TCS Daily


Feds Freeze Out Antidote, Costing Billions

By Henry I. Miller - January 18, 2007 12:00 AM

SAN FRANCISCO -- Jack Frost taunted area farmers last week with blasts of arctic air that threatened several of central California's major farming areas. The direct losses in citrus alone could approach a billion dollars.

Such climatic catastrophes are nothing new. A 1990 freeze in California caused about $800 million in damage to agriculture and resulted in the layoff of 12,000 citrus industry workers, including pickers, packers, harvesters and salespeople. A three-day freeze in 1998 destroyed 85 percent of the state's citrus crop, a loss valued at $700 million. And in 2002, lettuce prices around the country went through the roof after an unseasonable frost struck the Arizona and California deserts.

Peaches, citrus and other crops are regularly threatened by frost in the Southeastern United States. Losses to American farmers are in the billions of dollars annually.

Farmers have only pathetically low-tech methods for preventing frost damage to their crops. These include burning smudge pots, which produce warm smoke; running wind machines to move the frigid air; and spraying water on the plants to form an insulating coat of ice. The only possible high-tech solution, a clever application of biotechnology, has been frozen out by federal regulators.

In the early 1980's scientists at the University of California and in industry devised a new approach to limiting frost damage. They knew that a harmless bacterium which normally lives on many plants contains an "ice nucleation" protein that promotes frost damage. Therefore, they sought to produce a variant of the bacterium that lacked the ice-nucleation protein, reasoning that spraying this variant bacterium (dubbed "ice-minus") on plants might prevent frost damage by displacing the common, ice-promoting kind. Using very precise biotechnology techniques called "gene splicing," the researchers removed the gene for the ice nucleation protein and planned field tests with ice-minus bacteria.

Then the government stepped in, and that was the beginning of the end.

The Environmental Protection Agency (EPA) classified as a pesticide the obviously innocuous ice-minus bacterium, which was to be tested in northern California on small, fenced-off plots of potatoes and strawberries. The regulators reasoned that the naturally-occurring, ubiquitous, "ice-plus" bacterium is a "pest" because its ice-nucleation protein promotes ice crystal formation. Therefore, other bacteria intended to displace it would be a "pesticide." This is the kind of absurd, convoluted reasoning that could lead EPA to regulate outdoor trash cans as a pesticide because litter is an environmental "pest."

At the time, scientists inside and outside the EPA were unanimous that the test posed negligible risk. (I wrote the opinion provided by the Food and Drug Administration.) No new genetic material had been added, only a single gene whose function was well known had been removed, and the organism was obviously harmless. Nonetheless, the field trial was subjected to an extraordinarily long and burdensome review just because the organism was gene-spliced.

It is noteworthy that experiments using bacteria with identical traits but constructed with older, cruder techniques require no governmental review of any kind. When tested on less than 10 acres, non-gene-spliced bacteria and chemical pesticides are completely exempt from regulation. Moreover, there is no government regulation of the use of vast numbers of the "ice-plus" organisms (which contain the ice-nucleation protein) commonly blown into the air during snow-making at ski resorts.

Although the ice-minus bacteria proved safe and effective at preventing frost damage in field trials, further research was discouraged by the combination of onerous government regulation, the inflated expense of doing the experiments and the prospect of huge downstream costs of pesticide registration. As a result, the product was never commercialized, and plants cultivated for food and fiber throughout much of the nation remain vulnerable to frost damage. We have the EPA to thank for farmers' livelihood in jeopardy, jobs lost, and inflated produce prices for consumers.

When will the EPA re-think its policies? Probably not before hell freezes over.

Henry I. Miller, a physician and fellow at the Hoover Institution, headed the FDA's Office of Biotechnology from 1989-1993. Barron's selected his latest book,"The Frankenfood Myth..." as one of the Best 25 Books of 2004.


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21 Comments

Another Small Example
Of a bureaucracy existing primarily for its own self-preservation and -perpetuation and justifying its existence principally through policy decisions demonstrably inimical to its patrons, the taxpayers.

I'm trying to figure out who wins here . . .

'Berg

This is nothing
compared to the ghastly, expensive debacle the EPA created in the late 1980s with its doomed program on household radon gas. Again it was a program that the EPA launched because it was out of things to do and needed to avoid an appropriations cut.

Cold Reality
If the socialist "reasoning" and mentality behind the EPA's "regulations" had been in place at the time of the Mayflower's arrival to the then-New World, we would still be huddled along the North East shoreline of the continent. Socialist liberalism is in many ways similar to Nazism in that a few "enlightened" statists force their will on the rest of us. The only real difference is that the National Socialists used work and death camps to enforce their will and modern liberals use fees, taxes and financial penalities to enforce theirs. The end result, however, is the same. A few bending the many to their will.

It's not socialism
It's the natural tendency of any bureaucracy when not given clear and specific direction by elected officials. With a policy void created by lack of oversight by legislators, bureaucrats will carry on what they perceive to be valuable and useful programs, but they do so in a situation of taking only their department's priorities into account. This isn't socialism, it's undirected bureaucracy, and it can and has happened everywhere.

