Putting Beef and Climate Into Perspective

Beef has gotten a very bad rap when it comes to climate, and in the popular media and among activists gets presented as if reducing beef consumption is a number one priority and one of the most important things we can do to reduce our impact on climate.

However, in their research about influencing consumer choices to reduce climate impact Ferraro, et al. (2022) make a very important point. We have to consider more than just the potential impact we have on climate change when it comes to decisions about food, shelter and transportation. We have to look at the big picture, the costs, benefits and 'plasticity' - how impactable are people when it comes to changing behavior? What has the greatest realistic expected impact on climate? 

When thinking about the problem this way, one question that comes to mind is - how many other seemingly arbitrary choices (other than reducing beef consumption) could we make in our daily lives that would have a similar climate benefit?  

Let Me Count the Ways (other arbitrary ways to reduce your carbon footprint)

Another article by Obringer, et al. (2021) provides some interesting insights about the carbon footprint associated with various ways we use the internet:

• Globally, the Internet use has a carbon footprint ranging from 28 to 63 g CO2 equivalent per gigabyte (GB)
• The world median is 32.3 g CO2 per GB
• The U.S. median is 9% higher
• Common streaming services require 7 GB per hour of streaming using ultra HD quality video and have a carbon footprint of 441 g CO2e/hr
• Streaming 4 hrs/day with HD quality video produces about 53 kg CO2e/month
• Streaming at a lower quality SD video would reduce CO2e/month to about 2.5 kg
• Standard video conference services use ~ 2.5 GB/hr associated with 157 g CO2e/hr
• 15 one hour meetings a week equate to a monthly carbon footprint of 9.4 kg
• By turning off the video camera at an individual level, monthly CO2e emissions could be reduced from 9.4 kg to 377 g CO2e. This is equivalent to enough emissions savings to offset charging a smart phone each night for over 3 years (1151 days). 

Framing Up the Discussion

Obringer, et al. (2021) certainly motivates us to think of a number of arbitrary ways we can reduce our carbon footprint other than making dietary changes when we think of all the various ways we use internet services in the age of Zoom meetings, Netflix, Amazon Prime, and smart phones. But let's take another look at beef consumption. 

• In the U.S. the average consumer consumes about 60 pounds of beef/year
• On a monthly basis that equates to 5 lbs or about 2.26 kg/beef/person
• According to Rotz (2019) 1 kg of U.S. beef produces 22 kg of CO2 equivalent emissions

So if an individual consumer gives up U.S. beef for a month that equates to a reduction of about 50 kg CO2e emissions. It looks like the emissions related to beef consumption may be very similar to streaming HD video on a monthly basis given the assumptions above. 

On the other hand, it looks like giving up beef for a month would have a much bigger impact on climate than giving up your Zoom camera for a month! More than 2x the impact. 

But that is not even the full picture. We also have to consider how livestock emissions differ from emissions related to many other arbitrary things we do on a daily basis. Sure CO2 is CO2 but there's more to the story and that requires consideration of the biogenic carbon cycle pictured below:

That little cloud in the sketch represents the carbon footprint of beef - and if we are considering U.S. beef it represents less than 1/2 of 1%  (i.e. < .5%) of global greenhouse gas emissions. If all U.S. consumers give up U.S. beef, then that little cloud completely goes away. On the other hand, if you decide to consume the same average amount of beef you have consumed for decades, that decision is not adding any new net GHG emissions to the atmosphere. We just keep recycling that same little cloud over and over. And as production technologies and management practices improve, we can eat the same amount of beef or more and make the cloud even smaller. But it doesn't get any bigger and on the net beef consumption doesn't have any new net impact on the climate. (we also have to consider tradeoffs related to nutrient density to really grasp all the implications related to food choices and climate)

But, as pictured below, the story changes when we shift our attention to many other arbitrary choices we make on any given day: 

Almost every thing else we do that creates CO2 emissions bypasses the biogenic carbon cycle and adds new and long lasting greenhouse gasses to the atmosphere. If we give up U.S. beef, that little cloud goes away (and as stated before has a minimal impact on a global scale). But for example, every time you turn on your web cam or stream HD, you are contributing to adding new and permanent long lasting GHG emissions to the atmosphere. So maybe according to the facts above, the little cloud you are recycling from monthly beef consumption is 2X larger than the cloud you are producing from your Zoom meeting. However, every time you zoom you are making another little cloud. And those little clouds can add up to be much bigger and never go away even if you eventually stop 'zooming.' On the other hand - every month you are streaming video you are producing a new cloud just as big as the one that's just being recycled if you consume beef, and its having a permanent and lasting impact on climate. 

