Grandpa's Grumbles

2012-01-07T15:51:00.001-05:00

Thursday, April 19, 2007

Escaping from Farm Programs

Since the 1920's, economists, policymakers and farmers have been at odds over the need for programs to deal with the tendency for output to increase faster than consumption and with the large variation in commodity output. For the most part, economists have argued for reliance on the free market and the competitive system to cure these problems. However, farmers have asserted that they were at a disadvantage in the market compared with other industries and needed help to get a fair deal. Policymakers listened to their farmer constituents and sold their ideas to consumers and taxpayers. They justified market interference on the basis that family farmers were the backbone of our society. They pointed to depressed farm incomes and suggested that our food security should be guarded. They argued that an income transfer to farmers was, thus, a good idea.

Policymakers and their farmer constituents designed intervention programs to raise total income for the sector and average incomes of commercial producers of program commodities above free market levels. The programs control prices, hold stocks, idle land and transfer income. As the various administrations have operated the programs they have provided annual price floors for program commodities. During most the past 65 years, these floors exceeded short run market clearing levels. Over the entire 65 year period, they have exceeded long run free market prices. Thus, the price floors have encouraged production which was larger than the market could clear. The excess over sales accumulated in government storage programs, and resulted in attempts to reduce production to avoid further accumulations. For producers of program commodities, incomes and asset values were higher than they would have been in the absence of the programs. Producers of program commodities became dependant on, or coupled to, income support programs.

The Food Security Act of 1985 (FSA) moved a step toward market orientation by allowing price floors and commodity prices to decline. Income support to producers of program commodities was maintained through direct payments based on program yield and program acreage. The income support was achieved at a substantial increase in budget cost because the direct payments replaced hidden transfers from consumers.

As a result of the increased budget cost, the variability and size of the program budget became a major policy issue. The purpose of the income transfer and effectiveness of the program in achieving income stability was questioned and was considerable debate over whether these income transfers should continue.

At issues as we move toward a new Farm Program is whether commodity producers deserve a larger than free market share of income? Does the government have a role in providing for market stability even if it does not provide an income transfer? Such questions will only find answers in Congress through legislation.

Since the beginning of commodity programs economists have rather consistently argued for market orientation in agriculture with prices free to signal the need for more or less resources committed to production. However, the lack of a clearly defined statement of the sources of market failure and lack of sound economic programs to address the fundamental problems has often blunted their arguments for program reform.

The following evaluates how a free agricultural market diverges from the economists'competitive norm and to suggests how Federal programs could ease long run price discovery in a market oriented system.

THE COMPETITIVE MARKET NORM

At the center of the agricultural policy issues is the underlying faith of our society in the value of the free market in allocating resources and returns. Economist rely on competitive markets as a norm or standard. The assumptions of competitive market theory are a scale against which they measure economic performance. They argue that only in cases of market failure would an economy be better off with Government intervention. Pressure to cut government interference and move to a free market stems from a belief that competitive markets are effective, efficient and equitable. That is, competitive markets will result in just the right use of resources to produce just the right quantity of a commodity. And, according to the competitive theory free trade results in countries producing according to their comparative advantage.

Most economists believe that it would be desirable for the market to pass the "appropriate" economic signals through from consumers to producers concerning the quantity of resources to use in the production of commodities and how much to produce. They seldom specify the type of signal, but most infer that prices are the appropriate mechanism. In a free and competitive market the market price adjusts to bring about an equilibrium between the quantity supplied and the quantity demanded. Price provides the signal for adjustments in production and consumption. This competitive theoretical framework assumes perfect knowledge and instantaneous adjustment to equilibrium for long run and short run positions. That is, there is no short run. Capital, labor and current expenditures adjust eliminating excess resources. And, no stocks are carried in the system.

DEPARTURE FROM FROM THE NORM

Although the competitive model is a useful tool for analysis, the market for farm commodities departs from the rigid assumptions of the perfect market model. Specifically, there is a lack of perfect knowledge; production and consumption do not adjust simultaneously; random shocks affect production; there is not a fixed relationship between units of input and units of output; and production is seasonal, but consumption is continuous. Although producers can plan for an expected output and estimate how that output might vary, they have no basis for determining how output will vary in any one year. Producers make planting decisions on the basis of an expected price and an expected set of cost relationships. These would permit them to earn a return over variable cost sufficient to cover some or all of fixed cost. However, it would be coincidence if expected cost and actual cost or expected price and actual price coincided.

Probability theory offers no assistance in bringing expectations together with reality. It merely consists of the mathematics of the distribution of possibilities for situations which can not be empirically identified. (1) Thus, the quantity shock that occurs because of yield and weather variability is a non trivial condition. We can know the likely hood of a particular shock, but we have no information at planting time on whether that shock will occur in a particular year. Although nothing else changes, weather will bring about a mismatch between expected and actual yield and therefore expected and actual prices. Because the market allocates actual supply among demands rather than allocating expected supply among expected demands, determining the existence of fundamental shifts in demand or supply caused by economic forces requires several production periods.

Although many argue that market orientation will strengthen agricultural markets, some evidence shows that fitting agricultural production more closely to the competitive norm may not be good for the agriculture in either the short run or long run. McCalla and Carter argue that "... if production agriculture is a competitive island surrounded by varying degrees of concentration in markets, then deducing conclusions about the advantage of a return to a free market from theoretical constructs may not be valid"(3). However, consequences of government price fixing include (1) a heavy burden on the public treasury, (2) higher taxes, (3) higher cost of living, and (4) over stimulation of production for the protected commodity. In spite of these problems, agriculture programs from 1933 to 1985 have by one means or another established a floor price for program commodities by acquiring stocks and limiting production or marketings to set prices. A persistent problem remained through the existance of the programs. Policymakers could not establish a floor price belowr the long run market price and they therefore had difficulty clearing out stocks from farmer or Government held reserves. This is not surprising because income support through price supports, with out relying on the public treasury, requires that demand be inelastic and prices must be higher than the long run average free market price.

Although the legislators and program managers usually assumed the problem to be a chronic excess production problem that resulted in a low income problem, they relied on weather related production variability to extract them from the long run problem of stock accumulation. The stock accumulation was the result of excess production created by the price support effort. However, production variability is an ineffective procedure for emptying out storage bins, unless large acreage reduction programs restrict production to a level short of expected demand.

Using price as the trigger variable to initiate a Government action prevents the price from serving as a true measure of the need for production in future periods. Fixed current prices do not provide a sound base for forming expectations concerning future prices. Fixed prices also distort market allocation of the current year's crop and truncation of the expected price distribution on the lower end causes the expected price faced by the consumer to be higher than the price floor.

CONTINUING MARKET AND POLICY FAILURE

D. Gale Johnson, in an evaluation of agricultural policy, said "The policies of the 1950's were concerned with attempting to protect agriculture from changing conditions."... "The policies of the 1960's were reasonably effective in aiding agriculture to adjust to the inevitable resource transfers and the relative contraction of the farm sector."(2) In the Johnson context, policies of the 1980's tended to protect the sector from changing conditions rather than allow the sector to make the inevitable resource transfers.

Speaking to the subject of policy failure, Johnson has said: "If my analysis of the flexibility of resource allocation in agriculture is approximately correct, small errors in program formulation will very soon result in substantial cost to taxpayers, and possibly in difficulties in maintaining our pre-eminent position as a great agricultural exporter." In other words, it is relatively easy to create significant excess capacity in agriculture. if prices or payments are inconsistent with the underlying demand and supply situation. When agricultural output is greater than the demand, at politically acceptable levels of prices, a long time and large income transfers are required to eliminate the excess productive capacity and avoid major shocks to the production sector.

Price floors above long run market price levels are a major cause of excess production, but removal of such floors will not result in a stable market for agricultural commodities. Changing technology will result in a continuing expansion of production with a given set of resources. Producers have no means of retaining the benefits of cost reductions and real prices will trend downward as output increases faster than the combined effects of population and income shift demand.

In addition, a lack of homogeneity in the costs of production and marketing, resulting from differences in size, management, technology and location, will produce continuing excess capacity disequilibrium. Loss of resources from the sector will occur regardless of the form of policy. Because costs vary among firms, any price level below the average variable cost of the highest cost firm will in the result in the inevitable resource adjustment. Some firms will leave the sector while others continue to earn returns above of their variable and, perhaps, total production cost. Unlike industrial assets under excess capacity situations, land retains it's basic productivity. Frequently the assets of the exiting firms are recombined with those of the more profitable firms and production expands or cost decline or both. With no change in demand, or with demand shifting more slowly than supply, price will decline forcing additional firms to exit. However, production does not, necessarily, fall, because continuing consolidation of assets will occur. In the very long run, with firms exiting the sector a homogeneity of sorts may be achieved, permitting an equilibrium. Or, as concentration continues an oligopolistic system will be developed which permits some control of output at a level allowing the least competitive firm to remain in production because allocation of market shares has occurred.

ADJUSTING TO THE MARKET

Past price support policies caused more resource employment in crop production than the level needed to meet domestic and export demand at current prices. Stocks have accumulated. Removing excess capacity from the sector requires that real prices for output and real earnings must fall to force disinvestment from the sector.

Allowing real earnings to fall to the point that forces many of resources out of the sector is a painful treatment of the problem. In 1922, Henry A. Wallace, discussing the problem of heavy production against slack demand and addressing the possibility of market intervention said: "... in the long run every economic evil creates its own cure. If prices of farm products continue sufficiently long enough below cost of production, there will eventually be forced into bankruptcy enough farmers so that there will be no longer a disastrous surplus. At the same time there will be readjustments of land values, wages, etc., which will lower the production costs. "Henry A. Wallace, (4). However, avoiding the adjustment is impossible on a long term basis and easing the adjustment process becomes complex. Expansion of demand (shifting demand) at a fast enough rate to keep prices from falling seems economically and perhaps biologically impossible. Arbitrarily establishing a rigid price floor or a target price results in price certainty and provides the wrong information about future profitability. Tying price floors to current production costs results in distortion of returns in a manner that escalates future costs. This results in higher support levels in the future, higher production costs and an upward ratchet effect on support prices.

On the other hand, allowing the market to set prices without accounting for random disturbances from weather distorts the longer run economic signals. Prices changes from changes in demand or changes in technology and output are the economically determined signals that we wish to have transmitted.

WORKABLE OPTIONS

The critical aspect of any market oriented system is that the programs should not directly set prices and induce greater disequilibrium conditions. Providing protection against random shocks to the system need not distort long-term market signals if the shocks are due entirely to weather and yield quantity triggers rather than price triggers are used to initiate stock acquisition and dispersal. Also, stock acquisition must be limited to the yield increment.

Preventing the dynamic effects of the heterogeneous structure from driving prices down is difficult to achieve without inducing greater excess production. However, the most likely feasible solution may be some type of resource diversion (long term acreage diversion program) that diverts resources from production without fixing prices. With prices free to move according to true demand and supply shifts the cost of resource diversion program would be diminished.

CONCLUSIONS

Without price fixing programs, the agricultural sector would continue to experience a high degree of quantity and price variability from yield shocks. Also, the sector would continue to experience price disequilibrium, because of heterogeneity, even after the excess capacity induced by current programs is removed.

To achieve improved long run price discovery flexibility in prices is essential. To treat chronic excess capacity through Federal programs resources must leave the sector through positive adjustment programs and prices must adjust to economic stimuli. Prices must react to rationalize the market if income declines as a result of a change in the business cycle or if demand shifts as a result of a change in foreign exchange rates.

Programs that attempt to provide for price stability must use quantity changes as triggers and prices must be free to move with long run supply and demand conditions.

REFERENCES

1. Boulding, Kenneth E., "Normative Science and Public Policy", Economic Analysis and Public Policy, ed. Day, Richard H., Iowa State Press, Ames, Iowa, 1982

2. Johnson, D. Gale; "Food Production and Marketing: A Review of Economic Developments in Agriculture"; Food and Agriculture Policy; American Enterprise Institute for Public Policy; Washington D.C., March 10-11, 1977

3. McCalla, Alex F. and Carter, Harold O. "Alternative Agricultural and Food Policy Directions for the U.S. with Emphasis on a Market-Oriented Approach.

4. Wallace, Henry A., "Adjusting Production to Demand Benefits Both Farmers and the Public", Ames, Iowa, Dec. 28, 1922

Wednesday, April 18, 2007

Excess Capacity in Agriculture

Two fundamental problems in agricultural markets result in the inability of agriculture to arrive a long run economic equilibrium. The first, yield variability, has been address in separate papers. The second, structural excess capacity, is the subject of this blog.

INTRODUCTION

"I clearly recognize that in the long run every economic evil creates its own cure. If prices of farm products continue sufficiently long enough below cost of production, there will eventually be forced into bankruptcy enough farmers so that there will be no longer a disastrous surplus. At the same time there will be readjustments of land values, wages, etc., which will lower the production costs. Economic affairs always work themselves out if you leave them alone. However, it is equally certain that they will work themselves out even though you tamper with them. The disadvantage of tampering is that those who do the tampering are likely to be reviled by about half the population." Henry A. Wallace, Dec.28, 1922 (17).

Discussions, seminars, and symposiums have been conducted prior to consideration of every new farm bill. For the most part, the arguments focused on the desirability of providing for a market orientation in agriculture, although there has not been agreement on the meaning of market orientation. During the discussions, the term has been allowed to remain ambiguous, perhaps in the hope that consensus could be reached without clarity of definition. However, lack of an agreed upon definition of market orientation and a clear statement of the intent of commodity programs, has made it difficult to determine how to modify programs to achieve a more market oriented condition or, to determine how non-market oriented diverges from the "norm" or standard of perfect competition.

Digression on Programs vs Policies

What we call farm policy is, instead, a collection of programs to control price, hold stocks, and transfer income. In fact, the only consistent aspect of the programs has been the attempt to support incomes. The record of the programs, as they have been administered over their 40 year history, is that they have provide a price floor for program commodities and this floor has resulted in excess production which was stored and which resulted in attempts to reduce production. The net result was that incomes and asset values were higher than they would have been in the absence of the programs. From the record, one would conclude that the major goal of the programs was to keep income above free market levels. Despite this, however, protection against price variability has often been cited as a major objective. But no consistent policy has been articulated by Congress, farm groups or the several Administrations since the 1930's. The collection of programs has been variously interpreted by economist and policy analysts as providing income support, price stability, protecting the food supply, and protecting the family structure of agriculture.

The argument has been frequently made that current commodity programs are not working(12). However, since no statement of purpose has been articulated for the programs, it is difficult to evaluate how well they are or are not performing. The evidence available suggest that the cost of the programs has been higher than some thought desirable. Also the benefits of the programs went to producers with large farms. And, programs supported income but did little to lessen price variability or provide for stable budget cost. In fact, it is the variability and size of the program budget that appears to have been at issue rather than the effectiveness of the income transfer or the effectiveness of the program in achieving market stability.

This paper identifies issues associated with commodity policy; develops a rationale for and suggests a possible definition of market orientation; examines how the sector would behave under market orientation; evaluates the process of transition; and evaluates whether there is a continuing need for Government involvement in agriculture, because of the potential for market failure. No attempt is made to provide empirical estimates of the effects of alternative programs. These will be reserved for succeeding reports. This report relies on economic theory to suggest interactions and directions.

COMPETITIVE MARKETS

Competitive markets are a norm or standard by which economists measure economic performance. The argument is made that only in cases of market failure would an economy be better off with Government intervention. The pressure to move to market orientation stems from a belief that competitive markets are effective, efficient and equitable allocators of resources and output. That is, competitive markets will result in just the right amount of resources used to produce just the right amount of a commodity with equitable compensation for resources.

Past intervention by Government to support incomes of certain groups of producers above market clearing levels was based on the premise that market failure caused incomes in the farm sector to be below those in the non farm sector. It was deemed equitable, therefore, to provide a larger income to farmers by transferring it from taxpayers and consumers. Presently there is considerable debate over whether these income transfers should continue. That is, over whether commodity producers still deserve a larger share of the pie or whether the actions of Government to support producer incomes is causing the sector to be less profitable than it would be under free market conditions. Also at issue is whether there is a role for the Government to provide for market stability even if it does not provide for an income transfer. And, if market stability is a concern how can it be provided?

Some farm groups tend to support continued income transfers to the sector and in particular to producers of specific commodities. Others tend to suggest that the sector is no longer deserving of income transfers but rather deserves some protection from the capriciousness of the market which comes about through variability induced by weather and by the actions of foreign Governments (17).

Although it is often argue that a market orientation will strengthen agriculture, there is considerable evidence that making agricultural production more competitive may not be good for the sector in either the short run or the long run. McCalla and Carter, citing Dorfman, Samuelson, Josling and Galbraith; argue that "... if ... production agriculture is a competitive island surrounded by varying degrees of concentration in markets, then deducing conclusions about the advantage of a return to a free market from theoretical constructs may not be valid"(8). They argue that the evidence is not clear that agriculture will be better served by a return to a free market. Also, it is not clear that domestic consumers would benefit.

There dose seem to be agreement, among those involved in the debate, that a market oriented agriculture does not mean a total withdrawal of Government from commodity markets. What is missing, however, is a reason why continued involvement of the Federal Government would be required or why it would contribute to better market performance.

