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Social, Economic, and Cultural Impacts of Large-scale, Confinement Animal Feeding Operations John Ikerd Agricultural Economist University of Missouri, Columbia http://www.ssu.missouri.edu/Faculty/JIkerd/papers/WI-LAND.html Posted on Cacapon Institute website with author's permission I was recently asked by a rural advocacy group in Missouri to list some logical reasons why rural community leaders should be concerned about the impacts of livestock factories on their communities? I considered this to be a reasonable request and thus developed a list of reasons why I think rural residents should question whether or not they want large-scale, corporate hog farms to locate in their communities. Those reasons seem to make a logical starting point for a paper concerning the social, economic, cultural impacts of large large-scale, confinement animal feeding operations (CAFOs) on rural communities. As I indicate in my response to the request, there is no scientific consensus on this issue. Thus, there is no set of scientific "facts" to either prove or disprove the validity of these concerns. Research exists to support many of the concerns on my list, even though they cannot be proven. However, most of the concerns on the list are based primarily on logical reasoning and common sense. Some may dismiss these "logical" concerns as illogical, uninformed, or inconsequential. But, such assessments simply represent differences in "beliefs," not proven facts or some unique knowledge of reality. The people of rural communities have a right and responsibility to weigh the evidence and logic on both sides of this issue and to make their own decisions. Top ten reasons for rural communities to be concerned about large-scale, CAFOs A "top ten list" wasn’t chosen just to be cute or catchy. Ten is enough to get the point across, but not so many as to overdo discussion of the issue. Also, I wanted to start at the bottom of my list and work my way to the top. Concern #10. Hogs stink Odor is at the top of the list for many opponents of large-scale hog farms. The most vocal opponents tend to be those affected most directly – those who wake up most days to the smell of hog manure. To a hog producer, hog manure may "smell like money," but to the neighbors, it just "smells like hog manure." There are legitimate human health concerns associated with air quality surrounding large hog operations. Thus, the odor problem goes beyond the very real nuisance of living with stench in the air. Odors associated with giant hog farms affect the lives of people for "miles around," not just those on adjoining farms. Few would be willing to stay in, or move into, such a community if they have an opportunity to locate elsewhere. Odor ranks only 10 on my list because something could possibly be done to mitigate its impacts, such as using odor-reducing technologies, compensating those most affected and locating facilities so as to minimize impacts of the greater community. Concern #9. The work is not healthy for people A large confinement hog facility is not a pleasant place to work. Known health risks are associated with continuously breathing air that arises from manure pits in confinement hog facilities. Health problems cost money in lost wages and health care costs. But more important, an unhealthy workplace can destroy peoples’ lives. History has proven that people will choose to work in dangerous work environments when they are desperate for jobs. Health risks can be life threatening, so I rank worker safety above odor problems. But as in the case of odor, health problems can be mitigated by protecting workers from the noxious fumes, by limiting exposure, and by keeping people with other health problems out of confinement facilities. Concern #8. Piling up too much "stuff" in one-place causes problems. If you spread out the hogs and let hog manure lay where it falls in a pasture, it doesn’t bother anyone very much. But if you start collecting it, flushing it, spreading and spraying it around – all normal practices in confinement hog operations – it becomes air pollution. Water pollution also is a symptom of the same basic problem -- too much manure in one place. The difference between the hog lagoon spills, such as those in Missouri and North Carolina, and the normal runoff from a hog pasture is a simple matter of concentration. When you put a lot of hogs in the same place, you have to collect and store the waste. If it gets into the ground water or gets flushed into streams, it kills fish, clogs streams and lakes with algae, feeds water born disease organism, and wreaks havoc in the environment. In addition, manure on diversified hog farms normally is spread back onto cropland where the feed grain was grown. Most of the nutrients used to grow the crops are returned to the soil. But, when feed grains from specialized crop farms are shipped to distant hog-factories, the nation’s future productive capacity is being stacked up and flushed out into places where crops can’t grow. We can treat the symptoms – air pollution and water pollution – but the basic problem of piling up too much stuff is inherent within the system of large-scale, concentrated production. Concern #7. Consumers have little if anything to gain. Large-scale, corporate hog production is frequently justified to the general public as a more efficient, lower cost, means of producing higher quality pork. The facts of the situation simply do not support such a claim. The average consumer spends just over 10 percent, a dime out of each dollar, of their disposable income for food. About 10 percent, a penny out of the dime, is spent for pork. The costs of live hogs make up only about 35 percent of that penny. The rest goes for processing, packaging, advertising, transportation, and other marketing costs. Farm record data have shown that costs of large-scale hog operations are only slightly lower than costs of "average" commercial hog producers. Even if production costs were five percent less, about $2/cwt of live hog; the "maximum" savings to consumers would be less than two cents per dollar spent for pork at retail. At best, total food costs would be two-tenths of one percent less and consumers on average would spend only "two-one-hundredths of one percent" less of their income for food. Any savings would be lost in rounding error in consumer food cost statistics. With a handful of large hog producers and packers gaining control of the industry, it seems far more likely that in the long run pork prices would go up rather than down as a consequence of further industrialization. The argument that factory pork would be higher in quality doesn’t hold either. Pork would be more uniform because it would all come from the same basic genetic stock, as is currently the case with chickens. However, consumers have different tastes and preferences – different perceptions of quality. Making all pork "the same" would not necessarily please more consumers. Greater profit for producers and processors, not lower costs or higher quality, is the driving force behind the current trend toward industrial hog production. The only ones who really need to shave another penny or two off production costs are those who are trying to export more pork into highly competitive world markets. That doesn’t include many hog farmers or pork consumers. So, why should the general public support industrial