There are many other little things we do just as arbitrary as the decision to consume U.S. beef that also have important if not more consequential implications for climate change.

What do should we do? What is the most important thing you can do to have an impact on climate? If we are really concerned about this we have to ask ourselves when it comes to combating climate change, which behaviors and barriers should we be targeting to have the greatest impact? 

As a personal choice some might say why not give up beef and also do other things to fight climate change - we should be doing everything we can. Many might agree that is a good idea - but being a good isn't enough for an idea to scale effectively to have the impact we desire. Trying to scale one idea based on beef consumption can risk drawing attention and resources away from more effective strategies. It could lead to odd and distracted behaviors like having a salad delivered by Uber Eats instead of a steak and thinking every order like this is doing your little part to save the planet as pictured below:

A broader perspective asks, how should we prioritize our time, attention and resources TODAY to have the greatest impact tomorrow? Do we start with that little cloud from beef while we continue to livestream HD quality from Netflix and have our salad delivered by Uber eats?

Turning off the video essentially has an easy button and cuts off the unending flow of climate emissions. But changing culture and food systems requires a lot more effort with a much lower expected payoff. We'd be shooting for 1/2 of 1% of global GHG emissions max and that's not even a realistic goal. I know where I would put my money!

Related Readings:

Behavioral Economics, Beef, and Climate: https://ageconomist.blogspot.com/2023/02/behavioral-economics-beef-and-climate.html 

References:

McFadden BR, Ferraro PJ, Messer KD (2022) Private costs of carbon emissions abatement by limiting beef consumption and vehicle use in the United States. PLOS ONE 17(1): e0261372. https://doi.org/10.1371/journal.pone.0261372

Obringer, R., Rachunok, B., Maia-Silva, D., Arbabzadeh, M., Nateghi, R., & Madani, K. (2021). The overlooked environmental footprint of increasing Internet use. Resources, Conservation and Recycling, 167, [105389]. https://doi.org/10.1016/j.resconrec.2020.105389

C. Alan Rotz, Senorpe Asem-Hiablie, Sara Place, Greg Thoma, Environmental footprints of beef cattle production in the United States, Agricultural Systems, Volume 169, 2019, Pages 1-13, ISSN 0308-521X, https://doi.org/10.1016/j.agsy.2018.11.005.

Canceling Science and Monetizing Outrage

If we maintain the fantasy of a puritan separation of science and business then innovation will dry up and die. There will be no one left to block and tackle for science or help us navigate the valley of death that lies between a scientific discovery and a cure, product, or better policy. The negative epistemic valence being cast by digital and mainstream media is polluting the commons of scientific communication, hindering the public's ability to distinguish fact from fiction. The implications for health, climate, democracy, and human welfare are tremendous.

*This article was originally appeared at: https://ageconomist.blogspot.com/2022/12/canceling-science-and-monetizing-outrage.html 

Background

In a recent article in the New York Times the intersection between business and science are at the center of debate regarding ongoing climate research by Dr. Frank Mitloehner at UC Davis. This parallels a prior article from some years ago about  Dr. Kevin Folta and his work as it relates to agricultural biotechnology and science communication and outreach.

In the article, it seems to assert that Mitloehner's industry connections and collaboration are compromising his integrity and research as it relates to the relationship between livestock and GHG emissions.

Below are some of the most critical comments from the article:

“Industry funding does not necessarily compromise research, but it does inevitably have a slant on the directions with which you ask questions and the tendency to interpret those results in a way that may favor industry,” said Matthew Hayek, an assistant professor in environmental studies at New York University.

“Almost everything that I’ve seen from Dr. Mitloehner’s communications has downplayed every impact of livestock,” he said. “His communications are discordant from the scientific consensus, and the evidence that he has brought to bear against that consensus has not been, in my eyes, sufficient to challenge it.”

