Farming Magazine - December, 2012

COLUMNS

Opinion: How the Second and Fourth Estates View the Third

An agricultural forum for the progressive farmers of the Northeast.
By Martin Harris Jr.

Even though he was removed by his parents back to England from a military-governed 19th-century India for a proper education just before he reached kindergarten age, Rudyard Kipling was nevertheless a "fan" of the English soldier. His comment, "for it's Tommy this, and Tommy that, and 'chuck 'im out, the brute,' but it's 'Savior of his Country' when the guns begin to shoot," is as critical of supposed sophisticates who won't acknowledge those who make their lifestyle possible (until it's challenged) as it is supportive of those with "boots on the ground." There's no homegrown Kipling speaking up for American agriculture in a similar vein; the closest might be Kipling contemporary Mary Lease, a Kansas newspaper publisher who urged farmers to speak up for themselves with her "farmers should raise less corn and more hell" quote. She's always been out-voiced in the American press by more recent commentators such as The Wall Street Journal's (WSJ) Tim Ferguson, who advised in print to his mostly urbanite readers that frosty Wisconsin sunrises were a valuable part of the intangible compensation package that made technically unprofitable dairy farming actually quite rewarding in a more cosmic sense.

Such urbanite attitudes have deep historical roots; they go back at least to the pre-French Revolution feudal system centuries in which the First Estate (the church) and the Second Estate (the government) supposedly provided divine and defensive services to the Third Estate (the farmers), who were then required to keep the first two fed, sheltered, clothed and wealthy in return - for free - and to build roads and castles (the unpaid labor corvée), and to serve on sacred and secular military missions when needed. Originally, the Fourth Estate was the dismissively applied label for any previously unrecognized group beyond the first three, such as the then-new phenomenon of escaped serfs turned freemen, safe in the new cities and creating profitable free market-based economies. They were known as "the bourgeoisie." Since then, a new information profession has arisen (think moveable type for 15th-century printing and publishing), and this frequently inconvenient-to-its-betters group (think Gutenberg near-contemporary Luther or 18th-century Philadelphia printer Franklin) was first labeled the Fourth Estate, replacing the bourgeoisie, in a 1787 speech by English parliamentarian Edmund Burke.

More recently, the Fourth Estate, now comprising both print and electronic and calling itself "the media" for its intermediary role between information producers (mostly business and government) and information consumers (everyone interested enough to try to learn what they're paying taxes for and voting on) has been asserting its objective "all the news that's fit to print" professionalism. But the summerlong heartland drought has produced additional deep cracks in that already-questioned, no-bias veneer, from its start in late spring (when the USDA was still forecasting, for example, record corn acreage, yields, production and total value, albeit with modest per-bushel price) until the yield projection shrank as the rains failed. The typical Fourth Estate commentary was soon aimed at forecasting "skyrocketing" retail food prices for nonfarm consumers, who are 98 percent of their readership and viewership, and offering only rare discussions of impacts on the other 2 percent: the growers and feeders who, in Kipling-esque terms, are deemed invisible until adversity arises and consumer comfort is threatened. Typical: The August 12 Associated Press wire service piece, a half-page in scope and printed in hundreds of papers nationwide, that describes in some detail an Illinois livestock grower purchasing water from a vending machine in a nearby town and the shrinkage of fertilizer pollution flowing down the Mississippi River. The obligatory fried-eggs-on-the-sidewalk anecdote got column inches; any mention of impact on grower income didn't. Actually, there's been zero upward impact on retail food prices (USDA data) so far, and major downward impact (USDA projections) on crop grower and crop user prospects, both apparently unworthy of Fourth Estate notice, but there's been considerable reportage of USDA Secretary Vilsack's reassurance that "farmers and ranchers remain resilient and the country will continue to meet [consumer] demand," along with fervent correlations with "Al Gore warned us about global warming."

Only if you faithfully view The Weather Channel would you have learned (one evening, not repeated) that the 2012 drought exactly replicates parallel historic/meteorological events, Pacific Ocean-based with subsequent heartland effects, which occurred in the mid-1930s, the late '50s, the early '80s, and the late '90s; and only if you faithfully peruse the WSJ could you have read (one issue, not repeated) a reasonably full explication of crop loss by state, crop insurance reimbursement, or near-term versus long-term impact on retail food prices. WSJ forecast: Beef prices will be down, short-term, as distressed growers ship cattle early, but up long-term, and only if consumer demand holds up, as herds are slowly rebuilt. In contrast, a Fox News reporter on the August 12 Bret Baier news announced that corn growers were making "record profits" from $8-per-bushel corn, but never mentioned that there's now a lot less corn to ship and overall grower incomes will suffer accordingly. An hour earlier, Fox commentator Melissa Francis opined that "if farmers want crop insurance, they should pay for [all of] it," but, of course, retail food prices shouldn't be affected. She made much of the taxpayer subsidy (60 percent of premium cost) of crop insurance, but avoided entirely its New Deal "to prevent undue price increases to consumers" origin and design intent: encouraging continued production with reimbursement for occasional crop loss to convince growers to accept farmgate prices so low they barely (and not always) cover production costs and never create margins adequate for growers to practice self-insurance. The Latin phrase "cui bono?" (to whose benefit?) was never raised by this history and economics-knowledgeable opinionator-interviewer.

