John is an agricultural economist, and professor emeritus at the University of Missouri. In 1970, after earning his PhD, John began working as an agricultural extension economist, first at North Carolina State University and then Oklahoma State University. In the 1980s, he was at the University of Georgia, when the farm foreclosure crisis hit. It was then that he began to see that there was something deeply wrong with what he and other economists had been advising farmers to do. Namely, to either get big or get out.

John underwent a conversion of sorts, and in 1989 moved to the University of Missouri where he began to focus his research and education on sustainable agriculture. He retired in 2000, but his work to foster a more intelligent and sustainable farming economy didn’t stop. Since then, he’s written six books, including most recently in 2012 The Essentials of Economic Sustainability.

I met John this summer at the Organization for Competitive Markets conference in Kansas City, where he gave a truly rousing speech. You can watch that speech online, we’ll be sure to post a link to it on the show page for today’s episode which you can find on our website at ILSR.org.

John joins us today from his home in Fairfield, Iowa. John, welcome to the show 

So tell me a little about what you were doing in the 1970s and what it was that you were telling farmers to do. 

So that meant, as you suggested, that our responsibility was to go out and work with farmers and help them devise marketing strategies and make marketing decisions. I taught such things as future markets and options and forward pricing, and I was the person that did the market out for cattle and hogs and livestock in general. And we’d try to analyze what trends were going into the future.

But we also dealt with farmers on general business management strategies and we saw marketing as part of the broader sort of business management of farming. As you suggested, the basic theme of that time and it still is in many agricultural universities, is that farming has to be a business. If farmers think it’s a way of life, that’s kind of old fashioned or it’s out of date, so they have to focus on the economic bottom line. You often hear that, from back in the 1970s and 1980s was the period of time when we had expanding export markets and farmers were expanding production. It was very profitable in the 70s, as it has been up until the last few years now.

Farmers were told, “Well, you need to expand to get bigger, to get out,” was the saying a lot of people had, and that’s because what we were promoting was kind of an industrial model of agriculture. We said you need to specialize. Move away from diversified family farms. Specialize in particular commodities or one or two commodities. And then when you specialize then you can standardize and mechanize the process. And chemical fertilizers and pesticides and antibiotics in livestock allowed farmers to have much more control over that production process, so you could kinda write a recipe for how to grow a crop or how to grow a hog.

So you standardize, and then once you’ve done that you’ve simplified the management process so that you can consolidate into larger and larger farming operations. That’s what we thought, that was the get big or get out. You need to follow that industrial model, and you’ll become more economically efficient.

I bought into it and I think a lot of people still do. Under the idea that if we made agriculture more efficient, then we’d reduce the cost of food and make good food affordable for everyone. I think that’s the fundamental flaw in the industrialization of agriculture. It has tremendous negative impacts on rural communities and family farms and on the environment.

But most important thing, it failed to provide good food for everyone. We have a higher percentage of people that are food insecure in the country today than we had in the 1960s before we had this last round of industrialization. We made food cheaper for the people could afford it and for the average consumer, but we’re not getting food to the people who need it most because it’s not a problem of food costs being too high. It’s a problem of unequal distribution of income and access to food.

The reason you have food deserts in the city, it’s not profitable for the large industrial or corporate food retailers products into those markets at a reasonable price. So we didn’t feed the hungry. In addition to that, the food that they’re getting, and it’s not just because it’s highly processed junk food, but the food they’re getting is not healthy.

We didn’t anticipate all those things, but I contended that was an outcome. It took me many years to come to that outcome, but that was an outcome of agricultural industrialization. So I had to do something different. 

Unfortunately at that time, it was also a time when furl prices were high, inflation was high which meant interest rates were high. So farmers out here, and also cost to farm inputs were going up. Farmers following the advice of the so-called experts in terms of expanding, many of them borrowed large amounts of money at record high interest rates in order to take advantage of what were seeing as this opportunity for profitability in the future of agriculture.

But when we got into the 1980s we had a change of administration. Ronald Regan came in as president, said we’re going to bring inflation under control. Tightened up on the money supply, put the country into the domestic recession, that turned into a global recession. All those export markets dried up.