hog production? Concern #6. Continuing regulatory problems are inevitable. Without regulations, big hog operations will impose costs on their neighbors – air pollution, water pollution, and others -- that are not part of the historic costs of producing hogs. It will cost money for hog factories to deal with "externalities" such as air and water pollution. No "bottom-line" driven hog operation will incur those costs unless they are forced to do so by government regulations – federal, state, or local. Family farmers are people with human feelings and values, and most feel some sense of responsibility to their communities and the environment. Family farmers at least have personal incentives to be stewards of the environment and good neighbors, regardless of how they choose to behave. Public corporations have no such incentives. They are not people. Corporations have no heart or soul. Stockholders often are so detached from their investments they don’t know or care what stocks they own – just as long as they make money. Local managers and workers may be good people who really care about the community, but when it comes to keeping their job, they must put profits and growth ahead of community. Professed corporate support of local communities, by necessity, can be nothing more than another strategy for profit and growth. Thus, government regulation and continual conflict are an inherent fact of corporate life. Concern #5. Hog factories destroy public confidence in agriculture Over the decades, family farmers have built up a vast treasure of public confidence and good will. Many people in the cities either grew up on farms or have parents or other close relatives whom either now are or once were family farmers. The "farm family" conjured up images of people who are hard working, moral, honest, solid, dependable, trustworthy, caring, and responsible. These images have been a valuable source of wealth for farmers – although not widely recognized as such. Farmers have been awarded special privileges, exemptions, and variances under a whole host of public policies -- from taxation to environmental regulations -- because they were trusted to behave in the public interest. Support of "family farms" has been an important part of the rhetoric of every farm bill that has passed congress. Farmers have also enjoyed a special status "as people," apart from any monetary benefits. They have been respected and trusted. However, bad publicity surrounding large-scale, corporate hog production is using up the farmer’s stock of public confidence and good will at an alarming rate. Negative stories have appeared on every major television network over the past few years. When Ms. Magazine runs a feature article on the ills of corporate hog farming, as they did in 1997, we can conclude that the story has just about made the full circuit of public opinion shapers. Family farms will be paying for this loss of public trust for decades, if not forever. Concern #4. Future of the community is turned over to outside interests. Rural people need to take charge of their own destinies if they expect to sustain a desirable quality of community life for themselves, their children, and future generations of rural Americans. Quality of life is about much more than just creating more jobs and making more money. Quality of life is also about positive moral and social values and being responsible caretakers of the community as a place. Sure, people need jobs and need to make a decent living. But, jobs and high wages didn’t save the cities from decline and decay and jobs won’t save rural communities either. When an apparent solution to a problem comes from someone else, from outside, you can just about bet that the benefits will be going to someone else from outside as well. Some rich and powerful outsiders have their own problems, and they have their eyes on rural communities as places to solve them. Sparse population, trusting people, and lack of jobs in rural areas are seen as ideal opportunities. They are looking for someplace to "dump stuff." An Industrial society creates a lot of "trash," whether in the form of garbage, toxic chemicals, or hog manure. Most "outsiders" promoting rural development schemes have something they need to "dump." Jobs just aren’t enough compensation for turning a community into a "dump." Rural people need to take control of their own destiny and build the kinds of communities in which their children and their children’s children will choose to live and grow. The solutions to the problems of rural Americans are in the hands, hearts, and minds of rural people themselves, not in outside investment and corporate control. Concern #3. The decision making process can rip communities apart. The process of decision making may be more important than the decision itself. Anyone who has been a part of a family has experienced this first hand. The memory of an act that triggered a family feud has long since faded, but the feud goes on. Feuds result from a loss of confidence and trust, regardless of the context within which the loss takes place. The large-scale, corporate hog farm issue is one of the most contentious issues to confront rural America in recent history. The social fabric of rural communities has been ripped apart by controversy surrounding the introduction of large-scale, corporate hog operations. There seems to be no middle ground. Some people seem determined to bring in the big hog operations, by almost any means, and others seem just as committed to keep them out, by almost any means. Almost everyone eventually seems to feel obligated to take sides. The larger question in such communities is not whether the hog factories come in or stay out, but can the community ever heal the wound left by the fight? A healthy, unified community can deal with almost any problem, including a large-scale corporate hog farm on the outskirts of town. A sick, bitterly divided community is incapable of much more than survival, regardless of its other advantages and opportunities. The future of rural America depends on communities of people being able to work together for their common good. The divisiveness of the decision making process, presumably, could be avoided. But, the consequences of failing to do so are so destructive that it ranks near the top of my list. Concern #2. Hog factories degrade the productive capacities of rural people. Factories "use up" people. Assembly line work is "non-thinking" work. When you work on an assembly line, you simply do what you are told as fast as you can for as long as you can. I know. I have been there. Large-scale hog operations may not be assembly lines, but the principle is the same. Big hog operators do not want people who know anything about raising hogs. They want people who can be trained to do what they are told to do without thinking. An experienced hog farmer might start thinking, asking questions, and mess up their process. Hog factories, like other factories, are looking for people who are dependable, who know how to carry out orders, and will work hard for a little money. On balance, large-scale, industrial hog operations destroy more jobs than they create. A driving force behind industrialization is to substitute capital and technology for labor and management – to make it possible for fewer people to produce more. Large-scale hog operations concentrate the jobs created in one place and call it economic