Market Signals from Competitive Markets

Most economists suggest that it would be desirable for the market to pass the appropriate economic signals through to producers concerning the quantity of resources to use in the production of commodities and, by inference, how much to produce. They also suggest that it would be desirable for signals to be sent to the consumer about how much to consume. The type of signal to be sent is seldom specified but most infer that prices are the appropriate mechanism to provide the signal. In a free and competitive market, where no buyer or seller is large enough to affect the market price and where everyone has equal and perfect information, output will be allocated among consumers efficiently by the changing market price signals. The market price adjusts to bring about an equilibrium between the quantity supplied and the quantity demanded. That is, it provides the signal that adjustments must be made. However, this theoretical framework assumes perfect knowledge and instantaneous adjustment to equilibrium which is simultaneous for long run and short run positions, ie., there is no short run. Capital, labor and current expenditures adjust so that no excess resources are used in production.

Non Simultaneity of Price and Quantity Changes

The market for farm commodities has several aspects that depart from the rigid assumptions of the perfect market. Specifically, imperfect knowledge; production and consumption do not adjust simultaneously; production is stochastic; and, to the extent that it is affect by weather, random and normally distributed; and, there is not a fixed relationship between units of input and units of output. Although producers can plan for an expected output and, given sufficient experience, estimate how that output might vary, they have no basis for determining how much, or in what direction, output will vary in any one year. Planting decisions of producers are made on the basis of an expected price and an expected set of cost relationships that would permit them, under expected conditions, to earn a return over variable cost sufficient to cover some or all of fixed cost. However, because of the random nature of yield variability, it would be coincidence if expected cost and actual cost or that expected price and actual price coincided. Probability theory is of no assistance for it, according to Boulding, "... is merely the mathematics of the distribution of 'possibilities' ... in situations which can not be empirically identified"(1). Thus, the quantity shock that occurs because of yield and weather variability is a non trivial condition. If no other changes occurred, weather would distort the market by bringing about a mismatch between expected and actual yield and therefore expected and actual prices. As a result, it often takes several production periods to determine the existence of fundamental market changes, that is, shifts in demand or shifts in supply caused by economic forces. This is so because the market determined price allocates the actual supply with demand rather than allocating expected supply.

Floor Prices

Agriculture programs from 1938 to 1985 have by one means or another attempted to establish a floor price for program commodities to address what was perceived to be a low income problem for the sector as a whole. A defense of the floor price was conducted by acquiring stocks and limiting production or marketings. But, a persistent problem remained. That is, it was exceedingly difficult, if not impossible, for policymakers to establish a floor price to protect income, which would allow the long run market price to be above the floor by a sufficient amount to clear stocks out of farmer or Government held reserves. This should not be surprising. In order to support income through price supports in a market, demand must be inelastic and prices must be higher than the long run average free market price. The inelasticity of demand has been a major source of problems in setting program parameters because an implicit assumption of the programs has been that variability would be sufficient to empty out the storage. However, this cannot occur unless supply (production) is somehow restricted. Thus, although the legislators and the program managers assumed the problem to be a low income problem, they relied on variability to extract them from the long run excess capacity problem, which they had, in part, created by the supply control effort. For most of the historical period, long run prices appeared to be below the floor price. As a result, stocks accumulated in Government ownership as nonrecourse loans were forfeited.

The focus on price as the trigger variable to initiate a Government action prevented the price from serving as a true signal for production in future periods. That is, current year prices were not a sound basis for forming expectations concerning future prices. Also market allocation of the current year's crop was distorted because the distribution of expected price was truncated on the lower end and the expected price faced by the producer was necessarily higher than the price floor.

D. Gale Johnson has said that "The policies of the 1950's were concerned with attempting to protect agriculture from changing conditions."... "The policies of the 1960's were reasonably effective in aiding agriculture to adjust to the inevitable resource transfers and the relative contraction of the farm sector."(6) The policies of the 1980's, thus far, have again tended to "protect" the sector from changing conditions.

CONDITIONAL POLICY

Stepping back from current programs and considering the prospects for a long term policy for agriculture, it is possible to conceive a framework with both income support and reduction in price variability as objectives. It is also possible to develop programs to support either of these objectives. However, a clear articulation of the policy is required. D. Gale Johnson calls this to our attention quit forcefully. "The most critical assumption is the future level of net income of agriculture. For the years ahead we can not rule out a decline in net agriculture income of 10 percent and a decline of farm operator income of somewhat more. If this were to occur there would probably be some downward pressure on real estate values, unless the income decline were thought to be temporary." He continues: "If my analysis of the flexibility of resource allocation in agriculture is approximately correct, small errors in program formulation will very soon result in substantial cost to taxpayers, and possibly in difficulties in maintaining our preeminent position as a great agricultural exporter. It will, in other words, be relatively easy to create significant excess capacity in agriculture by providing incentives, through prices or payments that are inconsistent with the underlying demand and supply situation. Experience has shown clearly that when agricultural output is greater than the demand at politically acceptable levels of prices, a long time and large income transfers are required to eliminate the excess productive capacity."(6)

Just and Rausser have provided a basis for a new look at commodity policy (7,8). They argue that inflexibility in commodity programs has resulted in policy induced variability [instability] in commodity markets, making decision making by farmers and policymakers even more risky than it would be without commodity programs. They conclude that policy that is conditional in its response to economic conditions will be more likely to result in the transmission of appropriate signals to producers and consumers. Daft concludes that "The principle strength of the chapter by Richard E. Just and Gordon Rausser is its non traditional view of commodity policy. The authors assume that the reduction of risk and uncertainty is the principal justification for commodity policy. After reviewing the recent track record, they find that commodity policy, itself, has often been a source of instability rather than a cure for it. They attribute much of this policy failure to the attempt by legislators to establish future legislation on past economic conditions. When future conditions deviate from the assumed state, as they inevitably do, policy failure has resulted." "...Just and Rausser conclude that legislators should stop trying to anticipate conditions and, instead, adopt policies that would respond automatically to changes in sector economic variables." "As an illustration, they suggest that the Government agree to purchase 1 million bushels of grain for every one cent per bushel that the market price falls below a specified target price."

While Rausser and Just have performed a major service in providing a new perspective on commodity policy, a further extension of their approach will clarify the fundamental farm policy problem.

INSTABILITY, VARIABILITY, RISK AND UNCERTAINTY

According to Offutt and Blanford, "An unambiguous definition of instability would provide the ideal starting point for the selection of an appropriate empirical indicator [of risk]. Unfortunately the concept of instability is nebulous because the perception of what constitutes unstable behavior is largely subjective." "... Variability and instability can not necessarily be equated and require an implicit or explicit judgment be made as to what constitutes 'unacceptable variability'."(11)

For our purposes, it is not necessary that a judgment be made concerning whether or not variability is or is not acceptable. Rather, the issues are: is it measurable, is it reducible and to what extent are variability and uncertainty separable.

For the purpose of this paper it will be convenient to view risk as the measurable variation in a normal random variable, such as yield, with a quantifiable probability distribution of the "possibilities". Uncertainty will be considered as being exemplified by supply or demand shocks to the system that are the result of policy or economic variables where the result is expected to be a systematic change or structural change. Such actions are unmeasurable in an expectations framework and no probabilistic statement can be constructed concerning their occurrence or outcome.

Much of the research related to variability is associated with the stock holding function and the potential for determining an optimal level of stocks with a concept of covering negative supply deviation 80, 90, or 95 times out of 100. In reality, there can be no optimal stock level for any particular year. Because output for the coming season is a random variable, the optimal stock level must also be a random variable. Given an expectation of production variability one can construct an expectation of the level of stocks that would offset the production deviations. One cannot however anticipate, identify and offset supply and demand shifts as a result of policy or production changes.

The Just and Rausser argument, that conditional policy will allow the free market to function while providing stability, presumes that it is possible operate as though it was possible to control price and still allow the market to clear because of quantity variability. The conditional policy response suggested by Just and Rausser reacts to both physical and economic phenomenon and attempts to shield the producer or slow the effect of real supply and demand changes as well as the effects of random yield shocks. They presume that conditional control of the effects of other economic forces on price will reduce the likelihood of policy induced instability. However, Just and Rausser do not consider the possibility and implications of policy induced excess capacity as the result of conditional intervention which prevents the full impact of supply and demand shifts from being realized because of the manipulation of the market price.

Pass Through of Market Signals

While it is possible to mathematically estimate a number for the coefficient of variatation of price, the number is meaningless unless the price variation is random and normally distributed with mean zero. Historical price data contain both random and systematic changes and there is little reason to believe that the deviation will be normally distributed or that the estimate will be unbiased. There is, however, reason to believe that in the absence of market intervention policies the effects of weather would, over time, be normally distributed and it would be possible to remove the weather related effect from prices. It would also be possible to estimate the effects of a stocks management program that reacted to weather variation by acquiring, for example, yield in excess of expected normal and disposing of stocks if yield is less than expected normal.

Under conditions where long term supply and demand were in balance the smoothing effect on quantity would result in a stablity of domestic consumption and a stable supply for export. Such a stocks management policy would minimize the impact of domestic weather variation on commodity prices. All other factors would be reflected in the market including demand and supply shifts as a result of technology or changes in financial or macro policy variables. The effects of weather in importing countries and on competing exporters would also be transmitted through the market. Also the impact of their policies would be felt.

Some have viewed the wide price changes of the 1970's as an indication of increasing variability in the market and concluded that the random forces causing such disturbances may increase in the future. However, many of the events of the seventies appear to have been systematic structural changes which, in connection with random yield disturbances resulted in a confusing set of prices. For example, entry of the Soviet Union into the market on a major scale to aquire grain for livestock feed was a systematic change rather than a random event, as was the decision by the Chinese to buy wheat rather than tighten their belts, and the decision of the U.S. to raise loan rates and target prices rather than let farm income decline in the late seventies. Even the weather shocks on foreign yields are transmitted to our markets through a set of systematic filters that distort the random nature of the yield variability. Thus, the most truly random influence in the market is the effect of domestic weather on domestic yields. All other changes fall into the category of uncertainty or instability. And, it is these changes that are structural or systematic in nature that should be reflected in market price signals.

Implication for Stock Holding

Numerous studies of price variability and variability of quantity marketed, through domestic and export channels, have been conducted. Most have assumed that deviations in price from trend or deviation of production from trend were normally distributed random variables with mean zero (12,14,15). Therefore, the analysts also assumed that the probability of the actual deviating being less than a specified number is also a normally distributed random variable. However, the normal random variable assumption does not appear to be a correct specification of the behavior of either production or price. Many of the forces in the market are systematic and result in deviations that do not have zero mean. This is not to say that a mathematical representation with the sum of the deviations equal to zero cannot be constructed. But that such a construct is an erroneous representation of the forces causing market prices and quantities to change.

Under conditions where long term supply and demand were in balance, the smoothing effect of a reactive policy to acquire positive increments to trend yield and store them until they could be disposed of in periods of low yields would result in stability of supply for the domestic and export markets. Such a stocks management program would minimize the impact of domestic weather variation on commodity prices. All other factors would be reflected in the market including demand and supply shifts as a result of technology or changes in macro or policy variables.

Sharples and Slaughter suggest that "Adding to or releasing from buffer stocks in response to changes in quantity produced would stabilize the major source of food price variance in a closed system. That is, if operated world wide, such a program would provide reasonably stable food supply and prices. Theoretically, a buffer stock managed by such a quantity rule would stabilize prices with minimal interference with the allocation function. Prices would be free to respond to changes in demand [and changes in supply], and the allocation signals so generated would not be clouded by the noises of price changes in response to production variances occasioned by weather vagaries." However, they dismissed the quantity rule because production worldwide is difficult to measure and the size of the quantity buffer stock may preclude the response required. While they suggest that the price rule may be appropriate, they recognize that it runs the danger of obscuring allocation signals generated by non-random supply and demand shifts. "This suggests that the programs have built in self corrective features in order that the reserve acquisition and release prices adjust in accordance with the long un moving equilibrium."

Worldwide rationality on stockholding policy would imply that all producing countries would store the positive deviations from trend yield and dispose of them during periods of negative deviations. Storing more than the positive deviations from trend would require that in some year the market would have less available than had been planned for by producers or expected by consumers. Storing less than the positive deviations means that the probability of incurring a shortfall in stocks is increased because the positive increment from yield has not been stored but consumed and future consumption must be reduced below what it could have been if stocks had been retained.

If the U.S. changes its' policy from encouraging excess production with supported prices to free market pricing, then the appropriate response to changes in export demand would be to allow the market to clear, with the exception that the U.S. would stand ready to buy or sell the additions to or shortfalls from trend yield on whatever acreage was planted. Under such conditions the U.S. would not export its' domestic variability from weather on to the world market.

THE ARGUMENT OF CONTINUING MARKET FAILURE

Heterogeneity in the cost of production and marketing, which is the result of heterogeneity in size, management, technology and location will result in continuing excess capacity disequilibrium and loss of resources from the sector regardless of the form of policy. Because costs vary among firms, any price level within the range of total cost will result in some firms being driven out of the production while others continue to earn returns in excess of their production cost. As a result the assets of the exiting firms will be recombined with those of the more profitable firms and production is likely to expand or cost decline or both, because of the efficiency of the acquiring firm. With no change in demand, price is likely to decline and additional firms will be forced to exit. Continuing consolidation of assets will occur until a homogeneity of sorts is achieved or until an oligopolistic system is developed which permits some control of output that will allow the least competitive firm in the production structure to remain in production because allocation of market shares has occurred.

Policy analysts have identified two basic factors that have been important for agriculture policy determination in the United States. One is a tendency for output to increase faster than consumption. The other is a high degree of variation in commodity output and price variation, which results in variation in earnings. The purpose of this analysis is to explore the causes of excess capacity and price variation and identify how various types of policies and programs might be used to assist in overall adjustment of the farm sector.

The following analysis attempts to separate the various reasons for price and income changes and suggests how particular policy tools may relieve or exacerbate price and income stability and excess capacity problems.

SUPPLY/DEMAND SHIFTS CAUSE CAPACITY AND VARIABILITY PROBLEMS

Prices are the result of the simultaneous interaction of supply and demand. Therefore, before corrective policy actions are taken, it is important to understand whether the changes in price are the result of shifts in supply or demand or some combination of the two. It is also essential to understand whether the shift is a result of short-term or long-term phenomena. Lack of clarity in identifying the source of the change in price or in the reason for a particular price level can lead to a choice of policies that exacerbate rather than correct the perceived problem.

The unique aspects of agriculture are that agricultural production is subject to the random impact of weather and food is basic to survival. There is, thus, a general concern that some groups within the population (either domestic or world population) will have insufficient income to acquire sufficient nutrition for their existence at market determined prices.

Humanitarian Aspects

A humanitarian goal of society is that no one starves regardless of their ability to purchase food. To achieve this goal, output must be greater than the free market would be expected to achieve. This can be achieved by a shift in demand by transferring income to the disadvantaged (for example, through food stamps or other direct income transfers) or by a shift in supply making commodities available to certain segments of society at subsidized prices or through donations. This aspect of agricultural puts it somewhat in the nature of a public utility which must provide service to all segments of society.

Enhancement of the effective demand or expansion of the quantity marketed, is complicated by the biological nature of the production process, the random disturbances in the market created by weather and the inelasticity of demand for the product. These biological factors produce short-run changes in market supply (quantity available for consumption) that make discovery of long run prices extremely difficult and therefore longer term investment and subsidy decisions are frequently made from erroneous price expectation. Improvement of long run price discovery is the primary focus of the remainder of this paper.

BIOLOGICAL NATURE OF THE PRODUCTION PROCESS

Because agriculture is a biological process, it is subject to seasonality, perishability of output, weather related problems and environmental problems including insects, disease, and weeds. Environmental consideration preclude agricultural production in some regions and enhance it in others and alter the feasible output mix in a particular geographic area. To some extent these biological considerations are manageable. That is, we have the ability to modify the environment so that supplies can be obtained at prices that permit adequate returns to the producer for investing in the environmental modification technology. In the following sections, the various biological factors and the implications of allowing the sector to deal with them under free market conditions were considered in a paper presented to SAEA in Feb 1987.

To this point the discussion has focused on the impact of biological factors and weather changes on farm prices and farm income. This section focuses on supply and demand shifts resulting from economic forces.

Demand Shifts

Demand shifts occur because of changes in population, taste and preferences, and income. They may also result from policy decisions made about, and applied to, other sectors of the economy. The demand shifts may be temporary (a few quarters) or they may be permanent. Whatever the cause, a decrease in demand (a shift to the left of the demand schedule) results in consumers buying less of the commodity at any schedule of prices. If no change in the supply occurs, the result of the demand change will be that the price will fall and some smaller quantity will be consumed. In order to achieve an equilibrium some resources must be removed from production. In a free market this occurs because revenue is reduced to the point where it is unprofitable for some producers to produce the commodity and resources are transferred to other employment or underemployed. Setting prices above the new equilibrium level, to maintain producer revenue, results in the accumulation of stocks (inventories). If the demand reduction is permanent or extended, a rigid price floor results in continuous stock accumulation.

