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Here’s how cows can ‘go green’

This past summer, we read about Danish farmers paying a carbon tax on their cows and pigs. Starting in 2030, they will pay about $43 per ton of carbon dioxide emissions equivalent. But despite cows and pigs 9% contribution to global methane, cows can actually play a positive role in climate change.

Just like this example illustrates, dairy cow and cattle farms are often criticized for their methane emissions and manure runoff, which are believed to significantly contribute to climate change.

However, let’s challenge this assumption by exploring how farmers manage their farms and ranches to positively impact the environment. Here are some ways farmers and ranchers are reducing methane output and enhancing environmental sustainability.

Land management

Many of us outside of the ag sector are surprised to learn that livestock and dairy cows are one of the best tools for land management.

Ranchers who allow their cattle to graze on grasslands practice regenerative agriculture, which benefits the environment in multiple ways. Grazing animals contribute nutrients to the soil, promoting healthy plant growth and supporting native wildlife. Additionally, healthy soil absorbs rainfall more effectively, reducing water runoff into roads, streams, and wetlands.

Research from the Soil Health Institute highlights that livestock grazing improves soil health by increasing organic matter and enhancing soil structure, which helps retain moisture and nutrients. This method of land management not only sustains livestock but also promotes a balanced ecosystem.

Emissions reduction

A study by The Nature Conservancy, “Reducing Climate Impacts of Beef Production,” shows that ranchers who manage both grasslands and livestock can cut emissions by up to 50%. This approach is particularly effective in the U.S. and Brazil.

When cattle graze, their hooves help mix seeds into the soil, and their manure acts as a natural fertilizer, promoting plant growth and creating a carbon sink. For example, Texas rancher Meredith Ellis sequesters 2,500 tons of carbon annually, equivalent to removing 551 cars from the road.

A 2020 meta-analysis published in Global Change Biology supports these findings, indicating that managed grazing systems can significantly reduce greenhouse gas emissions compared to conventional farming methods.

Pasture management

While 95% of cattle begin their lives on grass, they typically finish in feedlots. There’s a debate over which system is better for the environment.

Surprisingly, grass-fed cattle emit approximately 20% more methane than feedlot cattle because it takes longer for them to reach market weight.

Animal Nutrition

Animal nutrition companies are actively researching ways to reduce methane emissions through diet. Studies have shown that specific feed additives can reduce methane emissions by 30% to 50%. According to a 2022 study in Animal Feed Science and Technology, optimized feedlot diets result in less methane production compared to roughage-heavy grass diets.

Most recently, a study published in the Proceedings of the National Academy of Sciences showed that a pelleted form of seaweed added to the animal feed can reduce methane by an average of 38% without adversely affecting the animal.

Dairy digesters

The dairy industry has utilized anaerobic methane digesters for years to manage waste and reduce emissions. These systems capture methane from manure, converting it into electricity for the farm or selling it back to the grid.

California’s commitment to reducing dairy methane emissions by 40% by 2030 is largely driven by the implementation of digesters. According to a report by the California Air Resources Board, farms using these systems are greenhouse gas-negative, meaning they offset more emissions than they produce.

Carbon-neutral cows

Contrary to popular belief, cows are effectively carbon-neutral emitters over time. When cows consume plants, they intake carbohydrates containing carbon.

Through digestion, some of this carbon is released as methane, which is a potent greenhouse gas but only remains in the atmosphere for about eleven to twelve years. It then breaks down into carbon dioxide and water through hydroxyl oxidation.

A 2021 study published in Frontiers in Sustainable Food Systems explains that this cycle ensures that the methane emitted by cows is part of a short-term carbon cycle, balancing out over time.

Interested in learning more?

One of our favorite sources for learning about this topic is Dr. Frank Mitloehner, a professor and air quality specialist at University California, Davis.

Dr. Mitloehner is a leader in helping governments understand cattle, methane emissions, and solutions to mitigate climate change. He has a practical and optimistic approach for solving cattle’s contribution to climate change. You can listen to his podcast with Damien Mason on The Business of Agriculture.