development. The jobs lost elsewhere are ignored or denied. The numbers of independent hog farmers displaced elsewhere will be greater than the number of jobs created in new large scale hog operations. Hog factories replace more independent hog farmers with fewer assembly line workers. Other kinds of factories have come to rural America in the past. When these factories have found people in other regions, or in other countries, who would work even harder for less, they moved on. Corporately owned factories have no roots. They leave behind a workforce that doesn’t know how to do anything other than what they are told. Intelligent, thinking, capable, independent people are transformed into detached, non-thinking people who may be psychologically incapable of earning a living without depending on someone else to tell them what to do. Our cities currently are plagued with such people -- people whose capacities have been degraded by factories long since gone. It just doesn’t seem to make sense to do the same thing to rural people. When we replace independent, family hog farmers with hog factories we are degrading the most valuable resource rural areas have to support future development – rural people. Concern #1. Tomorrow’s problems are disguised as today’s solution. My number one concern regarding large-scale, corporate hog operations is that rural communities will see them as "the solution" to today’s problems without seeing them as a potential "source" of problems for tomorrow. Maybe there are some communities so desperate for jobs that it makes sense to take the risks. Maybe they feel they have to do something today to give them a chance to do something better tomorrow. But, hog factories are a short-run solution, at best, that may create more long run problems than they solve today. Low-wage, assembly-line-like jobs should be viewed as a stop gap strategy suitable only for communities with no other options. Sooner or later non-thinking jobs will be done somewhere else on the globe, where people will work harder for less money and are accustomed to doing whatever they are told – by those who have no other options. In the longer run, all non-thinking jobs will be done using computers and robots – not by people anywhere. The real opportunities for people to lead successful lives in the future will be in "thinking" work. The human mind is uniquely capable of complex thought. Almost anyone is "smarter" than a computer. But, people need to develop their unique human abilities to think. We need to accept the responsibility for thinking and for creating thinking jobs for ourselves and for others. As long as rural people think their problems are solved, or will be solved by someone else, they see no incentive to begin doing the things they need to do to ensure the future of their community. The primary advantages for rural areas in the twenty-first century will be the unique qualities of life associated with open spaces, clean air, clean water, scenic landscapes, and communities of energetic, thinking, caring people. Communities that sacrifice these long run advantages for short run economic gains may have a difficult time surviving in the new century. Thus, my number one concern is that large-scale, corporate hog operations are tomorrow’s problem disguised as today’s solution. They may keep rural people from doing the things that need to be done today to ensure the future of their communities. Large-scale, corporate hog operations will not create communities where our children and their children will choose to live and grow. Communities with a future must take positive actions today to ensure a desirable quality of life for themselves, their children, and rural children of future generations. Why Do Rural Communities Accept Confinement Animal Feeding Operations? Admittedly, there are reasonable arguments that can be used to support bringing large-scale confinement animal feeding operations (CAFOs) into a rural community. Community leaders who support such operations typically argue that people in their community:
There are logical responses to each of these arguments, but each also contains elements of truth. One thing nearly all pro-CAFO arguments have in common is their foundation in short-run, self-interest economics. They are based on a deeply held faith that the market place is the best means of allocating resources – whether it is allocation of people among alternative occupations, land among alternative uses, money among investments, or people among communities. Those things possible and profitable shall be done. People have a right to protect themselves and their property from damage caused by others, but beyond that, the economics of the marketplace shall prevail. A community is nothing more than a collection of individuals that happen to be located in geographic proximity to each other. These are typical assumptions of self-interest economics. After all, corporate investors are putting their money into CAFOs because they expect to make profits. Investments create jobs and enhance the local tax base. If CAFOs are more cost efficient than smaller farming operations, even if marginally so, traditional family farmers will inevitably be forced out of business -- so the argument goes. Why not give local farmers a chance to go to work for a profitable agricultural corporation? We know these Corporations are going to invest somewhere, so it might as well be here. There are always costs associated with anything that generates benefits. The opponents just want someone else to bear those costs. They reason that if environmental problems arise, it will be easier to work them out with a few large operations than many small ones. The big operations have the money to invest in the modern waste handling facilities that ultimately will be required of everyone. The technology is available, it’s profitable, so it’s both futile and foolish to stand in the way of economic progress. The people who are opposed to these operations are accused of being out of touch with economic reality. Opponents of CAFOs are labeled as Luddites – as people who oppose progress or just want to keep things as they are. If self-interest economics prevail, there is every reason to believe that CAFOs eventually will totally dominate animal agriculture in America. And, corporations will locate CAFOs pretty much wherever they choose, regardless of the ecological and social consequences. They will avoid locating them in heavily populated areas to minimize nuisance law suites. But, money invested in CAFOs will seek its place of highest return. The only way to successfully challenge this outcome it to challenge its basic premise – the right of private profits to prevail over public good – and to uphold the rights of people to prevail over the pursuit of profits in protecting their communities and shaping their destinies. Sustainability: The Challenge to Land Use Economics Current land use decisions in the United States have their foundation in economic theory as it relates to the concept of private property. Persons who hold ownership rights to property may do with it pretty much as they see fit, including exchange ownership rights with others, as long as it does not interfere with the private property rights of others. Any restrictions on individual land use are limited to uses that might affect the use rights held by other individuals. With relatively minor exceptions, land use