[Fwd: [Fwd: Re: AFBF Sust Ag Article]]

----- Original Message --------

Subject:	Re: AFBF Sust Ag Article
Resent-Date:	Tue, 28 Apr 2009 12:45:03 -0400 (EDT)
Date:	Tue, 28 Apr 2009 12:44:55 -0400
From:	Jack Rabin

When the USDA Sustainable Ag program began, people argued for years how to define it, before finally giving up. SA means different things to different people, with their own private agendas, which have little to do with farming sustainably.

Clearly, for domestic US agriculture, among real farms and farmers, the primary POLICY driver for sustainability was, is, and will always remain, Economic first, Environment, and Social goals 2nd and 3rd. I don’t think it was an accident the USDA Farm Bill of 1985 wrote the 3 components of sustainability in that order. They were listening to farmers and looking at empirical evidence of US history.


There is ample empirical support to show that without profits and prosperity, without Net Farm Income, a farmer, and a nation, can’t improve environmental protection.

• Minimum or No-Till taking “steel in the field” is herbicide dependent. That’s capital.
• That’s chemical research and manufacturing. More capital. (Rodger said a new Turb-0-Till is $60K+!)
  
• Reduced flow low pressure drip irrigation takes capital.
  
• Solar powered pump stations take capital.

Historically, the empirical evidence for US agriculture is that “indebtedness” has always been the foremost problem for sustainability. Max Pfeffer at Cornell (used to be Rutgers) has documented this.

It dates from the Prairie Populists after the Civil War and continued through the farm crisis of 1979-1985. Moreover, when farms are unprofitable, or have property rights problems, resources get abused. This empirical observation is worldwide, from the abused collective soils and farm resources of the former Soviet Republics to poaching of resources in poverty stricken Africa and Asia. Poor people, without private property rights protected by government, poach and abuse resources like trees, soil, etc. There is no conservation without markets and without pricing.

Look at this another way: Sustainability is really a GOAL a business enterprise shoots for, not a practice. Being sustainable means the farming system is DURABLE enough to withstand the famous FIVE RESOURCE RISKS to agriculture while INDEFINITELY using resources meeting human needs without depleting them:

1. Production Risk (weather, soils, hail, drought, pests, diseases, erosion depletion, drought depletion, etc.)
2. Economic/Financial Risk (interest rates, credit access, debt load, banking stability, impermanence syndrome from rising land costs, input costs rising faster than product sales = cost-price-squeeze, etc.)
3. Market Risk (loss of markets, inaccessible markets or dependency on external railroads/trucking, international price competition, monopoly power abuse, buyer consolidation, food value of the dollar, etc.)
4. Human Resource Risk (management depth and skill, family labor, hired labor, infirmity, death, etc.)
5. Legal Risk (government policies, coercion, local land use conflcts, takings, regulatory environment, illegal coercion from armies, environmentalists, terrorists, etc.)

The NRCS is “colored” by its successful history in the 1930-1950s of dramatically successfully reducing production risks. When the NRCS USDA’s Dr. Lowdermilk wrote his powerful “Conquest of the Land through 7,000 Years,” it shaped the world view for generations in that agency. And Lowdermilk was correct regarding soil and water. Without stewardship of soils and water, nations are impoverished and fall, losing their political freedoms and their very existence. But, that is ONE among the 5 risks toward the goal farming sustainably.

I think what that South Dakota farmer author was arguing [Farmers, it’s time to take back ‘sustainable’ by Troy Hadrick (p.2)] is that a farming system needs to durably withstand all 5 risks to be sustainable. Not one. Five. Any farm with a debt to equity ratio of > 0.6 is usually doomed to fail because it cannot durably withstand risks. That’s real empirical ag banking data, not newspaper Op-Eds.

So, in that sense, the agricultural sustainability definition debate has been hijacked by non-farmers. It has been hijacked by neo-Malthusians. It has been hijacked by anti-science, anti-technology advocates and special interests. It has been hijacked by a whole host of people and groups with lots of agendas. Mostly, like the Luddites of 18th century England, these people lament the tragedy to farm families. The tragedies happen continuously in all sectors of the economy. It is due to “economic dislocation caused by technological innovation.” Economic dislocation is painfully tragic to farmers’, to workers’, to investors’ wellbeing and livelihoods.

But “economic dislocation” occurs because it better serves consumers with lower cost goods. The revaluation and/or abandonment of outmoded producing economic assets are part of the cleansing vibrancy of a market system.