Mostly it falls down to the fault of elected officials who have a tendency to neglect good governance in the interest of partisan politics and short term thinking.

Were here to help.
It is amazing. Aspirin would be illegal if discovered today. This nation is being destroyed from within by agencies filled with people who only care about perpetuating lifelong employement at teh expense of innovation. Look at private aviation. There has been virutually no changes in private small plane technology since the 1950's. There are a few very expensive new planes but given that cars run on computer controlled fuel injected engines imagine what small planes would be like if the FAA would have not made innovation essentially to expensive? Likely a small plane would cost less and have vast digital cockpits with highly efficent engines. There is change but it is far behind the technology curve. The government takes huge sums of money from the private sector and then uses it to control that very sector. I wonder what cell phones would be like if the government had stepped in.

It's the natural tendency
of any bureaucracy, period.

Even when given clear and specific directions, the bureaucracy will seek ways around those limitations in order to continue growing.

But it is socialism....
ColinH, I agree that without oversight from elected leaders, bureaucracy will chart its own course. A course that invariably is self-serving. But as a governement employee, myself, my experience is that the default position for most bureaucrats is liberal socialism. The fact is that most of my coworkers simply don't trust their fellow Americans to do what they consider is right without the guiding hand of government. And the innovators, producers and risk-takers among us have committed the most grevious sin of all: they've shown the world that it can function quite well without the heavy hand of government at the controls. For that, they must be punished.

All too true
I don't call it socialism, because there's all too often a tendency to say, we're not socialist, it can't happen here. As Mark points out, it's a universal tendency within bureacracy, as you rightly indicated, that it knows what's best for others. It has existed as a tendency as long as bureaucracies have existed.

The taxpayer is the real victim
Having more experience with layoffs than I would like, I've got a great deal of sympathy for the 12,000 workers. But, let's think about why they will get laid-off.

As Dr. Miller points out, killing frosts are not unknown. In fact, they're somewhat frequent. Assume that you own a business that is subject to market forces that can be extremely detrimental to your business. Wouldn't you take steps to minimize the risk? Of course you would. You'd diversify (maybe different products, maybe different locations), you might strengthen your cash position (maybe to survive the downturn, maybe to buy the competitors during a downturn), and you'd invest in new technology that has the potential to minimize the downside.

If you would take steps to protect your business then why wouldn't the citrus industry? That's simplicity in itself - the owners are already protected from the negative aspects of the risk by the taxpayers. You've already heard about "disaster declarations" - who do you think will fund those? Yep, taxpayers. Who already funds the Farm Bill that is allegedly designed to maintain an adequate supply of farm products at reasonable prices? Yep, taxpayers. In bad times the taxpayer pays the farms that fail and pays higher prices at the market. In good times the taxpayer pays some farms to not produce, buys surplus product that is then destroyed, and pays higher prices at the market.

Unlike most businesses farms don't really have much incentive to optimize their operations. I think the saying "you get what you subsidize" is true and in the case of farms we're subsidizing inefficiency and poor business decisions. The EPA does deserve a share of the blame but most of the blame lies in our farm policies. In this case the citrus industry had no incentive to fight the EPA's ruling - they get paid either way.

It's clear, our farm policy is nothing but Pulp Fiction (and you had to see that coming).

Farm policies....
While I'm no fan of farm policies and much of what you say has merit, it is obvious you are not a farmer. Here are some facts you might ponder: The American farmer is the most efficient in the world (although it is quite possible, even probable, he/she would be even more efficient if they didn't have tax-payer safeguards); despite a few tax-paid bailouts, well more than half the American population was involved in food production in 1900. Today it is less than 3 percent. Something caused this mass movement away from farming. Today, many young people who would love to follow their farming parents footsteps but won't due to to the economic risks inherent in farming. If your position was the whole story, these kids' future as farmers would be assured. They aren't. Farming has been and always will be a gamble against nature each year and every year.

every venture has risks
Something like 3/4ths of new restaurants fail in the first 5 years.

Having risk is not evidence that you are entitled to govt subsidy. It's just evidence that you need a good business plan.

Farm Policies....
True, Dave. But agriculture as practiced in the United States has resembled a free-market enterprise in absolutely no respect for at least 75 years. As a result of conscious government policy decisions throughout those 75 of so years.

Speaking as the grandson of farmers (both sides of the family) who grew up on those farms, and as the son of a John Deere dealer and grandson of an IH dealer.

Those efficiencies have come as a product (and at the expense, to be sure) of economies of scale. Well, duh. The smart operators have started developing partnerships with their value-added-services vendees; the really smart (and well-capitalized) operators have developed those value-added services for themselves. Such as cutting their own meat and marketing it directly. Such as direct sales to area supermarket chains after on-site processing and packaging. The principal problem here is that most farmers simply are poor businessmen or, even if they are relatively market-savvy, too rutted in the way they've always operated to think outside the box.

The Farm Bill as it's currently written, and essentially has been for decades, enables and facilitates that comfort zone. Unsurprisingly, it's also created yet another class of politically dependent welfare whores. Believe me, having grown up the way I did, I have every respect for those who practice agriculture for their livlihood; unfortunately, they've gotten every bit as good at wringing maximum dollars out of the treasury as any other class of government dependents, using learned skills that could be far better employed in other pursuits.

