Is the US shedding crocodile tears for the family farm while gathering eco-friendly fuel
 It appears that the US Biden administration at this late date is cosying up to a sweet vision of family farming, which it now concedes has been largely lost in today's America.
In a spirit of regret, according to Bloomberg News, the "US is betting the transition to cleaner energy combined with massive infrastructure investments will reverse a persistent decline in family farms, creating new revenue opportunities for growers while boosting their ability to compete overseas".
Unravelling that, one finds what the British call a "mare's nest", a "situation of great disorder and confusion, intrigue and trouble". It is clear that whatever it is, it is anchored to the current carbon craze and the overall climate agenda. And in one way or another, the plan is to have factory farms and family farms produce environmentally friendly fuel, typically ethanol and/or methanol, the demand for which will be created by regulators worldwide.
The motives are hard to credit. Most would see the family farm rhetoric as a last minute vote-getting pitch to win support from the numerically dwindling farm vote while keeping in place a long-standing capital intensive agricultural policy, which has long been operational despite today's ostensible opposition from the US Government that has fostered it for more than a decade.
First, they tearfully admit to the problem: "America’s landscape has vanished over the last four decades as policies favoured consolidation. While the resulting industrial heft has bolstered the US’s status as an agriculture juggernaut feeding the world, it’s wreaked havoc on smaller and mid-sized producers and the rural economies that rely on them".
But a revival is under way, according to US Agriculture Secretary Tom Vilsack. “We have to change the direction, otherwise in 40 years we will be saying we lost another 500 million acres,” he said.
"Vilsack's agency is devoting tens of billions of dollars to promote climate-friendly farm practices as the world races to decarbonise, dealing with everything from fertilisers to grazing methods," says Bloomberg.
"The aim is to lower the greenhouse gas emissions of farming, and making growers eligible to take part in potentially lucrative new markets like crop-based sustainable aviation fuel [SAF]," says Bloomberg. Of course that is empty talk because producing one, that is, fewer agricultural emissions, has nothing to do with producing the other, more sustainable aviation fuel. Their mutual dependence is not in evidence.
That is, of course, unless regulatory mandates create such interdependence, which in this day and age, it is to be expected. Nor does family farming have anything to do with producing eco-friendly jet fuel. It may well be a positive hindrance. Yet such policies may well be useful in garnering votes in this do-or-die election year.
What is also evident, is that factory farming is not a new idea that can easily be blamed on former President Donald Trump as the Biden administration is so apt to do.
Nor can this longing for the family farms of yesteryear be credited to Secretary Vilsack's quick remedial response to looming catastrophe. Mr Vilsack has been around a very long time as federal agriculture chief, first under former president Barack Obama and is in fact the second-longest serving USDA secretary in history.
The world’s first plant using ethanol of all types to make SAF was unveiled in Georgia. A thousand miles north in Iowa, the country’s biggest producer of corn-based ethanol, farmers and biofuel makers said the opening was a wake-up call to move faster to decarbonise to compete with ethanol from Brazil.
Mr Vilsack, a former governor of Iowa, which more corny than Kansas in August, predicts a “rapid acceleration” in crop-based SAF investment after the Biden administration releases long-awaited details on federal tax credits aimed at setting off a surge in American production of lower-emitting airplane fuel. The update of a US tool used to calculate greenhouse gases from the transportation and energy industries is expected soon."
While federal strategy is focused on strengthening the small farmer and rural communities, says Bloomberg, Mr Vilsack expects the administration’s policies to also bolster the US position in world markets.
America over the past decade lost its status as the top global shipper of corn and soybeans to Brazil. Once the US fixes its roads and bridges, and the rail and port systems work more efficiently, America will be able to reclaim its infrastructure advantage, he said. President Joe Biden’s US$1 trillion infrastructure law, passed in 2021, will “change the game on exports”, Mr Vilsack said.
Central planners start out assuming that they are merely applying guard rails to existing market forces.
While the central planners believe the market will live with the new conditions imposed, they forget the largely voluntary nature of the market players, either acting in concert or alone. One common reaction is withdrawal. Sometimes, regulatory impositions lead to unforeseen consequences, in which withdrawals or the sudden participation of new elements lead to shortages, or unexpected abundance of unexpected commodities, which can trigger chain reactions, which generate price volatility, leading to destructive mis-matching cost structures.
For example, if regulations demand that only a scarce and costly high-grade fuel can be used in a market whose cost structures depend on cheap fuel, then producers and customers - or the means of transport - can be lost en masse and in one fell swoop.
Thus, state intervention changes the nature of the market, perhaps destroying it, or at the very least, warping it beyond recognition. And it is not as though the world is short of egregious examples. When will they ever learn? |