For further reading and detailed research, refer to:

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New Ag Leadership Faces Tough Agenda

The shock waves from Donald Trump’s surprisingly big victory in the presidential election were still rippling across Washington when speculation began about what the change in administrations will mean for agriculture.

Change is in the Air

No matter how many of the rumors prove to be true, it’s certain the changes at the White House — and on Capitol Hill — will usher in a new and somewhat different approach to policies and programs for farmers and everyone else along the food chain from dirt to dinner.

The most immediate effect when the 119th Congress now set to convene January 2, 2025, will be a shift in committee chairs from Democrat to Republican in the U.S. Senate. The Agriculture Committee, now with Sen. Debbie Stabenow (D-Michigan) as chair, will see the top spot likely pass to the current ranking Republican committee member, Sen. John Boozman (R-Arkansas).

“It is clear voters have demanded new leadership in the Senate and a return to the agenda President Trump has fiercely championed,” Boozman said after the election results were announced.

Boozman continues, “I look forward to helping the president-elect and this incoming Republican Senate majority restore prosperity, border security and public safety. The Senate Agriculture Committee will refocus on strengthening our rural communities and we will provide farmers and ranchers the policies and support they desperately need to remain viable.”

Rep. Glenn Thompson (R-Pennsylvania) is expected to retain the chair. Thompson’s long family history in the dairy industry has been highly valuable in his more than a decade as an agriculture committee member, and as ranking minority member.

Nonetheless, efforts to enact the long-overdue Farm Bill in the lame-duck session planned for the final weeks of 2024 aren’t expected to produce legislation. Key legislative issues with higher political priorities – such as continuing government funding and hurricane relief – will make strong demands on the limited time remaining this year.

Just as important, the two parties remain divided on several key Farm Bill issues, mostly on where and how to spend the enormous amounts of money involved in the omnibus legislation, including funding for the increasingly expensive Supplemental Nutrition Assistance Program (SNAP, now at about $113 billion per year) and ambitious green-oriented programs.

Who Will Be Secretary of Agriculture?

Several well-known names have been floated as possible replacements for current Secretary of Agriculture. But few if any observers are ready to place a big bet on any individual as the Trump team evaluates and begins to fill all cabinet positions — including State, Treasury, Defense, Attorney General, Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, and Homeland Security.

At the top of the Ag Secretary speculation list is Rep. Thomas Massie (R-Kentucky). Massie has commented publicly that he is “open” to taking the top USDA spot in the next Trump Administration. Massie’s growing close relationship with Trump supporter Robert F. Kennedy, Jr., also has been carefully noted by observers of the Washington political jungle.

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“President Trump’s resounding victory secured a mandate for big ideas like reversing chronic disease, conserving our land and empowering farmers,” Massie said in post-election comments cited by the Lexington Herald-Leader. He went on to note that no offer had been made from the Trump team as yet, despite suggestions of his leading candidacy from another prominent name in agricultural circles – Joel Salatin.

“I’ve been contacted by the Trump transition team to hold some sort of position within the USDA and have accepted one of the six Advisor to the Secretary spots,” Salatin wrote in his blog.  “My favorite congressman, Thomas Massie from Kentucky, has agreed to go in as Secretary of Agriculture.”

Salatin has gained fame – some say notoriety – for his maverick approach to farming and farm policy in general.  He is a prolific author on food issues, an active farmer and self-professed “Christian libertarian environmentalist capitalist lunatic farmer.”

Consider just a few of the titles of Salatin’s list of publications:

  • Folks, This Ain’t Normal: A Farmer’s Advice for Happier Hens, Healthier People, and a Better World  – sustainability and food production, local food systems
  • The Sheer Ecstasy of Being a Lunatic Farmer – farming in real life, and the benefits of sustainable farming
  • Everything I want To Do Is Illegal: War Stories from the Local Food Front – the different ways food policy shapes our food-choice freedom
  • The Marvelous Pigness of Pigs: Respecting and Caring for All God’s Creations – the link between pig raising and closeness to God
  • You Can Farm: The Entrepreneurs Guide to Start & Succeed in a Farming Enterprise – farming opportunities for true entrepreneurs

His family cleared land and set up successful diversified farming operations in Venezuela before coming to America, where they began farming in 1961 in Virginia. As a high school student, Salatin began his own business enterprise, selling a variety of farm products in local markets.

