The Real Organic Podcast, Episode #028
John Ikerd, Part One:
Industrial Food Can Never Be Sustainable
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John Ikerd: I guess my main mission in my old age is to say, it's not all about economics. So we've got to think of other ways of achieving what needs to be done that breaks this sort of paradigm. Well, if it doesn't pencil out, if it's not more profitable, if it doesn't work economically, then we can't do it. So we don't even look for alternatives. We don't even try. And you know, I tell people that that is the fundamental cause of the problem. I could go down the list of every major problem we're confronting. And it's because we give a priority to economic efficiency, productivity, profitability, and we end up compromising our relationships with each other, our social values. We end up destroying the natural resources, degrading the soil, and we do all of that in the name of economic progress. That's not progress.
Linley Dixon: Welcome to the real organic podcast. I'm Linley Dixon co-director of the Real Organic Project, a grassroots farmer led movement with an add-on organic food label that distinguishes soil-grown crops. And pasture-raised livestock. You just heard from John Ikerd, agricultural economist and professor emeritus at the University of Missouri. John speaks to a very timely situation in this interview. Just this past week, the dairy brand Horizon, which is owned by the $25 billion multinational corporation, Danone canceled 90 contracts with organic dairy farmers in the Northeast. So Horizon is no longer working with dairy farmers in the states of Maine, Vermont, New Hampshire and Eastern New York. It's simply more cost efficient to get milk from the giant 10 to 20,000 cow dairies in the arid west, where precious groundwater is being drained from the aquifers for hay and grain. And the facilities have been caught not putting their cows out to pasture, as is required by organic law.
These giant dairy facilities are also using a loophole in the organic law to source conventional calves rather than organic calves. The cancellation of contracts by Horizon in New England is simply devastating to those dairy farmers, many of which have been in the dairy business for generations, never mind the economic and social impact on their communities. Listen for John to explain how big industry players like Danone use methods like overproduction to position themselves to put small farmers out of business and control the market. Ironically, Danone is a B corporation, supposedly committed to environmental and social sustainability standards. This is the first part of a two-part interview because John and I had a long conversation. I really wanted to press him so we could truly understand how small farms can be more successful in spite of so much consolidation in agriculture. This has been the trend in conventional agriculture and is now impacting organic. Now let's jump into the first half of my conversation with John Ikerd.
I'm speaking today with John Ikerd. John is one of the most eloquent proponents of farming and sustainable agriculture. He's Professor Emeritus of Agricultural Economics at the University of Missouri and author of several books and essays, including A Return to Common Sense, and Small Farms are Real Farms, which is right up here in my corner. I love that book, John. And you speak all over the country too – until COVID, now you're speaking on Zoom all over the place, I imagine. John, you're a personal hero of mine and I'm so excited to be speaking with you today. So hello.
John Ikerd: Yeah, hello. I'm, honored to be with thisvery prestigious collection of people you have put together for the virtual conference this year. So thank you for inviting me.
Linley Dixon: Yeah. It's pretty amazing when you talk about soil health how many people feel that, you know, we've got all that in common so we can come together around that issue, right? So you write a lot about the decline of family farms and rural communities affiliated with that. And I'm wondering how you became so passionate about those issues in your life?
John Ikerd: Well, I grew up on a small family farm, a small dairy farm and spent the first 17 years of my life there. And this was back in the days when we actually didn't even have electricity or running water. When I first started out on the farm, milking cows by hand and this sort of thing. So I grew up on a family farm, two brothers and two sisters and mom and dad and so on. And so I really had a good taste of that. And then when I went into high school, I was in the, the Future Farmers of America at that time. So I was active in there. As I've made presentations from now and then, I say “I believe in the future of farming” that was in the creed, you know, “believe in the future of farming with a faith, born, not of words, but of deeds, achievements won by past and present generations of farmers, promise of better days through better ways.”
So I, I really bought into all of that, but the small farm that we were on, the small dairy farm, there wasn't room for anybody except one of us to stay there. And my younger brother, all he ever wanted to do was farm. And the rest of us all had other things that we could move on to, but I never got away from that. And I went to college at the University of Missouri and got my degree in Agricultural Economics. And I went out and worked in private industry for a while thinking, you know, “the thing I ought to do is go out and make some money” and this sort of thing. It didn't, didn't fit me. And I came back to graduate school then to eventually get my PhD in Agricultural Economics. But my motivation through all of that was this basic idea that what we were doing within the University system was there to help the farmers.
It was there to realize this vision that I'd had as a FFA member, “better days through better ways.” And so I believed in that all the way through, and then I got a job after I got out of graduate school. I took a position in Extension where I would be spending, I always had at least half of my time, even though I taught and did research at least half of my time, was out working with farmers and people within rural communities. So, I never really gave up on that. And that's one reason I gave up on industrial agriculture is I saw that it wasn't doing those things that I'd been told that it would do, and the things that I believed it would for so long. But I think I've always been connected to that. And if I hadn't grown up on a farm, and a good family farm,it would probably have been much more difficult for me, you know, to be a critic of the industrial agricultural system.
