Freedom to Farm
March 18, 2014
Despite trudging through the snow to keep livestock fed and watered, late winter was always an optimistic time at our farm. Harvest was in, and we anticipated the new growing season with hope. Now that we are well into 2014, I’m finally sensing some of that same feeling in our ag community. Months of grain-price doom and gloom is slowly giving way to a sense of reason. Mike Pearson referred to it as our new normal as he spoke at the annual meeting for the South Dakota Corn Growers.
And, albeit imperfect, we now have a Farm Bill.
This post is not about my predictions for the price of grain or the consequences (intended or otherwise) of specifics within the new Farm Bill, but rather how the unpredictability of regulation affects how we create and innovate in agriculture.
Farmers are in the business of reinventing and reinvesting in their operations every year. Born to parents and grandparents that were self-sufficient, they are among the most innovative among all business people – pouring their energy into finding the best ways to produce on their farms.
This might seem counterintuitive, but one of the primary requirements for entrepreneurial investment and innovation is that they flow through a cool pipeline of economic predictability. Economic author George Gilder calls that pipeline “the environment for innovation.” Critical to that pipeline are restraint among regulations and laws allowing the free market to work. From that pipeline of stability springs the surprise of creative entrepreneurship – and our economy booms.
It is no surprise to anyone that our pipeline of regulations has been broken for some time. Our newest snarl of red tape comes in the form of the Volker Rule, which has been finalized at 71 pages – with 900 pages of explanations. This rule penalizes not just the massive banks that participated in speculative trading, but also the smaller, regional banks that support the farming community.
And there’s more. In 2012 the Code of Federal Regulations weighed in at 154,000 pages. If you spent five minutes on each page, it would take 12,833 hours to read the entire Code. That’s over six years of on-the-job reading. And Geoff Colvin of Fortune Magazine tells us that the current tax code is eight times longer than War and Peace.
While the reach and merit of all of these regulations are debatable, the fact that they add uncertainty to investments in agriculture is not.
What’s remarkable about farmers is how they take uncertainty in stride. Perhaps it’s the unending cycle of planting seeds and pulling calves and breathing hope. Knowing nothing but unpredictability births a faith incomprehensible to those outside of ag. Farmers are antifragile players in our economy. They thrive and improve under volatility as they have for generations.
Because of the current state of regulation, we won’t ever know the opportunities missed in agriculture. We can look to smaller countries, with fewer resources, that are not as burdened by regulation. For example, in 1985 Peres, Israel’s minister of finance put in place policies to free up entrepreneurship, and the agro-tech sector exploded with new technologies. Included in this is micro-irrigation, which helped their agricultural output grow sixteen-fold in an arid climate while overall water usage dropped 10 percent. These innovations are now exported around the world.
With the Farm Bill passed, the hope is that ag-entrepreneurial investments will gain momentum, and innovation will bloom. Farmers will work through the “new normal” of today’s grain prices, and we can all press our members of congress to provide only the laws and regulations that don’t cripple the creativity, invention and investment of farmers and agribusinesses. Agriculture can return to dealing with the uncertainties like weather and markets that it already knows how to manage.
We will all reap the benefits of freeing up our farmers and agribusinesses to focus on creating the innovations that will feed the world.