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So how would you organize the agricultural economy to prevent all these ill effects of bumper crops?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Mon Jun 2nd, 2008 at 03:49:28 PM EST

I notice you also have a Keynes saying, with this one pertaining to casinos. Well, in big agriculture, there is casino financing, futures markets (not for the faint of heart or strapped for cash types), variable crop pricing and things like weather, pestilence and other things. Things like world hunger or environmental devastation are rarely considered. It's a strange world, and way to make a living.

For certain big crops, what would be needed by farmers with farms of some maximum size would be the likelihood of crop prices. Such income supports would be a function of farm size - the bigger the farm, the less the price buffering/income buffering. The government would set a price for certain crops and in effect, act as the crop bank, for some significant portion of the crops. In effect, it would almost be like paying a salary for farmers, in a way somewhat analogous to how Germany does things for it renewable electricity. This would help stabilize rural economics and populations. The drawback is that food prices would not be as potentially cheap in times of crop gluts, and governments would need to limit this to domestically consumed products - otherwise this would get into the "dumping" problems.

Along with this stabilizing effect would come some need to control the amount of food grown, and the need to be able to pay farmers for "land banking" - growing things which replenish the soils, like alfalfa, for example, or for reforesting certain areas. What the biomass industry has done is to create this huge increase in the need for carbohydrates and oils - ones which were traditionally low value added, and which are of limited use to a nation riddled with an obesity epidemic.

Things like this have been tried in the past, and they generally get real expensive - though a pittance compared to the military excess, or for oil and gas tax benefits. And if all the excess crops made are owned by the government and then dumped overseas, that definitely does not help matters. In general, this does offer the potential of rewarding farmers who use less fossil fuel inputs, less mono-culture, different breeds of the same crops, etc and who sacrifice some crop productivity or short-term profitability for eco-system services. And there is always this pressure to fund up corporate owned mega farms, or just mega farms, which must be avoided.

Anyway, that would be the plan. With biofuels of various sorts, an expanding market for crops is possible and this can soak up lots of high productivity farm output, and even more farms can "jump in". Until these became commercial, crop productivity was greater than the ability of the U.S. population to consume this food - even with obesity factored in. The excess was typically dumped overseas, which threw millions of people out of work - not good. As for the starving poor - until someone allocates money for them (oil despots, UN, tax on worldwide financial speculation?), it's tough for them to buy ANY food at just about any price. Modern ag in first world countries is not necessarily cheap to do, and it should not be used to to thow peasants out of work/off the farm.

So, I would propose buffering farm income as a function of farm size and crop type, with a goal of satisfying only the domestic markets. For those wanting to gamble on supplying overseas markets, well, there would be a lot less buffering, if any. Domestic demand can be maintained by energy crops and energy + food crops, and thus, there is not the huge need for earning export income for most farmers. In fact, biofuels provides quite the huge demand. And we can limit the pull on world prices by putting variable, graduated tariffs on imported bulk energy crops, where tariff rates go up as imports go up.


by nb41 on Tue Jun 3rd, 2008 at 04:36:41 PM EST
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