Washington Insider-- Tuesday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

NEW JERSEY GOV. CHRISTIE VETOES BILL TO BAN GESTATION CRATES

New Jersey Republican Gov. Chris Christie has vetoed a bill intended to ban the use of gestation crates by the state's hog producers. A number of restaurant and food chains have said they will not purchase pork from operations that use the crates due to the public's perception that confining sows in stalls so small that they are unable to turn around is an inhumane practice. In his veto message, Christie said the legislation was a "solution in search of a problem."

He may be right, a least as far as New Jersey's hog farmers are concerned. According to the Associated Press, there are only about 600 hog farmers in the state and they don't regularly use gestations crates. Still, the largely symbolic bill received overwhelming bipartisan support as it moved through the legislative process. In addition, a poll taken in September found that 93 percent of New Jersey residents asked said they were in favor of the legislation. And, before Christie vetoed the measure, he received a petition signed by 125,000 residents who urged him to approve it.

Christie has criticized supporters of the gestation crate ban as being politically partisan, which clearly is not the case. However, his stand against adopting legislation that would have virtually no effect on the state has some merit. The other side of that coin is that Christie would suffer no consequences -- and might reap some benefits -- in New Jersey from signing a symbolic bill regarding the rearing of pigs and hogs. But he likely would suffer in Iowa, home to 20 million hogs as well as to the first-in-the-nation Republican presidential caucus in 2016.

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WTO DIRECTOR-GENERAL CALLS FOR CHANGES IN TRADE NEGOTIATION PROCESS

Thirteen years into the World Trade Organization's Doha Round of trade negotiations, WTO Director-General Roberto Azevêdo has a novel idea. He is calling on members to "think about how we can operate in a more efficient way."

Azevêdo made his recommendation last week following a vote to approve the WTO's first multilateral agreement in 20 years, a Trade Facilitation Agreement that is aimed at reducing trading costs by simplifying customs procedures. "It goes without saying that we can't wait another two decades to deliver further multilateral outcomes," Azevêdo said.

The director-general made it clear that his call for greater efficiency did not mean he wanted to jettison the WTO's consensus rule that requires all members to agree to decisions by a consensus (100-percent agreement) vote. Azevêdo did place responsibility directly on WTO members to find ways to operate more efficiently. "I have ideas, of course I do ... but my ideas only go so far," he said. "It is about members, they have to talk about this."

Just how long it will take WTO members to reach consensus on how to make the organization more efficient is anyone's guess.

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WASHINGTON INSIDER: INDIANA FAMILY FARMER SURVIVES

Kip Tom, according to the New York Times, is a "seventh-generation family farmer" who produces seed corn, feed corn, soybeans — and data. He thrives on data and the Times treats that as it would any valuable crop.

The article paints a quaint picture of the Tom family, tracing back to a grandfather who depended on mule power on to today's owners who rely on technology. "We've got sensors on the combine, GPS data from satellites, cellular modems on self-driving tractors, apps for irrigation on iPhones," Tom told the Times.

The article admits that Tom's farm is a family operation, but it is not small and technology is seen as its lifeline, a "way to navigate the boom-and-bust cycles of making a living from the land. It is also helping them grow to compete with giant agribusinesses." Tom's farm has expanded to 20,000 acres from 700 acres in the 1970s.

The Times has no real idea how big a 20,000-acre farm really is, and how rare farms that size are in the United States. If all of that land is tillable, it means production from more than 31 square miles — pretty big for a family farm. It is hard to know how much that land is worth, but Purdue's Department of Ag Economics set the 2014 average value for tillable, bare land for the state at $7,976 per acre — suggesting that the Tom farm is managing land worth nearly $160 million, with the machinery and technology to go with that.

USDA economist David Schimmelpfennig tells the Times that the big operations can afford investments in the top technology, although others cannot. He also notes that "We've seen a big uptick in the productivity of larger farms."

Then, the Times goes another direction, suggesting problems and talking about the "incentive to grow single crops to maximize the effectiveness of technology at the largest possible scale." Farmers with diverse crops and livestock would need many different systems, and those "without technology" (whatever that is) could also grow one crop, but "would not capture most of the gains."

Then the Times says that "technology encourages farmers to move too aggressively toward easy-to-grow and easy-to-sell crops that are more easily measured by instruments, rather than keeping some diversity in the fields" The article doesn't quote Tom on this, and it may well be that's because Tom knows how hard it is to manage sales and markets and he may not be impressed by the thoughts of Ann Thrupp, executive director of the Berkeley Food Institute and her view on the effects of technology and scale.

Still, the Times sticks with the theme that farmers adopt technology because it makes things easier -- and, therefore a lot of farmers go that route. The article cites a few examples, but never explains the "ease of use" theory.

The theme of the article is that "Farmers still think tech means physical augmentation -- more horsepower, more fertilizer," Tom said. "They don't see that technology now is about multiplying information" suggesting higher efficiency, even though the Times is skeptical of the outcome.

The article does note that Tom Farms has 25 employees, including six family members, year-round and at various times can have up to 600 temporary workers. "Farms of this size can gross more than $50 million in a good year," the Times says.

And, the Times says better uses of data analysis have raised Tom's return on investment to 21.2%, from 14%. And, unlike other producers who are often quoted in similar articles as bemoaning their coming losses if corn stays at $4 per bushel, Tom is working out ways he can make money at that price.

So, what's the lesson here? Hard to tell. There are about 2.1 million farms in the United States, but only a few of them can apply anything like the capital used on the Tom operation. It is interesting, if hard to explain, why the Times thought the farm was relevant in the struggle to save the family farm.

Except, that it is. Family operations operate sophisticated, late-model technology and make money even when there are frequent reports of farming losses. And, operations like these, although somewhat smaller, produce the vast bulk of the U.S. food and fiber even though they amount to fewer than 200,000-acres operations. They are big; they know what they are doing; and they are tough competitors in global markets.

The suggestion that they are organized for "ease of operation" and perhaps mismanage their resources suggests a lack of real understanding of the structure of U.S. agriculture, Washington Insider believes.

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