And then farmers were caught with these huge debts at record high interest rates and commodity prices fell because of the loss of export markets. And so farmers simply couldn’t pay those debts. They couldn’t even pay the interest on it, let alone the principle on it. So we had farm foreclosures and bankruptcies were kind of regular fare on the network news programs at that time.

At that time I moved from Oklahoma State University, where I’d been a livestock marketing specialist and working with big feed lots out in the Oklahoma and Texas… out in the Oklahoma Panhandle. I moved to the University of Georgia and I was head of the Extension Agricultural Economics department there.

It was the responsibility of the people in our department to go out and work with these farmers and try to help them figure out, we had them bring their records in, we’d sit down right across the table from them and try to go through their records and see how much equity, if any equity they had left and try to help them find some way to survive financially. Or at least to get out of farming while they still had some equity left. Or at least, as I like to say, talk them out of committing suicide, because farm suicides were not uncommon at that time, as these farmers were losing these farms.

So that’s what made me really begin to think, and I began to understand that the farmers that were in the biggest trouble at that time were the farmers that had been following what we so-called experts had been advising them to do. They had gone ahead… We had said you don’t really have an economic problem, or a profit problem, you have a cashflow problem. So if you are borrowing money to make the cash flow then things continue to be profitable, then you can make up the cash flow payments, you can pay off the debts and everything will be alright.

But I saw that wasn’t working, and it sure wasn’t working for the farmers. And then I saw that it wasn’t working for the rural communities that depended upon those farm families, not just to buy fertilizer and feed and agricultural supplies, but those families were the people that shopped on the main street of the small towns. They’re the people that bought tissues and the clothes and the cars in those communities and when those farm families couldn’t make a living anymore, then the people that depended upon those couldn’t make a living. So we saw rural communities all across the country- I saw it in Georgia but it happened in Missouri and Iowa and everywhere, these rural communities really suffered because it takes people to support communities, not just production and not just agricultural profits.

And then I really became concerned about the negative environmental impacts of industrial agriculture, that farming fence row to fence row, and the soil erosion was rampant and we were polluting air and water with agriculture chemicals and biological waste out of the big animal feeding operations.

I came to the conclusion that this kind of agriculture wasn’t working. And it wasn’t going to work in the future. Thankfully the sustainable agriculture program was just coming on the scene and as you mentioned, I had an opportunity then to get a grant from USDA in Washington on the first sustainable agriculture research and education program that they had funded was in 1988. That allowed me to move and I’ve been working on sustainable agriculture ever since.

At first when I went to the University of Missouri, I think they were expecting me to develop a public relations program that basically said everything we’re doing here is sustainable so we don’t have to do anything different. And then as they began to discover that I was serious, that I really thought we needed to recreate agriculture, that we need to move away from the industrial model and move towards what had been a very successful program in the 40s and 50s, at the University of Missouri was a balanced farming program.

It was about balancing making an economic living on the farm with the quality of life for the family. You know, buying washing machines, getting indoor plumbing, getting running water and things of that nature in the homes. So it’s about the quality of life, but balanced with economic and then so of conservation with kerosene and things of that nature, so it was a balance of taking care of nature and the quality of life and the economic dimensions of farming.

When I went to the University of Missouri, I thought, well, the University of Missouri has this history in balanced farming so it’ll be easy here to sell this new sustainable agriculture program because that’s what it’s about. It’s about taking care of the land, being a good responsible member of the community and then making a decent economic living for the family. Because that’s what’s necessary to sustain the productivity of the land over the long run.

But whenever I started pushing that idea it was in conflict with industrialization so pretty soon I could see there was great resistance to what I really wanted to do. I really ran into resistance when I started questioning the industrial model of animal agriculture, the large scale confinement animal feeding operations when bringing in standard farms. The big corporations at that time, it exchanged hands several times since then, wanted to bring an 80 sow hog operation into North Missouri.