So, that's where I am and that's where I've continued. And I still believe there's a good future in small to medium size family farms, but not in the industrial approach to farming. In sustainable agriculture, organic agriculture, regenerative agriculture, all of those approaches to agriculture that are basically management intensive to begin with. That's what makes the farm smaller, but where the farm is a way of life, as well as a way to make a living. I think that's the critical thing that a lot of people are missing in organic and regenerative agriculture. If it's just another way to make money, we end up right back where we are with industrial agriculture, with the large commercial operations. And we've see a bit of that in organic. I think that's the reason that Real Organic kind of came about, is because of industry and kind of industrial system moving in when it's about profit.
And then we've got to recognize that if we just continue to try to maximize economic efficiency and productivity, we'll end up right back where we started. I'm an economist, an agricultural economist, and the economy, is meant to be a means to some greater end. Money has no value except what you can get with it. And if you don't know why you need it and what you're going to use it for, I can tell you, you will never have enough. But we have to recognize that that the economic part of regenerative agriculture, organic farming, sustainable agriculture, the economic part is to give us the means to live the kind of life we want to live as farmers. To take good care of the land, to be good neighbors, and to be stewards of the land and community so that those people, future generations, will have opportunities equal or better than we have today. So it can't just be about economics.
Linley Dixon: Yeah, it's interesting, John because when we were fighting for the integrity of organic at the National Organic Standards Board level and the National Organic Program, we were often told, you know, that we're just fighting for a way of life and that shouldn't be considered when we're defining what organic. And so I'm curious, you know, you grew up on a dairy farm. What was that farm like? What was that way of life? What are we at risk of losing? How many cows were you milking? How much land was there?
John Ikerd: We had, I think there was about 200 acres on the farm. And when I was growing up,we were milking maybe 25, 26 cows. All of us kids that were large enough, we all had cows to milk, the cows all had names and this sort of thing. And I think it's important to remember too, that my dad only had a fourth grade education. His dad had died when he was in the fourth grade and he was the oldest. He had an older brother, but he had a hip problem so that he couldn't work too much. And so my dad left school in the fourth grade. And then during the great depression, he was able to buy a farm. He had worked at farm work, that's all they ever did, but you know, during the great depression, people were losing farms and he was able to buy a farm that someone else had lost during the great depression.
He bought it from an insurance company or railroad or someone that had taken it over. And my dad, on that farm, he was able to buy that farm and pay for it, buying it through the great depression with only a fourth grade education. I mean, that is really amazing. It amazes me more now than it did at the time. But that's where I was growing up, it was a small farm. And he continued, but my brother stayed on the farm. And then my brother kind of followed, you know, what I was doing when I was in school. He was on that same pattern of saying, “well, we've got to get larger. Cause we got to make more money. We've got to make the farm more efficient.” And he got up to where he was trying to milk about a hundred cows at one time on that same farm, buying all of these feed and total mixed ration.
And he was about to go broke. You know, he's told me this several times – he was about to go broke. And he decided that what he was doing, that same time I did in the university system, that it wasn't working, it wasn't going to work. And so he switched over and started going to a grass-based dairy operation. And he focused on reducing his cost of production and, you know, just living a simple life, but a good life and reducing his cost of production. And the later years he was on the farm, he was back down to milking about 50 cows. And he told me at one time, every year he was milking fewer cows and getting less milk and making more money. And I've told people over and over again: when you quit trying to make money and start farming in a way that you really want to farm in all probability, if that's what you're really intended to do, that you find some way to make money, but you may even make more by not trying to make it then you do the other way.
But I grew up on that farm and we all worked. And an important part about a family farm, a small family farm, is that we were contributing to the farm. We were milking the cows. My dad would give us a cow rather than an allowance. We grew up into our teenage years. We knew if the cows didn't milk, we didn't have money. We had some work to do and we had to work for all of that, but we knew what it would take. You know, where money came from, you had to do something productive, you had to work for it. But that we were making a contribution to paying off that farm. Every fall ,there'd be the farm payment that had to be made before almost anything else.
But you grew up with the sense of self-worth. You grow up with the understanding that what you do matters, that you're not just a burden on your parents, although I'm sure all kids are to a certain extent, but that we were actually contributing to the well being of that family. And, what I've recognized since and I often say is that on a true family farm, the family and the farm are a part of that same whole. And that family on a different farm or anywhere else would be a different family. And that farm with any other family on it would be a different farm. And that's the connection se had to the farm. And my brother stayed on that farm and continued to make a living there. He retired when was able to get Medicare and then he quit milking cows, but he had beef cows and he actually just died this last December.
But as I said, you know, he lived the life he wanted to live and had a good life. He would take vacations with his children and in the later years, he could hire somebody to take care of the farm. And it was still this small family farm. So always in the back of my mind, when I was talking about family farmers, I had an example of the farm that I grew up on and my brother was still there and he was making it work. And it wasn't anything outstanding or fancy, but I knew that he had had a good life there. He raised his kids there. He was able to send both his children through college. And he didn't have an affluent life, but he had a good life there on a small family farm.
