with a focus on grass based dairy cattle.

I also get the impression that New Zealand (and Australia) have a number of labor saving techniques that allow them to handle a larger number of livestock and acres with less people (due to a historically smaller labor force).

There is also no question that at the current time, most farmers growing rotations of these subsidized crops would absolutely not money without the subsidies. If subsidies were cut off immediately, I am not sure exactly what would happen. No doubt this would spur some measure of more consolidation. But would corporations even be successful at making a profit without the subsidies? I don’t know. At some lower level of the crops when the market worked itself out, perhaps. But I have to believe this would have a very strong effect on farming practices in very short order. Without cheap grain, the feedlots become more economically unsustainable. And I believe it would happen in a matter of years, not decades.

Just some thoughts… I’d be interested in hearing others’ thoughts on what would be the practical effects of a lack of subsidies.

Hi Rich — the ranch I was living on at the time (I wasn’t working on it as in farming, I’m not a farmer) was nothing short of enormous. The entire perimeter of the property (it had to be hundreds of square miles) was fenced electrically to prevent escapes. I do remember quite a bit of rotational grazing… moving sheep and cows from one pasture to another. Some of these enclosed areas were actually mountain ranges, so the individual pastures were huge. Of course there were thousands of sheep. But the pastures were so enormous, so the animals would only be moved once a week or so. To my recollection, the owner only had several farm hands and a few herding dogs for a ranch this size.

I agree with you on the subsidies… there’s no reason farming shouldn’t be profitable without government, just like any other business. So many of the reasons it can’t be are these onerous government controls and what people can and cannot sell, supposedly for our own safety, that make it impossible to make a profit unless you’re huge. It’s so silly — outlawing something humans have been doing for millenia.

While the system is in existence, though, I don’t blame anyone for taking the subsidy money offered them. It’s the only way to make money on the subsidized crops for many people, so long as the system remains in effect. And heck, for the smaller farmer, even if one doesn’t plant the crops, I would see it as a way to get some of your tax money back. 🙂

“So I’m not sure we need to change the way corporations are viewed or treated, so much as we need to change or eliminate the rules altogether that have resulted in such a sharp rise in corporate ag. Get rid of the regulations that create disproportionate cost to small farmers, and eliminate the subsidies that disproportionately reward large farmers (whether corporate or not), and the rest will take care of itself”

We’re so used to corporation, that we don’t know the advantages we have.

Simply put, there’s no way an individual can compete against a corporation, in anything. Corporations allow individual shareholders to band together and be treated, for everything, as a person. They’re taxed as a person. The company has liablity as it is a person, but the shareholders do not.

That’s why, I feel, that as long as corporations can farm, individual farmers are at a tremendous disadvantage. And that’s why no true “laissez faire”, or even free market, can exist in an environment when corporations are treated as though they are persons, while the individuals who make up the corporation are free from any responsibility, other than the slight chance of financial loss.

Wal-Mart, a non farm entity, is the best example. No one person, or even one partnership, could have as many stores, with such economic power, as Wal Mart does. Indeed, I doubt that any one individual could avoid the serious labor trouble running a place like Wal Mart, the Wal Mart way, would create for an individual, but which Wal Mart large avoids, due to its insulation from its own acts. This has allowed it to participate in destroying the local “yeoman merchant” in many places, with no negative repercussions.

Corporate farming is the same way. Corporate food production even more so.

Corporations are not people. Why should we tolerate the fiction that allows them to be treated as if they are?

“”The fact that so many farms consolidated under relatively free-market economics before the FDR era is evidence of this. I think there’s a free market historical precedent there for consolidation of farms. (Were there corporate farms at this time?”

I don’t think that’s correct. There was next to know consolidation, as we’d now understand it, in this era. There were some large entities, but they were the classic “plantation”, which was the descendant of an old, and highly flawed, “planter” system, and there were some large corporate ranches at that time. But corporate farming didn’t exist.

When “consolidation” occurred, it typically occurred in the context of a small single famer being bought out by a larger one, which is quite a bit different.”

To attempt to clarify my comment here (keeping in mind that I’m so sleep deprived today my writing is making no sense”) the consolidation we used to see, in this era, was due to, principally, advancements in machinery, or farm failures due to excessive numbers of homesteads (with the homestead act only being repealed in 1932).

This differs from the huge Mega Farm we see today by quite some measure.

We might still see, of course, very large farms. But we wouldn’t see, without corporations, whole collections of large farms under a single corporate owner.

For what it’s worth, I understand that (getting back to somewhere earlier in the thread- “Are small farmers starting to have an impact?”) that has certainly been the case in Australia. An ag extension guy from down there came and gave a presentation at UF.