So, in reality, all these advocates, including farmers, who hijacked the agricultural sustainability agenda are really frustrated at the economic dislocation from technological innovation in our society. They mistakenly pick on farming efficiency. They pick on factory farms. They pick on large farms. Like Luddites, or Shakers, or any other group, they mistakenly believe technology itself, not their failure to manage capital to adopt it, to adapt to it, is the problem.

Yes, the debate has been hijacked.

Real sustainability advocates recognize farmers can usually deal with about 2 Risks simultaneously. In the 1979-1985 farm crisis, farmers had 1) rising interest rates and inflation, 2) loss of export markets from disastrous policies, and 3) rising energy input costs with falling product output revenues, which resulted in falling Midwest farmland prices where they owed on mortgages more than the equity value of the land [sound familiar in today’s consumer real estate banking/credit crisis?].

FARMERS WERE DEALING WITH 3 RISKS AT ONCE, and they were overwhelmed. Notice that all these sustainability problems dealt with financial economic risk.
This event gave rise to the USDA L.I.S.A. [Low Input Sustainable Ag] which became the Sustainable Ag program. This was its policy origin. Not resource conservation. Not soil. Not water. Not organic. Not anti-industrial. The chemical/organic/fertilizer issue came in simply as a way for farmers to reduce purchasing petro-chemical inputs whose price was rising faster than their sales revenues.

Anyway, that farmer is right. The interesting thing is that all farmers do care about these resources, pragmatically, as they affect the bottom line (sustainability). The frustration farmers feel is that their needs are pragmatic, daily, and these hijacked policy debates go on in Washington, or in newspapers, on the web, in blogs, above farmers heads. Real farmers are too busy to get caught up in the debate.

From my perspective, it is essential to make sure farmers and all their resources are prepared for durability of all 5.

Even [NJ farmer] Bob Muth, when you spend a lot of time with him, will explain that it was the creation of the family trust -- removing the land value equity risk and his eschewing of debt -- which is of equal importance to his farm's sustainability as the "sustainable practices" he employs. If his financial base was not solid as a rock, he could not do the rotations he does.

Okay, enough of Jack for today.

Where there is demand, an entrepreneur will follow, but who is sustaining whom?...

So it is in agriculture, as in any other business. If there is growing demand for locally produced food products, then there are opportunities for entrepreneurs to grow crops and livestock to sell to those consumers. Hence Vermont, which, according to Art Edelstein writing for vermontbiz.com, "boasts the highest percentage of people who buy locally grown food," is seeing an increasing number of small farms and new, young and entrepreneurial growers capitalizing on the locavore movement.

It's nice that the locavore movement is creating such opportunity. Small farms are getting much attention in the media, in the slow food movement and at USDA. Sustainable agriculture advocates often point to the small farm as the savior of ag, especially here in the Northeast. But are small farms really sustainable? In the vermontbiz article, the Green Mountain State's Agricultural Commissioner Roger Allbee indicates "the majority of food producing farms in the state other than dairy have less than 50 acres and the majority gross less than $50,000."

Indeed, the 2007 AgCensus figures just released in February show that across the country, there were 74,000 more farms with sales of less than $2,500 than in that category in the previous census five years earlier.

It's interesting that the AgCensus refers to “residential/lifestyle farms, with sales of less than $250,000.” $2,500, $50,000, $250,000... those are gross income figures. Any small business operator knows that when the expenses are paid at the end of the year, that's what the owner gets paid. Non-farmers earning wages in the $50-75K range think farmers grossing $250K are getting rich. Not so!

The article does point out, rightly so:

• One can make money because “farming is so entrepreneurial and there are so many micro niches.” It takes business savvy, sales and creativity, but about 90 percent fail, a number he says is consistent with other start-ups, according to John Cohen, Westminster, chairman of the Vermont Farmers Market Assoc.

• Despite claiming "add[ing] in the environment and an agricultural landscape and community and social benefit" makes small farms "absolutely successful businesses"..."in the final analysis," Mimi Arnstein, owner-operator of Wellspring CSA Farm, Marshfield says, “If a business is not financially sustainable it won’t be a business.” And "she admits and agrees that, “the biggest challenge is making enough money to pay myself and staff well. You have to sell a lot of zucchini to make the budget balance.”

It's tough to pull a living wage, let alone a salary, out of a $250,000 gross income. How then is agriculture sustainable if a farm business relies on supplemental off-farm income to maintain the farm family? Rather the hobby/part-time/lifestyle farm income supplements the family income to sustain the family, not vice versa.