Another Mental Health Crisis


This post is by Jeff Carter from Points and Figures


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Farmers have a tough life.  They are beholden to the weather.  If you haven’t seen what’s been happening in Nebraska you ought to take a look at it.  My friend Governor Pete Ricketts has done a very good job dealing with it but until the water recedes there is only so much you can do.

Bloomberg thinks there is a mental health crisis in farming.

Certainly, if I woke up to that scene in Nebraska it would be tough on my mental health.  They will take years to recover.  If you want to donate you can donate to the Nebraska Farm Bureau here.

Having risks that you cannot control can really give you heartburn.  It’s easy to see how farmers aren’t a lot different than early stage entrepreneurs running to put out fire after fire.  This is true in animal husbandry operations, row crop operations, fruit crops or anything else you are relying on nature to create food.

Farming is one of the most heavily regulated industries in our nation.  A lot of people are comfortable with this, since it is our food supply.  Farming is also one of the industries where both sides of the political aisle feel comfortable showering government money and programs.  As I have delved into it both when I was a trader and investor, I am becoming more and more uncomfortable with the level of government intervention into farming.  If you look through farming via the lens of classical economics, your stomach should be doing flip flops.

It wasn’t always this way.  Farming was always an independent entrepreneurial venture.  That was until about 1933 when FDR took office.  He wanted to lock up the farm vote, so his administration created a lot of agencies that administered farm policy.  The Depression and then WW2 allowed him to create a climate of fear so that they could push through a lot of bad public policy.  FDR created subsidies and price supports for farming that are still with us today.

All the government intervention and money has created a gigantic farm lobby.  Lobbyists have bastardized various words.  Normal humans think the word “organic” means one thing but the legal eagles in Washington have turned it into something that means a variety of things.

As anyone that has taken Econ 101 and learned anything, subsidies and supports screw up the free market.  Those same programs drive bad policy.  They also can kill innovation and create artificial monopolies.  Ethanol policy is an example of a bad policy.  In America, we subsidize the planting of peanuts and the government buys excess peanuts to keep them off the market.  That’s not the only crop they do this with.  It is an entire regulatory state ripe for change in a world that’s processes are rapidly changing due to technological innovation.  But, it’s another third rail in American politics.

American farmers are incredibly efficient and with all the tech I have seen they are going to become even more efficient.  Contrary to popular opinion, they are pretty quick to embrace new technology.  They are the historical source of America’s entrepreneurial spirit.

They are also quick to use debt to expand operations.  Many government programs make it easy for them to do this.  Like any entrepreneur that takes on too much debt they can’t service, it’s causing them a lot of hurt as prices decrease. Debt is always a double edged sword.

The trade war with China isn’t helping.  But, that is not the main cause.  There was a crisis in 1985, and prior to that I remember farmers rolling tractors down Jackson in front of the Chicago Board of Trade.  This crisis lies in a lot of other trends.  Because farmers are so technologically efficient, they can farm larger and larger tracts of land.  We need less people to produce.  Combine that with the movement of rural America to the suburban/city metroplex and there is a smaller personal support group for farmers in their own town.

I wonder what would happen if we got the government out of the food processing business.

My gut tells me that there would be a lot of dislocation in the short run.  But, in the long run I think farmers would innovate a lot in what sort of crops/animals they plant/raise, how they plant/raise them, and it would be better for our nation’s food supply in the long run.

I think it would also be better for a farmer’s mental health in the long run as well.

Addition:

My daughter, who is in law school, pointed me to this SCOTUS case that set the wheels in motion for government to over regulate farming.

When you read the case, you can see how people who are less interested in private property rights and individual liberty might interpret things differently than a person who is very interested in it.