Communicating the Science

Assertions are made, but no evidence is offered in relation to how Mitloehner's research is compromised or in what ways his work contrasts with any scientific consensus. But it certainly puts his communications about his research on the chopping block. This is a big risk of doing science communication and outreach, as I have discussed before here.  In attempting to simplify complex scientific ideas for a broader audience, communicators are at risk for getting called out for any particular nuance they failed to include. It also creates enough space for any critic to write an entire thesis about why you are wrong. As I stated previously:

"Usually this is about how they didn't capture every particular nuance of the theory, failed to include a statement about certain critical assumptions, or over simplified the complex thing they were trying to explain in simple terms to begin with. This kind of negative social harassment seems to be par for the course when attempting to communicate on social media ... A culture that is toxic toward effective science communication becomes an impediment to science itself and leaves a void waiting be filled by science deniers, activists, policy makers, decision makers, and special interests."

One example called out in the NYT article was the production of a video called Rethinking Methane:

The article states: 

“The message of the five-minute video is that, because methane is a relatively short-lived greenhouse gas (once it’s in the atmosphere, it becomes less potent as the years go by), cattle would not cause additional warming as long as their numbers did not grow.”

“The argument leans on a method developed by scientists that aims to better account for the global-warming effects of short-lived greenhouse gases like methane. However, the use of that method by an industry “as a way of justifying high current emissions is very inappropriate” 

When considering sources of GHG emissions, understanding the way methane behaves is fundamental to understanding climate change, and personal and policy decisions related to mitigating future warming.  Understanding this can help direct attention to those areas where we can make the biggest difference in terms impacting climate change. As discussed in Allen et al. (2018):

"While shorter-term goals for emission rates of individual gases and broader metrics encompassing emissions’ co-impacts remain potentially useful in defining how cumulative contributions will be achieved, summarising commitments using a metric that accurately reflects their contributions to future warming would provide greater transparency in the implications of global climate agreements as well as enabling fairer and more effective design of domestic policies and measures."

But instead of diving into the meat (pun intended) of the science, the second statement about this video makes an assertion about using this science to justify high current emissions. 

Is that what Dr. Mitloehner is doing in his many communications, or is it actually the case that when we estimate the impact of climate change he thinks we should be using metrics that do a better job capturing the dynamics of different GHGs?  If his science really led him to dismiss the 'current high emissions' related to methane then why would he be spending time and energy researching and communicating about ways to reduce GHG emissions related to methane via feed additives and other management practices? 

And when we talk about current high emissions related to livestock what do we mean - compared to what?  The article states:

"scientific research has long shown that agriculture is also a major source of planet-warming emissions, ranking below the leading causes — the burning of coal, gas and oil — but still producing almost 15 percent of global emissions, the United Nations estimates."

That is a nice factoid, but it conflates all global emissions from agriculture with livestock emissions. It also makes kind of an ecological fallacy if we attribute that global number to the specific GHG emissions related to livestock of a specific country, particularly when the audience here is U.S. consumers who mostly eat beef produced in the U.S. (where in fact the the contribution to total global GHG emissions is less than 1/2 of 1%.)

The fact about global numbers is relevant to Mitloehner's work only in the sense that his research could have much greater impact in developing countries where GHG emissions may be 10X greater (EPA GHG Emissions Inventory, Rotz et al, 2018). As stated in a recent article in Foreign Policy: 

"Generalizations about animal agriculture hide great regional differences and often lead to diet guidelines promoting shifts away from animal products that are not feasible for the world’s poor....A nuanced approach to livestock was endorsed in the latest mitigation report of the U.N. Intergovernmental Panel on Climate Change (IPCC).....there is great room for improvement in the efficiency of livestock production systems across developing countries" 

But these nuances are lost in the NYT article along with recognition that there are multiple margins to consider when thinking about the tradeoffs related to food production and consumption. Policy should consider the numerous choices consumers and producers make in a modern and global economy in relation to nutrition, energy, and climate.  

Parallels with the Past

When reflecting on this NYT article and the prior article focused on Dr. Kevin Folta I see at least three parallels:

1) An appeal to the nirvana fallacy of a perfect separation between science and business. While this is not explicitly stated, both stories paint a picture of malfeasance and industry influence connected with the work of these scientists, without providing evidence that that their research or findings are biased or conflict with any major consensus. They simply imply that any industry connection is questionable, Guilt by association alone.