decisions are determined by the economics of the market place. Provisions are made through laws of eminent domain to acquire private property for public use, without the consent of owners, but not without just economic compensation to current landowners. Land uses of a criminal nature, deemed to be of clear public harm, may be restricted without compensation. Land use zoning may restrict land use as well. But in reality, economic considerations commonly dominate planning and zoning decisions. The question becomes, how can economic development be maximized with the minimum negative impact on community residents. Requests for changes in zoning are typically motivated by a desire to put land to a higher economic use. Opposition to changes typically is motivated by the desire to protect private property rights. It is a rare community that uses the tools of planning and zoning to ensure the long run ecological and social well being of the community as a whole. So, with minor exceptions, private property may be put to its highest economic use. The concept of highest economic use gives legitimacy to competing private property rights, but commonly ignores or denies any right of the community, or public as a whole, to participate in all land use decisions. Economic theory treats a community as a collection of individuals, not as an entity with rights separate from, or in addition to, those of individuals of which the community is composed. In addition, conventional economics gives no consideration to potential ownership rights of future generations. Rights of intergenerational transfer of ownership are based on the premise that to prohibit or limit such transfers would unjustly restrict current private property rights. Free market economics makes no provision for future generations, other than those reflected in the self-interests of current decision-makers. And economics drives land use decisions. The question of long run sustainability presents a serious challenge to conventional economic thought as the foundation for land use decisions. Over the past decade, many different people have defined sustainable development, of which sustainable agriculture is but one part, in many ways. However, the underlying theme of nearly all such definitions is one of intergenerational equity – a responsibility to meet the needs of the current generation while leaving equal or better opportunities of those of all generations to follow. In more common language, sustainability development applies the Golden Rule across generations – doing for future generations as we would have them do for us. The three cornerstones of sustainability are ecological soundness, economic viability, and social justice. The three are not separate goals or objectives, but instead are three separate dimensions of the same whole -- as with the three dimensions of a box; height, length, and width. Any object lacking any one of those three dimensions quite simply is not a box. Any system of development that is not ecologically sound and economically viable and socially just quite simply is not sustainable over time. All are necessary and none alone or any pair is sufficient to ensure sustainability. Thus, sustainability requires that we look beyond the economics of short-run, self-interest to the broader set of issues affecting quality of life or human well being over time. Sustainability requires that we broaden our economic thinking to consider the long run health and productivity of the natural ecosystem, not just the optimum means by which it may be exploited for our short-run gratification. Sustainability requires that we broaden our economic thinking to consider the well being of the community, or society, as a whole, not just sum the welfare of individuals who make up a community or society. The economics of self-interest is an important dimensions of sustainability, but it is but one among three. Things ecological, social, and economic must be considered as complementing dimensions of the same whole, not as competing objectives that can be pursued separately. Land use decisions: The long run fallacies of short run economics The inadequacies of short-run economics in guiding long run decisions can be made clear through an illustration using fairly basic economics. Those who have never taken Economics-101, need not struggle every detail of the charts and graphs. They only need to be aware that the conclusions drawn from them make economic sense. The reader may feel free to skip ahead if they get bogged down in details. However, those who skip ahead may wish to return to this section later as it provides the theoretical foundations for some fairly bold conclusions in later sections of this paper. The chart and graph in figures 1 and 2 were adapted from those in a standard economics textbook. They were designed to illustrate the stages of economic production. In this case the question is how much variable input – things such as pesticides, fertilizer, or labor – should be applied to a given amount of fixed resources – such as land. The illustration is based on 3 units of fixed resources, say 3 acres of land, and examines the potential use of from 1 to 8 units of variable resources, say from 100 lbs. to 800 lbs. of fertilizer on that land. As the amount of variable input applied to a given fixed resource increases, by definition, the amount of fixed resource per unit of variable input declines. While the ratio fixed/variable ratio has little intuitive meaning at this point, it becomes important in the discussion of long run decision making. Units of variable input are shown in the first row of the chart in figure 1, and units of fixed resource per unit of variable input are shown in the second row (SRF/SFV). The top line in the chart traces out a typical total production function for the short run situation (TP SRV). It shows that total production rises fairly consistently, from 10 to 60, as from 1 to 5 units of variable inputs are added. Production peaks at 6 units, levels off, and then declines as more variable input is added. The average production line (AP SRV) shows total production per unit of variable input (TP SRV/Units of Input). The marginal production line (MP SRV) shows the change in total production as each additional unit of variable input is applied to the given fixed resource. For example, going from 2 to 3 units of variable input changes total production from 24 to 39, a marginal product of 15. Plotting marginal product of 15 with 3 units of input rather than somewhere between 2 and 3 units causes some graphical problems that will be clarified later. Note that average production peaks at 3 units of variable input, levels out at 4, and declines thereafter. Marginal product peaks above variable product at 3 units, declines and drops below average product after 4 units, and drops below 0 as total production peaks and begins to decline. At this point, the analysis can become a bit confusing, in that we are not accustomed to thinking in terms of "applying" fixed factors, such as land, in the process of production. But when we apply an input to land, we also are applying land to that input. So, the fifth line in figure 1 (TP SRF) is used to show total production attributable to utilization of the short run fixed resource, for a given amount of variable input. For example, TP SRF might indicate total production associated with using additional acres of land with a given