[O]nly 71 entities used these tax credits in the last full year they were active. That’s right, just 71! Forgoing millions of state tax dollars in favor of so few entities seems like the opposite of the governor’s sentiment in the tax rebate discussion. I’d simply ask the same logic to be applied to agricultural tax credits. Research and experience have shown us that these programs do not work. Instead of using the special session to double down on bad policies, a better and fairer solution is to lower taxes for everyone.

Indeed, as Show-Me Institute analysts argued for with SBs 3 & 5, generally the best kind of investment government can make is in “the market.” Like investors, government certainly has the power to make big bets on small industries, but the prudent approach with taxpayer money is to let all Missourians keep and invest their money through tax cuts, rather than dole out more and more cash to rent-seeking special interests.

The good news is the legislature did pass a broad-based tax cut bill in the special session. Quite a treat for taxpayers! The bad news is it also passed the tax credits we warned about to benefit special interests in the agricultural industry. Quite a trick! Boo.

Show-Me Institute staff have noted the problems with “economic development” tax credits for years; those problems include their haphazard creation and the way in which they, in practice, serve to gild the coffers of a host of powerful special interests in the state. Those objections and criticisms are as applicable now as they’ve ever been. It doesn’t matter if tax credits such as these go to large-scale property developers in cities or large-scale farmers in the countryside—it’s bad policy, and wrong, to force the rest of the taxpaying population to underwrite the profits of these private actors.

Taxpayers shouldn’t have to have to endure the “tricks” of tax credits to get the “treats” of better tax policy through income tax cuts. At some point, legislators need to gather the courage and say no to this constant rent seeking, once and for all.

The post Boo: Agricultural Tax Credit Passage No Treat for Taxpayers appeared first on Show-Me Institute.

Missouri’s already one of the national leaders in sacrificing state tax dollars for private economic development interests. Over the past decade, our state has devoted nearly $6 billion to tax credits with little to show for it. That’s also why my colleague David cheered when four of the tax credits listed below were allowed to expire last year. But now that the state has a surplus of revenue as a result of a better-than-expected economy (in the year these tax credits were not active), it’s apparently time to bring them back.

I’m not disputing that rural parts of the state would benefit from greater investment. But state tax credit programs are clearly not the way to do it. Government officials cannot predict the future, nor should they be in the business of picking winners and losers, which is something I thought Governor Parson agreed with. When the governor vetoed the tax rebate bill that spurred this special session call, he criticized the legislature’s decision to approve one-time tax benefits for some, instead of favoring permanent tax relief for all Missourians. The governor was correct then. So why is he now supporting tax credits paid for by so many to benefit so few? Here is a list of the tax credit programs being considered in the special session, and how many (actually, how few) entities used each program in the last year credits were issued:

• Wood Energy Tax Credit – 8
• Meat Processing Facility Investment Tax Credit – 13
• Ethanol Tax Credit – NEW
• Biodiesel Retail Sellers Tax Credit – NEW
• Biodiesel Producer Tax Credit – NEW (6 producers)
• Urban Farm Tax Credit – NEW
• Rolling Stock Tax Credit – 0
• Agricultural Product Utilization Contributor Tax Credit – 31
• New Generation Cooperative Incentive Tax Credit – 4
• Specialty Agriculture Crops Act Tax Credit – NEW
• Family Farm Breeding Livestock Tax Credit – 15

As you can see, in total, only 71 entities used these tax credits in the last full year they were active. That’s right, just 71! Forgoing millions of state tax dollars in favor of so few entities seems like the opposite of the governor’s sentiment in the tax rebate discussion. I’d simply ask the same logic to be applied to agricultural tax credits. Research and experience have shown us that these programs do not work. Instead of using the special session to double down on bad policies, a better and fairer solution is to lower taxes for everyone.

The post Agricultural Tax Credits Are Still a Bad Deal appeared first on Show-Me Institute.

Supporters of the bill argue that the mandate makes sense because customers ask for biodiesel and it would support local industries. Yet if biodiesel truly is popular, a mandate wouldn’t be needed to convince people to buy it. Supporters also argue that this mandate would be a good way to support Missouri farmers, as it would require half of the mandated biodiesel to be made from Missouri-grown materials. Forcing everyone to buy a certain state industry’s product is not only a heavy-handed way to “support local industry” but also certain to give rise to legal challenges. Has anyone heard of the Commerce Clause?

