Why I still Believe in Markets

To hear the rhetoric coming from the presidential campaign, I guess we can conclude that markets have about had it. The time has come for policymakers to step in and save us from the Capitalists. Or has it?

 

Is the current economic crisis a sign of market failure? To an extent it is. Certainly it has been a very costly failure, and it does involve the core of our financial markets. But a better case can be made that what has failed is a long standing attempt to manipulate the markets to a certain end through policy. For decades now, we have sought to empower more and more people to achieve homeownership, and generally these efforts have been successful. (And this is undeniably a noble goal.) But our mechanism for doing so has involved pooling assets and insulating financial institutions from the risks of their loans. By externalizing the risks associated with marginal or subprime loans, we freed lenders to become ever more aggressive, and eventually they became reckless. Combined with a parallel government policy of maintaining high liquidity of capital and very low interest rates, there was really never a better time to be irresponsible as a consumer.

 

Wait… Irresponsible Consumer? Isn’t the problem with the Capitalists? Some of it is, but mostly the recent events have occurred because consumers have thrown caution to the winds, and thought that they could have it all, if only they could juggle the credit.

 

Well it turns out they couldn’t. But a few companies like Countrywide tried to make a lot of money at the expense of these optimistic but overextended consumers, and more respectable institutions were sucked into the excitement. So certainly these companies have their own lapse of judgment to blame for their circumstances, and I’ll agree with those who say that some of them have not paid the full price for their errors.

 

But how do we approach fixing the problem? Carefully, because we must not overlook the role that bad policy played in setting this scenario up. Do we allow Policy to overtake Markets as the backbone of our economic system?

 

Unlike Policy, which is driven by a few individuals with vague direction from society, markets directly reflect the wishes and desires of millions. Policy, once established, becomes an end to itself, with its own constituency, and is highly resistant to change.

Markets, on the other hand, have a built in mechanism for self correction. Every consumer acts every day with his or her dollars.

 

As recent events remind us, markets can go awry, but in this respect they are no different than policy or regulatory means of decision making. The reason is simple: all modes of decision ultimately rest with human beings, and we frankly don’t always make very good decisions. Look at the decisions that the “average” American has made about their health and diet, their retirements savings and credit card debt, or their means of transportation. On average, we simply aren’t making very good decisions in these areas.

 

Markets reflect these decisions, but so does policy. Look at our national political scene: are voters demanding the information that would lead to reasonable and enlightened choices between our candidates?

 

I suppose one logical conclusion would be that the masses can simply not be trusted, and we must empower a small group to act in their best interests. As this approach has been tried and widely discredited (aside from being morally and philosophically indefensible in my view), what are we to do?

 

I believe that we must retain faith in markets as a highly imperfect, but the most accurate and most flexible instrument for economic decisions.

A New Course in the Fumigant Discussion

It has become clear to me after the last few months that those of us in the Ag industry have it wrong when it comes to fumigants. No, not with respect to their use, but in how we address concerns about them from the general public. I think it is easy to see that public concern has not abated, which tells us that our strategy has not been working. Even worse, I think we have actually amplified public concern. So let’s talk about where we have fallen short, and how we can change it.

 

Traditionally, the industry response to public outcry over fumigants has had two prongs. Both of these I will argue have done no good, and both have actually made matters worse for us.

 

The first traditional response has been to downplay the risks. We tell people  that there are many products and activities that carry more risk than fumigant use. This has not worked for the simple reason that public outcry over fumigants is an expression of anxiety. If we simply add more anxieties to the list, can we really expect concerns to abate? It has made matters worse for us by reinforcing a negative perception that farmers are ignorant of the risks associated with chemical usage, or simply don’t care. Feeding this perception has cost us dearly.

 

The second tactic that our industry has employed is to plead poverty. We say we must be able to use them or we will go out of business. This has not worked in part because it is a case of “crying wolf.”  Frankly we have used this argument a lot over the years, but we are still here. There isn’t a lot of perceived credibility in it anymore. It also hasn’t worked because of the anxiety issue discussed above. Will a parent place our business interests ahead of the health of their child? Of course not. We need to recognize that the poverty plea will always fall on deaf ears. We further hurt our case with this line of attack by continuing to undermine confidence in our industry. Would you trust a financially shaky, desperate industry to use a chemical wisely? Or would you fear that they would have every incentive to abuse the material and cut corners on safety?