quantity, 100 pounds, of fertilizer. Note that total product attributable to the short run fixed resource is equal to average product for the short run variable product. (They share the same line, with overlaid symbols in figure 1.) For example, when 200 lbs. of fertilizer is applied to 3 units of land, the result is 24 units of total production. This represents an average product of 12 units of output per 100 lbs. of fertilizer. But alternatively stated, a total production of 12 units of output is obtained by using 1.5 acres of land with 100 lbs. of fertilizer. Note as the amount of variable input applied to the fixed resource increases from 1 to 8, the amount of fixed resource used per unit of variable input (SRF/SRV), drops from 3 (3/1) to .38 (3/8). The average product for the short run fixed resource is calculated the same as for the variable input -- total product divided by units of fixed resource (per unit of variable). However, marginal product for the fixed resource must be calculated starting from the right hand side of the chart and working toward the left – the direction in which additional units of fixed resources are added per unit of variable inputs. For example, the amount of land used per 100 lbs. of fertilizer increases as the amount of fertilizer applied to a given amount of land declines. Coming from right to left, note that the marginal product for the fixed resource declines and become equal to its average product, at its peak, at about where total production attributable to the variable input peaks and marginal product becomes negative. Also note that the marginal product for the fixed resource drops below 0 just beyond the point, going left, where average product peaks and equals marginal production. These relationships among total, average, and marginal production for variable inputs and fixed resources are not accidental. In fact they are fundamental to economic theory of production. Figure 2 shows general relationships among average and marginal products attributable to any input, such as fertilizer or pesticides, and fixed resource – land in this case. The basic nature of these relationships will hold for any production relationship that is characterized by: (stage I) total production increases at an increasing rate at low levels of input use, (stage II) total production continuing to increase, but at a decreasing rate with additional inputs, and (stage III) total production declining beyond some point as more inputs are added. Continuous functions used in figure 2 eliminate the plotting problem for marginal product. Note that average product peaks as marginal product drops below average product for inputs. This occurs at the same point where marginal product for land drops below zero, meaning total production from using more land (moving right to left) has begun to decline. Likewise, average product for land peaks as marginal product drops below average product, which occurs at the point where marginal product for inputs drops below 0, meaning that total production from using more inputs (left to right) has begun to decline. All economically relevant production functions are characterized by these three stages of production, although stages I and stage III are frequently not observed in actual practice. Stage II defines the range of rational economic production. At any point in stage I, greater total production could be achieve by using less of the other resources or input – by using less land in stage I for inputs, or by using less inputs in the case stage I for land. If the availability of inputs is limited, it would be economical to let a portion of the land set idle rather than to apply so few inputs per acre as to leave production in stage I. If land were limited, it would be economical to leave some of the inputs unused, even if it were free, rather than to leave land-use levels in stage I. Thus, it is not economically rational to produce in stage I. Note that stage I for inputs and stage III for land (declining total production) coincide. And stage I for land and stage III for inputs (declining total production) coincide. The end of stage I for inputs (left to right) coincides with the beginning of stage III for land (right to left), and vice versa. It is not economically irrational to accept less from using more when you can have more from using less. So it is not rational to produce in either stage I or stage III for either inputs of land. This leaves stage II as the only economically rational range of production. Stage II coincides for both inputs and land. Within stage II, both average product and marginal product are positive but declining, and average product is greater than marginal product for both inputs and land. By implication, total production is increasing, but at a decreasing rate. It is not possible to determine the economic optimum level of production without assigning prices to production and inputs. But, if there is a profit to be made, it will be made somewhere within stage II, the range of rational economic production. We can, however, draw some important conclusions regarding optimum land use under some fairly general conditions without specifying prices. As long as prices of inputs are not dependent on how much a given producer buys, which is typical of farming, we know that minimum input cost per unit of production will occur at the point of maximum average product – the beginning of stage II. The more production per unit of input used, the lower will be input cost per unit of production. We also know that if inputs were free, it would pay to increase their use to the point of maximum total production, the end of stage II. Any increase in value of production will more than offset a zero increase in cost. The economic optimum within this range depends on the relative prices of inputs and products. Input use will increase as long as the value of the marginal production is greater than or equal to the cost of the additional input. Implications for Sustainable Land Use An intuitive grasp for the meaning of the three stages of production, from the preceding section, is sufficient to understand some fairly critical conclusions regarding the economics of land use. From a short-run economic perspective, production should be increased beyond the point of minimum cost, to a point where value of additional production no longer exceeds added cost of inputs. If inputs became cheaper or new technology allows more production per unit of input, the optimum level of input use would move nearer the end of stage II at a higher level of production and profits. As a consequence less land would be required than before to produce any given level of optimum total production. This is the economic rationale for the politically motivated "high-yield" farming movement. The basic argument is that if we use more commercial inputs and new production technologies to increase production per acre of land, more land can be set aside for wildlife and other non-agricultural uses. Alternatively, if we rely on less input-intensive farming methods, total production will fall, making it necessary to farm more land to meet the food and fiber needs of people. This would require the use of more environmentally fragile lands, some of which is currently set aside for wildlife. It is not likely coincidental that high-yield farming maximizes input use and is supported by those who sell or promote inputs -- thus, the