2) Establishing some theatre of doubt around the integrity and character of these scientists in the mind of readers, the next step involves a kind of ad hominem reasoning suggesting that because of these industry connections and questionable integrity of the researchers, anything they claim must be false or misleading or contradictory to the mainstream scientific consensus.

Having established the first two parallels, the public is then set up to make a third mistake in reasoning:

3) Argument by intimidation. The implication here is that anyone that references or leans on the work of these scientists must also have questionable integrity or character. This can be invoked as a way to bypass debate and avoid discussing the actual science or evidence supporting the claims one may be making. I'm not saying that the NYT article does this explicitly, but this article pollutes the science communication environment in a way that makes this more likely to happen..

This leads me to ask - why would mainstream media follow this kind of recipe when producing stories?

Changing Business Models for Modern Media

In Jonathan Rauch's book, the Constitution of Knowledge, he discusses how in the old days of print media economies of scale supported the production of real news or reality based content. But new business models have been built on information, not knowledge and are geared toward monetizing eyeballs and clicks. This new business model favors "professionals in the arts of manipulative outrage: the kinds of actors who were more skilled at capturing attention not persuasion and who were more interested in dissemination than communication."

Rauch observes: "By the early 2020s high quality news was struggling to stay in business, while opinion, outrage, derivative boilerplate, and digital exhaust (personal data generated by internet users) enjoyed a thriving commercial market."

Quoting one digital media pundit: "you can't sell news for what it costs to make."

As mainstream media has adopted social and digital media strategies it may not be surprising to see patterns like those above emerge.

 In 2020 former President Barak Obama said in The Atlantic: 

"if we do not have the capacity to distinguish what's true from what's false, then by definition the marketplace of ideas doesn't work. And by definition our democracy doesn't work. We are entering into an epistemological crisis." 

Communicating science is challenging enough. The battle with misinformation and disinformation did not begin or end with the COVID pandemic. It doesn't help when major media outlets would rather cash in on eyeballs and outrage, rather than communicate science.

Related Readings and Resources

Allen, M.R., Shine, K.P., Fuglestvedt, J.S. et al. A solution to the misrepresentations of CO2-equivalent emissions of short-lived climate pollutants under ambitious mitigation. npj Clim Atmos Sci 1, 16 (2018) doi:10.1038/s41612-018-0026-8

C. Alan Rotz et al. Environmental footprints of beef cattle production in the United States, Agricultural Systems (2018). DOI: 10.1016/j.agsy.2018.11.005 

Facts, Figures, or Fiction: Unwarranted Criticisms of the Biden Administration's Failure to Target Methane Emissions from Livestock. https://ageconomist.blogspot.com/2021/12/facts-figures-or-fiction-unfair.html  

The Ethics of Dietary Nudges and Behavior Change Focused on Climate and Sustainability. https://ageconomist.blogspot.com/2022/10/the-ethics-of-dietary-nudges-and.html

Will Eating Less U.S. Beef Save the Rainforests? http://realclearagriculture.blogspot.com/2020/01/will-eating-less-us-beef-save.html

Food Desert Mirage (redux)

A recent story in Eater resurfaces a tired argument about the observed correlation between certain retail stores and food deserts and nutritional equity. In this particular story, it is asserted that there is a direct correlation between their presence and food deserts. The policy proposal is to limit and regulate the expansion of dollar stores and similar retailers in these areas. This policy is biased from a couple different perspectives, one is that good intentions don't constitute an identification strategy.  It is hard work to move from correlation to causation, and as noted below, the nuance involved in generating meaningful insights that lead to meaningful policies don't generate the kinds of sensational headlines that media and special interests often seek. That leads to the second bias, as Daniel Kahneman states in Thinking Fast and Slow, System 1 likes to find quick answers to difficult questions by substituting easier questions and creating coherence where there is none. Policy advocates here have substituted an easier correlational question for a much more difficult causal question that builds a coherent story about food deserts, inequity, and Dollar stores. 

The more difficult question is, if you build a new supermarket in a food desert, will low income households go there to buy healthier food? Are Dollar Stores cornering the market in poor neighborhoods reducing options for healthy food choices? Is there a causal relationship between Dollar Stores and food inequity?