 

What must we do? Firstly, we have to reject the old arguments that have failed us. Secondly, we must clearly acknowledge and accept responsibility for the risks associated with these chemicals. If we do not speak clearly and reasonably about legitimate concerns, the public will listen to those who speak loudly and unreasonably instead. We need to make the case that we understand fumigant safety better than anyone; that we do not shy away from oversight because we know that the standards we set for ourselves are so high. We need to show that we have the resources, both financial and personal, to handle the use of the materials in a responsible fashion. In short, we must earn the community’s trust, and continually reinforce that trust.

 

Some would ask if this isn’t just a PR gimmick. I can’t deny that public relations are a factor here, but I truly believe that what I am describing is a more accurate depiction of agriculture than the one that we have helped inflict on ourselves.  We can’t allow ourselves to be seen as cowboys on a shoestring budget using these chemicals recklessly. Only by holding ourselves to the very highest standards of caution, prudence, and professionalism will retain the right to use these materials.

 

It is as simple as that.

Peeve of the Day - 9/10/08

I overheard someone complain the other day that farmers want to unfairly monopolize the benefits from the “Fruit of the Earth.” I suspect this individual has never gained any fruit from a bare piece of earth… Mother Earth does not simply give her fruits away. They have to be earned with work, and patience, and yes even such unseemly things as capital. What benefits farmers reap don’t come from their possession of the land anymore than having an office makes you an executive… The value in both cases comes from their work.

And that is the Peeve of the Day.

A Hill of Beans

Lately there seems to be a lot of interest in the concept of foodsheds. Connecting rural food producers with nearby urban consumers is a worthy goal. Transportation costs and energy consumption go down, dollars stay in the local economy, and people are reconnected with the landscape that sustains them.

 

So why is it that I seem to have this visceral negative reaction to almost any discussion of them?

 

Perhaps I’m just an old-fashioned farmboy, distrustful of change, particularly when it comes from urban environmentalists. But maybe there is something more….

 

I’ve had the chance to be engaged in a number of discussions on the topic, and the foodshed concept seemed great at first. But my discomfort seems to have risen over time. Are foodsheds the futon couch of the sustainable food world?

 

The foodshed analyses that I have seen do a fine job of discussing what is grown in a region, and better yet, what could be grown in a region that would support the nearest metropolis. So I can look at the study and know that Ventura County could be producing all the potatoes and wheat and lentils that Los Angeles could eat.

 

So why aren’t we? It’s because we are instead producing crops that can economically sustain a farm in coastal Southern California. Could we grow potatoes here? Sure… they’d probably be great, and every farmer around here knows it. But does anybody want Southern California potatoes? Not at the price it would take to grow them. So no potatoes. Low value crops just don’t have a place in one of the most expensive agricultural locations in the world.

 

Maybe this is just harmless chatter… reports produced with grant money that create interesting but useless factoids that make for great cocktail party banter, but no real guide for action. Is that why I dislike the concept?

 

In an analysis that I read late last year, a great map was prepared showing the different crops that could be grown in Ventura County. Our place was slated for beans. There is an old expression: “not worth a hill of beans” which of course means something with little to no value. Therein lies my fear: that rather than useless cocktail chatter, these studies could be seen as guides for policy (which is undoubtedly what their grant-writers intended) and implemented by well-intentioned but naïve policy makers. And what will a farmer like me be left with?

 

A hill of beans.

Croparazzi: Taking a Leap

Taking a Leap

 

In my “Long Tail” post a few days back, I discussed the opportunity/need for a different approach to local food. At the time I wrote that I was already working on an answer, but I wasn’t yet sure if it was time to acknowledge it publicly.  But after talking it over with a few people and looking for other sites trying a similar approach, I decided it was time to do it. I’m going to build this thing.

 

A quick recap of where current models are lacking: All current food guides or directories list farms and restaurants, but not the produce. It is an old model, a yellow pages type model. It isn’t real time, it’s not comprehensive. Local food seems a natural for online. It’s ”nichy”, valuable, time -sensitive, and has a fairly coherent built-in community despite highly  fragmented information on pricing and availability.

 

To more fully flesh out the concept:

One site that allows shoppers to see what farmers actually have available and buy or pre-order online.

A method for chefs and caterers to manage their supply of fresh, local produce in the quantities that they require.

Community based content with profile pages for local farms and restaurants, message boards, and blogs on food and farming.

Personality and Community are at the center of the concept. Consumers will come to the site because it is the most reliable way to source local foods, but meeting the farmers and chefs and food journalists will keep it interesting, and suggest new food ideas, thus reinforcing the

 

I’ll break down a lot of the individual concepts in later posts. Participation, benefits, business models, and marketing strategies are all evolving. I’ll start with what I know to be the core of the concept.