Factoid: One bushel of wheat sells, at the moment, for around $4.60 at the railhead. That bushel of wheat makes 60 loaves of bread. The rest of the roughly $2.00 retail price of a loaf of split-top wheat is in other ingredients (which in truth add negligibly to the cost -- essentially a trivial root), production, packaging costs, and transportation. What's the one constant throughout the entire process? Government regulation.

Another factoid: Currently, the regulations on safe production, handling, packaging, and marketing of cabbage consume 26 closely-typed pages. Ridiculous.

Still a third: The Federal Government, through the USDA, pays Scottie Pippen, on average, $130,000 a year. His claim on the public purse? He's part owner of a chicken farm in Arkansas. Seriously. Here's a guy whose grandkids couldn't possibly squander his fortune if they tried, and the American taxpayer is subsidizing his investment in a chicken farm? Again, ridiculous. In nearly any other line of business, three years worth of losses get that business declared (for I.R.S. purposes) a "hobby", at which point those losses are no longer declarable. Agriculture is different -- because?

Those aforementioned public policy decisions, decisions which were and are intended to ensure a safe and abundant domestic food supply. But which have so many cracks, loopholes, and simply silly regulations that nearly anyone (see above) can exploit them if they care to try hard enough.

But then there's the EPA, working at cross-purposes to those same regulations -- and we've all heard the horror stories of farmers in the San Joaquin valley having been enjoined from doing their groundwork because of the existence on their property of a putatively threatened species of toad. Of a farmer being prohibited from draining a one-acre marsh on his property because it's supposed to be essential temporary habitat for migrating waterfowl. Of the environmental impact statements they have to process simply to blow out a pond dam in one of their pastures.

Utterly risible. Don't any of these 535 people ever read what they themselves are supposed to have written?

'Berg

Big Farm Policies
I'm not a farmer but am among those who might have followed in hard-scrabble footsteps had things been different.

Two things to remember:

a) the Death Tax has a great deal to do with the disappearance of the family farm. Modern farms require large swaths of land to justify the high cost of the equipment. Unfortunately, large swaths of land tend to be valuable and small farms (really non-publicly incorporated farms) are very adversely impacted by the inheritance tax.

b) what I called Farm Policies are really Big Farm Policies. Most family farms (again non-publicly incorporated) don't get squat from the farm bills. The major beneficiaries of the farm bill are major corps and others who are exempt from the inheritance taxes.

It's pretty clear that if one doesn't already own the land then becoming a farmer just won't happen. The equipment is very expensive and requires a large amount of very expensive land. You might find some specialty crops that can compete on a small scale basis but the days of the small family farm are over.

The approved Federal solution to freezes
Obviously, the only EPA-approved alternative to freezing food is to warm the environment! I would love to see Al Gore take his road show down to California and tell the people that the earth is warming up. They would be scratching their heads, wondering which planet he had been living on.

But here's the interesting part
All the other bureaucracies were enthusiastic about the bacteria project. Only EPA had a problem, and a silly one at that. So, a more serious question is, are all bureaucracies equally prone to institutional idiocy, or only certain kinds, i.e. those that are closest to popular fads and the like?

Hah
Good one, Colt. A similar fiasco occurred about two years ago when the IPCC (I think it was Robert Watson) gave a presentation about climate change having its greatest effect in polar latitudes and then having to explain why moving the treeline north and increasing high latitude fertility was a bad thing.

It is all the fault of ...
It is all the fault of the Bush Administration!
If only they supported Global Warming, the oranges wouldn't have frozen!

Agree
As a dairy farm serf, I completely agree with your assessment.
Milking 30-50 head of cows twice a day does built a work ethic and it may be a great way to raise children who know how to work. It does little to promote an entrepreneur spirit when the government controls so much of what can be grown and how much you can sell they product.
My dad finally took the last cattle buy out and quit.

Looking back I learned a lot, but after an education and seeing some of the world, I realized we were essentially serfs working for the lord (USDA) to provide cheap milk.

And it still hasn't changed much except now I see there are actually robots that can milk cows and of course now it is mostly illegal aliens doing the work.

The ideal of a family farm is great if tax policies will allow the land to be passed down with out taxes. With that capital base, a farmer might have a chance to establish a prosperous enterprise and grow the crops that are in demand.

Well I think caution should be used when ever an alien
species is released into any Env.

Rationalize all you want, there is no way to KNOW what is going to happen. The negative could always be VERY negative.

That's why
you test it. No one said anything about releasing into the environment. This was a controlled field test, nothing more. You do this to discover if there are going to be negative effects.

True, but
The farm bill, if it was just a "subsidy" to help and some insurance would be fine. But the hoops, regulations and added expenses have turned it into a mess.

The death tax is a real problem, but the CRP program has been devestating to continued farming and the farm economy of the small towns that service farm areas.

Bring back a hand full of programs to the way they were 30 years ago and stop the CRP program!

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