That’s the epitome of industrial agriculture. And I supported the people that were opposing that because I did a study comparing actual records of Missouri hog farmers with what they were proposing to employ, the people they were going to employ, in the enzymes in these corporate hog operations. I concluded we were going to displace three independent hog farmers for every job that was created in one of those corporate capos.

You can imagine then, the backlash. The university was promoting this idea. I became pretty unpopular there, in the last five or six years that I was there. I joined forces with the [inaudible 00:15:14] at that time at Lincoln University, which is the historic black institution in the state of Missouri. They had a very good, small farms program, so we basically combined the Lincoln University small farms program with the University of Missouri’s sustainable farms program and that gave us both a solid footing to continue to do our work regardless of what the universities really thought about what we were doing.

And then I ended up in the last five years, I got 1.2 million dollar Kellogg Foundation grant to link sustainable agriculture with sustainable community development. But I did go ahead retire as soon as I had 30 years in, because I could retire without any penalties. When I retired I had no intention of not doing anything. I wanted to continue to do my work in a way that I wanted to do it. 

But I understand that you believe that there’s a hidden cost to that, can you talk about what that is?

I think when you look at the price spreads, which is the difference between what the producers are getting and what the consumers are paying, you find that those price spreads have widened significantly. And that was a natural consequence of industrializing the food system, is you continue to, in this idea of specialized, standardized, consolidate larger and larger operations, you eventually end up with large corporations that have the market power to enhance their profits both at the expense of the consumer in terms of food prices going up faster than inflation, but also in terms of producer, and the producer not realizing those prices.

So I think it’s a fallacy to say that in the last twenty years, that we’ve seen real advantages from the industrialization. That’s been one of the rapid periods of industrialization in the food system. The problem was that when we were actually getting the gains in terms of reduction in percentage that the average consumer spends on food, we still weren’t getting good food to the people that needed it most. You can go all the way back to the enclosures in the 1600s and hunger as we know it today really began whenever we began to rely solely on markets to make sure that everybody got enough food. The basic problem is you have people within society that simply… they’re good people of equal being and worth that may be making great contributions to society in other ways but they’re simply not able to earn to enough in terms of income. So we can’t solve that problem by making food cheap.

There was a a global meeting of something like, I can’t remember now, 80 scientists or something like that from around the world and they got together and concluded that obesity now is a greater global food problem than is actual hunger. And everywhere around the world that take this industrial model of agricultural production and industrial model of food production, we see the same sort of obesity, diabetes, high blood pressure, heart disease, the whole range of issues rise with it. And the United Nations studies in most of the rest of the world already concluded that they don’t really need or want the industrial agriculture because according to the UN, their issue in various UN reports between 70 and 80% of the people in the world today are not fed by industrial agriculture systems, but they’re fed by what basically we would call subsistence farms, small family farms.

We now now know through sustainable agriculture approaches, such as perma-culture, nature farming, agro-ecology, that we could increase yields on those farms double or triple, in some of the places even quadruple yields on those farms without adopting industrial models.

That’s reason much of the rest of the world is resisting genetically engineered foods and a whole range of industrial technologies because they simply have seen what happened in other parts of the world and they don’t want their agriculture to go that way. 

And then another fallacy that you hear is that we’re exporting about 20% of the food that we’re producing in this country, or 20% of our agriculture products go elsewhere, and we say okay we’re feeding them, but we’re not. There’s less than 1% of our agricultural exports go to the nineteen countries that are the hungriest people in the world today. Most of our exports are going to places like China and Korea and India and places like that where there’s an increasingly affluent middle class population. And what we’re doing is shipping more high protein foods to those increasingly affluent classes in the other places, we’re not even feeding hungry people in those countries.

What we are doing is allowing countries like China who has this tremendous population of people to provide, let’s say more meat for their increasingly affluent middle class there, rather than taking land out of rice production and other basic production that’s feeding the hungry people in those countries.

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I want to ask you as an economist, something that I think I find sort of puzzling in a way, which is that- the economic thinking behind this whole system was we’ll create more efficient operations, we’ll be able to have bigger output. And yet, what you describe is a system that’s become less and less competitive. There’s this enormous consolidation of not only farms, but most importantly at the processing and the retail level, it’s like a choke hold at this point, there’s so few companies that control those parts of the sector.