Salatin today operates Polyface Farm in the Shenandoah Valley of Virginia, raising livestock and selling meat, and generally promoting a “totally free market… without government regulations.”  His works champion policies designed to give farmers more control, allowing individual leadership in conservation and responsible environmental stewardship. His outspoken views and energy seem to resonate strongly with the Trump camp, regardless of his future official or unofficial role within the new administration.

But Massie remains far from the only name mentioned for the USDA top spot

Another contender may be former Rep. Mike Conaway, the former chair and ranking member of the House Agriculture Committee, who left Congress in 2021. His supporters cite two important advantages for the former West Texas legislator.  One is his robust experience in dealing with the last Farm Bill and all its political machinations.

Perhaps equally important, Conaway served as chair of the House Ethics Committee and the House Intelligence Committee during its investigation of Russian interference in Trump’s 2016 campaign. His leadership in presenting a finding of no collusion between Russia and the Trump campaign was noted then – and no doubt remembered by a President who values and rewards loyalty.Southerners note that in his last Administration,
Trump tapped former Governor George “Sonny” Perdue as USDA Secretary. Perdue served just as loyally through the tumultuous period of trade relations between the United States and China, even as the rising tensions cut deeply into exports of U.S commodities to China. USDA estimated that the tariff wars accounted for 95 percent of the $27 billion decline in farm exports between mid-2018 and late 2019. USDA also noted that soybeans made up 71 percent of the lost trade.
Perdue moved on to become chancellor of the University System of his home state of Georgia. But another Georgia name also has surfaced in the leadership discussions – Vincent Mearl Duvall – know far and wide in national agricultural circles as “Zippy” Duvall. (The noteworthy nickname allegedly is linked to his Caesarian birth.)
Duval is a third-generation farmer, beginning in dairy and expanding into production of beef cows, broilers, hay and other commodities. In his spare time, he also is President of the American Farm Bureau Federation – the largest general farm organization in the United States. He comes from a major agricultural state producing 40 different commodities and has traveled extensively across all parts of the U.S. farming system.
His supporters also note that his professed strong religious faith is very much in line with the values espoused by the President-elect. “I’m going to get up every day and do that, for you. We are the strength and the hope for this country and all around the world because we will provide the nourishment. There’s no human right more precious than the right to eat,” he told Farm Progress. “I believe we’re here as farmers to be stewards to God’s great works.”

What Challenges Will the New Ag Leadership Face?

Whoever wins the leadership derby will face a daunting list of challenges.

Farmers worry about soft commodity prices and tough competition for foreign sales. Most also point to the uncertainties created by the failure to pass the omnibus Farm Bill, and the continuing deadlock on spending priorities and decision-making authorities for remaining unspent “green” dollars authorized by the Inflation Reduction Act of 2022.

But the elephant in the barnyard in a new Trump Administration is clearly trade.

The President-elect repeatedly stated his intention to impose tariffs on imported goods — including a possible blanket 60 percent tariff on imports from China.

As of Oct. 31, U.S. soybean sales for export to China in 2024-25 were a 16-year, non-trade-war low.

Further, China accounts for only 44% of total U.S. soybean sales, an 18-year low when once again excluding the trade-war years of 2018 and 2019.

– Reuters, November 8, 2024

In 2022, China was sending $536 billion in exports to the United States; last year it had dropped to $427 billion. U.S. exports to China totaled about $150 billion.

Lower-level tariffs for other imports also have been reported, but regardless of the final level of any such new tariffs, the farm community fears resumption of another disruptive and costly trade war with the world, and in particular China. The lingering effects of trade conflicts with China in the first Trump Administration are still with farmers, particularly soybean farmers. With higher tariffs on sales to the United States, China simply turned to other suppliers.