I knew it could happen. And then also, all the people I worked with in Extension. I've been all over the country and I always worked with the small farms. I coordinated the Sustainable Agriculture Program at the University of Missouri with the Small Farms Program at Lincoln University, which is the, the historic Black institution there. So we integrated those two programs; small family farms and sustainable agriculture. So other than the 15 years, I spent sort of as a promoter of industrial agriculture, I've never left family farming, which made it easier for me to come back to sustainable agriculture. Sustainable agriculture was like the old balanced farming program at the University of Missouri that they had back in the forties and fifties. And it was about balancing – making a good living, but with soil conservation. That's when they were building a lot of terraces and things of that nature. And the quality of life and the family, it was all about that. So you could buy washing machines so you didn't have to hang the clothes on the line all the time. And that you could put plumbing in your house, you could have indoor plumbing. And this was a part of Extension. I thought, Sustainable Agriculture, that's what we ought to be doing for family farms.
Linley Dixon: Yeah, I think there are just as many people, if not more, that want to join the farming community right now that are young and hardworking and smart. And they can't access that land or they can't access capital in order to really implement their dreams. It just seems so out of touch now.
John Ikerd: Right. And we need to find ways to allow them to do it. I have people tell me. Kind of out of the conventional and what I call industrial agriculture sector, “well, nobody really wants to work anymore.” I don't think that's the case at all. I run across young people at these conferences that are willing to work and willing to go out and work hard, but they've gotta be able to make the economic piece of it work. And you can't buy land in this kind of speculative agricultural land market that we're likely to have going into the future. So we've got to find other ways, you know. There's people that are going together and having a collective buying land, collectively there's land trust. There's all sorts of good things that are going on, but I don't see anything that really solves that problem at this particular point in time.
But I think there are opportunities. But if you look at the various alternatives, just going out and buying a piece of traditional agricultural land I don't see any way that you're going to make that work unless you can buy a lot of land. But I think if you look at it and say “it doesn't take a lot of land,” as you know, some of the farmers are on a few acres of land that can support a family, but it's very intensively managed operations. So I think you have to rethink what kind of farm that you want.
Linley Dixon: Absolutely many of us are starting to just grow vegetables and even quick succession vegetables, right? Because then you can figure out how to make money on an acre and, you know, you can do it. But it really kind of rules out the idea of integrating livestock on that acre. And, you know, the idea of a holistic thinking for a farm, which is really a shame.
John Ikerd: Yeah. I think if you can find a farmer, kind of an older farmer that still has the values of family farms, and you could work out a long-term leasing arrangement of some sort of thing, that you could get a piece of land and then you could work your way on and be on that land for some period of time. But I think again if you approach that strictly on an economic basis, then it's probably not going to work. But if you can find a landowner that shares your ethical social values of trying to recreate a sustainable family farming kind of agriculture, and they have an opportunity to contribute in their later years to helping you to make that happen. So again, I think it's getting beyond that thinking about, “well, this is just purely an economic acquisition we're making here.” And so somehow or other we have to come up with enough money to buy it or enough money to pay a competitive lease price on it or something of this nature.
And so I think we have to look for opportunities, but we really need to change public policy so that we give people access to land. I think one of the ways to do that would be to permanently zone agricultural land, to be used in a sustainable agricultural kind of system. And I think you'd say, well, you have to compensate people, let's say for have a much higher value if you were going to do that, like we do with land trusts. But I think if you took it on the other hand and said, “anytime land is zoned up, you're basically zoning down” from kind of the speculative ability to use farm land now as a long-term investment, to having to use it as a source of income. So that's kind of zoning down. If where you took a piece of land on the urban fringe, somewhere that where you're expanding out into the countryside, and you said, that's going to be zoned up from agriculture to residential commercial.
The landowner didn't do anything to deserve that increase in income or increase in wealth that come from that, that was a grant from society. Society said, “okay, you can use it here. Now you can use it in a different way. You didn't do anything to increase the value of the land or anything. We ought to be taxing away a big part of that unearned increase in wealth. We ought to be doing that to compensate people, and then we would have agricultural land. And then you would be able to make a higher return per acre, probably on a smaller operation if you could actually buy it at actual farm land value. But another thing I think is realistic as well. The biggest obstacle, or one of the really big obstacles to young farmers today is that they can go out as a young family and they can work hard and make it work, but they've got children and it's a family farm, and then it comes along and how are we going to pay for the children's education?
Or the other thing that hits you even sooner particularly when you start having children, is how are we going to pay for healthcare? I've said the most important farm policy in my mind, to get more new beginning farmers is, to say, “okay, let's provide everybody out here with at least basic health care.” So that one of the couple doesn't have to work to get health care, and let's go back to the way it was that gave me an opportunity to go to a university. At that time, the University of Missouri, there wasn't any tuition. Fees were 67 dollars and 50 cents a semester. You know, I could come up with that. I could work my way through school. So if we had a way so that their children could go through college and you know, grow up on a farm so you can probably still work your way through. If you didn't have to pay for the fees and didn't have to pay for tuition and all this sort of stuff, and you have farm families with basic healthcare. If you did away with those two major drains on income, then all of a sudden your smaller farming operations have become a lot more economically feasible.
Linley Dixon: Yeah. And the Affordable Care Act did a lot of that. That was a great start.
John Ikerd: Yep. So we've just got to think about something differently. I guess my main mission in my old age is to say, “it's not all about economics.” So we've got to think of other ways of achieving what needs to be done that breaks this sort of paradigm: well, if it doesn't pencil out, if it's not more profitable, if it doesn't work economically, then we can't do it. So we don't even look for alternatives. We don't even try. And you know, I tell people that that is the fundamental cause of the problem. I could go down the list of every major problem we're confronting. And it's because we give a priority to economic efficiency, productivity, profitability, and we've ended up compromising our relationships with each other, our social values. We end up destroying the natural resources, degrading the soil. And we do all of that in the name of economic progress. That's not progress.