Farmers are getting less, consumers are paying more. Competition is like the bedrock of economics. I’m puzzled, how is it that economists didn’t see this coming and why hasn’t there been more of an about face.

But what I think they should have anticipated is when I was in graduate school I had a whole course in market organization, and we studied in that course what was necessary for competitive markets. We had something likened to what most people think of as antitrust policy, but it’s maintaining a competitive market system. A system that will really do what Adam Smith said in terms of the invisible hand working to allocate scarce resources to meet the needs of at least people as consumers.

There was kind of three characteristics. One was structure, which says you have to have a large number of small farms. In a purely competitive market, so many farms small enough so that the action of no one individual has a significant impact on overall supplies or prices.

The second is conduct. If you have small producers, you can’t allow them to collude so that they act as one big producer, so that’s conduct.

Then the third was performance, and that was kind of the consequence of structure and conduct. The idea was that if you had a competitive structure and conduct then you’d have larger quantities of product at lower prices. And so that was the basic idea. When we got into the 1980s and the economy was slowing down, we had some economic problems that I talked about with inflation, then they began to say okay, we need to rethink some of these things. So basically they want to perform.

They said, if we have increasing output and we have lower prices, and the other thing was the innovation. If we’re getting a variety of new products coming in, then we have performance. And then we simply won’t worry about structure or conduct to any great extent. As long we’re getting, what I call it, as long as were getting a lot of cheap stuff, we’re not gonna worry about whether we’re getting the right stuff. Because in order to get the right stuff, in order to make sure that what consumers need they were getting, at the lowest possible economic cost, then you would have had to have a competitive market structure, large numbers, small farms. And you’d have to have absence collusion.

Today we don’t have a large number of small farms. We have very few large firms. What sociologists and others have concluded is when you get down to the point where you’ve got four or five large firms that control over half of the overall market, you don’t have to have out and out collusion because they all know what each other’s doing. And they go about setting prices and colluding without talking to each other, without having any evidence of collusion. And that’s what we’ve gone toward. And that’s a natural tendency of a capitalist economy, to move in that direction. Therefore it’s the responsibility of the government, which is what I learned in graduate school and other economists did too, the responsibility of government is to not allow that to happen, rather than to sanction it or even encourage it to happen.

For example, if you looked in agriculture and there’s been studies done in various sectors in the economy you would find such things as rather than needing 500 sows, in a hog operation, if you had 50 to 100 sows in that operation then that would be ten pigs times that, you would’ve achieved all these economies to scale as I was talking about with industrialization.

Beyond that, it’s mainly a matter of accommodating this industrial slaughter and distribution system. It’s where you get the economic power. It’s the same way with farm after farm. I got a friend that for many years was in charge, and he still has the information on the dairy profitability standard at the University of Wisconsin and he says, basically the economy is to scale in the dairy operation are exhaustive at 100, 150 cows in the dairy operation. Beyond that, it’s a matter of the operations getting bigger to accommodate the industrial system of processing and distribution.

So the size that we have today is not necessary and it’s not there because of economic efficiency. It’s basically there because of the market power. The power to influence market prices, to charge higher prices than would be possible if it’s purely competitive. And to pay, in the case of agriculture, to pay producers less than you would be paying them, and to take a larger return for your shareholders than you have in a competitive market.

So that’s what we have. And then they use that market power that comes from the large size corporations to turn that into political power, which basically destroys the ability of people to influence the political system in ways that would regulate those corporations so that they would be, in fact, competitive. So we’ve just allowed capitalism to get out of hand in terms of concentration to markets which gives them market power that’s not characteristic of competitive market economy, and the political power which prevents the government from enforcing regulation that would necessary to return us to a competitive capitalistic model.

