The Final Stop on the Syntropic Journey…
…And we have arrived at our destination: the economic side of agriculture. I am going to go through the confusing town of agricultural economics street by street, starting with the main roads of the agriculture economy, then moving onto the “under construction” section of town or the current day state of the agricultural economy, and then attempting to project the changes that would occur to this town if syntropic agriculture would be implemented in the United States. So, let’s take a tour of this town together. Up ahead on Main Street to our right is a grey building housing the tariff office.
The Tariff Office:
As we move to the front of the unassuming building, we see a huge sign that reads “TARIFFS ARE POLITICAL”. And this is true. Tariffs are basically taxes on foreign agricultural products that are designed to protect American farmers. Or, if you’re in France, designed to protect French farmers. Agriculture is a global business, and different countries sell agricultural products either to each other or to companies that are in other countries. Sometimes, foreign countries can sell their products for less than what American companies can sell their products for because labor costs differ from country to country. Obviously, companies want the best deal possible, so they are more likely to go with the foreign, cheaper option. But this may put American farmers out of business. So to protect American farmers, the United States government adds taxes to the cheaper, foreign goods, which make them more expensive, and less appealing to companies. It is basically a way to ensure that American farmers aren’t heinously outcompeted by foreign farmers.
However, tariffs are often retaliatory. If we open up the door to the Tariff Office, we will see representatives from all different countries glaring at each other, waiting for an increase. If the United States chooses to increase tariffs on products coming from China, for example, China will very likely increase tariffs on products coming from the United States. This can be damaging to farmers, who now will likely not be able to sell their products in China. In fact, this exact thing happened under the Trump Administration. In 2018, the Trump administration enacted a series of tariffs against several trade partners, China included. Although these initial tariffs were primary on non-agricultural products such as steel, China responded by enacting a series of retaliatory tariffs on a variety of American products, including nuts, fruit, and soybeans. As we walk farther into the Tariff office, we can see the results of this. Both the United States representative and the Chinese representative are glaring daggers at each other and waiting poised to make changes. Behind the United States representative is a pile of burning cash, which represents the 15.6 billion dollars lost in trade because of these retaliatory tariffs.[1] Oh yes, tariffs of this kind often result in the loss of a lot of money for the country. The rest of the world’s representatives are monitoring this exchange, ready to jump in and offer tariff deals that best suit their country.
As we go further into the building and begin to come out the other side, a growing roar can be heard. Leaving through the back of the Tariff Office, the cause becomes visible. At the back of the Tariff Office is a hastily constructed shack with the words “Market Facilitation Program” scrawled on it. Ahh, here is the governmental response to the tariffs restricting the farmer's income. The Market Facilitation Program, set up by the Trump administration to help support farmers, gives direct cash payments to farmers. The shack has a proud sign that says “Over 14 billion paid to farmers in 2019!”[2] Wow, that is quite an achievement! And an awful lot of money to pay out because of trade disruptions and tariffs. In fact, money from the Market Facilitation Program and other governmental programs accounted for about 40% of national farm income, and some believe that farmers are now too dependent on the government for income.[3]
Pushing through the crowd around the shack, we emerge on a side street, leading away from the heart of town. The tariff office we leave behind, with the understanding that the Biden administration may choose to change the current tariff rate, and tear down the shack perched at the back door.[4] Walking along the cobblestone path, we move off the main streets, and out to the developments on the edge of town.
Construction Zone, aka some things going on today in the United States agricultural market:
As we approach the developments, it’s clear that some interesting things are being built. Now that we have ventured through the main street in the town and have an idea of the lay of the international agricultural economy, this Construction Zone is the domestic agricultural market, so construction here is based on the domestic market value of agriculture. Looking around at the buildings that are being built, at first glance we see that one building, in particular, is going up very quickly, almost becoming a skyscraper before our very eyes. Yelling out to a worker, we learn that the building represents the price of agriculture commodities. As the building gets taller, the price of agricultural commodities increases. An agricultural commodity is essentially any crop that is produced in the United States. The rapid pace of construction on the building indicates that the price of agricultural commodities is rapidly increasing. This increase is likely due to Covid related supply chain delays.
Around the rapid construction of the agricultural commodities tower, other, smaller condos are being steadily built. One, in particular, is emblazed with the letters FARMLAND REIT, and as we pass by the construction workers, we can’t help but overhear that a lot of them have already been bought by billionaires, such as Bill Gates and Jeff Bezos.[5] Let’s take a closer look at what this means. I call out party to a halt in front of the FARMLAND REIT, and as we gaze up at the luxury condos, I spin a small tale:
“REIT stands for Real Estate Investment Trusts, which are basically companies that people can buy stock in that own some type of income-producing real estate. Farmland REITs are trusts that own farmland. If people want to buy stock in farmlands, and not just a specific farm, they will often buy into a farmland REIT. Recently, billionaires such as Bill Gates have begun to buy mass amounts of stock in farmland REITs, inspiring the building of these condos to represent that investment.[6] Of course, the only people who know exactly why this spending spree has occurred are the buyers themselves, but experts generally guess that it is because farmland is a tax-efficient, safe investment.[7] No doubt, this spree also has to do with the sky-rocketing agricultural commodities building going up next door, which improves the values of the FARMLAND REIT building being built next door.”