Linley Dixon: Yeah. We have this mentality of cheaper is better.
John Ikerd: And we've got to turn it around and say, “what we're here for is to take care of each other and take care of the earth.” And economics allows us a more efficient means of accomplishing those objectives. The economy is simply nothing more than an impersonal means of interacting with each other in a way to meet our needs. If we go back to self-sufficiency, totally alone in the woods by ourself or whatever, we don't need an economy. It's us in nature. So there's no economy. Now, if we want to go beyond that, then we've got to have family. We've got to have friends, we've got to relate to other people. But if we just meet our needs with people that we know by working together, bartering or trading or whatever, we have a personal economy, but we don't need money.
So when we think of economics today, we think of what I call the transaction economy. And that is simply where we are able to buy and sell things rather than do things for other people. And they do things for us. And that allows us to meet our needs that are very important needs, even the basic needs, by getting things from people we don't know. And we'll never know. And we don't know how it's produced. It doesn't matter, as long as it meets our needs. And as long as it fits that sort of impersonal kind of thing. And that's what the economy is, is simply a means of allowing us to meet needs our basic human needs and wants through impersonal means rather than personal means, rather than doing it ourselves. The economy actually creates nothing of value other than allowing us to realize the value of what somebody else has produced [somebody] that we don't even know. But it's nothing more than allowing a transaction. And we've allowed this sort of economic thing to take priority over our relationships with each other and not taking care of the earth and various other things.
And until we get over that and see economics as simply a means of meeting our needs, it's not what we're trying to do. Making money is not our objective.
Linley Dixon: It sounds like you're talking about holistic thinking and really envisioning a world that we want to live in that's a good quality of life for all of us. And then making decisions to get to that end goal. But I have a question because I do a lot of that in my own life. You know, there's a dairy down the road that I trade milk for vegetables – and I feel like it's a drop in the bucket. And I'm curious if we need to do more?
John Ikerd: Right, right. I do too. But I think what we're doing now is that we're kind of developing alternatives to what's out there today. And I think that's a very important thing to do. And again, there's all kinds of advantages of being old. You know, you can remember when things weren't like they are. You know, there's a lot of people out here that can remember… When I first got involved in the sustainable agriculture movement – back in the late 1980s is kind of when I got involved – and there's people in the organic movement that were there a long time before. All that hasn't gone away. When we first started talking about sustainable agriculture, nobody knew what it was. And we talked about low input, sustainable agriculture. And we're talking about going back to farming with a hoe and using fish heads for fertilizer and things like that.
Everybody was making fun of it. And, the corporations didn't want anything to do with it. And they said it was all, you know, just being pessimistic. And so here we are, 30 years later, and every big corporation has a sustainability program. You know, organic agriculture got so popular that the industrial agriculture wanted to take it over. So that's grown in popularity, the local food movement, you know, all of that growth came in the nineties and it's kind of leveled off in terms of farmer's markets. But I think the main thing here is that local foods is kind of moving into the future, going online and having food hubs – and people are coming together. And I think that's one of the keys we can talk about. But the biggest obstacle I think out here is how do we re rebuild those relationships that we abandoned? You know, when we went to the exchange economy out here.
But my point is, this movement has grown. It may still be small, but I go back again to my childhood, and we had local markets. I'd say 80, 90% of our food came from within 50 miles of our farm. A good bit of, it we grew on the farm, but we had local flour mills and local canneries and local meat, packing plants. And all of those things were in the communities. There was the town of Springfield,about 40 miles away, that was the largest place. But, you know, if you went as far as Springfield, you could find about anything. Anything, in the way of food. And it came to the local grocery store, where we bought it and this sort of thing. There weren't any supermarkets. So I can remember when the first supermarket came to Marshfield, a Piggly Wiggly store where people actually went in and got the stuff off of the shelves themselves. You know, we just took in a grocery list to the grocery store.
Linley Dixon: That was revolutionary. Huh? We can do it is your point. It doesn't have to be a drop in the bucket cause we've done it before and we're even smarter now.
John Ikerd: The point I want to make here is we made that transition from that local, which I would say was close to sustainable family farming system. We made that whole transition in 40 to 50 years. And it all happened basically between the years of the sixties and nineties or late fifties and late nineties. You know, that period of time we made that whole transition because the food system hasn't really changed that much in the last 20 years. After it got taken over by corporations, they just get bigger and do things faster and all of that. But the basic nature of it hasn't changed all that much. But, but what I'm getting at is the industry – the sustainable agriculture, organic, permaculture, now the various things like this, they're much farther along now than industrial agriculture and the industrial food system was when I was actually a teenager.
I can remember in grade school, industrial agriculture was the steam engine that went from farm to farm to pull the threshing machines. Everything else was done with horses. You know, you look at that old steam engine, you say that's industrial agriculture. Is that going to take over farming? You couldn't think about plowing a field with a steam engine. So people tend to get too pessimistic because they think things can't change, but things are always changing. What we have to do is just try to do our best to make those changes positive rather than negative.