Gist of it was, the ag industry groups and their extension service were all out of sorts over a plague of urban refugees starting up small farms who weren’t very serious about doing a good job and threatened to breed diseases to share with their professional farming neighbors. This was accompanied by lots of pictures of miserable horses and other livestock in dirt yards.

Then they did one of their decade-ly censuses and realized that a lot of these “hobby farmers” actually meant business. For example, they found that if you were to remove the ring of small-acreage farms around Sydney, 2-3 million people would stop eating vegetables.

WHOA!!

There were also enough people moving out of the cities to do small-acreage farms in rural areas to actually alter the outcomes of some recent Parliamentary elections. Shazam!

“…I see NZ being linked to Australia here, in terms of farming.

Is that accurate? I’m not sure we should be equating the two…”

Even though Australia has eliminated some of their subsidies, I guess I was linking the two in terms of the way they adapt their farming and ranching practices to their local conditions (as I see it).

From what I have gathered, farmers and ranchers in NZ and Australia have some unique solutions they use to deal with some of the same obstacles faced in the U.S.

Learning about different techniques like: dealing with drought conditions, a lack of manpower and machinery, or the efficient use of building materials would be helpful to almost any farming or ranching operation.

It would be useful if there was an easy way to find information and comparisons of farms and ranches in a variety of places, such as South America, Africa, Australia, NZ, etc.

“They’re taxed as a person. ”

“What on earth are you talking about? 🙂 Surely you’re aware that corporate income in the form of dividends is also taxed on the shareholder level.”

I’m afraid that I”m quite aware that’s not the case. Corporations can elect to pay dividends, or not. Henry Ford famously commented that Ford wasn’t a charity, which is why it didn’t pay dividends for decades. And the dividends are the surplus the corporation chooses to pay, or not, to shareholders. Not the profits. More than one publicly traded American corporation today pays no, or next to no, dividends.

As a stockholder in more than one corporation (a hypocrisy I admit), I can assure you that there’s no requirement that corporations pay dividends.

And when those are distributed, they are taxed on the individuals income, not on the corporations. The dividend, in turn, is a deduction to the corporation.

Let’s take ADM. Do we suppose that the shareholders of ADM receive an annual percentage of its profits, or bear a percentage of its loss? Hardly. They may receive some share of the profit, if ADM chooses to distribute dividends. The losses will be born in the form of decreased stock value, however, a fiction for many shareholders in any event.

That right there (loss)is a significant difference between conventional persons, or partnerships, and corporations. Losses, including those created by bad business decisions, or by legal liability, or whatever, are not really borne by the shareholders, or at least are not in the same fashion as an individual does.

Let’s take General Motors. If General Motors goes out of business, what happens to the shareholders? At the very worst, they loose, completely, the value of their stock.

If your business fails, what happens to you? If you are an individual, you are individually liable. Put another way, if an individual farmer goes out of business, his creditors still get to attach his personal bank account, and seize his personal assets, whatever those may be. That sure won’t be happening to General Motors shareholders.

That’s my essential complaint with corporations. It isn’t so much their bigness, as their abiltiy to shirk responsiblity.

A farmer, or any businessman, must always balance his acts against the risk to him personally.

But a corporation, no matter how big or small, need only balance its decisions against its assets, even if its made up of a collection of individuals, which it always is.

Put another way, if you and I get together and decide to buy a farm, and blow it, our creditors will be looking to everything we have.

But if you and I incorporated (and we should, probably, in this example), and blow it, our personal assets are not at stake.

Why is that bad? It insulates us from our own acts, and gives us an advantage against those who can’t. There’s no personal responsbilty for acts committed by individual people. That’s my essential complaint with them.

But I will concede that this does allow for bigness. If one group of people must collectively decide something, that will restrict their size in and of itself. If they surrender the control of their group to a board, that entity can get bigger (and all corporations of any size are controlled by boards). Make it so that one group is made up of people whose personal assets are never at risk (which is the very purpose for forming a corporation), it will necessarily have an advantage over a group, like a partnership, where everyone’s assets are still at risk.

“I sense that you don’t like that corporations are *big*.”

No, as a lawyer, who defends lawsuits all the time, what I dislike, in chief, is that corporations (which aren’t remotely likely co-ops) are legally insulated from the impacts of what they do. Corporations are far more able to do acts taht

“”You’re making it sound as if the consolidation of businesses and farms is somehow inevitable and unstoppable. I’m not really seeing that — it is in large part something that is government-assisted.”

I fully agree. I think our disagreement is just in what causes it, or what the cure is. I think part of the government assistance is in the recognition of business forms, which you are disagreeing with. Otherwise, however, I don’t disagree.”

To add, I also agree with your comment that values have to change.