And that really struck me because my own research and focus in my work is around independent business and particularly main street retailers. It’s a very similar story. They have to operate profitable businesses and be financially viable and so on, but when you look at their decision making, and when you look at their role in the community, they’re making decisions that are governed by a mix of values. And they’re serving a wide array of functions in addition to distributing goods, they’re performing all these other functions. Economic, social, and otherwise in the community. And so when you’re comparing them to say, Wal-Mart, what we haven’t been taking into account is all these other things and all these other ways in which your research seems to say that’s true of family farms as well.

I was wondering if you would talk a little about what some of those functions are and how you see that working.

That was a period of time, when traditional family farm values were very strong and that balance approach was saying okay, on the one hand what we tend to talk about first is making a living. But the balance farming program was more about the quality of life in the farms. The 30s and 40s, quality of life… Many farms didn’t have electricity, they didn’t have running water. We didn’t have electricity on the farm I grew up on until about the time I started high school. We got running water when we got a Grade A dairy farm, but we didn’t have indoor plumbing in my house until I came home as junior in college and helped my brothers and my dad put in a bathroom over Christmas vacation.

The focus of balance farming is we need to improve the social quality of life. The various things that go with desirable conveniences. The other thing they couple that with is taking care of the land. There’s this long term ethic in agriculture that real farmers have a responsibility to leave the land for the next generation, as productive as they found it. And that’s in this idea of sustainability, the stewardship of the land. And there’s also responsibility for the larger community.

And I’ve said on a family farm, the family and the farm are inseparable. The farm and the way it functions and the way it’s operated is a reflection of the values of the family within the community. They’re thinking not only about what we’re doing on the farm, how we’re going to make money, but what are people going to think about this, are they going to think that we’re fulfilling our responsibilities as members of this community.

And you described the small family businesses or the small independently owned businesses much the same, and I think there’s a lot of similarity there. I think as an economist one of the most important things we need to realize is when we talk about the economics, economics is instrumental in that economics is the means of achieving something else. It was never meant to be the end that we pursue the economics with.

It’s a means of something else. If you look at money, money is the claim to something. If you don’t know what you want to claim with that money, you don’t know how much it’s worth or whatever. So I think in the multi functional farm, what you do is you look at the economic viability of the farm as the means by which you pursue whatever purpose you want for that business, or whatever you feel in terms of your social and ethical responsibility.

What is it that makes your life good? What makes it worthwhile? What gives your life meaning? Those are those social and ethical and ecological stewardship, and the economic piece of it is absolutely essential, but it’s a means of allowing you to do the other things. And so when we talk about the multi functionality, we’ve got to look at what’s the natural resource base that supports this farm or supports this business. What are we getting from…

And then the human resources, where are the people involved in the operation. We’ve got to maintain the productivity of the natural resource of the land, the water, the air, or for the business whatever sources or materials that they have. We have to take care of our employees, we have to make sure that it’s good for the family, it’s good for the community, if we want to sustain this business in the community, if we want to sustain the farm in the community.

And then if we do those things, then those things are where we create the economic viability that allows us to continue to do that. And in the absence of the dominate sort of influence, the economic system could function very well. It never functions perfectly but functions very well. The fundamental difference in what have now is we go to corporately controlled economy. But when you go to a large, publicly traded corporation, you’re basically in the global markets. The people may be good people that are managing these operations, they may have strong social and ethical values and the shareholders may have strong ethical and social values, but the only values they have in common is the desire to increase the economic value of that stock.

So when you’re managing the corporation, the corporation itself is purely an economic entity, it’s a mono functional operation by its very definition, the only thing it can do as a for profit corporation is to do whatever is necessary for it to maximize profits or returns through its shareholders. And that’s basically what it does, that’s the reason it tries to influence the political system, that’s the reason it tries to gain control of the markets, to gain monopoly power in the markets. It’s simply doing what corporations are designed to do.

And what we forgotten is that, a corporation, a large publicly held corporation has no social or ethical values, but we have to impose those through our public policies. And when I was talking about antitrust policy, that’s basically the justification. That’s the reason that we have government in control of capitalist economies. When government loses control, it loses the ability to impose the social and ethical values of the society in which that company or that corporation functions. And then the corporation continues to exploit and extract, exploit the natural resources, exploit the people, extract the resources and so on.