Linley Dixon: Okay. So I'm curious what policies, you know, I, I understand that I can make personal choices, but what policies can we enact to kind of make a bigger impact? And I'm actually curious what policies we have been enacting to make industrial agriculture rise to the point that it has as well.
John Ikerd: Well, I think that's the one thing that a lot of people don't understand. Industrial agriculture's tremendously efficient. You know, it applies that industrial model of specialized, standardized consolidation into larger and larger operations. Probably make the farm work like a factory and fields and feed lots work like biological assembly lines. But the thing is, it's efficient, but it's very fragile. It lacks resilience and the COVID-19 crisis has really revealed that where it's plain to see for anybody that looks at it. This big system is built just like an assembly line, basically that goes all the way from plant genetics and animal genetics all the way through to the retail grocery store and the restaurant. It's all just lined up. You used to talk about, you know, competitive markets, and this sort of thing. Most of the markets.. We used to have farm level markets and wholesale markets, and retail markets, the whole range of markets to coordinate.
It's all coordinated now by big corporations that decide what the genetics are, how it's going to be produced. A lot of it's produced under comprehensive contracts, how it's going to be processed. Everything is lined up. So you've got an assembly line full of of grain. And particularly what we saw in livestock, because they're perishable, you got an assembly line full of product coming, starting with the breeding animals and starting with the genetics. And it's moving through that system. And if you disrupt that system at any point, then if the whole system collapses, we see the same thing on the farms getting back to, let's say, farm policy out here. You go to these bigger operations, specialized one-commodity, big feed lots, single species of livestock. They're carrying out an industrial operation in a very risky sort of natural environment.
They do what they can. That's the reason they're taking the organics into hydroponics. They're trying to get away from nature, but it's a very risky kind of system out here. You can have droughts or floods or big straight winds, like the derecho that come across Iowa up here. You know, it can come in at any time and you can have disease outbreaks and crop disease and things of this nature. Insects. And in animals, you can have disease that wipe out, you know, hundreds of thousands of animals. It goes across the country. Well, the only thing that makes that economically feasible from the standpoint of its lack of resilience or its riskiness, is that we, the taxpayers, through farm programs, step in and absorb the large share of that risk. And I go back to the 1960s. We really had a transition in farm policy in the 1970s in the Nixon administration, during that period of time.
That's when agricultural economists convinced the policy makers that we had to focus on productivity and efficiency and forget about family farms. But at that time we shifted over and we changed the nature of farm policy. So we started absorbing the risk of this industrial agriculture, through price supports. Or now most of it comes through government subsidized crop insurance. We pay, the last figure I saw, more than 60% of the total across crop insurance, so there's going to be huge crop insurance claims across Iowa. And we, the taxpayers are going to pick up most of the payments, and we're going to pick up virtually all of the administrative costs of putting that money up. We'll have disaster payments on top of that. When you have an outbreak of disease in a big livestock operation, as we've had with layer hens here in Iowa, and we had with small feeder pigs, then you have the government step in and absorb those.
I calculated one time, at one point ,for all of the laying hens that had been lost in this, I don't remember what kind of disease it was. Taxpayers were paying about $14 a bird, and we were paying to clean up and disinfect the facilities for the people so they could continue to operate this big operation. So, first thing we've gotta do is recognize that the money that the taxpayer thinks that they're putting out here to support family farms are supporting this industrial system of agriculture. And if you pulled out all of those supports, all of those subsidies, which you can't do all at one time – you know, we don't want to be cruel, this system wouldn't be sustainable. It's efficient, but it's fragile. It's like a natural ecosystem that's evolved to the greatest point of efficiency. If you pull one species out, the whole system collapses. That's kind of where are we going with industrial.
Linley Dixon: And that reminds me of the Southern Corn Leaf bBlight. I'm a plant pathologis and in the seventies, do you remember that all of the corn had this one gene from, for cytoplasmic sterility and it made everything, even though there were different varieties out there, it made everything susceptible to that disease? So that's the fragility you're talking about. Yeah.
John Ikerd: So what we need to do now is, is we need to start transitioning those funds. And I've been involved with some people that have put together some proposals. Data For Progress put together one on regenerative agriculture and the Green New Deal. And all this is consistent with the Green New Deal. But what we proposed in that program was is that if farmers that want to transition to sustainable agriculture or regenerative agriculture, you know, organic – this whole range, or if you want to start a farm in that area, then what we ought to do with farm policy is that we ought to ensure those farmers are taken care of, as long as they present a plan, which says that we're going to make the transition. And it's going to take us some time. It's risky to make any kind of a change, but we're going… You used to talk about parity prices. And that's why we got into price supports, when we were actually supporting family farms.
Linley Dixon: Can you explain parity? Most people don't know what parity is.
John Ikerd: I'll get into that next, but what we need is to ensure parity incomes for those farmers that are making the transition; if they're doing something for the benefit of society as a whole and for future generations. And there's no reason we shouldn't be using funds now that we're subsidizing industrial agriculture with, because it didn't feed the hungry and it's not producing good food and a whole lot of things. And we need to absorb the risk of that transition, by insuring those families, a parity income with non-farm families in that particular area. And this would allow a lot of these young people that we we're talking about while ago. If you implemented a policy like that, then they would go out and if they had a bad year during the early years, they would know that their income would be made up.