Where we likely disagree is that I’d also take the more radical step of eliminating corporations (which of course is not going to happen, that’d be far too radical to occur) for most enterprises, for the reasons earlier stated, and I likely would restrict the size or reach of various enterprises, in favor of having more, individually owned, ones. But again, that’s highly unlikely to occur.

While I’m bothering everyone (and I fear that’s what I’m doing, which detracts from the overall fine quality of conversation here) allow me to tax everyone’s patience with one more example, after which, I’ll cease commenting on this topic, no matter how tempted.

And allow me to state my appreciation to Monica and Rich, and the others, whom I hope I am not bothering too much.

Anyway, a practical example of the difference between corporations and other entities, to illustrate the reasons for their existence.

If I am a shareholder in General Motors (which I am not, but which I am actually tempted to become, given as the stock is so cheap), and GM collapses, what does it mean for me, the stockholder?

The most I have risked is the amount I spent to purchase the stock. That’s all. I will not owe anything to the suppliers whose bills are not paid. I won’t owe anything to the employees who were not paid. I won’t owe anything to the pensioners whose pensions are left high and dry. I won’t have to pay for environmental cleanup. I’m out what I put in, and that’s it.

What if it was a conventional partnership, and not a corporation.

Then anyone GM owed money could collect it from me, and as much of it as they could get from me.

That’s the essential difference.

That’s why any business of scale incorporates (and justly so, I’m not saying they should not).

And that’s why it’s so much easier for a corporation to attract investment than a partnership, or private person. If I wanted to start a large business, it would be much easier to go to individuals and promise them that they were not at risk if the business failed, as opposed to letting them know that creditors would be looking to them if the business failed.

It’s also why corporations are better risks in all sorts of things.

To be clear, I accept this. Some businesses simply must operate this way, if they’re to fulfill their role in the economy. GM has to be a corporation, and we have to accept that.

Farms don’t, however. And to the extent corporations, a creature of a legal fiction, are in our economy, having created them, the government can govern their size.

Why would we want to do that? Competition is one reason. In meat packing we’re down to hardly any competition right now, and I’d wager that’s the case with other product producers. And the government has always accepted this role, at least up until recently. That’s why Standard Oil was broken up, or AT&T.

Beyond that, in the wider economy, while I accept corporations as necessary for somethings, they are not for many others. To use the Wal Mart example again, many people must shop there, as their incomes will not allow otherwise. Their incomes are low, in part, because of Wal Marts and other similiar entities. One Wal Mart represents, I’d guess, a half dozen smaller locally owned, middle class, stores in a previous economy. Those stores charged more, but they supported families with greater incomes and actual decent careers. But no store like that would be a publicly traded corporation, and no publicly traded corporation has any interest in being a store like that, controlled by remote shareholders, sort of, with economic interest being their sole reason for owing the shares.

Okay, I’ll stop bothering folks on this one now. It’s irritating the good folks here, and it’s also, I’m afraid, unrealistic as a hope, as much as I might like to see it occur.

“In fact, I looked up the difference between a cooperation and a LLC as a result of the discussion and was surprised to learn that the concept of the LLC originated in Wyoming (I believe that is where you are located).”

Yes, that’s quite correct. LLCs were a creature developed by our then Secretary of State. The LLC is a “limited liability corporation”, which is governed, more or less, on looser terms than most corporations (except a close corporation) and in which the “members” are taxed like partners of a corporation. Their liability, however, is “limited”, like that of corporate shareholders.

“Wasn’t late 19th century WY the scene of massive cattle baron corporations that bent the law to suit their ends? Didn’t foreign investors tie up large areas of open range and prevent small landowners from operating on “their land”, leading to violent range wars?””

Sort of, although that’s certain the popularized version of it.

Wyoming’s range wars stretched from the 1880s until about 1910. They had more to do with competition for resources (i.e., grass) than they did with business organization. Principally, the initial struggle was over two competing, and government sponsored, views on who “owned” the land. The Federal government encouraged water hole homesteading early on, and the state and Federal government cooperated in a system in which ranges beyond the water holes, for huge distances, on the Federal domain were regarded as the de facto, if not the de jure, of the grazer who first claimed them. However, both the state and the Federal government also encouraged continued homesteading, which busted up that domain. It’d be a lot like what would happen if you recorded your deed down at your county, for your house, but then found that the county felt that you really didn’t own your basement, and another, poorer, family could move in there and claim it.

After that, the cattle range war of the 80s and 90s, which resulted in a defeat for the “big” system in favor of continued homesteading, bled into a cattle v. sheep war which went on until about 1910. That’s another story, however. The whole question on the Federal domain was ultimately cleared up in 1932, when the Homestead Act was repealed. Then the dust bowl weather did what the “invaders” couldn’t, and cleared out a lot of the tiny operations which couldn’t survive with too little to graze, or plant, given the drought.