 

Community-building: For this thing to fly, it has to develop a community of people that love it. I know there is a community of people that love local food here in Ventura. If this site captures that love, and helps to build it, I will have succeeded.

 

Openness: I want openness to be in the very DNA of this venture. That’s why I am chronicling the development of the site in its own blog. I’ll have some good ideas, and a lot of bad ones… I hope that by posting them, I can have help telling the difference.

 

Good information: From the beginning, I will try to be sure that I offer good information, not simply more information.

 

And the name?

Croparazzi.com : Sort of a play on the celebrity farmer phenomena, a bit whimsical.
-or-

Nichefork.com: Rhymes with the iconic farm implement, but “niche” and ”fork” combine to give a foody vibe.

I have registered both, but I am using Croparazzi as a working name. More on that later, also. Track this project’s progress at croparazzi.wordpress.com, and start looking for the “larval stage” site at www.croparazzi.com

Sustainability at the Bug House

Among other ag industry activities of mine, I serve on the board of Associates Insectary, a grower owned cooperative in Santa Paula. For 80 years, we have reared and released beneficial insects as part of an Integrated Pest Management (IPM) program for Citrus and Avocados. In 1928, the term “sustainability” hadn’t yet been coined. Neither had the term “Integrated Pest Management.” But we did it anyway, because growers in our area have always been quick to adopt a practical idea when they see it. Typically it is done without recognizing that we are employing “sustainable” methods… most Insectary members think of themselves as “traditional” growers, although our organic acreage is on the rise.

 

Tuesday’s meeting brought another great example of a project that we didn’t conceptualize as being sustainable… it just seemed like the right way to get the job done. In order to raise predatory insects, you must have prey for them to feed on, and the prey must have food to sustain their population. The preferred food source for our feedstock is squash. For part of the year, we are dependent on imported squash from Mexico, since there simply isn’t any available closer to home.

 

But we have been very pleased with results from a pilot program with the Fillmore High School FFA. We provided them with seed, and they have cultivated a great crop of squash for us in a window that we typically use imported squash. From their small plot, they have delivered 5000 pounds of squash, and they are still setting blossom. More squash is coming and we are looking to expand the program in the fall. This has been a great outcome for every facet of sustainability. High School kids learn about farming and earn a few bucks by selling us squash. The whole production cycle has lower fossil fuel usage and carbon footprint, no risk of spreading invasive pests, and keeps dollars in the local economy. The Insectary gets reasonably priced squash, improving the economics of beneficial insect production for our members.

 

It feels pretty good when something works out this well, and there are many more stories like this one than the general public knows. I’ll touch back to this topic from time to time, because the Insectary always seems to have something cool going on.

 

Next time: converting our yard vehicle fleet to electric.

The Long Tail and Local food

I’m just back from vacation, and among the books I read was “The Long Tail” by Chris Anderson. I was struck by how clearly local food fits within the Long Tail concept. I’ll write a more detailed and thoughtful piece soon, but it made me think that the way to boost consumption of local produce and artisanal food products is by providing the data aggregation of the fresh food that are out there. This is a highly, highly fragmented market, and therefore one crying out for some navigational help.

How does one find local foods now? Probably the best model is the CSA (Community Supported Agriculture) template. Dependable, recurring business for the farmer, and assurance of weekly supplies for the consumer. But limited in choice. Alternatively, one can walk the farmer’s markets or cruise the fruit stands, but this takes time, and even within a given market it can be hard to compare offerings. Many small farmers can’t participate in all the markets for a region, and some wonderful market gardeners might not reach any. What about Aunt Tillie’s groaning peach tree or sprawling heirloom tomatoes? Some areas publish excellent guides to local farms, but these are published infrequently.

What if I want to know what’s available today?

What we need is something like eBay or Craigslist for local produce. To be sure, some can be found on those sites, but I really believe that this calls for a site (or network of sites) that is uniquely targetted on this niche. A virtual farmer’s market where growers large or small can post their day’s crops and buyers can search for what they want, in addition to seeing all the season’s offerings. In depth profiles of participating farms can add a social networking element. Where internet companies used to talk of Business to Consumer (B2C), the time has come for Farm to consumer (f2c).

In short, the recipe is one part Craigslist, one part eBay, a dash of myspace, and a healthy serving of local produce. Blend till smooth.

More to follow.

Common Ground?

A few thoughts that might provide a “strawman” for the Ventura AFA’s discussion on fumigants (Not in any particular order):

Organic and sustainable are not the same thing. While any use of chemicals, including fumigants, is not inherently unsustainable, lower usage will tend to enhance sustainability.