And I propose doing it through the income taxes like how we do earned income tax credits. And that's what was being proposed by Richard Nixon and Milton Friedman. And all those people talk about negative income tax and that sort of thing. That's basically what I'm talking about. So if you have a shortfall, then instead of subsidizing big crop producers, you go in and you make up that shortfall. And you can file your estimated taxes on a quarterly or monthly basis, and if you'd be running low, then you'd get a supplement. And then if you're running high, then you'd make payment. So you could go through the year like that, but you'd have to be making the transition to a more sustainable agriculture systems. And this would allow a lot of people to, you know, to get a foothold and to come in and, and to redefine the system.
So I think this was one of the more radical policies that was proposed or that has been proposed, but it's along this line. I mean, you talked about parity prices a while ago. When they first brought in parity, it was back during the great depression years. And, you know, farming was in really bad shape. And at that time, something like 30% of the people were farmers or something. And so when the farmers are in bad shape, you know, not only can they not feed society, but it's a big impact on the overall economy. And so what they did, which a lot of people don't realize is, is they said rather than just support the families directly, what they would do is they would calculate a price for all the different agricultural commodities so that it would give families a livable income.
And part of the Parity Index is the cost of living, the cost of living on the farm. So it was all about calculating farm revenue relative to farm cost of living, so that the farm families would have a decent way to stay on the farm and continue to feed their families and have a reasonable level of prosperity. So it was all about supporting the income of farm families to begin with. Then over time, those programs got distorted to where they simply supported commodities rather than focusing on supporting the families. And then when they did that, the commodity prices, parity commodity prices got so far out of line with what it took to support a family on the farm at that time, because of all of the new technologies and the abilities of farmers to produce much more per person and much more per family. It got so far out of line that they began to have to reduce the parity price.
And then somewhere along the line, they still include cost of living in the parity calculations, but farmers have basically lost the concept of parity income. And now it's all about supporting prices. And as long as we subsidize and support prices, and most farmers don't even like to think about this, you make it possible for the big farm operations to outbid and to drive the smaller family farms out of business. If they don't have to take the risk, it's just like big banks. The big banks, whenever something goes wrong, like it did in 2008/2009, the government steps in and picks up the pieces. So what we're doing in agriculture, basically, we're subsidizing the big operations at the expense of the small ones.
Linley Dixon: Could you unpack, too – and I learned this from you and it's probably one of the most disturbing things I've ever learned, so I, I want everybody to know this – but when we seem to have overproduction, or right now we've got a glut of milk, even in the organic industry, we have a glut of organic milk. What happens is the industrial operations tend to expand and produce more during this time. Would you explain why they do that and how they're able to do that?
John Ikerd: To begin with, I know this for sure, how it happened in pork, because I was in Missouri at that time, and we had what's called a mail-in records program. And we had enough hog producers in Missouri at that time that we knew what the kind of the family farming home operations, what their costs of production were and so on. And there's a wide range of cost to production among typical farms out here. So we could calculate the most efficient one third, the least efficient, and the one third in the middle. So when the big operations wanted to come into Missouri, Premium Standard Farm was the first one that went into north Missouri. When they wanted to come in they shared their cost information with people in the extension service, at the University of Missouri, because they wanted the university to help promote their operation.
They were promoting it as a real economic development strategy, but it was in a depressed area of the state. So we knew what they were using as a feasibility study. In fact, one of the people in my department, which made it you know, very touchy for me, had developed a report, which was basically promoting corporate hog farms as a rural community development strategy. So somebody that I was working with asked me to take a look at that report and I did, and I compared how many people would be employed and how much money they would make in this feasibility study for the industrial operation. I compared that to our actual records of the family farmers, hog farmers in Missouri. And my conclusion was that we were going to displace three independent Missouri hog farmers for every job that we created in these industrial operations. But, okay, so why do they continue to come in?
Well, they were more efficient than the least efficient third, up to about a half of our independent producers. So they could come into the market and then they could out-compete them and stay longer. And they would eventually be forced out of business. The other part that a lot of people didn't look at is that once you have that portion of the market, that you either own – like Premium Standard Farm actually owned the facilities – or you've got it under contract, then you've got an assured flow of product, regardless of what's happening in the other part of the market. So when you get in a period price cycles, agricultural prices always have been cyclical. I was a livestock marketing specialist, so we used to study those things. So you get a period of oversupply, which is typical and milk is typical. It used to be typical in hogs and chicken and everywhere you get an oversupply.
What usually happens is you lower the price, the wholesale price. The packers would lower the wholesale price because they've got more product to move and they need to move it. They'll lower the wholesale price, retailers lower the retail price. And so you move that product through the market at a lower price. And eventually the price has to come back up. But what do you do if you've got a lot of product under contract, is you just lower the price as your wholesale price or retail low enough to move your product through the market, but not low enough to clear the whole market. And then you can even continue to expand under those situations because you can bring in new contract producers if you want to. And so you either continue to expand or just stay tight during that period of time until you drive out, you know, another 10 or 15 or 20% of the independent producers, and then you can loosen up the market. And then you go to the independent producers and you say, “okay, if you want to survive, sign a contract with us,” or you just simply replace the ones that you put out of business with your own operations.