Brazil has emerged rapidly as a major competitor for the United States in international markets, including the important China market. Brazil in 2022 passed the United States as the world’s largest soybean producer, with 120.7 million tons of bean production, compared with 116.4 million for the United States. Brazil’s soybean acreage is projected to grow to 117 million acres in the coming year. The United States is projected to harvest 86.1 million acres, according to USDA.

The United States and Brazil supply over 80 percent of soybean global exports, while China accounts for about 60 percent of total soybean imports. Soybeans are the largest agricultural commodity exported to China by both the United States and Brazil. Over the last five years, Brazil has come to depend on the China market, with almost 75 percent of their exported soybeans headed to China.  For the United States, that figure is more like 50 percent.

Trump’s first administration kept farmers onside with generous subsidies to offset lost U.S. sales to China from the trade war. Soybean farmers received $5.4 billion more in aid than they lost in price impact, a University of California-Davis study found.

 Another trade war could cost soy farmers $3.6 billion to $5.9 billion in annual production value, depending on how the dispute plays out, according to an October study from the National Corn Growers Association and American Soybean Association.

For corn, Brazil overtook the U.S. as China’s top supplier in 2023, just one year after Beijing approved purchases from the South American agricultural powerhouse.

 – Reuters, November 7, 2024

Biofuels: The other elephant in the room

The nomination of former New York Rep. Lee Zelden as head of the Environmental Protection Agency (EPA) adds to the evidence of a much stronger focus on strengthening U.S. energy production through expanded oil and gas production. Zelden has publicly noted President-elect Trump’s desire for EPA to play a significant role in re-establishing what he called “energy dominance.”

Zelden was among many Republicans voting against the 2022 Inflation Reduction Act and previous green-focused Biden legislative initiatives. Environmental advocacy groups have given him very low approval ratings – unlike President-elect Trump’s high opinion of him.

Agriculture’s greatest stake in Zelden’s role as EPA head may be his approach to the standing focus on biofuels as a key element of Biden’s green agenda.  Currently, roughly 40 percent of U.S. corn goes into production of ethanol and other biofuels, and as much as 46% of the U.S. soybean crop.

Any shift toward greater reliance on traditional fossil fuels as a cornerstone of U.S. energy policy has the potential to create significant bearish pressure on commodity prices – at a time farmers already cite the adverse effects of soft commodity prices on their economic vitality.

Added to the possibility of economic fallout from renewed trade tensions with China under a new Trump administration, the farm community is closely watching the growing roster of policy leaders sharing Trump’s views and priorities – and perhaps holding its collective breath.

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Witnessing Helene’s Wrath

To all my Dirt-to-Dinner friends,

Thanks to everyone for the many, many expressions of concern and support following the devastating effects of Hurricane Helene.

My part of North Carolina was hit especially hard, with epic flooding and devastation that simply wiped away many of the small towns here and left cities like Asheville reeling from destruction almost beyond description. The photo on the right shows Helene’s impact on my hometown.

Remember just how widespread and damaging this storm has been for us.

Helene brought a 500-mile path of death and destruction from Florida to the southern Appalachian Mountains. Our state Department of Health and Human Services placed the death toll from Helene at 95 across 21 of our 100 counties – with another 200 still missing.

Almost three million people lost power across the affected states, including me, for eight days.  A gaunt work crew from far-off Ohio sent to restore our power politely declined our offer of some camp-stove instant coffee. Too many people still need our help for us to spend time drinking coffee, one of them said without a hint of pretension.

As if farming wasn’t bad enough this year…

Like most southern states, Georgia has a robust and diversified agricultural production system. But Helene brought four months’ worth of rain in barely two days to some areas of the state. Winds estimated at 79-111 miles per hour helped devaste a huge swatch of the Peach State’s prime production areas.

Georgia Agriculture Commissioner Tyler Harper commented on the hurricane’s effect on Georgia’s farms and farm families:

“Every commodity in our agriculture industry has been impacted by this storm. You got poultry houses that are leveled, pecan trees that are down.