Supply Shifts

Changes in supply occur primarily because of changes in technology, changes in the relative price of inputs or changes in the real price of inputs relative to output. For example, adoption of a new technology may result in the ability to produce more grain from the same resources and lower the cost of grain per bushel. Such a change means that at any schedule of prices more grain would be offered for sale. As in the case of a reduction in demand fixing the price above new equilibrium will result in accumulation of stocks.

External Policy Impacts

In addition to the impact of normal economic forces in a free market economy, the farm sector is subject to the impact of Government intervention in other sectors. For example, supply shifts occur as result of tax policy changes that encourage businesses to make investments. In particular, the use of investment credit and accelerated depreciation cause more resources to be employed in the production of crops than would be used without these investment incentives. Tax policy that allows the write off of farm losses against other income provides an incentive to continue farm production even though losses are being incurred. The net effect is to keep more resources employed in production than would be employed without the tax incentive.

Credit policy also encourages the employment of more resources in the sector to the extent that it provides interest subsidies or makes loans available to producers who could not obtain funds through commercial channels.

Monetary and fiscal policy have a substantial impact on the demand for commodities though their impact on business cycles and domestic income and though their effect on foreign exchange rates. Under a restrictive monetary policy which keeps U.S. interest rates above those in other countries the dollar tends to valued higher relative to the currency of potential importers. Thus, prices for U.S. commodities are inflated in the export market and the net effect is the same as if the U.S. supply was shifted left or as if an export tax were imposed on U.S. goods.

Presented with such problems policy makers are often disposed to create exceptions to a policy or to provide for offsetting special conditions. For example, to offset the impact of restrictive monetary policy on farm commodities, export subsidies may be instituted. The result is that the consumer and the taxpayer pay a higher price for the commodity, transfer income to the farmer and subsidize the foreign buyers.

Using farm commodity policy to protect farmers against price and income variability or against "low" incomes is to treat the symptom rather than the problem. Price and income changes occur in response to shifts in supply or demand . The cause of the problem must be uncovered be for a treatment can be proposed. If the source of the problem is outside the sector then perhaps that is the place to develop corrective policy, if such policy is needed. If tax laws are encouraging excess resources in production then a change in the tax law would be in order. If the problem occurs because of forces that are the result of random weather shocks then appropriate tools can be developed to react to but not anticipate weather changes.

ALTERNATIVE FUTURES AND THE IMPLEMENTATION OF POLICY

The need for and the effectiveness of agricultural policy will be determined by the continued certainty of yield variability and by the relative change in output and consumption trends.

If consumption is rising coincident with or faster than output, real prices will tend to remain flat or rise slightly. On the other hand, if output is tending to rise faster than consumption, real prices will tend to fall.

In part, because of past price support policies, more resources are employed in crop production than the level needed to meet domestic and export demand at current prices and stocks are tending to accumulate. To remove the excess capacity from the sector, real prices for output and real earnings must fall to levels which force disinvestment from the sector, resources must be acquired from producers and removed from production, or demand must grow more rapidly than output for an extended period.

Allowing real earnings to fall to the point where a large number of resources are forced out of the sector is a painful solution. Expansion of demand (shifting demand) at a fast enough rate to keep prices from falling appears to be economically impossible. The most feasible solution appears to be some type of resource diversion in combination with stability programs. Achieving the appropriate balance is complicated by the random variation of weather which results in highly variable yields and therefore highly variable prices which gave inappropriate signals for long-term resource commitments. Arbitrarily establishing a rigid price floor or a target price without regard to longer term market forces results in price certainty and has a high probability of providing the wrong type of information about future profitability. Tying price floors to current production costs results in distortion of market signals in a manner that tends to escalate future costs. This results in higher support levels in the future, higher production costs and in a rachet effect on support prices. On the other hand, allowing the market to set output prices without accounting for random disturbances from weather distorts the longer run economic signals that occur from changes in demand or changes in technology and output. These are the economically determined signals that we wish to have the market transmit.

Providing protection against random shocks to the system need not distort long-term market signals if the shocks are not the result of economic forces that is, if they are due entirely to weather. However, if income declines as a result of a change in the business cycle, providing price protection against the shift in demand will result in commitment of more resources in production than would be required. Or, if demand shifts as a result of a change in foreign exchange rates, establishing a price floor could result in a greater reduction in trade than would result from a market determined price.

SUMMARY

The previous discussion suggests that, farm commodity producers are subject to the risk of low levels of income because of the impact of weather and economic forces on the production, marketing consumption and prices of the commodities they produce. Because agricultural production is a biological process which results in the disassociation of the commitment of resources to the production process and the output of those resources, and because rainfall and temperature are not subject to the control of the producer the relationship between committed inputs and output is not fixed. Because the input/output relationship is not fixed and the impact of weather is random in nature, the producers best expectation of the price for the next crop year is likely some average of historical prices. If resources are committed with the expectation of normal yields and prices and the output results in a significantly better or poorer crop, prices and incomes can be dramatically altered, although the producers planned appropriately given their limited information.

Historically, society has recognized this risk and has attempted to protect producer from the most severe aspects of a random loss of income and consumers from the loss of the commodity. In the l930's, programs were established to put a floor under prices and thus prevent farm income from falling during periods of excess production. In order to support prices, nonrecourse loans were made. The loan rate became the price floor and crops not sold were forfeited to the Government.

As income increased, production at the supported price increased and stocks accumulated in Government storage as markets failed to clear and loans were forfeited. To limit stock accumulations, various marketing controls and production controls--largely through acreage diversion and acreage allotment programs--were instituted. In the l970's, with acreage diversion and export subsidy programs in place to help clear stocks, supplies diminished and prices rose rapidly. To prevent rapid price increases in the future, a farmer-owned reserve was introduced. A set of target prices and deficiency payments were established to, in part, guarantee an income transfer to producers who cooperated in supply control and stocks management programs while the loan rate or price floor was to be set near market-clearing levels.

Although there may be differing points of view as to how farm policy should be accomplished, the basis for a future farm policy appears to be linked to the following premises.

l. There is a societal belief and general consensus that farmers should receive some degree of protection from the random force of weather.

2. There is a need to hold some level of stocks against the possibility of a shortage of production but stocks should not be permitted to accumulate to the point where they will not be removed by short crop years.

3. Current year market prices do not allocate resources to the production of commodities in an efficient manner in the short run because of the temporal dislocation of inputs and production and because output is to some extent random. In the long run, resources will tend to be allocated by output prices if long run market signals can be determined.

4. Neither the Government nor the farmer can correctly anticipate or forecast the outcome of a specific crop at planting time except by chance, therefore, programs should be designed to be reactive to crop output rather than anticipate crop output.

5. Because commodity prices have been supported above market clearing levels in the majority of years since the l930s the sector currently employs excess resources in the production of price supported commodities.

6. Market prices will efficiently allocate output among consumers.

7. Protecting farmers from downside income risks requires two forms of programs. One to protect individual producers from the loss of a crop due to random weather events that are localized in nature and another to protect all producers from the price depressing impact of an exceptionally large crop.

8. Consumers desire some form of protection against scarcity from a short crop.

9. Tax payers desire to minimize Government expenditures.

REFERENCES

1. Boulding, Kenneth E., "Normative Science and Public Policy", Economic Analysis and Public Policy, ed. Day, Richard H., Iowa State Press, Ames, Iowa, 1982

2. Brake John R., "Short Term Credit Policies for Dealing With Farm Financial Stress and Their Impacts on Structure and Adoption of New Technologies. Speech ;Cornell, Ithaca, N.Y., 1985

3. Daft, Lynn M., Discussion Alternative Agricultural and Food Policies and the 1985 Farm Bill; Ed. Rausser, Gordon C. and Farrell, Kenneth R.; National Center for Food and Agricultural Policy, Resources for the Future, Washington, D.C.p 135

4. Harl Neil E., "Proposal for Interim Land Ownership and Financing", Iowa State University, Ames, Iowa Jan."1985

5. Hathaway, Dale E. "Grain Stocks and Economic Stability: A Policy Perspective ;Analysis of Grain Reserves: A Proceedings "ERS, USDA, Washington, DC, August, 1976.

6. Johnson, D. Gale;"Food Production and Marketing: A Review of Economic Developments in Agriculture";Food and Agriculture Policy; American Enterprise Institute for Public Policy; Washington D.C., March 10-11, 1977

7. Just, Richard E."Automatic Adjustment Ruless For Agricultural Policy Controls", American Enterprise Institute of Public Policy Research, Washington, D.C., Nov 1987

8. Just, Richard E. and Rausser, Gordon C.; Uncertain Economic Environments and Conditional Policies; Alternative Agricultural and Food Policies and the 1985 Farm Bill; Ed. Rausser, Gordon C. and Farrell, Kenneth R.; National Center for Food and Agricultural Policy, Resources for the Future, Washington, D.C

9. McCalla, Alex F. and Carter, Harold O. "Alternative Agricultural and Food Policy Directions for the U.S. with Emphasis on a Market-Oriented Approach.

10. Miller, Thomas A., "Increasing World Market Fluctuations and U.S. Agriculture: A Summary of Implications", NED, ERS, USDA 1984, ERS Staff Report #AGES 84920

11. Offutt, Susan E. and Blandford, David, "A Review of Empirical Techniques For the Analysis of Commodity Instability" Department of Agricultural Economics, Cornell Uni, Ithaca, New York 14853

12. Sharples, Jerry A. and Slaughter, Rudy W.Jr, "Alternative Agriculture and food Policy Directions for the U.S. With Emphasis on Stability of Prices and Producer Income: Alternative Directions for the United States and Implication for Research" Policy workshop Washington DC, Jan 1976, ERS, Farm Foundation and W.A.E.R.C.

13. Spitze, R.G.F. and Martin, Marshall A. Analysis of Food and Agricultural Policies for the Eighties. No. Central Regional Res. Bull. 27l. Ag. Expt. Sta., Univ. of IL, Nov. l980.

14. Walker, Odell L and Nelson, A.Gene, "Agricultural Research and Education Related to Decesion-Making Under Uncertainty: An Interpretive Review of Literature", Agri.Exp.Sta., RR P747 March 1977, Oklahoma State Uni., Stillwater, OK

15. Walker, Rodney L, Sharples, Jerry A. and Holland, Forest, "Grain Reserves For Feed Grain And Wheat in the World Market" Analysis of Grain Reserves A Proceedings, ERS, USDA Washington, DC, Aug 1976

16. Walace, Henry A., "Adjusting Production to Demand Benefits Both Farmers and the Public", Ames, Iowa, Dec. 28, 1922

17. Weber. Mark F. "Views on 1985 Farm Legislation of Agricultural and Consumer Organiziations", Policy Research Notes, Issue 19a, ERS, USDA, Feb 1985

18. Zelner, James A. and Price, J. Michael;"Automatic Adjusters and Farm Commodity Programs: The Case of Stock Triggers"; Speech presented at Southern Agricultural Economics Association Meetings; Biloxi, Mississippi, Jan, 1985

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Monday, April 16, 2007

The Evolution of Programs

Historically agriculture has been subject to periods of surplus and scarcity. During periods of "shortage" and strong demand farmers have responded to strong prices and prospects of high income levels by expanding production. Production increased through advances in productivity and the addition of land, labor and capital. As supply growth outpaced demand growth - prices and farm income declined. Similarly, during bust periods, characterized by low commodity prices and farm income, resources were removed or idled inorder to reduce production and bring demands and supplies into balance.

This is characteristic of U.S. agriculture prior to the 1930s - boom and bust periods. During the Civil War prices and income were high. However, as the war ended supplies grew and prices and income fell. Similarly strong demand and high prices stimulated by World War I provided the necessary incentives to expand production. After WW I and through the 1920s commodity prices and income trended downward.

Agricultural policies are the result of the resolution of conflict. They begin with divergent views about what should be done and end with a compromise between groups. They are carried out through compromises between the apparent or understood intent of laws and regulations and the personal philosophies and interest of policy administrators. Policies are, therefore, ambiguous to some degree. They leave room for interpretation. Policies are often rationalized to some unintended program objective after programs are written into law or regulation. Programs that were undertaken as an implimentation of a policy in dealing with some acute economic, social or political problem acquire a body of data and arguments in their defense that may be quite different from the original justification for the program or policy. Programs whose functions have been fulfilled are often continued for reasons quite different from those intended at the start of the program. Programs thus evolve over time, taking on different purposes and often supporting policies far different from their initial purpose.

Pre World War I

Prior to the First World War policies affecting agriculture were largley development policies focused on developing the fontier and expanding production. This single objective was facilitated by land settlement programs, support of the family farm concept, and increased agricultural productivity. A sound and expanding agriculture would complement industrial growth and economic prosperity. In 1862, a number of acts were passed that "opened the west" and established the importance of agriculture, from a Federal perspective. The Homestead Act granted acreage to those willing to improve the land and live on it for 5 years. The Morrill Land Grant College Act established agriculture as a mainstay at Colleges and Universities. The U.S.D.A. was established in 1862. Also, Congress subsidized development of the transcontinental railway system - to assist in transporting agricultural commodities. Eventually legislation was enacted to support research at agricultural experiment stations (Hatch Act 1887), extend the land grant college concept to black colleges in the South, and to provide Federal funds for agricultural extension (Smith-Lever Act - l914).

Three additional acts that significantly influenced agricultural development in the early 1900s were the Reclamation Act of 1902, the Federal Farm loan Act (1914), and the Capper-Volstead Act (1922). The Reclamation Act provided federal funding for irrigation development which enabled agriculture to expand in the West. The Federal Farm Loan Act established the Farm Credit System which gave farmers access to subsidized credit. The Capper-Volstead Act exempted agricultural cooperatives from the Sherman Antitrust Laws and allowed these organization to increase in number, size and power.

The 1920's -- Program Initiated

To a large extent today's farm commodity programs are a result of the economic chaos that affected agriculture in the 1920's. As the result of a decline in exports, the introduction of mechanical power for hauling freight and people, and the introduction of the tractor for agricutural production the capacity of agriculture to produce far exceeded the demand for its output. As the result of the shift to mechanical power some 50 million acres were released from production of feed for draft animals. At the same time land was being added to the productive base through expansion onto the plains and grass land and through massive irrigation and reclaimation projects. These forces along with the declines in both domestic consumption and exports in the early 1920's resulted in a rapid fall in farm prices while prices of manufactured goods continued to rise.

Farmers sought relief from, what they percived to be, selective economic depression in agriculture through the introduction of bills in Congress to support prices through the purchase of commodities. A more complex approach to price support was to be achieved through the McNary-Haugen Bills which were primarily programs to remove surpluses from domestic markets through export dumping. Although the bills failed to pass in Congress or were vetoed by the President, they brought a focus to the farm policy debate. The quest for "economic justice" for farm people, for "Equality for Agriculture", was lead by George Peak who believed in a natural balance between agriculture and industry and felt that agricultural commodities should be priced such that their puchasing power was maintained on a par with industry.

In 1929, Congress created the Federal Farm Board and povided it with $500,000,000 to purchase commodities in order to support their prices. The funding proved to be inadaquate and the Board with no ability to control production was seen to be a failure. In 1932, the Board recommended legislation which would "provide an effective system for regulating acreage or quantites sold" inorder to raise prices and incomes for producers of commercially traded commodities.

The forerunners of current commodity programs were created in the 1930's to raise the income of producers of "basic" commodities (commodities which were important in commercial markets) by restricting market supply. The Agricultural Adjustment Act (AAA) was to be a self supporting program to bring about supply restriction through processor taxes. Revenues were to be use to make allotment payments to producers who set aside up to 20 percent of their acreage. The Secretary of Agriculture proclaimed a 15 percent acreage reduction for contracting farmers to be eligible for payments on the 1934 crop.

In the Case of the U.S. vs. Butler, often referred to as the Hoosic Mills decision, the Supreme Court on January 6, 1936 declared the processor tax and production control provisions of the AAA unconstitutional. Thus, the self-financing provisions were eliminated and supply control was disrupted for a short period. To responed to the short-term crisis and replace the production control provisions of the AAA, Congress rushed through the Soil Conservation and Domestic Allotment Act of 1936 by February 29, 1936, less than 2 months after the Hoosic Mills Decision. Under the 1936 Act, acreage reduction was to be achieved through conservation programs, however, the program failed to restrict output.

The Agricultural Adjustment Act of 1938 brought about stronger Federal intervention in the market. The term parity was introduced into legislation for the first time and the Secretary was required to make nonrecourse loans for producers of corn, wheat and cotton. Nonrecourse loans were at the option of the Secretary for rice and tobbacco. Loans were set at a fixed percentage of parity. In addition, producers were to receive parity payments to bring their return as close to parity as possible with available funds. Because program benefits, from higher prices and parity payments, were tied to production, the larger and the more efficient a producer the larger the benefits to that producer.

The Commodity Credit Corporation was established by executive order in 1933, which provided loans to cotton producers enabling growers to hold their cotton until prices improved. For fruits and vegetables, production controls were supplemented by marketing agreements. Quotas were implemented for sugar.