They learned that in the chicken business. There were some restrictions on it. It was a little bit different in beef, but it's exactly what happened in hogs. And that's what's happening in dairy. Once the big operations get a foothold into the market, then they use that in times of surplus. They know that they can, during these periods of time, they can continue to expand, which keeps pressure on the independent producers. And eventually you force the independent producers out. Now, I don't know if that's where we are in the dairy business now, but in the late nineties, I'm sure you still hear people talk about when you had hog prices, eight, nine, [dollars per] hundred weight. They hadn't been that low since the great depression.That wasn't the market price, that was squeezing basically the last of the commercial independent producers out of business.
We may be there on dairy right now where this is an intentional expansion.Even if they're just breaking even in the short run, because they're positioning themselves to take the rest of the market. So they have that assembly line for dairy that they've already got for hogs and already have for chickens. They want large operations that can deliver trailer truck loads of milk, tanker truck, loads of milk. They don't want to deal with any farmer that can't operate at that level. And those plants are set up to receive so many of these tankers every day. And they have to keep them coming continually. Can't depend on the independent family farmers that may go out of business or may not, or whatever; you got to keep those tankers moving. And so that means you have to control the whole system. And so there's tremendous benefits as far as their shareholders gaining control of the system, even if they lose money.
And the other thing is, is once you begin to narrow down the number of corporations that are left, and we've seen that in dairy now, it becomes a contest between the survivors. And the independent producers are just collateral damage. When that starts, you have one big corporation trying to take market share away from the other big corporation, or drive it out of the market or drive it into bankruptcy. And the independent producers are this collateral damage as these two big corporations fight to control a bigger and bigger share of the market. So, you know, I'm an agricultural economist and a livestock marketing specialist for 15 years plus. I don't know why economists are not leveling with people, agriculture economists, aren't leveling with people. This isn't the working of a free market. This is the working of some sort of a monopoly form or oligopoly form, or I'm not even sure that there's any definition for it in an economics.
I'm not sure.. It's basically central planning by corporations. You know, the big corporations claim, “we're a free market system. We just want to be able to compete” and all this kind of stuff, but it's, it's basically the big corporations performing all of the function that used to be performed by a series of open competitive markets, reaching all the way from the retail back to the farm level. And we no longer have that. We have somebody, big corporate operations, I think increasingly it's going to be the retailers, the big Walmarts and people like that, Costcos and the various others that are going to control that whole system. Historically, it's been the processors that controlled it. So that's the reason you see things happening that don't seem to make sense, is because they don't make economic sense, but they do make financial sense.
Linley Dixon: Yeah. And when you talk, I mean, I want to cry for all the farms that are lost and a beautiful way of life, but at the same time, we haven't even touched on the external costs that these large industrial operations inflict, could you touch on that?
John Ikerd: Yeah. And, and the thing is, and this goes back to kind of the real organic sort of thing, is that there's two different conflicting worldviews that are going on here. The one that came out of the traditional family farms and the organic movement and sustainability movement, now the regenerative movement and that sort of thing is that the world is a big living system. And that farms and farmers and the living things in the soil and the plants and the animals are all part of this big organism. And that even the farmer and the farm family, I would argue and the community, is all a part of that. And so, you know, we as a human species here, we're just one of many. And now like every other species out here, we tried to tip the ecological balance in our favor.
We want to modify the environment so we get a little bit more out of it, but unlike other species – other species, basically in healthy natural ecosystems, they have limits to how far they can go. Something else will come in and their predators will come in and knock them off if they become too plentiful or things of that nature. We don't have that kind of balance in here. And so what we did is because we humans kind of have this extra ability and we don't have these natural constraints because of our technology. And some, I don't want to say “superior” knowledge. I'm not sure we're that smarter than a lot of these other things out here that we think of as dumb, but we've created, back in that in the period of the enlightenment, this mechanistic view of the world. That the world is actually a big, complicated, sophisticated machine.
But if we're just intelligent enough, we can learn how that machine functions. We can take it apart and look at the pieces in a kind of reductionist approach to science. We look at the pieces, we figure out how that machine works and then we can manipulate it. And so all of these living things out here, the plants, the animals, the things in the soil, whatever – we can manipulate them. And if we can't figure out how to manipulate, we'll just annihilate and replace them with some other technology, something of this nature. And so that's this kind of industrial system, kind of evolved out of that mechanistic view of the world. That the farm, as I mentioned before, and we used to tell farmers, “you got to make the farm work like a factory without a roof” and fields and feedlots are just biological assembly lines.
So you have to control those natural processes so that you can make them function like you want them to. And that's what I was talking about. The assembly line and the food system; it's that mechanistic view that we can manipulate and control and anything we don't need, we can just kill off and replace with a synthetic pesticide or fertilizer or machine. Or, if we don't like the way things are constructed by nature, then we can reconstruct them through genetic engineering or something of that nature. And we'll make it all function much more efficiently and we'll be in control of it. So that's what's driving the industrial system. And to the extent that it works in the systems it's more efficient, but in the process, nature isn't a big machine is what we're finding. And when we do things to nature, nature always reacts.