“That means we’ve lost that crop, not only for this year but we’ve lost that crop for years to come.”

Preliminary estimates by the state’s Agriculture Department, the Forestry Commission and University of Georgia placed the total economic damage to the state’s agriculture at $6.5 billion.  Harper estimated that about 30 percent of the overall economic output from Georgia’s farming industry was lost and with nothing to sell, the families and workers that make the state’s agriculture what it is are in need of help.

Atlanta television station WBS reported that the American Farm Bureau estimated Georgia had suffered a 75 percent loss in the pecan crop, and 80 percent in the poultry industry. Other reports said as many as 100 poultry houses no longer exist. That’s a huge hit for a sector that accounts for about one-third of the state’s agricultural economy.

Corn is the most widely grown crop in the state, notably in the southern half of the state. Autumn crops of produce also are critical, with one farmer estimating his losses alone at $7 million – with most of those crops not covered by crop insurance. Peach farmers also report extensive damage to their trees.

The storm brought notable immediate and lasting damage to at least two of the state’s most important crops: cotton and pecans. Cotton helps clothe us. Pecans are a mainstay of confections and notably holiday cooking. Cotton accounts for $1 billion of the state’s farm economy, pecans another $400 million. Both crops provide examples of the potential consequences of extreme weather events to producers almost anywhere.

Helene devasted as much as a quarter of the state’s entire pecan acreage. Pecan trees can take as long as 25 years to reach full maturity – meaning it will take years for the lost trees to be replaced.

According to Lenny Wells, the University of Georgia’s extension pecan specialist:

“”What we are hearing from most growers is that large trees (40-50 years and up) have suffered about a 70 percent loss and younger trees have suffered somewhere around a 40 percent loss. When I say loss, I am referring to trees blown completely down.

“These numbers are yet to be confirmed but from what I have seen myself and gauging by what we saw from Hurricane Michael a few years ago, I don’t believe these numbers are an exaggeration. I have heard from people in the damage area who have five or six trees left standing, and several who have no trees left standing.”

Cam Hand, the school’s extension cotton specialist, painted an equally somber picture:

“It seems like across the state, we lost somewhere between 35 percent to 40 percent of our (cotton) crop. … And there are fields worse than that and some that aren’t that bad, but that’s what the number looks like. And we’ve still got a long way to go on getting data and seeing the reductions in fiber quality associated with this storm.”

Let’s not forget another of the state’s key crops, supporting an industry worth an estimated $2 billion: peanuts. Georgia plants about 770,000 acres of the 1.8 million acres of peanuts grown in the United States and accounts for 53 percent of total consumption, according to industry figures. Officials are still calculating the extent of Helene’s damage to Georgia’s peanut crop. They also somberly note that Helene’s path cut through not just the state’s peanut-growing areas but the heart of the prime peanut-growing acres across the southeast.

And here in North Carolina, corn is one of our most important crops. The latest government reports show that we’ve completed 72 percent of our corn harvest, compared with 84 percent complete at this point in the last harvest season. But weather has taken its toll throughout the year, from dry conditions in the summer to torrential rains this autumn.

Only 12 percent of North Carolina’s corn crop is rated as “good,” another 11 percent “fair” – and a whopping 77 percent either “poor” or “very poor.”

I can’t think of a better barometer of the critical role of weather in our food system – here or anywhere else.

I’m pleased to report that we are recovering

In fact, perhaps the biggest ray of sunshine in all of this – if there is one – is the remarkable way people have pulled together to deal with the situation. No one has simply given up, and I’ve encountered precious few individuals prepared simply to wait for help from some government agency or an anonymous distant benefactor.

Neighbors are banding together to clear debris, and the sound of chain saws throughout the day from all directions tells me we’re out there thinking about the future, far more than about the past.

Thanks, everyone, but we are well on our way for getting through this.

As I watched all this unfold around me over almost an entire month, I’ve also noticed that the agricultural community is doing its part in the relief effort. I suppose farmers are more used to dealing with the vicissitudes of weather than we complacent consumers. Excessive rain, extreme heat, drought and the pests that come with them are part and parcel of the farming way of life. Finding ways to cope with them is the flip side of the farming coin.