political motivation for its promotion. However, the economic argument is valid -- but only from the perspective of short-run, self-interest economics. The conclusions are totally different if we instead take a long run, sustainable economics perspective of the land use question. In the long run nearly all the agricultural inputs that are variable in the short run are fixed. For example, fossil fuels, commercial fertilizers and pesticides, and machinery are all derived from finite, non-renewable stocks of natural resources. Thus, their long-run supply is fixed, not variable, even though their short run use may be variable. In the long run, our only variable resource is solar energy. Living organisms, including people, represent renewable resources, but living organisms are dependent on finite natural resources as well as solar energy. Every productive resource on earth can realistically be depleted over some finite period of time. But, the continuing supply of energy from the sun is expected to continue for billions of years into the future. Geographic space is required to capture solar energy, at least for agricultural use. Land represents space. Thus, land – as space – serves as a proxy for the only long run, variable resource. Of course, land has characteristics other than space -- such as organic matter, texture, and water holding capacity – which may influence its productivity and value. But, the non-spatial aspects of land are finite, and thus, may be depleted over time. Land as space, while fixed in total at any point in time, represents a virtually infinite supply of solar energy that may be utilized in varying quantities over time, and thus, represents a variable long run resource. Ironically, those things that are variable in the short run are fixed over the long run, and the one thing most fixed in the short run, space, represents the only variable long run resource. As we should expected, that which appears to be optimum from a short run perspective appears to be far from optimum when one takes a long run perspective. Returning to stages of production, if solar energy is considered the only variable resource and it is free, the economic optimum will be at the end of stage II for land – the point where returns from using additional space for production peaks and begins to decline. Any increase in solar use up to this point will result in a marginal increase in production greater than 0 and it will add more to long-run value of production than to costs, regardless of price of the product. This point of optimum land use will coincide with the beginning of stage II for inputs – the point at which average product for inputs is maximum and average cost of production is minimum. This result can be expanded to conclude that optimal long-run use of all finite inputs requires they be used at their point of maximum average product and minimum average cost. Quite logically, maximum production per unit of input, per period of time, will result in maximum total production over time, for any finite input. Conventional economic theory claims that minimum average cost of production is ensured by competition. If any operation becomes clearly profitable for existing businesses, new businesses will become involved in the same type of operation. The market will not expand accordingly, thus limiting the average output of each operation further as the number of operations increases. This process is assumed to continue until profits are dropped to a level sufficiently low so as to discourage any new operation from entering the market. At that point, production of each operation will be reduced to the point where marginal product is equal to average product and average cost is minimum. However, this conventional economic assumption has several critical flaws. The most obvious is the lack of competition, in the classical economic sense, in many of today’s markets. The persistence of 10-20 percent annual returns of investment in the food industry, for example, is clear evidence that profits are not always passed on to consumers through competition. However, even in competitive economic sectors such as farming, competition does not ensure minimum costs of production. Successive innovations force farmers to continually move from adoption of one new technology after another, limiting the competition among farmers using the same technologies and preventing markets from reaching their theoretical competitive equilibrium. Even more critical flaws of conventional economics relate to assumptions concerning the nature of fixed and variable resources. In the short run economic situation, fixed resources, such as land, are assumed to have no cost. By assumption, they have no alternative use within the short-run timeframe. Without this assumption, the cost of fixed resources would result in a competitive equilibrium at some level higher than the point of maximum average product. The value of the marginal product attributable to the fixed resource would drop below its price or marginal cost (moving right to left in figure 2) at some point prior to the end of its stage II, preventing markets from reaching their competitive equilibrium. In the short run, land might be considered fixed, and thus, treated as free. But in the long run, land in never a free economic resource. Land will always have a positive price in a market economy, because less land will always be available than there are people who want to use it. In the conventional economic long run, all inputs and resources are assumed to be variable – a critical flaw in economic thinking as indicated earlier. However, this assumption is necessary to support economists’ claims that competition will force all enterprises to operate at their point of minimum long run average cost. But if all resources were variable, land obviously would have a positive cost or price, as it can not be assumed to be free simply because it is fixed. As a result, the conventional long run competitive equilibrium would result in over-utilization of non-renewable inputs and under-utilization of land. So, market competition does not ensure efficient land use in short run and virtually ensures the misuse of land over the long run. So where does this leave the argument for high-input, high-yield agriculture? The only logical conclusion is that high input use, while resulting in high yields in the short run, simultaneously depletes finite stocks of inputs at higher than optimal long run rates. The result is lower that optimum total production over the long run, and ultimately, greater than optimal reliance on solar energy, or land use, as input stocks are depleted. In the long run, more land will be required for agriculture, leaving less land for wildlife and other uses, because productive inputs will have been prematurely exhausted. Thus, high-yield agriculture makes economic sense if one is pursuing short-run self-interest, but is economic nonsense if the goal instead is long run sustainability. Implications for CAFOs in Rural Communities So what does all this mean for confinement animal feeding operations in rural communities? First, applying increasing amounts of fertilizer per acre of cultivated farm land is conceptually no different from putting increasing numbers of animals on a given numbers of acres, or an increasing number of CAFOs in a given community or county. In economic terms, both imply increasing quantities of short-run