AFA values clarity and consistency in applicable pesticide regulations, but we recognize that current regulations, labels and science will likely change with experience and new data. Our understanding and awareness of certain impacts will evolve over time, and our best practices will co-evolve with them.

 Sustainability is based on best efforts to reduce or eliminate secondary impacts from their use, and consideration for alternative methods if practicable. Further, sustainability is not an easily identifiable end point: it is a process of continuous improvement.

Legal action may be appropriate as a means of getting redress from bad actors or pressuring regulatory agencies and policymakers, but AFA calls for safe harbor for responsible growers using approved legal practices.

AFA recognizes that all human activities carry with them certain impacts, and this includes agriculture, both conventional and organic. The challenge before us as stewards is to continually seek to minimize our impacts while still deriving the needed benefits.

Conventional agriculture is not something categorically wrong that we should seek to eliminate completely, such as violence, or racism, or disease. While seeking to reduce negative impacts, we must also recognize the positive benefits that society has received from agriculture.

The bundle of technologies and practices called the “Green Revolution”, were generally accepted as a complete package during the “Better Living through Chemistry” era of the 1950’s. That experience has shown that some of these have had differing impacts and levels of effectiveness. The task at hand is to “unbundle” these technologies and practices and keep the best, rather than reject the whole package.

Fumigants (as with many other chemicals) are potentially harmful materials that require training, professionalism, concern for others, and strict compliance with applicable guidelines to be used responsibly. AFA does not endorse careless, sloppy, or illegal usage of restricted materials.

Encourage further research and extension in the areas of alternative applications methods, materials, and cropping strategies.

In order to allow growers more choices of economically viable crops and practices, AFA should continue to promote a greater diversity of markets and distribution channels and support mechanisms such as land trusts and  conservation easements to ease economic pressures that limit farmer’s options.

 

Final: CDFA Listening Session

Mr. Secretary, thank you for coming to Oxnard this afternoon.

 

I am proud to be a 5th generation farmer in Ventura County. We grow avocados and citrus, but our family operation dates back to when dry-farmed lima beans were a staple of Ventura’s economy. We have seen many changes and many crops, but we have continued to evolve. To my mind, this is the essence of sustainable agriculture.

 

Regulatory Burden

Much will be said today about the need for supporting small farms. In no area is a small farm at a greater disadvantage to larger competitors than in regulatory compliance. When a single set of shoulders must bear the weight, the burden gets heavy. If it is the goal of our policies not to have small farmers choose to lay that burden down, we must examine the load. As these listening sessions give way to policy formulation, let us consider chipping away at the layers of policy that exist already. Some are problematic already, and others may become contrary to the new policies adopted to lead to our 2030 vision. I hope we will seek good policy, rather than simply more policy.

 

Agricultural policy has tended to favor large producers and a small range of crops for global distribution. You may hear advocates tell you that the proper role for policy is to favor the opposite end of the spectrum: very small, highly diversified farms serving local markets. I ask you to recognize that replacing one extreme with the other has seldom worked in politics, economics or any other field of human activity.

 

Let’s apply the concept of biodiversity to the economics of farming. Just as we now recognize that a range of species must inhabit a given habitat for a healthy environment, a variety of farms make for a healthy farm economy. With Ventura County’s diversity of crops, there is not a day in the year that something isn’t being harvested and sent to market. Our large operations are essential to maintain a healthy population of equipment dealers and service providers. Mid-size family farmers often provide much of the leadership in local co-ops and associations. Smaller farms help sustain the agricultural service economy, and often pioneer specialty crops while feeding local markets. There is room for them all. We need them all. Our vision should embrace them all.

 

Local Food Systems

Now to the topic of local and regional food. There is currently a great deal enthusiasm for this approach, and I happily support efforts to greatly strengthen this aspect of our food system. But as we look to create policy, we must ask: “How local should we be?”

 

To be sure, we could do a great deal more. Only 5 to 10 percent of food going to local consumption could yield a great reduction in the amount of energy used for transportation and a boost for local economies. What is the right amount of local food? Is it 30%? 80%?  I don’t have that answer for you, other than to suggest that there is a point beyond which we are not increasing diversity of opportunities for growers and consumers, but restricting them. The antidote to extreme globalization is not extreme localization.

 

To look at the broader view for a moment: There is a nutritional crisis all over our country, and California agriculture has the ability to deliver nutritional produce throughout the year. It is appropriate, both ethically and economically, that we do so. Changes in policy should recognize that agriculture is both a source of economic strength for California, and a resource for our nation.