The good news about agriculture, if there is any, is in the spectacular efforts of farmers to get ahead of the storm.

Thanks to the accurate heads-up provided by weather experts in the days before Helene came ashore, many farmers were able to get into the fields to speed the normal pace of the traditional farm harvest season that is underway at this time of the year. Key southern crops have been hit – some hard – but by and large an alert farming community helped cut the extent of devastation in real and meaningful ways.

But there’s still much to do

Even so, Helene’s effects on agriculture in the Southeastern United States are almost beyond comprehension.

Broken buildings, mud and silt are everywhere, still.

Roads are still closed. Downed trees, snapped power poles and drooping electrical cables line what roads are open. Obviously, some level of disruption to normal flow of crops and animals to market of course can be expected, creating spot shortages and sometimes lack of available supplies.

A visit two days ago to a prominent Asheville supermarket showed the effects in real time.

Weeks after the storm, the items on the previously robust aisles are sparse and picked over, and huge swatches of store shelves remain empty. Eggs and dairy products are in limited supply, and good luck finding any 2% milk.

Frozen food cases are bare, after extended periods without the power that makes them possible. 

“Bear with us,” the harried store manager told me. “We’ll be back. Count on it.”

That’s the voice of resilience and optimism.

The logistics system that delivers supplies and takes crops and animals to market has been severely disrupted in many areas, where roadways and bridges no longer exist. The famous Blue Ridge Parkway and other scenic attractions in this part of our state are completely shut down and will be for some time.

Local roadways are just gone in many places. The vital east-west Interstate 40 corridor remains closed in long stretches from Asheville to the Tennessee border, with eastbound lanes swept away by rains and mudslides. For those who don’t know our local geography, that’s roughly 50 miles.

It’s still possible to see farm equipment bogged down in fields that weren’t simply muddy. They were quagmires if lucky, and submerged if not. Thank the heavens above for the past week of sunny, dry conditions.

Advance weather notices helped many farmers avoid calamity.  But the sheer speed of the rising waters and the extraordinary levels of water on historically safe fields and city streets took all of us by surprise, nonetheless. This was a near Biblical event for people in this area, none more so than our local farming community.

The floods, tragically, have left hundreds of my fellow state residents dead or missing.

Finding a new path amidst the devastation

On top of that, uncounted animals also are dead or missing. Some of the luckier animals were stranded around this area, and supplies of hay and feed completely lost or rendered inaccessible. I’m told by my local farming friends that dairy farmers have faced enormous challenges dealing with their herds, without reliable delivery of feed, supplies and the ability to move product…or the power they need for milking and other management duties. Truckloads of hay from Pennsylvania and other somewhat drier distant areas have helped fill the gap for animal feed.

The peculiar thump of helicopters in the skies above delivering food, water and emergency supplies for desperate people and animals has become a normal sound of the day – and music to our ears.

Pastureland was flooded and remains wet, weeks after the storm. Some poultry houses no longer exist. Many barns, out-buildings and other elements of the farming infrastructure are left damaged, in rubble, or simply vanished down the turbulent river flows. I sense that we’re transitioning from a period of emergency response to a slower, more deliberate process of rebuilding and recovery. It will take months, perhaps years, to repair and recreate all the resources needed to move food from dirt to dinner. But we’re going to do it.

This may be the best example of “regenerative agriculture” that I’ve found so far.

As I’ve watched all this unfold around me, I also tried to take a look at how other areas hit by Helene have fared. The picture is much the same, across large portions of Georgia, South Carolina, North Carolina and Tennessee, not to mention the Florida Panhandle and parts of Kentucky, Virginia and West Virginia.  (Florida has its own story to tell about hurricanes, which probably deserves special attention.) But as a loyal Carolinian with a well-documented southern bias, I’m sensitive to what all this means for southeastern farming and ranching, and the key crops that form the foundation of our farm economy.