1940s - Abortive Attempts of Price Support Flexibility

Despite the use of acreage allotments and marketing quotas, commodity inventories began to increase in the late 1930s, particularly those owned and controlled by the government. Yield growth helped to make production controls ineffective. By 1939, direct government payments accounted for 35 percent of net cash income and 30 percent in 1940. However, WW II stimulus improved export demand and as a result prices strengthened and direct government payments fell to 13 percent of net cash income in 1941. WW II postponed the need to address growing surpluses and government costs in the 1940s.

Government price supports which were set between 52 and 75 percent of parity in 1938 were above market cleaning levels as surpluses started to become burdensome. However, the improvement in the industrial sector provided Congress with the impetus to raise support for agricultural commodities up to 85 percent of parity (for those commodities which producers had not disproved marketing quotas). Later legislation over 1941 and 1942 period raised support to 90 percent for some commodities and extended the level of support at these high levels to 1948. By 1945 more than l00 commodities were supported at high (above market clearing) levels. During the war years supports rose and supply control requirements declined.

As the war ended debate arose as to what direction supports should take - high fixed supports as in the War years or flexible more market oriented dependant on existing supplies. The Agricultural Act of 1948 favored flexible supports over time. However, supports would remain at near the 1948 levels for 1949 plantings. The 1948 act also revised the parity price formula specifying farm - nonfarm relationships dependant on current (10 years) period to account for productivity and then faster changes since the early 1900s. This would also support levels to decline beginning in 1950. The surplus problem facing policy makers in the late 40s was contributed to by the adoption of hybrid seed for corn and the full transition to "tractor power" as opposed to horse power.

Because prices were expected to collapse following the close of the war the Steagall Amendment was enacted in 1941 to keep prices at war time levels for two years. The amendment expired December 31, 1948. Although there was a growing bipartisan and multi-commodity group consensus that flexible price supports were desirable, the Agricultural Act of 1948 extended high price supports for one more year, after which flexible price supports based on a percentage of parity were to become effective. However, surpluses accumulated and in an act of expediency the Agricultural Act of 1949 pegged price supports at 90 percent of parity through 1950.

After 1951 cooperating producers of basic commodities could receive support levels between 75 an 90 percent of parity (if marketing quotas were not disapproved). Additional refinements to the parity pricing formula were made on the 1949 Act which general merged the price index level.

The outbreak of the Korean War on June 25, 1950 lead to a continuation of high price supports through 1952 for national security purposes and neither acreage allotments or marketing quotas were in effect for the 1950 or 1951 crops of wheat, rice, corn or cotton and stocks held by the CCC accumulated rapidly.

The 1950's -- Recognition of and Dealing with Excess Capacity

Flexibility in price supports was again deferred by Congress in July 1952 though by passing legislation to provide for 90 percent of parity for the 1953 and 1954 crops, if producers had not disapproved of marketing quotas.

Acreage allotments were reinstated for corn for the first time since WW II and marketing quotas were proclaimed for wheat and cotton and continued for tobacco and peanuts. Yet, 90 percent of parity loan rates resulted in the rapid accumulation of stocks by the CCC. The application of acreage allotments to a crop like corn caused expansion of production of nonallotment crops and depressed prices. It was becoming apparent that the rigidity of allotments did not allow for efficient production adjustment.

In recognition that rigid and high loan rates were incompatible with real economic conditions, the Eisenhower Administration moved to implement the adoption of flexible price supports. The Agricultural Act of 1954 set price supports at 82.5 to 90 percent of parity in 1955 and 75 to 90 percent of parity thereafter. A portion of CCC stock holdings were to be set aside and disposed of by export, donation and disaster relief.

The export market was first considered by Congress in the passage of Public Law 480 in 1954. This Act proved to be of major importance in assisting in the disposal of stocks yet it was limited in scope to sales for soft currencys, emergency relief and bartering for strategic material.

Although support prices were made flexible, the range of flexibility was not sufficient to slow the growth in output to an equilibrium situation with demand growth. Pressure from increasing stocks resulted in the establishment of the Soil Bank by the Agricultural Act of 1956. Because prices were above world levels, direct sales in world markets were not occurring and output restrictions seemed imperative. The Soil Bank was designed to take cropland out of production. Composed of an Acreage Reserve and a Conservation Reserve, the soil bank attempted to deal with both short-term and long-term problems.

The Acreage Reserve was an annual program that replaced the acreage allotment. Under the program farmers could reduce the acreage devoted to a crop below their allotment and be paid for diverting it to conserving uses. In 1957 the program had 21.4 million acres out of production, but it was terminated after 1958 because it was condemned as a high cost program that was ineffective in controlling production.

The Conservation Reserve was viewed as a measure to deal with the longer term adjustment of resources out of agriculture. Contracts were signed for a maximum of ten years for whole farms and for cropland to be diverted to conservation uses. By 1960, 28.6 million acres were under the program. The last land left the reserve in 1972. The 1956 Act also began a two tiered pricing system for rice with export rice supported at a different level that domestic rice.

The 1960's -- Direct Payments and Acreage Reduction

By 1960, the high price supports of 1953 had given way to generally lower and more flexible prices however neither the lowering of prices nor the restrictions on acreage had been able to bring about an equilibrium between output growth and demand growth. The export market while increasing slowly, through PL-480, was not moving grain at prices as high as our domestic support levels. Stocks reached record levels.

The decade year of the 1960 saw a fundamental shift in programs from price support to direct income support payments and from voluntary acreage reduction to diversion programs.

Beginning in 1961 Congress passed a bill giving the Secretary of Agriculture authority to make payments to producers in cash or certificates to achieve acreage reduction of at least 20 percent for corn and grain sorghum. Payments were made on 50 percent of their normal yield. If they withheld an additional 20 percent they were paid on 60 percent of normal yield.

The Food and Agriculture Act of 1962 continued the voluntary acreage reduction program but broke new ground by separating price support and income support payments. Loan rates on corn were allowed to decline to near the world price level. A direct income supplement of $.18 a bushel of normal yield was made to support farmer incomes if farmers complied with acreage reduction programs. The combination of large acreage reduction programs and world level loan rates resulted in a significant decline in grain stocks during the 1960 and by 1970 CCC stocks were approaching zero. However, the cost of direct income support payments rose rapidly and reached $3.8 billion in 1969.

The 1970's -- Foreign Market Dependency

Throughout the 1970's production capacity and export growth were issues. Farm programs increasingly built in inflation adjustments.

In the early 1970's a combination of acreage reduction and export subsidy programs, a series of devaluations of the U.S. dollar, and short crops in the USSR and India emptied the U.S. bins. Because of the Russian grain sale in 1972, grain prices rose rapidly. The Agriculture and Consumer Protection Act of 1973 expanded the concept of market orientation and introduced target prices and deficiency payments to replace the price support payments of the previous 10 years. Deficiency payments were to be made only when prices fell below the target price.

The short run situation of strong export demand and low stocks gave rise to a concern about the long run availability and stability of the market. General inflation in the economy and rising prices for fuel and fertilizer created increasing concern over costs of production. The initial target was fixed abitrarily by legislation and had no relationship to market conditions. In later years they were to adjusted by an index of the cost of production.

Yet, there was an effort to maintain the market orientation of the programs by keeping loan rates low relative to market prices. For cotton, loan rates were set at 90 percent of the price of U.S. cotton in world markets. Corn loans were well below the market. As the export market remained strong, more and more people came to believe that the future would be a period with more years of scarcity than of surplus. On the strength of tight markets lenders provided money to farmers to by land and machinery at higher and higher prices.

The Food and Agricultural Act of 1977 was an accommodation to the general inflationary spiral raising loan rates and target prices well above previous levels and above the recommendations of the Administration. Target prices changes were tied to changes in cost of production. A Farmer Owned Grain Reserve (FOR) was created to provide for the possibility of extended nonrecourse loans to farmers in order to provide for a buffer stock to encourage farmers to manage stocks. To encourage participation in the FOR farmers were offered an advance storage payment. Stocks were to remain in the reserve until market prices exceeded release prices.

Although exports remained strong in the late seventies grain was rapidly accumulating in the FOR. Market prices fluctuated with several shocks to the export market and program management became a complex game of balancing the entry and exit of stocks from the FOR.

The 1980's -- Changing Direction; Liberalization

The 1980's brought about the full realization that farm programs cannot be developed in isolation of macroeconomics and international competitiveness. Domestic policies have been clearly seen to have international market implications that alter the actions of consuming and and competitor nations. The beginning of the 1980's saw a reversal of world market conditions.

The value of the dollar rose sharply. Production increased in the consuming nations and our competitors were under-pricing the the U.S. in the world market.

In order to keep grain off the market and out of the CCC the loan rate on FOR grain was increased above the rate for regular CCC loans. Market prices declined and in 1981 dropped below the FOR loan rate for corn and approached the FOR rate for wheat.

Initial efforts toward a 1981 Farm Bill recognized the need for greater market orientation and a reduction in budget costs. However, with the export market turning sour, farmers were applying pressure for greater income protection. The farm sectors performance in 1981 was worse than expected and prices were well below 1980 levels. The grain provisions of the 1981 Act were a Congressional experiment in legislated prices base on expected rapid inflation in production cost.

World wide recession, a continuing strong dollar, and large increases in output dashed hope that the market would recover in 1982. Season average prices for corn and wheat were below the loan rate. Deficiency payments rose sharply. Rigid price floors were again creating stock piles as U.S. commodities were priced out of the market.

PIK, the largest acreage reduction program in the history of farm programs, was introduced in 1983. A total of 82 million acres wase enrolled under the PIK program with payment at 80 percent of production for all crops but wheat and at 90 percent of production for wheat. A combination of PIK and drought in 1983 cut stocks sharply and prices rose much more than anticipated. The bins were refilled in 1984.

The Food Security Act of 1985 introduced a general realization that world markets are a controlling factor in U.S. agriculture. Price supports were reduced from levels projected in the 1981 Bill and farmer incomes have been upheld by direct government payments. Export enhancement programs along with the declining value of the dollar and a modest recovery in world market have resulted in a turn around in exports. Acreage reduction programs and payments in CERTs have reduced stocks. Marketing loans for rice and cotton have made us competitive at world prices.

The evolution of programs has been conditioned by short-term economic and political conditions. Emergency measures once enacted have evolved into long-term programs that often had different objectives and impacts than those intended in the original legislation. Throughout most of the history of the programs the importance of market pricing has been stressed on a bipartisan basis. Yet, political expediency has resulted in a 55 year history of price support programs. A full recognition that income support through ridged prices is unfeasible over the long term is required in order to move to a market oriened program.

Multilateral efforts to bring about rationality in world markets by removing domestic and export market programs that interfere with prices and distort trade are essential to remove the excess capacity problem.

2012

2012-01-07T13:14:00.002-05:00

1/52 of 2012 is history.
When I was a teenager I never expected to live beyond the year 2000.
More than 10% 0f the 21st century is gone and I'm still here. I feel as good as I did at age 50. Maybe even better.
With any luck and perhaps some good judgement and the right health care I could make it to 2020 or even 2030.

Items to consider

2010-02-18T16:25:00.002-05:00

The Universe is about 13.7 billion years old.

Our solar system is about 4.6 billion years old.

On the surface of the Earth, the oldest rocks are about 3.8 billion years old.

The earliest fossils, are about 3.5 billion years old."

Fossil evidence first reveals living cells about 570 million years ago.

First mammals appeared 200 million years ago.

First Primates appeared about 65 million years ago.

Prosimians appeared 60 million years ago.

Early monkeys appeared 33 million years ago.

Hominids appeared 6 million years ago.

The oldest homo sapiens fossils are about 195,000 years old.

Evidence of farming appeared 10,000 tears ago.

Written language known to exist 5,000 years ago.

Plato and his student Aristotle in 2,400 years ago promoted the geocentric model of the Universe.

Claudius Ptolemaeus in the 2nd century AD espoused the geocentric universe.

Nicolaus Copernicus (February 19, 1473 – May 24, 1543) proposed a heliocentric cosmology.

Galileo Galilei (15 February 1564[2] – 8 January 1642) Espoused a heliocentric universe but was forced to recant by the church.

Sir Isaac Newton (4 January 1643 – 31 March 1727) removed the last doubts about heliocentrism and advancing the scientific revolution.

Charles Robert Darwin’s (12 February 1809 – 19 April 1882) 1859 book On the Origin of Species established evolution by common descent as the dominant scientific explanation of diversification in nature.

Edwin Hubble propose the Big Bang theory of the Universe in early 1900s.

Hubble Space Telescope's launch in 1990 allowing us to observe the borders of the Universe.

In 2007 there were 28 known planets outside our solar system.

Humans could perhaps survive another 100 million years, when it will likely become too hot for them to survive on earth, or they may be part of the 6th major extinction that is currently occurring.

In roughly 4 billion years the earth will be vaporized by the sun.

What do you think?

The Reinsel Family

2009-09-22T12:58:00.001-05:00

New genealogy site for the Reinsel Family
http://reinsel.tribalpages.com/?userid=reinsel&x=9&y=8

Proposed trip

2009-04-22T12:53:00.000-05:00

Proposed trip
Day 1

Fly to Seattle
Rent Car
Drive to Mt Rainier 102 miles
Over night Paradise

Day 2
Hike at Mt Rainier
Drive to Port Angeles 206 miles
Over night

Day 3
Ferry to Victoria
Over night Victoria

Day 4
Ferry to Port Angeles
Over night

Day 5
Drive to Hurricane Ridge 25 miles
Drive to Hoh 92 miles
Drive to Kalalock 31 miles
Overnight at Kalaloch

Day 6
Drive Kalaloch to Astoria 158 miles
Over night Astoria

Day 7
Drive to Mt St Helens 58 miles
Drive to Vancouver 40 miles
Overnight Vancouver

Day 8
Drive to Richland 231 miles

Over night with Ted and Peggy
Day 9
Overnight With Ted and Peggy

Day 10
Drive to Grand Coulee Dam 162. Miles
Over night

Day 11 Drive to North Cascades Newhalem Creek
Over night

Day 12 Drive to Seattle
Over night

Day 13
Fly home

The Dream

2009-04-19T07:56:00.004-05:00

Everything in sepia color

Scene I
I'm one of a group of people
all in their twenties
Somewhere in Europe WWII

Bombers coming
Run out of village
hide in fields

Scene II
In building looking at files
find packets of pictures and postcards
someone's ID
someone is coming
We think it is Nazis

Scene III
In room
2 US troops in charge
I tell them they need more files to hold documents
They don't pay much attention

Scene IV

Sitting in old world cafe with group
Rough tables and chairs
dusty

Looking at pictures from packet
charcoal drawings and sketches
beautiful artwork

photo images and portraits
on sepia colored paper
discussion about value and how to handle

Scene V

I wakeup!
Where did that come from?
I was 8 years old in 1945.
How did I get to be 20 years old?
In Europe?
Who were these people?

It was one of those dreams that makes you want to go back to see how it ends. And find out how you got there in the first place.

Obituaries from Clarion Newspapers ... - Google Book Search

2009-03-03T14:47:00.000-05:00

Obituaries from Clarion Newspapers ... - Google Book Search

Obituaries from the Clarion Democrat ... - Google Book Search

2009-03-03T14:44:00.001-05:00

Obituaries from the Clarion Democrat ... - Google Book Search

Dinner at Gunson Hall

2008-12-13T10:54:00.001-05:00

We had a great dinner and a tour of Gunson Hall.

For Obama: Dad's 3 seconds of Fame

2008-10-30T14:15:00.001-05:00

Grandchildren

2008-03-17T09:45:00.001-05:00

These are pictures from January to March 2008

The Fight

2008-01-22T13:27:00.000-05:00

The Fight: as told by Coxie Minich

"It was Halloween evening in 1920 and Bob and Joe and their cousin, Charlie Daugherty, were in New Bethlehem at a bar. The place was full and there was a lot of tension between the town fellows and the farm boys. Charlie was wearing a clown hat because it was Halloween and Vince Radecker from Fairmount got pushy and knocked the hat off of Charlie's head. Well that was the beginning of the fight.

The Bartender told them to take it outside so the whole crowd went out and went up the street to the ball park to settle the fight. Well charlie and Radecker squared off and were about to fight when Bob saw Radecker slip on a set of knuckles. He said, 'Don't fight him Charlie. He has a set of knuckles on.' Well Charlie backed off and Radecker swung around to Bob. He said, 'Do you think you want do try me?' Bob didn't say a thing . He just stood there for a second and then swung a right uppercut. Well he hit Radecker on the jaw and knocked him out cold! They had to carry him off the field.

There was only one problem, Bob broke all the bones in the third joint in his right hand.

That should have been the end of it, but the next week Bob and Joe were back in town in the same bar. And Radecker was there. Bob's hand was in a cast and and Radecker started to mouth off saying he wanted to rerun the fight but Bob said he couldn't fight then but would as soon as his fist healed. Well Joe, who was wearing a new suit said. 'I'll settle it right now.' They went out in the back lot of the bar where Joe and Radecker got into a boxing and wrestling fight. When it was over Joe had ruined his new suit, but he had made Radecker give up and say uncle.

I guess that is one reason they called Bob and Joe the mean Reinsel boys."