Detractors of the bill argue that biodiesel is more expensive at the pump than regular diesel and that mandating a more expensive fuel will harm the state’s economy. While prices do fluctuate, the true cost of biodiesel appears to be more expensive than regular diesel, although the price at the pump is trending downward. In 2015, biodiesel was 12 cents per gallon more expensive than regular diesel. In 2019, biodiesel cost roughly the same as diesel in the Midwest and was actually less expensive than diesel when calculating a nationwide average. But this calculation omits the current subsidies that biodiesel producers receive each year of $1 per gallon of biodiesel produced. Without these subsidies, that extra dollar will show up in the price at the pump.

The prudent course of action is to let the market work. If biodiesel is truly popular and cheaper than regular diesel, a mandate is not necessary. A mandate, particularly as this one is drafted, amounts to little more than a handout to certain farmers at the expense of anyone who buys diesel fuel.

The post Should Missouri Mandate Biodiesel? appeared first on Show-Me Institute.

If approved, the guidelines would require even a pickup truck driver hauling a single cow to a local sale barn to have a federal medical card certified by a physician, to keep a detailed maintenance log book and possibly to have a commercial driver’s license.

The only major difference I can see between you taking your pet to a check-up and a farmer taking his cow to a sales barn is the farmer intends to sell the cow. Why is the government considering such stringent regulations? From the same article:

Federal regulators argue that because the grain or livestock that farmers are hauling could eventually end up across state lines, the farmer’s intent is interstate commerce and therefore, for uniformity, they should be subject to commercial transit regulations.

The federal government wants to bring agricultural transport into the category of commercial transportation on the odd chance that agricultural products will cross state lines. Yet history has demonstrated that agricultural transport works quite fine as is.

This is a case of government growth with no benefit to the citizens. Missouri would be better off without it.

The post South of the Border appeared first on Show-Me Institute.

To help combat this problem/issue, the editorial suggests, we (of course) need a government solution. This is where I start to disagree:

Recognizing the value of animal health professionals, USDA Rural Development has contributed $500,000 to a partnership with the Missouri Department of Agriculture to create a business plan and pilot program for an educational institution to train veterinarians. The program will focus on skills specific to treating food animals.

Like many things, this problem does not need a government solution. In fact, strict licensing of veterinarians may be one of the reasons we have a shortage in the first place. Furthermore, the veterinarians (via their licensing board) are actively involved in maintaining that general supply shortgage, as evidenced by the ongoing lawsuits against horse-teeth floaters in Missouri. As Dave Roland wrote:

Missouri’s Veterinary Medical Board has sued to prevent horse owners from hiring anyone but licensed veterinarians from working on their animals’ teeth. Equine dentistry is a centuries-old profession that veterinarians traditionally avoided, and equine dentists have their own educational programs that offer far more training and experience with horses’ teeth than is offered in veterinary schools. Nevertheless, the law states that equine dentists must be punished with a $1,000 fine and a year in prison for every horse they treat.

Basic economics tells us that the solution to a shortage is: 1) higher prices or salaries; and, 2) reduced barriers to entry. If we make it easier to be a veterinarian (or vet tech, or horse teeth floater) and allow for the market demand to increase prices or salaries for vets who work on farm animals, this shortage will solve itself.

(Note: Don’t take this as a call to completely eliminate all licensing for veterinarians. There are many worse examples of unnecessarily licensed professions than vets. But there are changes that can be made — expanding the role of vet techs, for example — that would reduce the role of government and allow the market to solve this problem.)

The post Shortage? Yes. Government Solution Required? No. appeared first on Show-Me Institute.

I find it interesting that Dairy Management is funded by levies imposed on farmers, while the federal government has paid hundreds billions of dollars in subsidies to farmers. Two market distortions do not a free market make; instead, they further distort the market. A simpler and more efficient way for the government to decrease dairy consumption would be to eliminate subsidies to the dairy industry. This would cause consumer prices to rise naturally, which would in turn lead individuals to consume less. There are many problems in public policy, and a great number of them are government-created. The solution is not more government, but less.

I also find it morally questionable interesting that Dairy Management focuses on exporting the very products that have been deemed too unhealthy for domestic consumers. Again from the article:

Dairy Management, which reported expenditures of $136 million last year, also received $5.3 million that year from the Agriculture Department to promote dairy sales overseas.