I end my mini schpiel, and we all stare up and around at the buildings for a while, taking in the rapid changes and the pace of progress. Eventually, the shouts of construction workers become too much, and we move past the builders, and out further into the great abyss around this town. This is the future, and what will be built here is anyone’s guess. I cannot predict how the agricultural market in the United States will grow and shift with time; the next big changes may result from investors in the private sector, or from the governmental actions of the Biden administration.
But if we switch our large-scale conventional agriculture to syntropic agriculture, what would happen? How would the town change, and what future building plans would erupt?
The Future
The future is murky, of course, and the following will be speculation about how the market might change if syntropy is implemented country-wide. For starters, that Market Facilitation Program that I mentioned earlier? May need some changes. When growing on a syntropic farm, farmers often have many different crops to take to the market, instead of mass amounts of just one. This would likely result in less governmental funding being needed, as even if one product has a tariff enacted upon it, farmers would still be able to sell alternate products to recoup some of their lost income. In addition, the United States may be able to get rid of the tariffs it currently has enacted against other countries, because the US farmers, with more efficient soil and general crop production, may be able to better compete in a global marketplace.
The production of staple crops such as rice and corn depends on the management style of the farmers themselves, but there is no reason to suspect that the yields of these staple crops would decrease, especially if the farmers decided to do a 90-day retrofit on their rows. See here for more information about retrofitting and farm management. It is also possible that commodity prices would fall slightly, as more produce options would be available from more farmers. Specialty crops, such as fruit and nuts, may decrease in price as farmers expand their syntropic system. If it has not been abundantly clear already in this blog post, I am not an expert on agricultural economics, and so these amateur predictions are just that — predictions.
What I am sure about is that adopting syntropic agriculture would come with a whole host of changes, not just economically, but also socially, politically, and perhaps even morally in this country. The ripple effects of adopting this style are incredibly hard to predict and could result in any number of unforeseen changes. But even though the thought of the unknown is scary, it is clear the current agricultural system has significant problems, ones that will not be solved with tariffs and direct cash payments to conventional farms.
With a hope that you will join me in walking bravely towards the unknown,
Ajah
[1]Carter, Colin and Steinbach, Sandro. “The Impact of Retaliatory Tariffs on Agricultural and Food Trade.” Cato Institute., last modified December 9th, accessed March 10th, 2021, https://www.cato.org/research-briefs-economic-policy/impact-retaliatory-tariffs-agricultural-food-trade.
[2] U.S Government Accountability Office. “USDA Market Facilitation Program:
Information on Payments for 2019.” GOA.gov., last modified September 14th, accessed March 10th, 2021, https://www.gao.gov/products/gao-20-700r.
[3] Chinn, Menzie and Plumley, Bill. “What is the Toll of Trade Wars on U.S. Agriculture?” PBS.org., last modified January 16th, accessed March 10th, 2021, https://www.pbs.org/newshour/economy/making-sense/what-is-the-toll-of-trade-wars-on-u-s-agriculture.
[4] Hillberry, Russell. “Trade Policy Outlook: What should we Expect from a Biden Administration?” Purdue University, Agricultural Economics., last modified December 9th, accessed March 10th, 2021, https://ag.purdue.edu/commercialag/home/paer-article/trade-policy-outlook-what-should-we-expect-from-a-biden-administration/.
[5] Schwartz, Harrison. “As Billionaires Buy Farmland, Individual Investors Buy Farmland Partners.” Seeking Alpha., last modified March 9th, accessed March 10th, 2021, https://seekingalpha.com/article/4412396-farmland-partners-trading-near-nav-but-billionaire-buying-spree-may-extend-the-rally?utm_source=from.flipboard.com&utm_medium=referral.
[6] Schwartz, Harrison. “As Billionaires Buy Farmland, Individual Investors Buy Farmland Partners.” Seeking Alpha., last modified March 9th, accessed March 10th, 2021, https://seekingalpha.com/article/4412396-farmland-partners-trading-near-nav-but-billionaire-buying-spree-may-extend-the-rally?utm_source=from.flipboard.com&utm_medium=referral.
[7] Schwartz, Harrison. “As Billionaires Buy Farmland, Individual Investors Buy Farmland Partners.” Seeking Alpha., last modified March 9th, accessed March 10th, 2021, https://seekingalpha.com/article/4412396-farmland-partners-trading-near-nav-but-billionaire-buying-spree-may-extend-the-rally?utm_source=from.flipboard.com&utm_medium=referral.