Me and Charlie and the Amishman

2008-01-20T14:17:00.000-05:00

Me and Charlie and the Amishman As told by Grandpa Bauer

"One day me and Charlie and the Amishman was working in the forest along the dirt road cleaning the culverts and ditches. Well we came up to this one culvert and we seen that a groundhog had run into the pipe. Charlie said, 'Lets see if we can catch him.' So we decide that we would have the Amishman stand on the lower end of the culvert with a bag and we would pour some gasoline in the other and light it. We thought for sure that the groundhog would run into the bag and we would have him.

Well I poured some gasoline on the one end and the Amish man stood on the other with the bag and Charlie threw a match into the end with the gasoline. Well you should have seen it! There was a big explosion and the whole culvert lifted about 6" in the air. The dust flew everywhere and sure enough the groundhog came out the other end. His hair was on fire and he was traveling so fast that he ran between the Amishman's legs and knocked him over and kept on going down through the woods. It's a wonder that he didn't set the leaves on fire. All we could do was laugh.

Well just a little bit later the boss come along and said, 'What all that dust and smoke about? What are you fellas doing? We knowd that we would would catch it if we said what we did. But Charlie spoke up. Him been a fast talker and said, 'There was a nest of bees in the culvert and we burned them out'. Well that satisfied the boss and we didn't get in trouble that time.

If someone had got hurt or we'd set the woods on fire we really would have catched it for sure."

The rain

2007-10-25T12:51:00.000-05:00

The rain, it falls upon the just, and the grass and the trees and the flowers. Two inches of rain in the last day. Soft rain, gentle rain, soaking rain.

New 10 Commandments

2007-10-23T14:39:00.000-05:00

1 Do not do to others what you would not want them to do to you. .
2 Treat your fellow human beings, your fellow living things, and the world in general with love, honesty, faithfulness and respect. In all things, strive to cause no harm.
3 Do not overlook evil or shrink from administering justice, but always be ready to forgive wrongdoing freely admitted and honestly regretted.
4 Live life with a sense of joy and wonder.
5 Always seek to be learning something new, test all things; always check your ideas against the facts, and be ready to discard even a cherished belief if it does not conform to them.
6 Never seek to censor or cut yourself off from dissent; respect the right of others to disagree with you.
7 Form independent opinions on the basis of your own reasoning and experience; do not allow yourself to be led blindly by others, question everything.
8 Do not discriminate or oppress on the basis of sex or race.
9 Do not indoctrinate your children. Teach them how to think for themselves, how to evaluate evidence, and how to disagree with you.
10 Value the future on a timescale longer than your own.

Fog

2007-10-04T07:48:00.000-05:00

It was extremely foggy when I went for my walk this morning and that made me think about other fog experiences. Three times stand out.

In 1976, when we were on our way back from Nova Scotia, driving down I 81 past Scranton and all the way to Harrisburg, the fog was so thick that you could hardly see 50 feet in front of the car. It took hours and hours at 15 to 20 miles per hour to get from the northern Pennsylvania line to Harrisburg. Most of the time I followed a semi, staying back far enough to just see his brake lights.

In April of 1957, I had been out visiting my future spouse and had started the 25 miles home at about 1:00 am. It took me until 5:00 am to travel the 25 miles because the fog was that thick. My brother-in-law was coming up the road in front of his house from the other direction. And I stopped to see what he was doing in this fog. He said that he was coming home from the Hospital. My sister had had a daughter about 1:00 and he was just getting back to do the milking.

In September of 1954 I was doing the milking on the farm. One morning I got up at 5:00 am to go down to the barn. When I looked out, all I could see was a little spot of light in the fog, from the light on the pole down by the road. I went down to the milk house and got the milkers ready and then went over to the barn. Usually the cows would come up out of the pasture field when they heard me moving about in the barn, but this morning they didn't come. I stared down through the field to fined them but the fog was so thick and it was so dark that I was walking blind. I really couldn't see one step in front of me. I could tell by the slope of the land that I was not near the creek at the bottom of the field. When the land flattened out I knew I had about 75 feet to the stream but I still couldn't see any cows, so I took about 10 more steps and fell headlong over a big brown swiss cow. I was there in the middle of the herd and couldn't see them. The cows had all been laying down and they didn't move until I fell. That cause enough commotion that they got up and I could hear them but still could only see the one I fell over because I was standing right beside it. Once they got up, they walked up to the barn and I walked along with them.

Drought

2007-09-26T07:37:00.001-05:00

Mom and I went for a walk last night and found that the stream behind our house is dry for the first time in the 32 years since we have lived in this house. Oh, there are a few puddles but no water is flowing and the rocks in the stream bed are dry. It will take 15 to 18 inches of rain to get us back to a normal situation.

Defensive driving

2007-09-18T14:32:00.000-05:00

Mom and I are taking our 3rd defensive driving class this week. If we take the class every 3 years we get a discount on our insurance and since we are not doing a lot of other things it is a good thing to do. And, we do learn or relearn a few things about driving. Like the 3 second rule. What you may ask is the 3 second rule? Vell, I'll tell you. It is how far you should stay behind the vehicle in front of you on the highway. Oh. But how do you know? Well, you pick a marker that the vehicle is passing and see if it takes you 3 seconds to get there.

Also, when you are stopped behind another car in traffic, how far back should you be? You should be far enough back to see its tires on the road. That allows you room to pull around the car if it is stalled and maybe enough room not to get smashed into it if someone hit you from behind.

Learning to Drive

2007-09-16T07:44:00.001-05:00

When I was 14 I was working on the farm and drove the tractor all of the time. Sometimes on Sunday afternoon I would take the tractor over to my friends house about a mile and a half away and we would just sit around and shoot the breeze.

But there was another way that I got around. My sister Peggy was living at home and working in the Sylvania plant at Brookville. She bought a 1942 Ford Coupe to use to get to work. It had a high speed differential which meant that it didn't have much power but once you got moving it would run like a sacred rabbit. Since we lived on the back road and I knew every road in the township I would ask her to borrow it when I wanted to go to a 4-H club meeting at Shanondale or to visit another friend somewhere in our part of the world. Several tmes I took the back roads to Summerville on Sunday afternoon, or to Limestone to go swiming.

I took my drivers test the day after I was 16 and the cop said it seemed like I had been driving for a while. I said yes I learned to drive on the farm.

Road work

2007-09-15T14:22:00.000-05:00

Until 1952 the road past our house was dirt (mostly clay) and in the winter and spring of the year it got deep ruts whenever it was wet and the ground was not frozen. Sometimes it got so bad that we had to park the car up at the T (about 2/10s of a mile away from the house. For a month or more in the spring the only vehicles that got through were the mailman in his Model A Ford and the Milk truck that picked up the milk. Whenever the road dried enough we would hook the drag to the tractor and fill in the ruts so we could get the car in to the house.

In the wintertime the road often drifted shut with snow and sometimes the Township did not plow us out for a week or more. In 1944 we were snowed in for 5 weeks before they brought in bulldozers to open up the road. Dad had to park the car at the main highway, about a mile away,and walk out to get to work and he had to carry in groceries. My oldest sister had to walk through the snow to get to the bus to go to high school.

Things began to change in the summer of 1952. Dad convinced the Township Supervisors that the road needed to made passable in the winter for the school bus, mail, and milk truck, so they agreed to haul in sandstone to build a base for the road. That summer, in June my friend Roy and I were still 14, but old enough to get work permits, and the Township hired us to work on the road breaking the big rock into little rocks that the roller could crush in to the dirt. We worked about 4 weeks busting rocks on a little over a mile of road from Pumptown to the T. We got $1.00 per hour and worked about 8 hours a day. I was in pretty good shape when we finished. Of course we still had hay making and grain harvesting and chores to do but we were happy to have some money of our own.

With a solid stone base on the road the Township made an effort to keep the road open all winter and that made things a lot better.

Contractors In Iraq

2007-09-14T17:44:00.000-05:00

According to an article in Harpers magazine over 1,000 private contractors(mercenaries) have been killed in Iraq and over 13,000 have been wounded. This increases the american deaths by 25% and wounded by about 1/3.

Emerson on Thinking

2007-09-05T09:05:00.000-05:00

Beware when the great God lets loose a thinker on this planet.
-Ralph Waldo Emerson-

Quote of the day

2007-09-04T10:11:00.000-05:00

"The only reason some people get lost in thought is because it's unfamiliar territory."
Paul Fix

Age 13

2007-09-01T14:56:00.000-05:00

When I was 13 years old my dad worked 8 hour shifts on the gas wells: midnight to 8 am, 8 to 4 and 4 to midnight. My brother was away at college so I had a lot of responsibility on the farm. Every Third week I got up at 5:00 am and milked 25 cows, then fed the calves, chickens, and pigs and then washed the milkers. I washed up and ate breakfast at 7:00 and then set the milk cans out for the milk truck and got on the bus at7:20.

The next week when dad had the 8 to 4 shift he did the milking morning and evening and I did the feeding and washed the milkers. When dad worked 4 to midnight, I came home from school at 4:20 and changed clothes and started milking at 5:00 pm. We ate supper at 6:00 pm and I was usually in bed by 8:30.

The Farm Bill Again

2007-08-18T14:19:00.000-05:00

The Senate Side

The Senate Side Barbara Boxer wants to protect California Farmers.

Cute Kid

2007-08-14T11:59:00.000-05:00

Here is a picture from a few years ago that I think is pretty cute.

Bonus Years

2007-08-02T08:56:00.000-05:00

This morning I’ve been ruminating on life in general. I think that I am now in my bonus years. That is, considering how long my parents lived, every year I get now is a bonus. I plan to enjoy and live fully what ever time I have. To be able to enjoy my children and my grandchildren is the greatest pleasure. Every day there is a new surprise, something to look for, something to be thankful for.

Sunday Morning

2007-07-22T07:04:00.000-05:00

It is very quiet here this morning. Very few people outside when I went for my 6:00 am walk. Kind of cool at 62 degrees. It felt like a Cape Cod morning, just right for summer. I've had my second cup of coffee and scanned the paper. Not much there that I cared to focus on. I made a few updates to my Shelfari page. I'll work on my reviews as time goes by. No hurry with that

If a tree falls

2007-07-18T09:28:00.000-05:00

If a tree falls in the woods when you come out in the morning to take your walk and you hear it and then see it fall would you be surprised? I was this morning at about 6:15. I had just walked out of the house and heard a crack, crack, crunch and looked toward the woods behind the neighbors house. The tree fell with a whoosh, snap thump. Wow.

The air was still. Nothing moved. The tree just fell.

Being a somewhat curious person I walked down the woods path at the end of my walk to see exactly what happened. Maybe the tree fell over the path. Nope it didn't. It had been standing on the edge of the creek and the stream had undercut its roots. It just happened that it chose 6:15 as its time to fall.

Well that is life on the Court.

Bolivia in the Parade

2007-07-08T19:14:00.000-05:00

Parade

2007-07-05T10:57:00.000-05:00

Reunion

2007-05-22T12:20:00.000-05:00

My family is planning a reunion of the offspring of my grandparents. This year it has been setup by my niece and nephew and it will be held in south central Pennsylvania.

All of the children of my grandparents are deceased as well as most of my older first cousins. At age 69 I am the 2nd from the youngest grandchild of the 39 grandchildren.
Of the 39, I believe that 16 are still living. The oldest grandchild was born in January 1911 and the youngest in February 1941.

There are 121 great grandchildren, that I am aware of. The oldest was born in 1942 and the youngest in 1975. There are 136 great great grandchildren that I have information on. I'm sure there are more that are not included in my genealogy data base. The oldest was born in 1965 and the youngest in May 2007.

Of the 136 great great grandchildern only 6 males carry the Reinsel name.

Golden Compass

2007-05-05T14:37:00.001-05:00

Bernie's Daemon

2007-05-04T18:53:00.000-05:00

Beaver Lodge

2007-05-02T18:08:00.000-05:00

Most often beavers build their lodges in the water but this one built one on the court. Her odometer recorded 12 miles today. Mostly from the back yard to the street.

Bamboo

2007-05-02T11:58:00.001-05:00

I've spent the last 2 days cutting dead bamboo and mom has been carrying it up to a pile on the street. Still have a bunch to cut and carry. The pile on the street is getting to be too high for mom to reach and it keeps growing sideways. I'll post a picture later.

Green space, ball fields and traffic

2007-04-25T07:21:00.000-05:00

Last night the City Council held a hearing on a proposal to put two soccer fields on a tract of land that was purchased by the City for open space. The proposal included artificial turf, field lights on 70 foot polls with cell phone antennas , 100 parking spaces for cars, rest rooms, and several zoning variances. It would have required cutting many large trees and grading 8 acres of the area down by as much a 20 feet. In my view this constituted development of the space. I attended the hearing and spoke against the proposal.

I believe that the end result of the hearing will be that one field will be constructed, fewer trees will be cut and no lights will be put up and no cell phone antennas will put up.

I believe that the area is unsuited for even this reduced level of activity and I feel that the change in traffic flow will create problem for residents of the subdivision. However, the City Council seems determined to proceed with construction of one field.

“Don't it always seem to go
That you don't know what you got, till it's gone
They paved paradise and put up a parking lot

They took all the trees, and put em in a tree museum
And they charged the people a dollar and a half to see them
Don't it always seem to go
That you don't know what you got, till it's gone
They paved paradise, and put up a parking lot”

Lyrics by and sung by Joanie Mitchell

Stored things

2007-04-24T14:30:00.000-05:00

Years ago we stored some things above the carport. I guess we thought that sometime some of our children might want what we had saved for them. Today I got the stuff down to inspect it. Most of it will get tossed but a few items may be retained.

There are 2 tricycles, 1 wagon, one potty, 2 potty seats, 1GI Joe jeep and trailer, 1 GI Joe, 1 play school shopping center, Several model airplanes, a broken high chair, part of a stroller, a small person step stool, and an old hall light.

Grandma

2007-03-23T09:47:00.000-05:00

I was still three years old when my Grandma died in May 1941. I don't remember that. What I do remember was the Grandma and Aunt Marcella lived on the one side of our house and we had the other. Grandma was an old lady (80 years old) who was not very well and she spent a lot of time sitting in her rocking chair. My Aunt Marcella took care of grandma and really was like a second mother to me. When I wanted something that I couldn't get at home I would go over to their side of the house and ask Marcy. She would usually find a way to give me what I wanted. I remember asking her to read to me and she would. Or if I wanted coffee soup instead of what we were eating at home I could have it. That didn't always sit well with Mom.

I think it was in the spring of 1940, the year I turned three, that Aunt EmRose and Aunt Lois, who lived in Akron, Ohio, came for a visit. They were 57 and 58 years old at that time but to me they were really old. They were siting on the side porch along with Marcy and Grandma and of course I was out there with them. One of them got a banana washed it and laid it on the porch rail for me to find. I did find it and ask where it came from. They said that the Easter Bunny had laid it. Well I look it over and it was still wet because they had washed it. I wouldn't it because the Easter Bunny had laid it and it was still wet. They got a big kick out of that and that story got told over and over.

That same year Dad and Uncle Joe decide to have a wiener roast up on top of the hill behind the house. There was a kind of trail that went up to the top of the hill and Dad loaded Gandma, Marcy, Mom, and me in the old Buick and drove to the top. The other kids hd to walk.

After Grandma died in May of 1941, Marcy joined the St Joseph Sisters convent in Erie. She took the name St Emily Rose. Her sister Margaret , Sister Jane Francis, was all ready there, having joined in 1914 when she was 17years old.

1941

2007-03-23T08:54:00.000-05:00

I was four years old in 1941, so a lot of my memories are fairly cloudy. One the that is clear though is that people were really upset when the Japanese attacked Pearl Harbor. Mom and Dad listen to the news every evening that they could get the battery radio working so that it would pick up KDKA from Pittsburgh.

One evening I went with Dad down to the barn when he went to milk the cows. I remember the light from the kerosene lantern was not very bright and it seemed to cast all kinds of shadows so it was a place where it was good to have Dad there. I was sitting up on the ledge behind the cows watching him milk and I was asking him questions about the war that President Roosevelt had declared. Why were we going to fight? Would they be fighting here? Where was Japan? Where was Pearl Harbor? He was trying to explain where Japan was and who the Japanese were. I guess I thought about that for a while and then I said, "If God hadn't made the Japs we wouldn't have to fight them." He readlly agreed with that and said I had that about right.

When I was 10 years old

2007-03-21T13:26:00.000-05:00

When I was 10 years old we got electricity on the farm and in the house. Bill Clinger was the electrician who did the wiring in the evening after his main job and I helped by holding the flash light when he had to work in a dark area. It was a big deal for us to get electricity. For one thing it meant that we could have a radio that didn’t run on batteries. And we could have a real bathroom with water pumped to the commode, and sink and shower. No more house! We could have an electric washing machine rather than one that ran on a one cylinder gasoline engine. We got lights in the barn and didn’t have to carry a kerosine lantern. And we got an electric milking machine.

That was the year my sister Susie got married. The reception was at our house and there were a lot of people there. Mostly big people. No kids to play with. During the afternoon a big thunder storm came up, so everyone was inside.