There is a misconception, a mirage if you will, related to the relationship between proximity of super markets that sell healthy foods and actual consumption and health effects. As discussed in this New Food Economy article 'Is it time to retire the term food desert':

"The idea that supermarkets enter into food deserts and all of a sudden provide access to healthy food is a little bit of a misconception"

Public Health literature provides evidence that households in lower income neighborhoods tend to eat less healthy food. These neighborhoods are often characterized as being food deserts due to the lack of access to healthy groceries for a given geography. Policy and discussion involving food deserts is often colored by an implicit or assumed causal relationship between food deserts (lack of supply of healthy food options) and nutrition and health outcomes. Failure to better understand this causal relationship can lead to potentially bad policy decisions. According to this City Journal article 'Unjust Deserts'  some communities have essentially banned or greatly restricted Dollar General from operating their stores which provide a variety of low priced products. However, some research questions a relationship between food choices and the presence or absence of a Dollar General store.

In a Health Economics Review article (Drichoutis, 2015), using a combination of difference-in-difference and propensity score matched analysis authors looked at the relationship between BMI in children and the proximity of Dollar General Stores and failed to find a relationship.

The authors conclude:

"Combatting the ill effects of a bad diet involves educating people to change their eating habits. That’s a more complicated project than banning dollar stores. Subsidizing the purchase of fresh fruits and vegetables through the federal food-stamp program and working harder to encourage kids to eat better—as Michelle Obama tried to do with her Let’s Move! campaign—are among the economists’ suggestions for improving the nation’s diet. That’s not the kind of thing that generates sensational headlines. But it makes a lot more sense than banning dollar stores."

A paper from the National Bureau of Economic Research this past year took a very exhaustive look at the relationship between food deserts, poverty, and nutrition. "THE GEOGRAPHY OF POVERTY AND NUTRITION: FOOD DESERTS AND FOOD CHOICES ACROSS THE UNITED STATES." Working Paper 24094 (http://www.nber.org/papers/w24094).

This paper helps provide a very rigorous empirical understanding of these relationships that can be leveraged for more effective policy and interventions to improve nutrition and health.

They used a very rich dataset consisting of:

1) Nielsen Homescan data - 60,000-household panel survey of grocery store purchases

2) Nielsen’s Retail Measurement Services (RMS) data - 35,000-store panel of UPC-level sales data (this covers 40% of all U.S. grocery store purchases)

3) Nielsen panelist survey data on nutrition knowledge

4) Entry and location data for 1,914 new supermarkets by zip code

Among the many findings uncovered in this data source was the following:

"over the full 2004-2015 sample, households with income above $70,000 purchase approximately one additional gram of fiber and 3.5 fewer grams of sugar per 1000 calories relative to households with income below $25,000."

Their data reflects what has been found in the public health literature in relation to low income households and nutritional health. In addition, household food purchase data was transformed using a modified version of the USDA's Healthy Eating Index (HEI) based on dietary recommendations. These various sources were brought together to give a very rich picture of household choice sets, retail environment, consumption patterns, and nutritional quality.

Using a regression based event study analysis and a structural demand model they examine the impact of supermarket entry on the nutritional quality of changes in food purchases. They also are able to separate the main drivers explaining the differences in the measured nutritional quality index (HEI) of food purchases between low and high income groups.

They model household and income group preferences using both constant elasticity of subsitution (CES) and Cobb-Douglass utility specifications. They apply this model to the rich data sources mentioned above using a Generalized Method of Moments (GMM) framework and use the model estimates to simulate policies that allow households of different incomes to be exposed to similar prices and product availability. (i.e. to make apples to apples comparisons and determine what's driving healthy vs. unhealthy food choices among low income households in food deserts vs. wealthier households).

Key Findings:

1) When new supermarkets open in what was formally a food desert, they find most of the changes in consumption are related to shifting purchases from more distant super markets to the new local super market. The change in the healthy eating index or substitutions away from unhealthy purchases from convenience and drug stores to more healthy food was minimal. This is because even in food deserts among low income households, willingness to travel was quite substantial and mitigated the lack of access to local healthy food.

" households in food deserts spend only slightly less in supermarkets. Households with income below $25,000 spend about 87 percent of their grocery dollars at supermarkets, while households with incomes above $70,000 spend 91 percent. For households in our “food deserts,” the supermarket expenditure share is only a fraction of a percentage point lower"

"one supermarket entry increases Health Index by no more than 0.036 standard deviations for low-income household"

They conclude that access to supply of healthy food or lack thereof explains only about 5% of the difference in the healthy eating index between low and high income households. Access does not appear to be driving the nutrition-income relationship.