When the government subsidizes one thing and taxes another, individuals change their consumption as a consequence. No one knows the optimal mix of goods and services — your guess is as good as mine (or as good as a government official’s, for that matter). Individuals could achieve higher levels of welfare if they were allowed to choose for themselves the bundle of goods and services that they consume.

Incidentally, the Show-Me state has historically played an instrumental role in propping up dairy prices. From the first article (emphasis added):

For years, the federal government bought the industry’s excess cheese and butter, an outgrowth of a Depression-era commitment to use price supports and other tools to maintain the dairy industry as a vital national resource. This stockpile, packed away in cool caves in Missouri, grew to a value of more than $4 billion by 1983, when Washington switched gears.

The post Schizophrenic Public Policy on Dairy Products appeared first on Show-Me Institute.

1. This production incentive encourages overproduction. This is undesireable from an environmental perspective, because it leads to deforestation. It’s also detrimental for the American economy because it results in an inefficient allocation of resources.
2. It increases the cost of fuel for taxpayers. Each gallon of ethanol that is produced costs them $4.18. This is separate from and in addition to the price that they pay at the pump. In a piece on The Huffington Post, Nathanael Greene explains how this happens:
   

   [N]ext year the oil companies will be required to buy 12.6 billion gallons of conventional corn ethanol, but because tax payers are giving them $5.85 billion they’ll consume 1.4 billion more than required. That works out to $4.18 per extra gallon.

3. It drives up the prices for corn, soybeans, and wheat. This is bad for consumers because they have to pay more for food. This is also bad for the environment because it leads to land-use change and further overproduction and deforestation. The FAPRI report quantifies that eliminating the tax credit for corn ethanol would cause the prices of these grains to fall. According to p. 64, if the production incentives were removed, the average corn prices would decrease by approximately $0.15 per bushel during the 2010-2019 period:
   
4. It discourages the development of biofuels that are cleaner and more renewable than corn ethanol. These alternatives are forced to compete at a disadvantage because they do not receive the financial favor that corn ethanol does.

The corn ethanol production incentive program is an application of the broken window fallacy. Politicians in Washington fail to consider the cost to taxpayers, and the aforementioned negative consequences. When taxpayers are forced to spend their money on subsidizing the overproduction of corn ethanol, they cannot spend it on something else, such as infrastructure or education or alternative renewable fuels.

Supporters of the production incentives will argue that discontinuing the program would hurt farmers’ bottom lines. However, government payments constitute a very small amount of their compensation relative to sales, as shown on p. 62 of the report. For this reason, eliminating the production incentives would not actually be detrimental to this group:

The post Negative Unintended Consequences of Corn Ethanol Production Incentives appeared first on Show-Me Institute.

In a Springfield News-Leader article, the assistant attorney general explains why selling milk “from a farm,” as state statute requires, should preclude off-site pickup spots:

“A farm is not anywhere defined in Missouri statutes as a vehicle in a parking lot away from the farm premises,” Blome argued.

Of course, no one would define a farm as a vehicle temporarily parked in a lot. But that isn’t a good definition of a food establishment, either — and the state, calling this family’s parked vehicle a food establishment, says it should be subject to the same regulations as a mini-mart or a grocery store.

If you can’t pick up raw milk from a farmer’s vehicle, what can you do with it? You can pick it up yourself at the farm. But suppose you drive your car to a parking lot, meet a friend there, and give him a gallon of the milk. Does your car now become a food establishment? Or maybe you bring your milk home, invite guests over, and serve them milk with dinner. Does your house turn into a restaurant?

The post Disappointment for Family That Sells Raw Milk appeared first on Show-Me Institute.

Under the bill, farmers with a grade ‘A’ dairy farm permit would be allowed to buy a permit to sell raw milk.  They would have to meet certain sanitary conditions for bottling milk and have a sign to let consumers know raw milk doesn’t provide the same protection of pasteurized milk.

The proposed change in law would give farmers greater freedom to sell their milk. And consumers would be able to make their own decisions about whether to purchase unpasteurized dairy products. Everybody would win.

The bill’s restrictions should be enough to protect the public. We don’t station a policeman by every cow to prevent farmers from drinking raw milk, and we needn’t impose that level of surveillance on other people, either. Regulators ought to concentrate on stopping fraud and deceptive advertising, like if a farmer were to display a sign saying “Buy pasteurized milk here!” when he’s really selling raw milk.