Dad had drilled a water well close to the house and the rig was still sitting there. A bolt of lightening struck the drilling machine and shocked some of the people who were sitting on a metal daybed in side the window about 8 feet from the rig. No one was seriously hurt but it did cause a lot of excitement.

We learned later that the father of one of the people at the reception was killed by lightening that afternoon while he was working on a dragline at a stripmine. That was a sad thing.

I think Peggy started her senior year in highschool that year and Ed was a junior. That year I started 5th grade at Summerville. Helen Wesson was my teacher and she was a tough old girl. Helen and her sister Mary had been teaching 4th and 5 grade forever, or so it seemed.

Coming from out of town and being one of the 3 Catholics in the school I had to defend my rights for a while until the kids got use to me. Glenn Reed, Dick Garis, Don Getty and Tom Fitzsimons turned out to be pretty good friends. Later on Tom Eshelman (Mouse) and Jack Snyder got added to our group.

During April at the end of 5th grade. Roy Gourley’s parents bought a farm around the hill from us. Roy was one day younger than me and he thought that he had to prove how tough he was so he tried to bully me on the school bus. I took it for a while and then decide that I needed to do something, so I turned around to face his seat and hit him on the nose. I broke his nose and it bled like everything. We have been friends ever since.

Back on line

2007-01-17T15:27:00.000-05:00

It has been nearly a month since my last posting. I guess I didn't have much to say, but I did have a lot to read since Christmas.
I have just finisned "The Island at the Center of the World" by Russel Shorto. This is a must read book for anyone who has an interest in American history. Shorto tells the story of the New Netherlands, starting in 1624 and ending in 1673 when it became an English colony named for the Duke of York. Much of the story is tied to a Dutch lawyer, Adriaen van der Donck. We have much that we aquire from the the work of van der Donck, including the basis for the 1st and 2nd amendment to the Constitution. Freedom of speech and feedom of religion were ideas that van der Donck worked hard to preserve in the Manhatten colony and these were preserved for us under the colony of New York.
I have also finshed "Mysteries of the Middle Ages - The Rise of Feminism, Science, and Art from the cults of Catholic Europe" by Thomas Cahill. This is the fifth book in Cahill's "Hinges of History" series. The other four are: Sailing the Wine Dark Sea; Desire of the Everlasting Hills; The Gifts of the Jews; How the Irish saved Civilization. In my view all are worth reading. Mysteries ranges from Alexandria to Rome, Paris, and London. In it you meet Pluto, Philo, Clement, Constantine, Leo the Great, Gregory the Great, Augustine, GregoryII, Hildegard, Bernard of Clairvaux, Thomas Aqino, Frances of Assisi, Roger Bacon, and Dante. It is an easy read but it will require a second time through to capture the relationships.
I have lined up on the shelfwaiting, "The Audacity of Hope" by Barack Obama; "On Being Christian" by Hans Kung; "Saveges" by Joe Kane; "One Christmas in Washington" by David Bercuson & Holger Herwig and 'Foreign Aid" by Carol Lancaster.

12 days of Christmas

2006-12-22T19:07:00.000-05:00

The twelve days of Christmas are the twelve days between Christmas and Epiphany (January 6th), which is when the three wise men supposedly arrived on the scene

The day before the day before Christmas Eve

2006-12-22T16:30:00.000-05:00

The cimamon rolls are baked, the groceries have been purchased, the breads been baked, and the BBQ has been prepared. All that is needed is people to surround the table tomorrow.

The wraping station has been stored and the gifts secured. Anticipation is great.

The longest night of the year

2006-12-21T14:38:00.000-05:00

The precise moment of the 2006 winter solstice will be December 21, 2006 at 7:22 P.M. EST when the sun will be directly over the Tropic of Capricorn.

It seems to me that it would have been good if Pope Gregory had adjusted his calendar to make New Years day align with the winter solstice. Of course we would have had to move Christmas to New Years Day and then where would we be. Well, it might be that we would have moved Christmas to the fall equinox but that would really be confusing

Office Party

2006-12-20T12:11:00.000-05:00

The CEO has decided that tonight would be a good night for the office party. I believe it will be at the Market Inn. Not a bad place to take the help. My guess is that the main course will be crab cakes.

Plans are well underway for the Christmas weekend. Especially with food and drink and things under the tree.

Santa comes to Singleton

2006-12-18T09:17:00.000-05:00

It was a great evening when Santa arrived and the boy was only slightly afraid.

Half way thorugh Advent

2006-12-11T15:56:00.000-05:00

The Christmas season is short this year and we are soon approaching Christmas Day. It will be a big year for our youngest grandson, really the first one where he will have a good idea about presents. He will have Christmas at his house, then come over to ours and the next day fly off to his western grandparents. What a big year for him.

This year the whole family will be together on Christmas. That will be fun.

Thanksgiving and Giving Thanks

2006-11-22T18:33:00.000-05:00

Mom and I were visiting this evening about how much we have to be thankful for. Our family seems to be doing well. All are able to manage their own lives and they appear to enjoy what they do for a living. We are healthy, comfortable and secure. We have truly had several golden years. Our grand children are a joy to have. They are a blessing for us. Our son-in-law and our two daughters-in-law are amazing people and we love them as our own. They complete our family.

Orange cookies

2006-11-21T18:32:00.000-05:00

It is fast coming to the holiday season and today we made orange cookies. There is something about them that just smells and tastes like Thanksgiving or Christmas. It almost takes 2 people working together to stay ahead of the process. Grate the orange skins, squeeze the juice, beat the batter, make the frosting, put batter on the cookie sheet, bake, put on the cooling rack, frost the cookies while warm, move the cookies from the rack to the table while the frosting sets up, and wash the bowls and pans and cookie sheets. Sample cookies

I called Debbie and told her to come over to sample them. I didn't have to work very hard to get her and the boy to come over for tea and a cookie. Seth chomped down two and seemed to think that more would be Ok with him. A few were sent home for Daddy but I'm not sure how many he will get.

Closet light, Sale flyer, Leaves and a conference call

2006-11-17T11:20:00.000-05:00

Well mom I finished the sale flyer and then I installed a new closet light in the den. This afternoon will be a leaf moving day, it should be fairly dry by then.

We got to talk to M and J on a Skype conference call this morning. That was pretty cool with M in Istanbul and J in Baltimore and us in Virginia. I really like Skype it is clear and also cheap. No charge for Skype to Skype calls. I think a webcam might be on the list of things to acquire so we can communicate with M & J in Ecuador.

Pandas

2006-11-04T15:15:00.000-05:00

A trip to the Zoo

2006-11-04T15:12:00.000-05:00

Poll tracker

2006-11-01T09:23:00.000-05:00

I've added charts to the footer on this page that track what the polls are saying about the upcoming election. If you click on one of the charts that will take you to a more complete analysis of the polls.

Sunday Parade in the Woods

2006-11-01T08:18:00.000-05:00

The Sunday Parade

Trick or Treat

2006-11-01T08:12:00.000-05:00

The Boy seemed to enjoy the event and we did also.

Seth's Birthday

2006-10-12T14:00:00.000-05:00

Well the boy is 2 years old today. What a happy guy he is. His mom and dad have done a great job raising him.

School

2006-10-11T11:16:00.000-05:00

I was thinking, this morning, about being a kid and going to school. My first school was a one room school about a tenth of a mile from my home on the farm. When I was in first grade there were 9 kids in the school, 3 of the 9 were my sister, my brother and me. Another family also had 3, another 2 and of course there was a single kid from one family to make up the 9.

Inside the school was the main school room, two cloak rooms , one for the boys and one for the girls, and an entry hall where there was a rope through the ceiling attached to the school bell. In the center of the main room was a big coal stove. An American flag with 48 stars stood in one corner and the State flag in the other. There were also pictures of Washington and Lincoln above the blackboard. Because we had no electricity, we had no lights in the school and on some dark winter days it almost got too dark inside to read. We didn't have a water well or spring at the school, so we had to take a bucket and walk to the neighbors spring to get water to fill the water crock. Every one drank out of the same dipper so when anyone got sick it went through the whole school pretty fast. One of the worst days I had in school was when my friend, Beaver, actually his name was Frank, barfed all over me at lunch time. I was really angry. The teacher sent me home to get cleaned up and I didn't go back to school that day. Funny thing though, I didn't get sick.

Outside the school was a coal house and the toilets. The toilets were outhouses, one for the boys and one for the girls. They each had 3 holes and the boys' had a trough.

The school ground was about 1 acre, which was enough room for a softball field. With 9 kids in the school we took turns coming up to bat and took turns at each base and in the field. You move from position to position as the batter changed.

Every morning we had to say the Lords prayer, do a reading from the bible and recite the Pledge to the Flag, which, at that time, did not contain the words "under God".

I spent a lot of time listening to the older kids reciting their reports and the poems that they had to memorize. They also had to read the "classics" out loud so I heard the "Tale of Two Cities" and the "Last of the Mohegans" plus a lot of poetry.

Required Reading

2006-10-09T19:07:00.000-05:00

The End of Iraq by Peter Gaibraith

State of Denial by Bob Woodward

Conservatives Without Conscience by John Dean

Free Press

2006-10-07T11:12:00.000-05:00

We need to keep a Free press

Beamer and Friends

2006-09-12T10:55:00.000-05:00

Sept 10, 2006

2006-09-12T10:52:00.000-05:00

September 2006

2006-09-12T10:49:00.000-05:00

It smells like September

2006-09-03T07:10:00.000-05:00

When I went out for my walk at 6:00 am today it was still dark and it was still damp from yesterday's rain. The air had that end of summer feel and smell. You know, back from vacation time, back to school time, ready to harvest the corn time.

One would think that September was a kind of ending time, but for me it was always a beginning time. Maybe that is because there were always new projects or new classes that started in September. Maybe endings always signal a beginning.

Gearing up for a new Farm Program

2006-08-31T14:25:00.000-05:00

Next year Congress will Act on a new Farm Program. The blogs that follow, that were posted on August 30, are coments on farm programs and policy that reflect on what prograns do and why we have programs.

Escaping from Commodity Programs That Set Prices

2006-08-30T17:16:00.000-05:00

Excess Capacity; At Supported Prices

2006-08-30T16:56:00.000-05:00

The Evolution of Programs

2006-08-30T16:52:00.000-05:00

Introduction

Historically agriculture has been subject to periods of surplus and scarcity. During periods of "shortage" and strong demand farmers have responded to strong prices and prospects of high income levels by expanding production. Production increased through advances in productivity and the addition of land, labor and capital. As supply growth outpaced demand growth - prices and farm income declined. Similarly, during bust periods, characterized by low commodity prices and farm income, resources were removed or idled inorder to reduce production and bring demands and supplies into balance.

This is characteristic of U.S. agriculture prior to the 1930s - boom and bust periods. During the Civil War prices and income were high. However, as the war ended supplies grew and prices and income fell. Similarly strong demand and high prices stimulated by World War I provided the necessary incentives to expand production. After WW I and through the 1920s commodity prices and income trended downward.

Agricultural policies are the result of the resolution of conflict. They begin with divergent views about what should be done and end with a compromise between groups. They are carried out through compromises between the apparent or understood intent of laws and regulations and the personal philosophies and interest of policy administrators. Policies are, therefore, ambiguous to some degree. They leave room for interpretation. Policies are often rationalized to some unintended program objective after programs are written into law or regulation. Programs that were undertaken as an implimentation of a policy in dealing with some acute economic, social or political problem acquire a body of data and arguments in their defense that may be quite different from the original justification for the program or policy. Programs whose functions have been fulfilled are often continued for reasons quite different from those intended at the start of the program. Programs thus evolve over time, taking on different purposes and often supporting policies far different from their initial purpose.

Pre World War I

Prior to the First World War policies affecting agriculture were largley development policies focused on developing the fontier and expanding production. This single objective was facilitated by land settlement programs, support of the family farm concept, and increased agricultural productivity. A sound and expanding agriculture would complement industrial growth and economic prosperity. In 1862, a number of acts were passed that "opened the west" and established the importance of agriculture, from a Federal perspective. The Homestead Act granted acreage to those willing to improve the land and live on it for 5 years. The Morrill Land Grant College Act established agriculture as a mainstay at Colleges and Universities. The U.S.D.A. was established in 1862. Also, Congress subsidized development of the transcontinental railway system - to assist in transporting agricultural commodities. Eventually legislation was enacted to support research at agricultural experiment stations (Hatch Act 1887), extend the land grant college concept to black colleges in the South, and to provide Federal funds for agricultural extension (Smith-Lever Act - l914).

Three additional acts that significantly influenced agricultural development in the early 1900s were the Reclamation Act of 1902, the Federal Farm loan Act (1914), and the Capper-Volstead Act (1922). The Reclamation Act provided federal funding for irrigation development which enabled agriculture to expand in the West. The Federal Farm Loan Act established the Farm Credit System which gave farmers access to subsidized credit. The Capper-Volstead Act exempted agricultural cooperatives from the Sherman Antitrust Laws and allowed these organization to increase in number, size and power.

The 1920's -- Program Initiated

To a large extent today's farm commodity programs are a result of the economic chaos that affected agriculture in the 1920's. As the result of a decline in exports, the introduction of mechanical power for hauling freight and people, and the introduction of the tractor for agricutural production the capacity of agriculture to produce far exceeded the demand for its output. As the result of the shift to mechanical power some 50 million acres were released from production of feed for draft animals. At the same time land was being added to the productive base through expansion onto the plains and grass land and through massive irrigation and reclaimation projects. These forces along with the declines in both domestic consumption and exports in the early 1920's resulted in a rapid fall in farm prices while prices of manufactured goods continued to rise.

Farmers sought relief from, what they percived to be, selective economic depression in agriculture through the introduction of bills in Congress to support prices through the purchase of commodities. A more complex approach to price support was to be achieved through the McNary-Haugen Bills which were primarily programs to remove surpluses from domestic markets through export dumping. Although the bills failed to pass in Congress or were vetoed by the President, they brought a focus to the farm policy debate. The quest for "economic justice" for farm people, for "Equality for Agriculture", was lead by George Peak who believed in a natural balance between agriculture and industry and felt that agricultural commodities should be priced such that their puchasing power was maintained on a par with industry.

In 1929, Congress created the Federal Farm Board and povided it with $500,000,000 to purchase commodities in order to support their prices. The funding proved to be inadaquate and the Board with no ability to control production was seen to be a failure. In 1932, the Board recommended legislation which would "provide an effective system for regulating acreage or quantites sold" inorder to raise prices and incomes for producers of commercially traded commodities.

The forerunners of current commodity programs were created in the 1930's to raise the income of producers of "basic" commodities (commodities which were important in commercial markets) by restricting market supply. The Agricultural Adjustment Act (AAA) was to be a self supporting program to bring about supply restriction through processor taxes. Revenues were to be use to make allotment payments to producers who set aside up to 20 percent of their acreage. The Secretary of Agriculture proclaimed a 15 percent acreage reduction for contracting farmers to be eligible for payments on the 1934 crop.

In the Case of the U.S. vs. Butler, often referred to as the Hoosic Mills decision, the Supreme Court on January 6, 1936 declared the processor tax and production control provisions of the AAA unconstitutional. Thus, the self-financing provisions were eliminated and supply control was disrupted for a short period. To responed to the short-term crisis and replace the production control provisions of the AAA, Congress rushed through the Soil Conservation and Domestic Allotment Act of 1936 by February 29, 1936, less than 2 months after the Hoosic Mills Decision. Under the 1936 Act, acreage reduction was to be achieved through conservation programs, however, the program failed to restrict output.

The Agricultural Adjustment Act of 1938 brought about stronger Federal intervention in the market. The term parity was introduced into legislation for the first time and the Secretary was required to make nonrecourse loans for producers of corn, wheat and cotton. Nonrecourse loans were at the option of the Secretary for rice and tobbacco. Loans were set at a fixed percentage of parity. In addition, producers were to receive parity payments to bring their return as close to parity as possible with available funds. Because program benefits, from higher prices and parity payments, were tied to production, the larger and the more efficient a producer the larger the benefits to that producer.

The Commodity Credit Corporation was established by executive order in 1933, which provided loans to cotton producers enabling growers to hold their cotton until prices improved. For fruits and vegetables, production controls were supplemented by marketing agreements. Quotas were implemented for sugar.

1940s - Abortive Attempts of Price Support Flexibility

Despite the use of acreage allotments and marketing quotas, commodity inventories began to increase in the late 1930s, particularly those owned and controlled by the government. Yield growth helped to make production controls ineffective. By 1939, direct government payments accounted for 35 percent of net cash income and 30 percent in 1940. However, WW II stimulus improved export demand and as a result prices strengthened and direct government payments fell to 13 percent of net cash income in 1941. WW II postponed the need to address growing surpluses and government costs in the 1940s.

Government price supports which were set between 52 and 75 percent of parity in 1938 were above market cleaning levels as surpluses started to become burdensome. However, the improvement in the industrial sector provided Congress with the impetus to raise support for agricultural commodities up to 85 percent of parity (for those commodities which producers had not disproved marketing quotas). Later legislation over 1941 and 1942 period raised support to 90 percent for some commodities and extended the level of support at these high levels to 1948. By 1945 more than l00 commodities were supported at high (above market clearing) levels. During the war years supports rose and supply control requirements declined.

