After my earlier rant against the CEO of Pilgrim's Pride, I received an insightful email from a friend in North Carolina who has an upfront and personal view on how changes in the poultry industry are impacting local communities and farmers. Hopefully on Monday I'll have something directly from him to post on the blog. I'm looking forward to it.
Beyond that, his email really made me think about the impacts of structural change in agriculture. And we're certainly seeing much structural change in the livestock industry, mostly in reaction to the increased price of feed grains. It is true that meatpackers enjoyed an indirect subsidy by purchasing below-the-cost-of-production grain for several years, and it can be argued that such cheap grain encouraged consolidation and concentration on both the production and processing sides of livestock. But those arguments, and many like them, are luxuries that few farmers and workers can afford. Then again, in many ways they can't afford not to have those discussions.
As an admitted policy wonk, it is very easy to get caught up in "intellectual" policy debates. But for those of us in the policy world, and those of us who really care about the policy world, we should never forget the real people behind the policy. Because of things like a renewable fuels standard, hog and chicken farmers will inevitably go out of business. Because of certain farm policies, real farmers will lose the farms that have been in their families for generations.Real people and real families will suffer. And it is not inevitable that the greater good will be furthered as a result of a policy such as the renewable fuels standard. It takes good public policy to make sure the public good is being served at all.
So when I say the opinion of an agribusiness CEO matters little to me, that doesn't mean I don't care about the fate of chicken growers or those who work in packing plants. It's because that CEO- and usually the corporation in general- need the least help in these situations. They'll be fine (and if they're not, they're really bad at financial planning). They make millions. But the workers and growers, as always, will be the ones who pay the price for the public policy whims of elected officials. And it is incredibly important that those individuals receive the assistance they need.
I don't particularly believe most CEOs worry about that sort of thing. To most of them, the market prevails, and that's the only good you need to worry about. The CEO of Pilgrim's pride is clearly far more irate over the fact that federal mandates have screwed up their business model than the increased cost of food for consumers. And the federal policy that favored made them rich in the past is simply ignored. Pure hypocrisy. And that's what really ticks me off.
Structural change in any economic arena is hard, and creates winners and losers. If necessary, those who are worse off because of structural change should receive assistance. Obviously, there's a lot of room in that statement for debate. I would argue that when it comes to row crop agriculture and livestock production, the government has a greater responsibility, because it is the driving force behind much of agricultural economics. That is something that has not changed for decades, and it doesn't look like it will change anytime soon.