How we can help

And maybe more of concern to the average consumer, the effects of Helene on the poultry industry are significant. For example, the National Chicken Council (yes, there is a national chicken council) notes that Georgia, North Carolina, Arkansas, Alabama, and Texas were the top five states for liveweight broiler production in 2023, accounting for 55.5 percent of total U.S. federally inspected production. Replacing the productive capacity for broilers, layers, eggs, turkeys and other poultry lost because of Helene won’t happen overnight.

If anyone wants to offer help to the people ravaged by Hurricane Helene, please visit CharityNavigator’s Hurricane Helene Support page for an overview of various charitable organizations helping in the relief effort.

Thanks again for all your support and concern. We all appreciate it more than we hope you will ever know.

– Garland

 

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Do price controls work?

The Harris/Waltz campaign promises to bring down American’s grocery costs. One of their strategies is to pass the ‘first-ever federal ban on price gouging.’

Price gouging is, in times of short supply or inflation, companies, or individuals, raise the price of their goods above and beyond what is fair and economical. For instance, during Covid, some people bought personal hand sanitizer dispensers for $1.00 and resold them for over $7.00. Or, during an inflationary period when prices are rising, companies charge more than their basic profit margin.

Many states already have ‘price gouging’ laws that prohibit ‘excessive’ or ‘unconscionable’ prices in the wake of a declared emergency, such as a hurricane or other natural disaster. These laws purport to protect consumers against companies’ exploiting a surge in demand for necessities, including food and energy, caused by an emergency.

Whatever the merits of those laws, they appear to be quite different than the generalized price controls proposed by the Harris/Waltz campaign.

Price Controls in a Global Food System

Price controls are not a simple solution. If uncontrollable costs increase the price of food, then food producers and consumer product companies will suffer because their goods sold have to remain competitively priced.

Because countries are interdependent on each other for food prices, what happens around the globe reverberates to the grocery aisle…

  • a drought in Argentina can affect corn prices in the U.S. because there is less global corn available,
  • the price of your chocolate dessert has increased because the Ivory Coast and Ghana governments raised the farmgate price for cocoa buyers, or
  • the potential longshoreman strike could affect the price of your bananas or tomatoes coming in from Mexico or Holland.

The list of potential situations affecting the price of food in our grocery aisles is endless.

Price Controls in Your Neighborhood

Let’s take a simple example of a lemonade stand to demonstrate pricing controls.  Your children want a new iPhone, and you tell them that they need to earn it themselves. One hot sunny summer day, your son and daughter decide to create a lemonade stand to keep your neighbors cool and hydrated. “Our lemonade will be unique”, they said. “It is sugar free and has electrolytes.”

You help fund a big table, two chairs, lemons, electrolyte powder, stevia for sweetness, plastic cups, and a blender for mixing.  You calculate that if they sold 100 cups of lemonade, they could charge their customers $1.25 per drink.  That way, they would cover their costs of $0.75 a cup and make a 50-cent profit on each cup. If they sold all 100, that would be $50 for the day. In a little over two weeks throughout the summer, they would have the new iPhone in time for school.

You walk around the neighborhood and see that other neighbors also have lemonade stands, each with unique features, such as cinnamon, hot chilies, or even icy slushy blueberries and strawberries in their drinks. But you notice that the lines are longer around some and see that many prices are only $1.00 a cup.

You wonder: are your children charging too much?  So you go back and encourage them to drop their price to $1.00, knowing that at least they should make $25.00 for the day. This will take most of the summer, but an iPhone is still in their future. Life is good.

And here come the price controls: the town government decided that the lemonade around the neighborhood is too expensive.  Thinking it is helping those who cannot afford to pay $1.00 a cup, the town puts a ceiling of $0.70 a cup.  This creates a loss for everyone whose cost is about the same at $0.75 a cup. The lemonade vendors, your children included, fold up their chairs and that is the end of neighborhood lemonade.

The government goes back to reconsider their price ceiling and decides to help the lemonade vendors.  They increase the ceiling to $0.90. They also put in a price floor of $0.80. With a small profit margin realized, a few optimistic lemonade vendors are back in business. Your children are hanging in there.