As the war ended debate arose as to what direction supports should take - high fixed supports as in the War years or flexible more market oriented dependant on existing supplies. The Agricultural Act of 1948 favored flexible supports over time. However, supports would remain at near the 1948 levels for 1949 plantings. The 1948 act also revised the parity price formula specifying farm - nonfarm relationships dependant on current (10 years) period to account for productivity and then faster changes since the early 1900s. This would also support levels to decline beginning in 1950. The surplus problem facing policy makers in the late 40s was contributed to by the adoption of hybrid seed for corn and the full transition to "tractor power" as opposed to horse power.

Because prices were expected to collapse following the close of the war the Steagall Amendment was enacted in 1941 to keep prices at war time levels for two years. The amendment expired December 31, 1948. Although there was a growing bipartisan and multi-commodity group consensus that flexible price supports were desirable, the Agricultural Act of 1948 extended high price supports for one more year, after which flexible price supports based on a percentage of parity were to become effective. However, surpluses accumulated and in an act of expediency the Agricultural Act of 1949 pegged price supports at 90 percent of parity through 1950.

After 1951 cooperating producers of basic commodities could receive support levels between 75 an 90 percent of parity (if marketing quotas were not disapproved). Additional refinements to the parity pricing formula were made on the 1949 Act which general merged the price index level.

The outbreak of the Korean War on June 25, 1950 lead to a continuation of high price supports through 1952 for national security purposes and neither acreage allotments or marketing quotas were in effect for the 1950 or 1951 crops of wheat, rice, corn or cotton and stocks held by the CCC accumulated rapidly.

The 1950's -- Recognition of and Dealing with Excess Capacity

Flexibility in price supports was again deferred by Congress in July 1952 though by passing legislation to provide for 90 percent of parity for the 1953 and 1954 crops, if producers had not disapproved of marketing quotas.

Acreage allotments were reinstated for corn for the first time since WW II and marketing quotas were proclaimed for wheat and cotton and continued for tobacco and peanuts. Yet, 90 percent of parity loan rates resulted in the rapid accumulation of stocks by the CCC. The application of acreage allotments to a crop like corn caused expansion of production of nonallotment crops and depressed prices. It was becoming apparent that the rigidity of allotments did not allow for efficient production adjustment.

In recognition that rigid and high loan rates were incompatible with real economic conditions, the Eisenhower Administration moved to implement the adoption of flexible price supports. The Agricultural Act of 1954 set price supports at 82.5 to 90 percent of parity in 1955 and 75 to 90 percent of parity thereafter. A portion of CCC stock holdings were to be set aside and disposed of by export, donation and disaster relief.

The export market was first considered by Congress in the passage of Public Law 480 in 1954. This Act proved to be of major importance in assisting in the disposal of stocks yet it was limited in scope to sales for soft currencys, emergency relief and bartering for strategic material.

Although support prices were made flexible, the range of flexibility was not sufficient to slow the growth in output to an equilibrium situation with demand growth. Pressure from increasing stocks resulted in the establishment of the Soil Bank by the Agricultural Act of 1956. Because prices were above world levels, direct sales in world markets were not occurring and output restrictions seemed imperative. The Soil Bank was designed to take cropland out of production. Composed of an Acreage Reserve and a Conservation Reserve, the soil bank attempted to deal with both short-term and long-term problems.

The Acreage Reserve was an annual program that replaced the acreage allotment. Under the program farmers could reduce the acreage devoted to a crop below their allotment and be paid for diverting it to conserving uses. In 1957 the program had 21.4 million acres out of production, but it was terminated after 1958 because it was condemned as a high cost program that was ineffective in controlling production.

The Conservation Reserve was viewed as a measure to deal with the longer term adjustment of resources out of agriculture. Contracts were signed for a maximum of ten years for whole farms and for cropland to be diverted to conservation uses. By 1960, 28.6 million acres were under the program. The last land left the reserve in 1972. The 1956 Act also began a two tiered pricing system for rice with export rice supported at a different level that domestic rice.

The 1960's -- Direct Payments and Acreage Reduction

By 1960, the high price supports of 1953 had given way to generally lower and more flexible prices however neither the lowering of prices nor the restrictions on acreage had been able to bring about an equilibrium between output growth and demand growth. The export market while increasing slowly, through PL-480, was not moving grain at prices as high as our domestic support levels. Stocks reached record levels.

The decade year of the 1960 saw a fundamental shift in programs from price support to direct income support payments and from voluntary acreage reduction to diversion programs.

Beginning in 1961 Congress passed a bill giving the Secretary of Agriculture authority to make payments to producers in cash or certificates to achieve acreage reduction of at least 20 percent for corn and grain sorghum. Payments were made on 50 percent of their normal yield. If they withheld an additional 20 percent they were paid on 60 percent of normal yield.

The Food and Agriculture Act of 1962 continued the voluntary acreage reduction program but broke new ground by separating price support and income support payments. Loan rates on corn were allowed to decline to near the world price level. A direct income supplement of $.18 a bushel of normal yield was made to support farmer incomes if farmers complied with acreage reduction programs. The combination of large acreage reduction programs and world level loan rates resulted in a significant decline in grain stocks during the 1960 and by 1970 CCC stocks were approaching zero. However, the cost of direct income support payments rose rapidly and reached $3.8 billion in 1969.

The 1970's -- Foreign Market Dependency

Throughout the 1970's production capacity and export growth were issues. Farm programs increasingly built in inflation adjustments.

In the early 1970's a combination of acreage reduction and export subsidy programs, a series of devaluations of the U.S. dollar, and short crops in the USSR and India emptied the U.S. bins. Because of the Russian grain sale in 1972, grain prices rose rapidly. The Agriculture and Consumer Protection Act of 1973 expanded the concept of market orientation and introduced target prices and deficiency payments to replace the price support payments of the previous 10 years. Deficiency payments were to be made only when prices fell below the target price.

The short run situation of strong export demand and low stocks gave rise to a concern about the long run availability and stability of the market. General inflation in the economy and rising prices for fuel and fertilizer created increasing concern over costs of production. The initial target was fixed abitrarily by legislation and had no relationship to market conditions. In later years they were to adjusted by an index of the cost of production.

Yet, there was an effort to maintain the market orientation of the programs by keeping loan rates low relative to market prices. For cotton, loan rates were set at 90 percent of the price of U.S. cotton in world markets. Corn loans were well below the market. As the export market remained strong, more and more people came to believe that the future would be a period with more years of scarcity than of surplus. On the strength of tight markets lenders provided money to farmers to by land and machinery at higher and higher prices.

The Food and Agricultural Act of 1977 was an accommodation to the general inflationary spiral raising loan rates and target prices well above previous levels and above the recommendations of the Administration. Target prices changes were tied to changes in cost of production. A Farmer Owned Grain Reserve (FOR) was created to provide for the possibility of extended nonrecourse loans to farmers in order to provide for a buffer stock to encourage farmers to manage stocks. To encourage participation in the FOR farmers were offered an advance storage payment. Stocks were to remain in the reserve until market prices exceeded release prices.

Although exports remained strong in the late seventies grain was rapidly accumulating in the FOR. Market prices fluctuated with several shocks to the export market and program management became a complex game of balancing the entry and exit of stocks from the FOR.

The 1980's -- Changing Direction; Liberalization

The 1980's brought about the full realization that farm programs cannot be developed in isolation of macroeconomics and international competitiveness. Domestic policies have been clearly seen to have international market implications that alter the actions of consuming and and competitor nations. The beginning of the 1980's saw a reversal of world market conditions.

The value of the dollar rose sharply. Production increased in the consuming nations and our competitors were under-pricing the the U.S. in the world market.

In order to keep grain off the market and out of the CCC the loan rate on FOR grain was increased above the rate for regular CCC loans. Market prices declined and in 1981 dropped below the FOR loan rate for corn and approached the FOR rate for wheat.

Initial efforts toward a 1981 Farm Bill recognized the need for greater market orientation and a reduction in budget costs. However, with the export market turning sour, farmers were applying pressure for greater income protection. The farm sectors performance in 1981 was worse than expected and prices were well below 1980 levels. The grain provisions of the 1981 Act were a Congressional experiment in legislated prices base on expected rapid inflation in production cost.

World wide recession, a continuing strong dollar, and large increases in output dashed hope that the market would recover in 1982. Season average prices for corn and wheat were below the loan rate. Deficiency payments rose sharply. Rigid price floors were again creating stock piles as U.S. commodities were priced out of the market.

PIK, the largest acreage reduction program in the history of farm programs, was introduced in 1983. A total of 82 million acres wase enrolled under the PIK program with payment at 80 percent of production for all crops but wheat and at 90 percent of production for wheat. A combination of PIK and drought in 1983 cut stocks sharply and prices rose much more than anticipated. The bins were refilled in 1984.

The Food Security Act of 1985 introduced a general realization that world markets are a controlling factor in U.S. agriculture. Price supports were reduced from levels projected in the 1981 Bill and farmer incomes have been upheld by direct government payments. Export enhancement programs along with the declining value of the dollar and a modest recovery in world market have resulted in a turn around in exports. Acreage reduction programs and payments in CERTs have reduced stocks. Marketing loans for rice and cotton have made us competitive at world prices.

The evolution of programs has been conditioned by short-term economic and political conditions. Emergency measures once enacted have evolved into long-term programs that often had different objectives and impacts than those intended in the original legislation. Throughout most of the history of the programs the importance of market pricing has been stressed on a bipartisan basis. Yet, political expediency has resulted in a 55 year history of price support programs. A full recognition that income support through ridged prices is unfeasible over the long term is required in order to move to a market oriened program.

Multilateral efforts to bring about rationality in world markets by removing domestic and export market programs that interfere with prices and distort trade are essential to remove the excess capacity problem.

Why do we have farm programs

2006-08-30T15:56:00.000-05:00

Farm problems are on the U.S. policy agenda largely because dissatisfied farmers, working through their special interest groups and their congressmen, put them there. For the most part, Farm Bills are written by the special interest groups that are affected by the Bill. The policies that arise out of Farm Bill debates reflect the compromises that result from Congressional efforts to deal with peoples' conflicting views about what ought to be. They reflect the beliefs and values of farmers and others concerning equity and efficiency in the farm sector and the economy as a whole.

People disagree about beliefs and values and about the effects of programs. Some contend that farmers are in a chronically disadvantaged disequilibrium situation and they believe that this situation is not self-correcting and is not of the farmers' own making. They believe that the sector deserves compensating intervention through government programs. Others believe that agricultural commodity markets operate competitively so that all resources would be exactly and fairly compensated for their contribution to output if the government would withdraw from farm programs and the free markets were allowed to bring about equilibrium adjustments.

Since 1933, the primary thrust of U.S. farm policy has been to transfer income from the non-farm sector to what farmers and many policy makers believed was a "relatively disadvantaged" farm sector. Programs that were intended to be temporary when introduced in the 1930s have persisted. And, they have evolved over time to address problems which grew out of their own unintended consequences. Many, though not all, consider past programs to be increasingly inappropriate as U.S. agriculture continues to change.

Differences in emphasis can be detected from one year to another in the national debates on farm policy, but over the decades there has been a consistency in the problems that Congress attemps to deal with; including price and income prospects, the distribution of income, the role of technology, the availability of resources, expansion of domestic and foreign markets, risk management, financial stress, and others.

Brandow's review of the literature on "Policy for Commercial Agriculture, 1945-71" makes it clear that the issues faced by Congress today are not new. Ted Schultz, D. Gale Johnson, Brandow, and a multitude of economist's following

Roosevelt's Agriculture Adjustment Goals

2006-08-30T15:06:00.000-05:00

Exerpts from "Wheat and the AAA" pages 33-35.

Franklin Roosevelt in a campaign speech at Topeka, Kansas in September 1932 enunciated the following six points for a program for agricultural adjustment.

"1. The plan must provide for the producer of staple commodities, such as wheat, cotton, corn (in the form of hogs), and tobacco, a tariff benefit over world prices which is equivalent to the benefit given by the tariff to industrial products. this differential benefit must be so applied that the increase in farm income, purchasing and debt-paying power will not stimulate further production.

2. The plan must finance itself. Agriculture at no time sought and does not now seek such access to the public treasury as was provided by the futile and costly attempts at price stabilization by the Federal Farm Board. It seeks only equality of opportunity with tariff protected industry.

3. It must not make use of any mechanism which would cause our European customers to retaliate on the grounds of dumping. It must be based upon making the tariff effective and direct in its operation.

4. It must make use of existing agencies and so far as possible be decentralized in its administration so that the chief responsibility for its operation will rest with the locality rather than with newly created bureaucratic machinery in Washington.

5. It must operate as nearly as possible on a co-operative basis and its effect must be to enhance and strengthen the co-operative movement. It should moreover, be constituted so that it can be withdrawn whenever the emergency has passed, and normal foreign markets have been re-established.

6. The plan must be, in so far as possible, voluntary. I like the idea that the plan should not be put into operation unless it has the support of a reasonable proportion of the producers of the exportable commodity, on which it is to apply. It must be so organized that the benefits will go to the man who participates."

In December of 1932, the Federal Farm Board, in its report to Congress, went on record supporting certain principles of a farm program.

"One of the present needs is not to stabilize the variations in farm prices but to raise their general level up to the average level of other commodities. In light of experience ... the Board recommends that any new legislation be based on the following principles,...

(1) Prices cannot be raised unless some one pays the cost. The new plan must be self-sustaining, with a continuous method of covering the cost.

(2) Prices cannot be kept at fair levels unless production is adjusted to meet market demands. ... Any method which provided higher prices and did not include effective regulation of acreage or quantities sold, or both would tend to increase the present surpluses and soon break down as a result."

On the Cape

2006-08-22T12:22:00.000-05:00

We had a great family vacation.

Cape Cod

Aug 12, 2006 - 37 Photos

Cape Cod

2006-08-10T12:17:00.000-05:00

On the 11th we leave for Cape Cod for a family vacation. I’m happy that all 10 of use will be able to get together this year. We have a house that is big enough for all of us and an adopted brother, uncle, friend, priest.

While we are on the cape everyone will be able to do their own thing, but most nights we’ll be together for dinner. There is a rumor that some people would like grandma and grandpa to babysit while they enjoy a night out. I’m sure that can be arranged.

The car is packed and ready to go in the morning. The last thing to go in is the ice chest and a bag for the hotel tomorrow night.

Back to being young

2006-08-07T08:50:00.000-05:00

August

Here it is again, August, a month of hot sultry days that are the real part of summer. A lot of the farm work is done for a while. The hay has been made, the wheat has been cut and threshed and the oats may still be standing in the shock or by now it has been threshed. It is time to go to camp.

From the time I was 10 years old until I was 15 I went to 4-H camp, for one week, at camp Cornplanter, in McKean County during the first or second week of August. The site was originally Dunkle Corners Civilian Conservation Corps Camp No. ANF-11, which operated in 1935-1936, and then it was run by the YMCA from 1939-1958.

The camp was a pretty rustic place that consisted of 8 residence cabins, a large dining hall, swimming pool and several special service buildings. The cabins were just boards tacked to a frame. The windows had no glass, just screens and the toilets and showers were 50 yards down a path below the cabins. The showers and wash basins had only cold water. Every morning we had to take a cold shower. Each cabin had a center hall with a room where the councilors, really Assistant County Agents, stayed. The rooms on either side had 12 iron cots with web springs and a 3" mattress. The dining hall, swimming pool, and ball field were about 300 yards from the cabins.

Each cabin had kids from different counties in northwestern Pennsylvania. We all had assigned chores to maintain the camp and at the dining hall. One day we set the table, the next we served the food, the next we washed dishes and the next we helped get the meal ready. We would peal potatoes, cut cabbage and clean the kitchen.

One good thing about the camp was the everyone had to learn how to swim or at least try to learn. I had never been in a swimming pool or even tried to swim in a creek or river when I was 10 so it was a big deal for me. I remember struggling for a long time to make it across the pool and the first time I had to jump in the deep end was really scary. But I did learn a lot that first summer.

I think today a major fuss might be made by the parents about the dress code at the pool. Because it was an all male camp, except for the cooks in the dining hall, none of the boys wore swimming suits. At the pool we all went natural and it seemed like it was a normal thing to do at the time. Anyhow that was just part of camp and it was ok.

Besides learning to swim, we spent a lot of time playing baseball and doing craft projects and every night we would have a big campfire, roast hot dogs, play campfire games and tell stories.
That was a great time.

The other grumbling grandpa

2006-08-04T09:22:00.000-05:00

"Grampa Grumbles" from Little Bear

Sources of Conflict

2006-08-03T15:02:00.000-05:00

George Weigel's column from the Arlington Catholic Herald, July 20, 2006, page 9, is a prime example of how religion can lead to conflict when it takes priority over faith. Weigel chastises Cardinal McCarrick for his comments about sticking to the "middle" in order to stay in touch with everyone. As I see it faith allows unanswered questions. Faith allows us to think and reason. Cardinal McCarrick is a man of faith who believes that we must communicate with people who have different faiths and different religions.