If Missouri adopted a similarly free milk policy, it would be a welcome end to the bizarre law that says exchanging cash for milk in a barn is legal, but the same transaction in a parking lot is prohibited.

The post Improving Raw Milk Policy appeared first on Show-Me Institute.

It is also the start of a national conversation about the importance of understanding where your food comes from and how it gets to your plate. Today, there is too much distance between the average American and their farmer and we are marshalling resources from across USDA to help create the link between local production and local consumption.

The USDA’s program relies on the premise that local production is a social and environmental good that should be encouraged by the government. Blake Hurst, the author of the Weekly Standard article, debunks the idea that local is necessarily more “carbon neutral.” He cites a study by Hiroko Shimizu and Pierre Desrochers for the Property and Environment Research Center about “food miles.” The study’s abstract includes this conclusion (emphasis added):

The evidence presented suggests that food miles are, at best, a marketing fad that frequently and severely distorts the environmental impacts of agricultural production. At worst, food miles constitute a dangerous distraction from the very real and serious issues that affect energy consumption and the environmental impact of modern food production and the affordability of food.

Certain climates and types of land are better suited for particular agricultural purposes. The local-food movement trumpets locality and proximity above all else, though, ignoring the enormous energy inputs required to grow food on land that is not well-suited for that purpose. An assessment of the environmental impact of food growing needs to take into account all of the inputs — not just the distance traveled from the farm to the store.

The USDA has created its own matrix for evaluating the most important environmental factor for farms — proximity — without taking into account other criteria that could also have significant environmental impact. If an individual thinks it is important to buy locally, that is fine. But that decision should be made by the individual, without the help of a massive advertising campaign by a governmental agency that expends large sums of taxpayer dollars in order to promote their particular environmental model.

(This discussion is related to my recent post about farmers’ markets, and to Sarah Brodsky’s blog posts about local food.)

Another problem, in addition to USDA program’s misguided focus on buying local, are the implications that local food is somehow healthier. Fruit grown in Missouri is not any more nutritious than fruit grown in California or Florida, yet the USDA program seems to conflate the idea with statements like, “USDA wants to expand access to local, nutritious foods,” implying that proximity could contribute to nutritional value. Local food may not even be as fresh as food transported from other locales; in fact, the PERC study found that because larger farms ship much more frequently than small farms, their food is often more likely to be fresh when it reaches market. The USDA’s misleading claims about the purported environmental and health benefits of local food makes its program even more questionable, beyond the way in which it exerts influence on consumer choices.

Buying local food is not always the best way to be environmentally or health-conscious. At any rate, it is not the government’s job to influence consumer behavior, and the $65 million used by the USDA in its program to promote local food surely has a better use.

The post Buying Local Not Always Environmentally Friendly appeared first on Show-Me Institute.

Why is the USDA involved in promoting individual fruits? Can’t the blueberry growers and the mushroom growers manage their own public relations?

These organizations belong in the private sector. The USDA should follow the precedent set by the state of Missouri and get rid of extraneous boards.

While we’re on the subject of produce, the National Watermelon Promotion Board links to this picture of a bus stop shaped like a watermelon. Check it out.

The post Some Boards That Should Be Independent of the USDA appeared first on Show-Me Institute.

Will life be sweeter if we are personally acquainted with the guy who made our bathtub?

Most people have no desire for better knowledge of the workers who did their plumbing or built their garages. (Or who put together their carports, as the case may be.) Those workers contribute to our economy just like farmers do. So why does the USDA single out farmers for us to associate with?

Curlee wisely observes that even if you want to know your farmer, your farmer might not want to know you. Farmers, after all, are busy people with lives of their own. I agree. It’s patronizing of the USDA to assume that farmers want closer acquaintanceship with all the final consumers of their produce, as if farmers had infinite free time or lacked friends.

After reading the many sensible things Curlee says, I’m confused by this statement toward the end of the column:

Somebody at the USDA deserves credit for encouraging a closer relationship between food producers and food consumers.

People should feel free to cultivate relationships based on shared interests, ideas, and personalities — but you shouldn’t have to hang out with someone just because chance juxtaposed the two of you on the food supply chain.

It’s wrong for a federal agency to endorse farmers as uniquely worthy of friendship. For the same reasons, I’m opposed when Missouri schools present this ideology to children as an unchallenged truth.

The post Friends and Farmers appeared first on Show-Me Institute.