variable inputs – feed, fuel, medication, labor, etc. – applied to a given quantity of short-run fixed resources – in this case, land. And, short run economics will dictate that animal numbers be increased as long as each additional unit of production – increase in size or number of CAFOs --adds more to total value of production than it adds to total costs. For large-scale operations, costs of production may rise as size increases because feed and other inputs may have to be shipped in and products shipped out from and to increasingly distant locations. But in reality, something other than economic scale of production typically limits the size and number of CAFOs in a given area. Costs associated with such things as foul odors, water pollution, worker health, displaced farmers, degradation of human potential, and destruction of communities are all considered to be "externalities," if considered at all, in short-run, self-interest economics. The limit of size typically is not one of internal economics, but rather one of external pressures. External costs, by definition, are costs not imposed by the market place. Thus, those who are damaged must impose such costs – through law suites, government regulations, and social pressures from the surrounding community. External costs typically limit the growth of CAFOs within any given area. But, the economics of self-interest provide the constant and relentless motivating force for those who operate CAFOs to do the things that result in law suites, to violate government regulations, and bribe and coerce the community into accepting their presence. CAFOs almost always see opportunities to increase profits if external constraints can be overcome, avoided, or removed. The existence of externalities cause those who operate CAFOs to choose those areas least willing and able to impose external costs, which allows them to operate as near as possible at the short-run, self-interest economic optimum size. Thus giant animal feeding factories have been located in remote, economically depressed rural areas. It all makes logical short-run, self-interest economic sense. But, it is all long run, sustainable economic nonsense. What can rural communities do? Rural people must become actively involved in shaping the destiny of their communities. They cannot rely on some "invisible hand" of economics to create a positive future. The "invisible hand" has been severely crippled, if not cut off, as an economy made up of small proprietorships has been replaced by an economy dominated by large corporations. Rural people must assert their right put their long run, community interest ahead of the short-run, self-interest of those who invest in and operate CAFOs. Such operations cannot even be justified on economic grounds, when one takes a long-run perspective. Nor can the impacts of CAFOs on environmental quality and social justice be tolerated if communities are concerned about their long-run sustainability. Markets cannot be allowed to allocate the use of land as space. This is the most important conclusion of the foregoing illustration of short run versus long run economics. Markets place positive prices on economic inputs, resources, and products. Those things that are most scarce – that are less available relative to the aggregate desire and ability to posses them – will command the highest market prices. Higher prices both ration the scarce supplies among those who are willing and able to pay and provide an incentive for increased production to reduce the scarcity. Higher prices limit the use of resources and inputs in scarce supply and simultaneously encourage increased production to reduce the scarcity. But land, as space, cannot be allowed to have a positive price without misallocating its use, and higher land prices quite simply cannot create more space. Land price guides its use to its highest valued short-run economic alternative – whether for residential development, hog factories, farming, or wilderness. Those using outdated economic theory have falsely assured use we will realize the highest total value from a given stock of land by allowing free markets to allocate land use. Some portion of the total value of land will reflect its inherent productive capacity, whether in agriculture, recreation, or other land-based production processes. That portion of land value can be allocated by market prices. However, much of the value of land represents its value as space -- a geographic place to carry out some activity, or simply as space to be held or controlled. Land as space, as a collector of solar energy, must treated as a "free resource" to achieve its long run, optimum use. Any market value placed on land as space will cause it to be used too intensively, using too many inputs on too little land, and will deplete resources at a faster than optimum rate. Thus, long run sustainability will require a rethinking of fundamental concepts of private property, specifically of what it means to own land. The concept of private property has never meant the right to do whatever one chooses with the property they own. Conditional ownership was always implied, if not always stated. A new condition needed to ensure sustainability is one that denies any right to degrade the productivity of land, just because one owns the right to use it. Thus, the owner of land cannot possess, and thus cannot convey to another, the right to use land is ways that are inconsistent with long run societal well being. If society, rather than the individual, makes the ultimate decisions regarding how land is used, land as space will have no market value because there will be no right of alternative use for its owner to convey. Its price will reflect only that portion of its value that is associated with its potential productivity in its current use. The large CAFOs locate in economically depressed rural areas for purely economic reasons. They locate where then can purchase or control enough space to pursue their short run economic objectives while coping with the inevitable environmental and social constraints. Such decisions make short-run economic sense for the CAFO, but are long run economic nonsense for the communities in which they locate. Rural communities must demand their right to make logical, long run economic decision for their communities. They must refuse to allow the long run economic well being of their communities to be degraded in the pursuit of short-run, economic self-interests. They must demand the right to allocate land use within their community by means other than market prices – and to exceed any state or national environmental standards. Traditional remedies such as law suites and environmental regulations will not provide lasting solutions. Traditional remedies are based on the principle of conflicting self-interest, rather than the collective interest of the community as a whole. Law suites, at best, only compensate individuals who are damaged by the actions of another – even in the case of class actions. Environmental regulations invariably reflect some compromise among conflicting individual interests, which settles to some minimum common denominator in a society driven by short-run, self-interest. Communities must find the courage and the means to act as a whole, for the long run well being of the community as a whole, both now and forever. This is not a matter of compromise among conflicts; it is a matter