Weigel is a man of religion who believes that everything is black and white. Anyone who does not believe as Weigel does is wrong. This view has resulted in the major wars between sects of "Christians" and between those Christians and others who propose that their religion is right and everyone else is wrong. These fundamentalist views do not serve humanity well. Those who are of the same mind as Weigel are the same as those who created and perpetuate the Middle-east conflict

Conflict

2006-08-01T15:32:00.000-05:00

I started this blog to comment and talk about ordinary life, from growing up to getting old. It was not suppose to be about wars and current events, but I keep getting pulled into talking about Iraq and Israel and foreign aid and the Bush Administration.

Nationalism, religion, and control of resources produce the seeds of conflict. Authoritarian attitudes, lack of tolerance and inability to compromise and a failure to communicate bring about an escalation of disagreements to the point of conflict. Conflict continues so long as both side maintain the belief that they are in the right and both have the resources to continue fighting. When people quit talking, negotiating and trying to understand each other they begin to build fences, verbal and real. When we don't talk and don't try to achieve a middle ground,that allows each side to see that half a loaf is better than no loaf; marriages end in divorce, friendships end in assaults, and national disagreements end in wars.

Authoritarian governments

2006-07-28T12:37:00.000-05:00

"Authoritarian governments are identified by ready government access to information about the activities of citizens and by extensive limitations on the ability of citizens to obtain information about the government. In contrast, democratic governments are marked by significant restrictions on the ability of government to acquire information about its citizens and by ready access by citizens to information about the activities of government."

Robert G. Vaughn, Transparency- The Mechanisms: Open Government and Accountability" Issues of Democracy

Mideast Crisis

2006-07-26T10:49:00.000-05:00

The editorial is worth reading because it makes clear that there is no simple solution to the general Mideast conflict. So long as the Islamic states refuse to recognize Israel, and there is no strong support from the US and western Europe for an independant Palestine, we will have the possiblty of a growing globalconflict.

Mideast crisis also sign of U.S. failure an NCR Editorial

U.S. Speeds Up Bomb Delivery for the Israelis - New York Times

2006-07-24T11:22:00.000-05:00

U.S. Speeds Up Bomb Delivery for the Israelis - New York Times

This is inexcusable.

Crisis in the middle east

2006-07-19T10:29:00.000-05:00

When I came back from Pakistan in 1983, I said that World War III would begin in the middle east. We are not at that stage yet but we are very close to a global conflict caused by nationalism driven by religious intolerance.

We are again facing the ineptitude of the British and the U.S. who created Israel by taking land away from the Palestinians. By partitioning the middle east without regard for local realities they perpetuated the sources of conflict rather than ameliorate the problem. Both Syria and Iran seek the destruction of the Jewish state. And both will continue to seek the destruction of a democratic Iraq. They want an Islamic theocratic nationalistic government in both Iraq and in the area that is now controlled by Israel.

Our hope for solving the current crisis is weak at best because the Jewish lobby is such a dominant force in our foreign policy. Both Democrats and Republicans are seeking the Jewish vote in the November elections, so we as a nations will not come down on Israel to stop them from using force rather than diplomacy in dealing with their neighbors.

The justification for creating a Jewish state in the middle of an Islamic territory was weak in 1948, and remains weak today. Yet, the state was created to assuage the guilt of the WWII allies for ignoring the genocide carried out by Nazi Germany.

The solution to the middle east conflict and avoidance of WWIII, if there is to be a solution, must come from enlighten Islamic/Arab governments. The “West” created the problem and is unlikely to be able to solve the diplomatic problem, given the Christian and Jewish fundamentalist leaning of western governments.

Random 2

2006-07-13T16:44:00.000-05:00

Here is mine:

By RMR

Random as suggested by Damselfish

1. Pick up any book.
2. Go to page 127.
3. Find third sentence
4. Post it on your blog (plus these instructions)
5. Don't choose the book, just pick up the one closest to you.

Here is my line from the book I'm currently reading.

"It was sometimes accompanied, like Hayden's and King's parties, by a clanking escort of cavalry."

Beyond the Hundredth Meridian, Wallace Stegner

Random

2006-07-13T15:10:00.000-05:00

Random as suggested by Damselfish

1. Pick up any book.
2. Go to page 127.
3. Find third sentence
4. Post it on your blog (plus these instructions)
5. Don't choose the book, just pick up the one closest to you.

Here is my line from the book I'm currently reading.

"Catalin Trico and her daughter Sara testified in a custody case that the promiscuous Nan Beech had told them that 'Mr Smith' had fathered the child she was carrying."

The Island at the Center of the World by Russell Shorto

Presidents and Polls

2006-07-07T12:59:00.000-05:00

While I was listening to George and Laura on the Larry King Show last night it seemed to me that they were disconnected from reality. Larry kept asking them if the low poll ranking bothered them or caused them to loose sleep. Both of them said that they didn’t worry about the polls and that George was going to continue to govern according his convictions. In other words they seemed to say that once you are elected you don’t need to be responsive to the wishes of the majority of the people. They think that a President who listens to the polls would be a failure. It is good that we have the opportunity to change presidents every four years.

George keeps tying the Iraq conflict to the “War on Terror” and contend that we must fight them there or we will need to fight them here. I believe that there was no tie between September 11, 2001 and the Government of Iraq. George created the conflict and linked it to terror. If we had used the resources that are tied up in that misbegotten venture to pursue those who planed a carried out the September attack we would be in a much safer world today.

No question that Saddam was and is a bad cat and he was harmful to the Iraqi people. But we can not justify the invasion of that county based on that. Nor can we justify staying there based on the idea that we are creating a democracy. It seems that George did not learn anything from Viet Nam or from the Russian failure in Afghanistan. The majority in Iraq may want a theocracy. Who are we to tell them that they shouldn’t?

Mid year 2006

2006-06-30T17:41:00.000-05:00

Here it is. The first half of aught six is history. I'll be 69 in a few days. I don't feel old but I use to think that 69 was something that I'd probably never reach. Well I am here and still moving. Life is good. I enjoy each day because it is mine; because I claim it when I get up in the morning; because I don't know what tomorrow will bring; and because our family is good to us.

More Weather

2006-06-27T07:16:00.000-05:00

Yesterday I talked to a lady who said, "I hope the weather returns to normal soon." I replied, "The weather is seldom ever normal. Most people think that normal is average and the average is made up of variations from average, some more extreme than others. So unless we define normal to be within a certain number of standard deviations, plus or minus, from the mean we don't know what normal is.

She looked at me as though I had totally lost it and said, "Well I hope it quits raining soon."

Weather

2006-06-26T07:04:00.000-05:00

The drive from Silver Spring to Fairfax last night was through some of the worst dirving conditions that I have ever experienced. Let me change that and say that it was the worst. Rain was falling at the rate of 2" per hour, the sewers were not able to handel the water and the roads became streams.
From Kendal Ct to Viers Mill the street was full, curb to curb, and twice that deep at Viers Mill.
At Connecticut Ave and the Beltway the water pressure in the sewer system had lifted a manhole cover and water was spouting 5 feet in the air through the open manhole.

It had stopped raining by the time we reached I66 but Rt 29 was closed at Pan Am and we had to turn around and get back on 66 to Fairfax.

Route 50 was closed between Eds St. and University Dr.

We got 5 inches of rain Sunday and another 1/2 inch between last night and this morning.

Imperial VP

2006-06-23T10:28:00.000-05:00

Last night on the CNN Situation Room Dick Cheney provided the best evidence yet of why we need Congress to step up to the task of providing a check on the Presidency. The following exchange between John King and Cheney Shows how Imperial Cheney has become.

JOHN KING: “You're also a human being, though. Your poll ratings are lower than the president's. You have an image that, I think it's fair to say, is not positive with the majority of the American people. That doesn't trouble you at all?”

CHENEY: “There's a great sense of freedom when, in fact, you don't have to worry about the polls. We don't worry about the polls. They go up, the polls go down. The fact of the matter is, we're doing what we think is best for the nation. And that's what the American people elected us to do. I think, ultimately, in the final analysis, that history will judge this president as a very successful, very effective leader. And I'm proud to be part of his team.”

CHENEY: “It's the other thing that's working here, John: I'm not running for anything. My career will end, politically, with this administration. I have the freedom and the luxury -- as does the president -- of doing what we think is right for the country. And the advice I give and the positions I take on issues are based upon that fundamental proposition: We're doing what we're doing in Iraq, in terms of here in the U.S. with the terrorist surveillance program and so forth because we think these are essential policies for the nation to follow. We're not trying to improve our standing in the polls, we're not out there trying to win votes for ourselves. Neither one of us will ever be a candidate again. We're doing what we think is right. And I'm very comfortable with that.”

Cheney seems to be saying that since he was elected he can ignore the wishes of the people. He can act as though he was Emperor or King. He knows best and the hell with the rest.

It would be very bad for the United States if anything bad happened to George Bush in the next 2 ½ years.

13 Days

2006-06-20T10:56:00.000-05:00

If George Bush had read "13 Days" before he went to War with Iraq we might never have been dragged in to the situation that we now have. If he read it now he might find a way out of the current war. He might avoid conflict with Iran and North Korea.

It would be a good thing if all executive branch, all military and all senators and congressmen were required to read this book before assuming office. We might then make every effort to talk rather than fight.

The Room Is Done

2006-04-21T14:24:00.000-05:00

My first four cars

2006-04-13T11:37:00.000-05:00

This is the same style as my 1954 Plymouth that I bought in may 1958 for $600. Mine was Blue and White.

This is like the 1957 Ford that I bought when I started to work in Meadville.

Here is a picture of the 1962 Rambler American like we had when we moved to Maryland

Here is the 1964 Malbu like the one we had before the 1972 ford

More Cars

2006-04-13T08:07:00.000-05:00

Here is a list of Cars that Debbie and Bob have owned in reverse order:

2006 Honda Accord
2004 Honda Accord
1998 Mercedes Benz E320 (leased 2001)
1996 Honda Accord
1989 Pontiac Sunbird
1989 Ford Escort

Cars

2006-04-12T18:01:00.000-05:00

This is a 1935 Ford that we had util WWII was over. Ours was Gray.

Here is a 1929 Buick. That is the first car that I can remember that Dad owned.
I was 4 years old when we got the 1935 ford

Going to school

2006-03-29T09:10:00.000-05:00

I’ve always thought that I got to where I was in life in spite of my education rather than because of it. I started to first grade in 1943 at a little one room school about 1/10 mile from our house. That year there were only 9 students in the school. Besides myself and my brother and sister there were 3 Switzers, 2 Bowersox and 1 Dwyer. Our teacher was mister Hetrick. The school had a big coal stove in the center and did not have any electricity. Two pictures hung in the front of the room, one of George Washington and one of Abraham Lincoln. We had a 48 star U.S. flag and a Pennsylvania State flag.

There was a crockery water jar with a spigot on the side. We had to walk to the neighbors spring, about a quarter mile away, to get water and carry it back in a bucket to fill the jar. We had a dipper to fill the bucket. It was the same dipper that we used to drink from. I don’t think the Health Department would approve to this arrangement today.

The toilets were outhouses, one for the boys and one for the girls.

I spent a lot of time that year listening to the older kids recite their lessons and being taught by the older kids because the teacher was working with someone else. At recess, and we had a lot of recess, we would play out in the school yard sometimes the older boys would knock out flies. Or we would rotate around the bases and then up to bat. In the winter we would sled ride from the neighbors woods down past the school to the creek. We also played Fox and Goose and Warriors Base.

Everyone had to learn and recite poems and the older kids had to read the classics, like “Tale of Two Cities”. I remember the older kids reading Evangeline, The Village Blacksmith, and A Cask of Amontillado.

Art Work by Victor

2006-03-24T12:49:00.000-05:00

Here is the progress this week. It seems that Victor knows what he is doing.

August Vacation

2006-03-21T11:45:00.000-05:00

We will now have 2 houses on Sundown Lane. The usual place and the one across the street. That will be good.

Basement Overhaul

2006-03-20T13:26:00.000-05:00

Today we started the overhaul of the basement. Victor and Kevin are the final two in our March Madness. The panneling is gone and we are going to bring the whole thing up to code with new studs and pressure treated base plates. Also going to wire it with coax and speaker wire and maybe Cat5.

Expertise

2006-03-08T14:18:00.000-05:00

Well here I am responding to a tag from DamselFish. A meme (rhymes with theme) tag. I didn’t have any idea what a meme might be so I searched back across the blogs and discovered: an idea, a thought that gets conveyed but may mutate in the process.

The original tag from Paul via eninnej was to state what five resources - online or otherwise - would you point people to, if you wanted to give them an entry into your field of expertise?

First I must first say that I am retired. I was, and for that matter still am, an Economist whose major area of interest is in government policy related to agriculture.

If one were to feel that this was their major calling then to enter this field they mst first have, as a minimum, a BS and Masters or, preferably, a BS and PhD in Economics or Agricultural Economics. I presume that within this level of education you have fields of study in International Trade, International Development, Statistics, Agricultural Policy, Resource Economics, Environmental Policy and Agricultural Finance.

As to Resources:

1. A fundamental online resource can be found in the Core Historical Literature of Agriculture collection at Cornell University's Albert R. Mann Library which offers free electronic access to back issues of AJAE for years 1919 through 1995. To access the 1919-1967 issues of the Journal (at that time called the Journal of Farm Economics) can be accessed here. The Journal's back issues from 1968 through 1995 are available there. Electronic back issues of AJAE for the years 1919 through 1999 are available at www.jstor.com to members who are at institutions that participate in JSTOR's Art & Sciences Complement Collection. A list of participating institutions can be found here.

2. Choices Magazine published by the American Agriculture Economics Association (AAEA) provides current thinking by University and Government Economists on issues related to food, agriculture, resources and development.

3. EuroChoices was launched in 2001 by the Agricultural Economics Society (A.E.S.) and the European Association of Agricultural Economists (EAAE). EuroChoices main aim is to bring current research and policy deliberations on agri-business and rural resource issues to a wide readership, both technical & non-technical.

4. Resources for Economists on the Internet “This guide is sponsored by the American Economic Association. It lists 2,100 resources in 97 sections and sub-sections available on the Internet of interest to academic and practicing economists, and those interested in economics. Almost all resources are also described. Those searching the Internet for economic information might also wish to try the Economics Search Engine (ESE). It indexes 300,000 pages on 10,000 economics web sites from around the world. Searches with it only return their contents”.

5. Agricultural Statistics, USDA, National Agricultural Statistics Service -- provides links to the electronic version of this publication starting in 1994

Big Cat and Big Sister

2006-03-01T16:12:00.000-05:00

One of my greatest fears when I was young was going to the barn to do the chores after dark, particularly before we got electricity. It was always kind of spooky, even in the daytime and when the light started to get dim outside the shadows really got dark inside. On top of that, if it was windy, the barn would creak and you couldn’t be sure what made the noise. I didn't mind the noise of the livestock moving around and making noise, I knew what those sounds were. It was the unexpected things like a screech owl, a bird, a bat or the wind that caused the hair on the back of my neck to stand up.

It was often my job to put down straw from the strawmow to bed the shed and you couldn’t have a lantern in the strawmow because if it upset the whole barn would be on fire in a few minutes. So you worked in the near dark and there might be anything in the corner where you couldn’t see, or so I thought.

It didn’t help that dad had told me about going down to the barn in the early morning to feed the horses, when he was 10 or 11. He said that he opened the stable door and a big cat jumped of off the steps to the barn floor and came past him out the stable door. He said he thought it was a mountain lion. Well I knew there weren’t suppose to be any mountain lions left in Pennsylvania, but knowing and believing are two different things. And I really did believe that there could be a big cat in the barn.

Also I was working on the barn floor one day and was coming down to the feeding room to get a fork. Unknown to me, Peggy was hiding behind the steps and as I came down she reached through and grabbed my ankle. Well I cleared the 10 feet to the stable door without touching the ground and didn’t stop until I got to the middle of the barnyard. Peggy thought that was great. I didn’t think so. She might have been a big cat.

Jockey and Skinny

2006-02-27T11:09:00.000-05:00

When I was in 1st grade I had a hat that was a jockey’s cap. It was made of a silky material, had a red bill, and had alternating red and white sections around the cap. I thought it was really great and I wore it every where. However, it created a conflict between me and Mr Hetrick, my first grade teacher. I wore the hat to school and Mr Hetrick started to call me Jockey. Well that was ok for a time or two, but I really didn’t want the kids in the school to pick up the nickname and start calling me Jockey.

I didn’t know what to do about it so I complained to mom about what he was doing. She thought a while and came up with the solution. You see, Mr Hetrick had a nickname that people had hung on him. People referred to him as Skinny Hetrick. Mom said that the next time he called me Jockey I should say “ok Skinny.” I wasn’t sure what would happen, but it worked and he never called me Jockey again.

CLARION AIRPORT

2006-02-26T09:45:00.000-05:00

Clarion Airport was named for pioneer pilot Parker D. Cramer, shown beside one of the planes he flew in and out of the original airport, in the shadow of the hangar built there under joint federal and community auspices. The flying field (the first municipally-owned one in the United States) was later named in Cramer's honor after he and his crew were lost on a route-mapping flight over the North Sea. Cramer once flew a plane through this hangar, from end to end.