2) Most of the differences in healthy vs unhealthy food choices by income group are driven by demand factors...i.e. preferences. When faced with the same choices and same prices, lower income households simply made purchases with a lower HEI.

"The lowest-income group is willing to pay $0.62 per day to consume the healthy bundle instead of the unhealthy bundle, while the highest-income group is willing to pay $1.18 per day."

They find that wealthier households value fruit three times the rate of lower income households and twice the rate for vegetables compared to lower income households.

Policy Implications

The authors reference studies by Montonen et al (2003) and Yang et al (2014):

"consuming one additional gram of fiber per 1000 calories is conditionally associated with a 9.4 percent decrease in type-2 diabetes" and consuming "3.5 fewer grams of sugar per 1000 calories is conditionally associated with a ten percent decrease in death rates from cardiovascular disease."

Improvements of the HEI definitely could be a driver for better health. However focusing on access may not be the greatest way to lever change. Certainly the correlations between income, food deserts, and healthy eating hold in this study and can be great flags to predict or identify which populations may need intervention. However, as this study points out the intervention should be based on theoretical and causal relationships that go beyond the supply of healthy foods and focus on aspects related to food preferences and demand. The authors conclude:

"For a policymaker who wants to help low-income families to eat more healthfully, the analyses in this paper suggest an opportunity for future research to explore the demand-side benefits of improving health education—if possible through elective interventions—rather than changing local supply."

References:

Drichoutis, A.C., Nayga, R.M., Rouse, H.L. et al. Food environment and childhood obesity: the effect of dollar stores. Health Econ Rev 5, 37 (2015). https://doi.org/10.1186/s13561-015-0074-2

NBER. "THE GEOGRAPHY OF POVERTY AND NUTRITION: FOOD DESERTS AND FOOD CHOICES ACROSS THE UNITED STATES." Working Paper 24094 (http://www.nber.org/papers/w24094)

Eating your Steak and Having it Too

Methane has gotten a lot of attention recently in relation to fighting climate change:

"The oil, gas and coal industries are the largest source of human-caused methane emissions. An Environmental Defense Fund study found that cutting methane emissions now could slow the near-term rate of global warming by as much as 30%."

While these are the facts, it takes theory to explain facts, and unfortunately bad theory leads to bad decisions even if we get the facts right. A recent article in Politico provides an example in it's criticism of the Biden administration's failure to target methane emissions from livestock to combat climate change:

"This creative accounting and the administration’s policies belittle the livestock industry’s role in the methane emergency. While Biden and other U.S. officials are preaching the importance of slashing methane emissions to prevent catastrophic warming and imposing tough new methane regulations on fossil fuel companies, they are allowing super-polluting meat and dairy corporations to continue to emit massive amounts of the same greenhouse gas with impunity."

While understanding the greenhouse effect is critical to understanding climate change, understanding the biogenic carbon cycle is critical when understanding the impact of different sources of methane on climate change. When you get in your car to go to your favorite restaurant, the associated methane and CO2 emissions that result represents new and long lasting emissions. For the most part the steak or burger on your plate doesn't directly add any new warming potential to the atmosphere that didn't already exist, nor has any steak or burger you may have eaten in the last 30 years!

Why is this true? Read more as I dive into data from the EPAs data on greenhouse gas emissions and sinks here in Facts, Figures, or Fiction: Unwarranted Criticisms of the Biden Administration's Failure to Target Methane Emissions from Livestock.

The STEP Act is About More Than Property and Taxes

I recently caught an episode of Agritalk that included a farmer forum discussing the STEP Act. 

Link: https://omny.fm/shows/agritalk/agritalk-march-31-2021 

Senator Chris Van Wollen uses colorful language to describe the rationale for the STEP act: "This is one of the largest tax breaks in the entire federal tax code, with the Joint Committee on Taxation estimating that it is worth $41.9 billion in 2021 alone. Every dollar of the tax break from tax-free stepped-up basis is a government subsidy for inherited wealth, and the bulk of that subsidy goes to the wealthiest family dynasties." 

So how might this play out? How are these wealthy dynasties taking advantage of this sneaky loophole?