Suddenly there is frost in Florida and the price for lemons have doubled. The price floor doesn’t help as the lemonade vendors have a higher cost of goods than they can sell on the market. Their cost to produce lemonade is now $1.25.  This is way over the price floor of $0.80 and over the price ceiling of $0.90.

Lemonade is now a nostalgic memory. There will have to be plan B for an iPhone.

Price Controls Gone Awry

On a much more serious scale, here is what happened when governments tried price controls in Venezuela, Russia, and even in the United States.

Hint: It didn’t work then, either.

Price controls are often associated with Communist countries, as it involves more government intervention than Western Democracy often practices. Despite the best intentions to maintain cheap prices, history has shown that price controls tend to backfire with severe shortages of consumer necessities across a nation.

Venezuela

Venezuela struggled during the 2008 commodity and financial crisis and due to price controls and overall poor governance, they have still not recovered.  In 2008, due to weather, crop shortages, and oil prices, global prices for rice and wheat escalated by over 200% and 100%, respectively.

President Chavez announced, “there is a food crisis in the world, but Venezuela is not going to fall into that crisis”.   He passed the Law for Fair Costs and Prices which put price ceilings, floors, and audits on companies.

Like the lemonade stands, many of these companies went out of business due to negative margins.  As a result, production dropped, food availability on the grocery shelves suffered, and there was a significant food crisis.

The number of undernourished people escalated to 6.5 million in 2020 from .7 million in 2013. Venezuela has still not recovered As of June 2024; it is estimated that there are 550,000 Venezuelan’s who have migrated to the U.S.

It is no wonder. Their Global Food Security Index score is 106th out of 113th in the world, and is ranked 18th out of 19 South American countries.  Only Haiti is below them.

Soviet Union

In the 1980s, President Mikael Gorbachev, had good intentions to keep food and consumer goods prices low to ensure they were affordable for the public. Gorbachev implemented price controls as a staple economic policy aimed at stabilizing prices and preventing inflation. However, these controls often led to significant issues, notably shortages of goods and a decline in product quality.

One of the main reasons these controls failed was that the fixed prices didn’t reflect the actual costs of production. Companies and producers of food lost their incentive to supply the grocery store when they had a loss.  This led to empty store shelves. The black market flourished because people had to eat and went to the black market which set its prices based on basic economic supply and demand. It ended up undermining the state price controls.

Gorbachev caved and he removed controls and settled for a basic market economy. Then, when price controls were lifted, there was hyperinflation, and prices rose by over 2,000%! There is nothing quite as predictable as basic supply and demand for market efficiencies.

United States

If you were born in the 1960s, you will remember the 1970s gas shortage while trying to fill your car with gas. Once again price controls imposed by President Nixon didn’t work. There was a 1973 OPEC oil embargo and in response the U.S. government-imposed price controls to keep gas affordable for the customer.

However, these price caps led to unintended consequences. Gas prices were $0.36 a gallon. When going to parties, I remember contributing $1.00 for three gallons of gas. Of course, this was way below the cost of production, so the oil companies stopped producing oil because they lost money for each gallon of gas. This also prevented them from investing in new drilling or additional resources.

This also led to VERY long lines at gas stations and at-home stocking of gasoline.

Would History Repeat Itself?

“We economists don’t know much, but we do know how to create a shortage.

If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage. It’s the same with oil or gas.”

― Milton Friedman, Nobel Prize-winning economist and statistician

While governments can be tempted to control the price, the complex relationship between government policies, producer incentives, and consumer needs shows that market dynamics reign and cannot be ignored.

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Media Madness and the Search for Truth

How far down the rabbit holes of news and media do you want to go? The depths seem endless, especially as we approach another election.

Thankfully, our dear friend and media savant, Garland West, sheds some much needed insight to light a path of rationality back into our overzealous media consumption habits.

Now, it’s up to us to put Garland’s wisdom into good use so we may become well-informed, rational and responsible citizens.