I think ultimately we’ve gotta get back to a situation where we reflect those social and ethical values as well as our economic necessities and the decisions that we make and the policies we make in the way we farm and the way we run our businesses.

When you look back at where we’ve come over the last ten years, do you feel like we’ve made any progress? Do you have hope? What do you think needs to happen next in order to really overcome this?

I think we have made progress because there’s greater public awareness. There’s much greater public awareness of the issues I’m talking about today then there was 25 years ago, or 27, 28 years ago when I came back to the University of Missouri. Most people had never heard the word sustainable at that time. Actually, I was thinking back, I don’t think I ever heard the word environment, environmental until Silent Spring. Rachel Carson wrote Silent Spring.

There’s a person by the name of Margaret Wheatley who’s kind of a leading writer and has been over the years on organizational change, and different ways of holistic thinking, things of this nature. She went away on a retreat of some time and she came back and made a talk at the University of Wisconsin that I picked up on the internet, that I’ve used several times and I think it’s very insightful. She came back, she said she had three basic observations.

The first was there’s a feeling of impotence and despair in society today and I think that’s particularly true in rural areas where they’re being dominated by the large confinement animal feeding operations, industrial agriculture and we see rural areas in economic and social decline and decay. I think it’s true across society, there’s this feeling that something fundamental is wrong. I think that’s the first thing that has to happen before you’re able to bring real change. People have to come to the realization that something isn’t working here. We certainly don’t have agreement in what we ought to do about it. But when you have agreement that there’s something wrong, you’re at least one step closer to doing something about it.

The second observation that I hadn’t thought about, at least not clearly until I read what she said, she said, “The information doesn’t change minds anymore.” And I’ve written something about this too. The issues that we’re dealing with now are so complex that you can look at them from various different directions and come to different conclusions. For example, economists, you know, kind of neoclassical economists in the traditional vein of that would look at the same things I’m look at and talking about here and they’d come to a different conclusion.

So information isn’t changing minds. We talk about alternative facts and things of this nature. People don’t know what to believe. But the third part that I think is most hopeful, she said she had come to the conclusion that the only way you bring about change is when people within communities take charge of their own destiny. That change within the community is the way that you bring about change within the larger society and change within the global community as a whole.

I really believe that’s where we are in… If you look around, you’re aware of a lot different organizations, and I am too, that are all working in the same basic direction. We may have different ideas on what we ought to do and things of that nature, but we all realize there’s something fundamentally wrong.

And I would argue they all come under this conceptual umbrella of sustainability. How do we meet the needs of everyone here today? Not everyone has everything that they want, but how do we meet the basic food needs of people so that every child in this country and every child in the world has enough good, basic food to eat so that they can have healthy development of their minds and body and grow up to be productive, happy people? How do we do that? But how do we do that in a way that doesn’t diminish opportunities of future generations to meet their needs as well? So that they and their children will have enough to eat and have enough clothes and housing and that sort of thing.

I think there’s a realization that what we have now isn’t meeting the needs of many, if not most, of the people of the world today. We certainly aren’t leaving equal to better opportunities for the future. The next step in that is for people within all of these different communities, and when I talk about communities I’m talking about communities of place which are important, but communities of interest, people that are like minded and see a particular dimension of the issue I’m talking about, like the organization to competitive markets. And these are people within communities that have come together with other people within those communities and they connect with each other, and then they bring the connections with all these other organizations that they’re a part of. We’re developing this network of communities that are just all across the country and around the world, and I think that’s where the change is going to emerge from.

We change at the local level and then we begin to have impacts at the local level, then we can change at the state and regional and national and hopefully the international level. But it all begins when people take charge of their own destiny within their own communities.

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This show is produced by Lisa Gonzales and Nick Stumo-Langer. Our theme music is Funk Interlude by DysfunctionAl. For the Institute for Local Self Reliance, I’m Stacy Mitchell. I hope you join us again in two weeks for the next episode of Building Local Power.