It's not like a machine that you take a part off and you throw it away. It doesn't do anything. Nature's going to come back at you when you do anything to it. And that's why we call it the “unintended consequence” of industrial agriculture. And you can look across wherever we are and see the erosion of the soil and depletion of the natural productivity of the soil and the pollution of the air and the water with agriculture. With biological and chemical waste and a whole range of things that in the process of making food cheaper, let's say. Okay, we're going to make more money. Are we going to feed more food to people? We end up basically creating an environment in which the people can't live a healthy, full life even if they had good food to eat. And besides that, we end up producing food that's lacking in the basic nutrients that were in that soil and dependent upon those living organisms that were in the soil to put whatever nutrients were there in the crops.
We didn't pay any attention to that. As long as we can grow more bushels per acre, make the animals grow bigger or whatever. And we ended up with foods then that aren't making people healthy, that aren't providing food security. You know, we're not even feeding the hungry. The people, particularly the lower income people that can't buy enough to eat end up buying the cheap food. In the kind of the industrial system that we've created, there's an epidemic of obesity and diabetes and heart disease and high blood pressure and whole range of cancers. And that's a consequence of not paying attention to the health when the process is focusing on economic efficiency and how we manipulate the system.
And then we think, well, we can manipulate the medical system. And if we make all those people sick, then we'll find some way to sell a medicine and give them a cure. And all of that, it's just that somehow we can manipulate this thing and make it work. And we're still driving that. And when we talk about the issue of Climate Change, probably the most money or the biggest investments are in “how do we manipulate nature now so that we deal with climate change?” And a lot of farmers don't like it when I say it, but I'm just saying, just go out and pay farmers to put carbon back in the soil. That's that mechanistic thinking you're dealing with nature. And what you're going to do is pay somebody an economic incentive, which is what got us into the problem in the first place. And you're going to say, “well, all you have to do is get carbon in the soil.” Pretty soon we'll have huge carbon sequestering industrial farming operations that will be reaping billions of dollars of government subsidies.
Linley Dixon: I don't trust it either, John. I think that they're going to rob the carbon from another piece of land and then calculate how to get the gains from this one. So,I don't trust the system.
John Ikerd: I think they'll do all of that as well, but I'm just saying that even if they are, even if they could accomplish it, the problem is – and this goes back to the food system – that if you have the worldview that this is a living system and that we're a part of it, which I firmly believe it is. And I think that's what Real Organic is about. It's that the farm and the farmer is part of an organism. Communities and organism. And we're in that organism. If you take that reality and you put a mechanistic farming operation, in that reality, you're inherently going to create conflicts because the system you're producing food is in conflict with the larger natural system and the social system within which that system must function. And it has to get all of its productive resources eventually from nature by one means or another.
And the purpose of the whole thing is to meet the needs of people. And when you've got a system that's in conflict with this natural resource base where it's going to get all of its resources, sustainability ultimately is going to depend upon solar energy and green plants to collect it. And that sort of thing, when it's in conflict with that, in conflict with the wellbeing of the people in community and the people that eat the food, then there's nothing you can do to fix the system. You have what they call “a wrong paradigm” or the wrong worldview. I think what all these people were talking about is that it still remains so small. It's not an easy task, but we'd have to figure out how do we create agriculture and food systems that function in harmony with that system?
We can still tip the ecological balance in our favor, relative to other things, just like other species do, but we have to recognize the limits of nature. Because when we go beyond the bounds that nature set, the laws of nature can't be changed. We didn't create them. We didn't make them; they're there. And when we go beyond them, we violate those basic boundaries that are set for us. There are going to be negative consequences, and there is nothing we can do about it. We can divert it from here to there, push it here and there, but we can't avoid it. And I would argue the same way about human relationships. I think there are fundamental principles that were created about how you maintain positive relationships. And people say, “oh, you'll never agree on that.” But the Institute For Global Ethics has done surveys and interviews all around the world.
And they say, well, there are five basic principles that people agree on. Everybody has all sorts of different values, religious values, things like that, but all ages, nationalities, religions:, honesty, fairness responsibility, compassion, and respect. I think if you, if you went down that list, if you've got a system that violates, consistently violates those relationships among people, you can't sustain the society. If you've got a system that's unfair, dishonest irresponsible, totally uncaring and disrespectful you can't have a society that functions that way. And when you've got an industrial food system or if you've got any system that functions solely for economic individual, self-interest, you're going to violate those principles and it can't exist. It can't be sustained. So the point is that if we're going to sustain the future of humanity on this planet, we've got to rethink how the world works and where we fit in, how we live our lives.
We've got to come to the reality that we're not in charge here, that we may have special talents that other things don't have, but they have special talents that we may not have. And we need to find our place here. And I believe in a world that makes sense – and life doesn't make sense unless we're here for some good purpose. And that, that the way to live well, to live a life of virtue is to fulfill whatever that purpose may be. And I think if we focus on how are we going to make it economically feasible for us to do what we see is our role here and our particular place within this whole of reality, then we're going to continue to move toward more sustainable regenerative, real organic food systems.
Linley Dixon: Thank you for listening to the Real Organic Podcast. We hope that you will subscribe, tell your friends, and please leave us a rating and review on Apple Podcasts or wherever you found us. A video version of this interview, as well as a full transcript with links related to our conversation can be found at realorganicproject.org/episode28. Please join us next time for the second part of our interview with agricultural economist and family farming hero of mine, John Ikerd. To find a Real Organic farm near you ,visit realorganicproject.org/farms.