of harmony within. Communities may use zoning laws to pursue their objectives where they are allowed to do so under current state law. In cases where state or national laws prevent a community from protecting itself from economic exploitation, the laws must be changed. But zoning, as currently practiced, is only a "band aid" treatment for a potentially fatal disease. Those with the greatest economic interests ultimately prevail. New means must be found for allocating land use that will remove any economic incentive for rezoning land to allow more intensive uses. Land must be treated as a commonly managed natural resource, rather than an economic commodity that can be bought and sold to the highest bidder. The inherent common property nature of land as space certainly is not a new concept. In 1796 revolutionary writer Thomas Paine, in his paper, Agrarian Justice, pointed out that all land was initially held in common. Thus, the previous removal of land from the commons deprived those of later generations of their common birthright – the right of access to land. Initially, land could only be removed from the commons if as much land and as good of land was left for any others who chose to claim it. Consequently, land taken from the commons had no market value -- by definition, it could not be scarce. A similar argument can be made to support the rights of future generations to as much land as good of land as we have today. And to protect this right, land as space cannot be allowed to have a market value. Economist, Henry George in his 1879 book, "Progress and Poverty" proposed that all use value of land be taxed away to prevent the pricing of land as a market commodity. A more logical approach today might be devise a policy for capturing any increases in land values attributable to rezoning for higher market valued uses in order to compensate those whose land is rezoned to lower-valued uses. This would remove any economic incentive for current of future owners to rezone land to either higher or lower valued uses, and would make it much easier for the community as a whole to make logical long run land use decisions. A similar capturing of capital gains in land values attributable to growing population demands would remove speculative incentives for land ownership and would generate public funds to sustain and enhance the productivity capacity of land. Sustainable development ultimately will require that land use decisions be made by means that find harmony among long-run economic, social, and ethical or moral concerns. It makes no more sense to buy and sell the right to misuse land than to buy and sell the right to misuse another person. Land, particularly land as space, is a fundamental resource upon which all life depends. It cannot be allowed to belong to anyone individually or to us in total as a collection of individuals -- just as people cannot belong to other people. Land belongs to the earth just as people belong to the earth, to the collective us as a whole – inseparable, indivisible, across all generations. We may logically buy and sell those things that enhance the productivity of land -- for those uses with impacts that fall within the realm of legitimate self-interest. But we cannot allow markets to allocate the use of land as space. We may logically decide some land use issues by a vote of the people -- for those uses with impacts that fall within the realm of the community of interest. But, many uses of land as space have impacts on future generations, and future generations cannot vote. Such land use decisions must reflect our fundamental values concerning the responsibilities of being human. Such issues cannot be resolved by economics or politics, they rest on a fundamental code of ethics or morality. They arise out of a consensus of what is fundamentally right and wrong. Many issues concerning the natural environment are fundamentally moral or ethical issues. We should not be buying and selling pollution rights, because no individual has the moral right to pollute in the first place, and thus, has no right to sell it. Businesses may argue that society has given them that right, through the political process. But, no society has the right to pollute, so it cannot convey that right to a business or anyone else. Pollution of the environment is fundamentally, morally wrong, the same as it is morally wrong to kill, to steal, or enslave. The environment can assimilate some level of waste, as society can tolerate certain amounts or kinds of killing, stealing, or enslaving. But, those things are still morally and ethically wrong, regardless of the ability of society to survive them. We don’t condone or encourage them by allowing people to openly buy or sell the right to enslave another person, nor vote on whether one person should be allowed to kill another for personal reasons. We cannot prevent pollution, but is always morally wrong to degrade the natural environment. It is also morally wrong for one person to exploit another person for personal, economic gain. The short-run economics of self-interest makes no provision for avoiding such exploitation. Those who have fewer opportunities are forced to do the jobs that others can avoid at wages lower than others would be willing to accept. Pursuit of short-run profit dictates that people be hired to work as hard as they can be made to work at wages as low as they will accept. There is not short run economic incentive for businesses to invest in improving the productive capacity of people if there are already people available who possess the skills and abilities needed. But, communities have a very large stake in maintaining the productive capacities of their members. In essence, a community is the collective whole of its people. If we allow the people of our community to be degraded, our community is degraded. If we allow our communities to be degraded, human society will be degraded. No one has the wisdom to plot a true course toward a sustainable human society. At this point in time, we simply don’t know how we can meet the needs of the current generation while leaving equal or better opportunities for those of future generations. But, we are beginning to learn some things that we cannot do. We cannot allow the economics of short-run, self-interest to determine the use of our land and our people. We know that the relentless pursuit of profits and growth will degrade both our natural and human resources, and will not leave as much and as good as we have today for those of future generations. We also know that we cannot allow large, corporate organizations, such as CAFOs, do whatever they want to do wherever they have the money and/or votes to do it. Rural America may well be the place where America makes a historic stand for sustainability – just as the cities of the South gave birth to the Civil Rights movement. The first rural community to declare and defend the fundamental moral and ethical right of people to determine how land is used may be remembered much as Rosa Parks is remembered for refusing to move to the back of the bus in Montgomery. The most significant long-run social, economic, and cultural impacts of CAFOs on rural communities could well be the beginning of a new revolution -- a revolution that ultimately will discard the outdated paradigm of short-run, self-interest economics for a new paradigm of sustainable economic, ecological, and social development. |