Paul Nieffer gives one among many egregious scenarios that could play out if certain parts of this act pass:

"Bill and Mary have four children and they usually gift $15,000 of grain to each child annually to help fund their college expenses.  Bill and Mary each gave $60,000 of grain in 2021.  This reduces their lifetime transfer exemption to $40,000.  If they give the same amounts in 2022, they will each have $20,000 of ordinary income to report and it may be subject to self-employment taxes."

Interesting this behavior gets characterized as a 'loophole' and simply raising a crop and earning a living counts as a 'tax break', while sending your kids to college is the thing of 'dynasties.' But the real impacts on flesh and blood human beings are abstracted behind the political rhetoric of the legislation's proponents. As the discussion went during the episode, there are lots of incentive effects to consider. Why invest and improve operations when so much is going to be taken back? What will they have to pass on to the next generation? And this is key. It's not just family farms that are going to be largely impacted, these effects will impact small businesses too. But this is just scratching the surface. Family farms do more than just produce food and small businesses do more than just produce goods or provide services. In addition to being part of the social fabric in towns and communities, and in addition to providing a source of employment they serve other important social functions. 

Thomas Jefferson wrote to George Washington in 1787:

“Agriculture … is our wisest pursuit, because it will in the end contribute most to real wealth, good morals and happiness.”

These operations also serve as important institutions that not only transfer real property and assets to the next generation, but also the work ethics and values that go with it. Growing up I raised cattle with my grandfather, but also worked on the larger farms owned by my neighbors. I also worked for a family of WWII veterans who owned a hardware store, farm implement dealership, and a propane gas company. As the author Ayn Rand writes in Atlas Shrugged, 'All work is an act of philosophy.' What I learned from these people (the value of hard work, morals, character, resilience, civic duty, the list goes on....) is more valuable than any lesson learned in college or graduate school. We have gotten so distracted with credentialization we've forgotten that education is about more than a piece of parchment we can hang on the wall.  While I won't inherit a dime in terms of what these land owners and proprietors pass on to their heirs, I'll still pass on the values and philosophical underpinnings I learned from them to another generation. 

While there are many ways that these successful farmers and businessmen give back to their community in visible ways, there are many important contributions they make to society that go unseen. I'm certainly not the only example of someone that has benefited in this way.

As we continue to spend trillions at the federal level, we definitely should be asking how are we going to pay for all of this spending. Note even the loophole above is estimated to be only in the billions (keep in mind it takes 1000 billion to make a trillion). Let's also not forget that there is a huge difference between tax rates and the revenues that are actually realized. Human beings aren't cogs in a wheel or pieces on a chess board that can be played at the will of planners and bureaucrats.  But it is also important to ask what are we paying for and trying to accomplish? What are we giving up to get it? As economist Thomas Sowell writes in 'The Quest for Cosmic Justice"

"many of those pursuing a vision of cosmic justice simply take an adversarial position against the traditions, morals, and institutions that make the survival of this civilization possible."

Along the lines of what Jefferson said, the family farm is one of those important institutions that propagate morals and traditions key to the survival of our civilization from one generation to the next. Will the STEP act put its survival at risk?

Market Commentary: December 2020 Corn Futures

***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. ***** 

Dan Zwicker makes a salient point about fundamental vs. technical analysis - by the time you get the balance sheet figured out its too late. ( https://lnkd.in/ep2-pPw ) Well this year  looking both at fundamentals and technicals the best I could, I would have never expected this bounce back in corn or any of the commodities. With negative crude prices early in the pandemic, I think I overestimated the long term impact of COVID on domestic demand and overweighted domestic demand period. Crude has returned to trading pre-pandemic levels lately. Never expected stocks to use to take us all the way back to levels like 2012-14 (after the drought). China coming in with purchases was not on my radar. Now there is the buzz of a weather market with South America. 

Although looking at the fundamentals - my two model projections did a decent job bracketing December corn futures....going back to Dan's point...could I figure out the balance sheet fast enough to provide trading or hedging value? 

(chart produced using R Quandl & quantmod)

***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. ***** 

Understanding the Distinctions Between Methane and Carbon From Livestock Emissions

This is a very nice video that gets into some of the key differences between the way methane behaves in the atmosphere vs. carbon, and the impacts on climate change. See also:

Cain, M., Lynch, J., Allen, M.R. et al. Improved calculation of warming-equivalent emissions for short-lived climate pollutants. npj Clim Atmos Sci 2, 29 (2019)