Social,
Economic, and Cultural Impacts of
Large-scale,
Confinement Animal Feeding Operations
John Ikerd
Agricultural Economist
I was recently asked by a rural advocacy
group in
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
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
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
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
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
Sustainability: The Challenge to Land Use
Economics
Current land use decisions in the
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 sage 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 be 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 or 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 works 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
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.