The WSJ even devoted considerable space, once in the August 2 issue, to the variation in drought impact, both farmgate and checkout. Overall, there's a WSJ recitation of USDA predictions for a 3 to 4 percent rise in food prices (think the pennies' worth of actual grain in a multidollar short-pound box of breakfast cereal) next year, but there's also recognition that while the new high over-$8-per-bushel corn price is nationwide, drought damage isn't. Growers beyond the margin of actual rainfall deficit will do quite well. For the corn growers who bought insurance, (two-thirds of them now do) reimbursement will be near full, even though the insurance rules prevent coverage of more than 85 percent of previous average production. The major impact, uninsured, will fall not on grain growers, but on users - beef and dairy - whose input costs will rise, predictably more than their own farmgate receipts. These are grain users whose product price, unlike that for cereal sellers, contains a major feed cost component. For dairy, a just-published California Department of Food & Agriculture study says that 2011 feed costs at $10.10 per milk hundredweight make up 64 percent of $15.79 total production costs (which, by the way, don't include such things as land mortgage interest or operator labor and management), against which the current "mailbox" price (see chart in every issue of Hoard's) looks marginally to acceptably profitable in comparison. A list of the categories within the "Operating Costs" component was furnished on this humble scribe's request, and it includes the full expense of leasing a dairy facility, but not the full costs of owning one with or without a mortgage; an item for interest on short-term operating loans, but not on property mortgages; and hired services, but not farm family services. Further inquiries as to the differences between such official farm accounting and normal business accounting went unanswered. The Golden State's Department of Food & Agriculture, historically and monetarily linked to the federal USDA, is, of course, a branch of the modern Second Estate. Why Second Estate ag bureaucracies employ a unique accounting system for farming is an unanswered question.

The Fourth Estate question relates to the single kudo earned by the WSJ for its unique-among-publishers reportage, limited as it was, of drought impact on farm income. All during midsummer, WSJ coverage, detailed and analytical, of costs, sales, and net and gross profits for urban businesses never faltered from its usual intensity. On August 16, the journal devoted a full page, less advertising, to the prospects for apparel ("Abercrombie's Profit Drops on Weak Sales" and "Target Expansions Flatten Net") and office supplies ("Weak Sales Hamper Staples"), and a week earlier there was a detailed analysis of the profit prospects for Dean Foods, the nation's largest milk wholesaler, as it spins off its more profitable organic milk sector separately from its less profitable traditional generic milk sector. But never in the 50-some-odd years of this humble scribe's WSJ readership has it produced any similar profit/loss/margin/return-on-equity analysis for any sector of the actual food and fiber agricultural industry. Why not? Nor has any other member of the modern Fourth Estate; as the 2012 drought has merely emphasized, not changed, the media practice in recent history has been to view all that happens (or doesn't) in or to agriculture through the lens of all that then happens (or doesn't) to the modern Third Estate, the base of society, now substantively restructured to constitute only 2 percent agricultural and the other 98 percent service/manufacturing/information/government, which, like its ancestor, produces (or doesn't) on behalf of society and governance as a whole. If the question were raised in professional academic circles (it hasn't been), the potential answer might lie in the parallel interests of both the Second (governance) and the Fourth (media) Estates in pleasing their new Third Estate, the 98 percent supporters/voters/customers who, like Kipling's Gilded Age gentry, are never concerned about the well-being of those (soldiers or farmers, the old Third Estate) who invisibly and inexpensively support their quality of life, until that quality (or its cost to them) meets with unwelcome challenges.

Postscript: One day after completion of this column, your humble scribe was pleased to read on the journal's op-ed page a first-ever truly complimentary-to-agriculture commentary by historian/author Victor Davis Hanson. A mid-essay pull quote: "The mystery is not why we have devastating droughts, but how so few Americans are able to produce so much food." Well worth reading in full, although Hanson doesn't directly address the questions raised in this opinion column. A few days later, the WSJ posted its first during-the-drought news piece with direct mention of "net farm income." Not to worry, it quotes the USDA: "Predicted net farm income will climb 3.7 percent this year."

The author is an architect and former farmer.