 

Immigration Reform

This state was built with the labor of those seeking a better life through hard work. And for all of our faults and sins along the way, our state and our country have been the greatest generators of wealth, freedom and human happiness this world has ever seen. Today the energy to continue this growth comes not from the East, but from the South. California must lead the way to practical, workable immigration reform. The people who travel here seek work and economic opportunity, and that is what we have to offer. A well managed border is in the national interest of both the United States and Mexico. California stands to gain if we enact meaningful reform, but no state stands to suffer more if we fail.

 

Invasive Pests

While we need a border that can accommodate a two-way flow of goods and labor, we cannot accommodate the introduction of foreign pests. Phytosanitary controls at the border must be increased. Without these measures, there will be no alternative to costly control measures taken after the fact. As we see currently with the Light Brown Apple Moth, such measures are costly both to government and growers, and will often anger certain segments of our community. Tight controls at the border are not only good policy, they are also a good investment.

 

Conclusion

I would like to close with a thought on our purpose here today. I often hear it said that we must have a common vision of the future, and that creativity and innovation will be necessary for success.

 

But if innovation and creativity are the solution to the problems of our food system, then is a common vision a meaningful goal? Has genuine innovation ever emerged from within a broadly held common vision? Or has it been the fringe view (the Uncommon Vision) that has been the origin of innovation? History is filled with those creative souls who have found new ways to accomplish what was thought to be impossible. Do we innovate here today? No, we don’t, but there is a role for us to play.

 

A common vision transformed into policy places limitations on the possible. Our role here today is not to define how the food system of 2030 will look. Today we begin to define the possibilities, and clearly we must leave them open. We cannot expect to find the results we seek by limiting our options. We must allow room for people to experiment, to make mistakes, and even fail and we will find the answers. If we are not prepared to let innovation be our guide, then we will fail.

 

I am reminded that here in Ventura County, where we are lucky to have people working on innovative farm-to-school programs, institutional and policy obstacles prevent them from fully realizing the potential of these programs. Will our new policies set them free? I hope so. In our pursuit of “common vision”, let us not preclude the Uncommon Visions that will be the catalysts for true success.

 

 I am pleased that CDFA is recognizing these issues, and again, Mr. Secretary, I wish to thank you for your time.

 

 

Are Organic and Sustainable the Same Thing?

Often in discussions of sustainability, and the words “organic” and “sustainable” are used interchangeably. But these are two very different concepts, and confusion on this point is a factor that many people cite when expressing concerns about embracing “sustainability.” How do these differ?

 

First some definitions:

 

Organic: Only naturally occurring, or naturally synthesized, materials and compounds are used in agricultural production.

 

Sustainable: Those agricultural practices which we do today, must not preclude others from performing them in the same way in the future.

 

As we can see, these are greatly different. But to summarize the crucial difference, “organic” relates to inputs, while “sustainable” relates to outcomes. “Organic” is a relatively simple, black and white term. One either meets a verifiable set of standards, or one does not. “Sustainability” on the other hand is an extremely broad, and chaotic concept, not easily defined except in hindsight.

 

Are these simply semantic distinctions? Surely organic is just the first step to sustainability, isn’t it? The answer in both cases is “no.” Several examples could illustrate the difference, but since the AFA mission is to preserve agriculture in perpetuity, let us look at history’s all-time leading farm-killer: soil erosion. (The other leading farm-killer? Insufficiently protected personal property rights, although this is counterintuitive to those who would seek to save farms by diminishing these rights. But that is a topic for another day.)

 

The loss of productive topsoil has plagued us from the Fertile Crescent through to the American Dust Bowl of the 1930’s. Agriculture cannot exist in perpetuity without addressing this issue. Much work in the field of sustainability has been done to advance “conservation tillage” and “no till” soil conservation practices, and significant successes have been made in soil retention and soil health over the past few decades. At this point we arrive at this tale’s central irony: these practices require greater utilization of herbicides than conventional tillage. And the practices that brought desertification to the Middle East and nearly to the Mid-West? These were organic, although the term was not in vogue as there were not yet chemical alternatives.

 

It is not my intent to claim that this proves that chemicals are good, and organic is bad. The evidence does not support the claim. But it does make the case that sustainability is a much more complex concept that organic, and that the right chemical used in the right way is consistent with sustainability. If we are to succeed in our daunting mission to preserve agriculture in perpetuity, we must be clear in our concepts and our words, and not leave unexplored options that may hold the key to success.