Course:ECON371/UBCO2011WT1/GROUP1/Article 4: Corporate Agribusiness Pollution Across America

Summary

This report discusses the issues regarding corporate agribusiness pollution across America, focusing on the state of Minnesota. It is a news report of a research paper released on November 18, 2010 by Environment America Research & Policy Center: Corporate Agribusiness and America’s Waterways—The Role of America’s Biggest Agribusiness Companies in the Pollution of our Rivers, Lakes and Coastal Waters. The full text of the research paper can be found at following the website: http://www.environmentminnesota.org/uploads/07/33/0733d1bbab633d289b7637ae52fc272b/Ag-Pollution-Report-_report_vAM.pdf

The organization that published the article is Environment Minnesota, a statewide, citizen-based environmental advocacy organization. Their mission is to combine "independent research, practical ideas and tough-minded advocacy to overcome the opposition of powerful special interests and win real results for Minnesota's environment." As part of Environment America, they fight to protect air, water and open spaces in Minnesota, in state capitols across the country, and in Washington, D.C.

Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., and is the twenty-first most populous, with 5.3 million residents. It also known as the “Land of 10,000 Lakes.” These lakes, together with plentiful state parks and forests, contribute greatly to the variety of outdoor recreation available in the state. http://en.wikipedia.org/wiki/U.S._state

In the report, the author emphasizes how the serious water pollution problems in Minnesota, stemming from corporate agribusiness, have not yet been efficiently solved. The research paper reports how "corporate agribusiness in the Midwest and across the country not only help create pollution, but have a hand in the policy environment that worsens the problem and hampers solutions.” This statement refers to the large amount of political power these large corporations have, which they can use to ensure that legislation pertaining to the practices of their company is favourable for themselves, even if it is not favourable for the environment. Later on, this report points out that Cargill, an international producer and marketer of food, agricultural, financial and industrial products and services, located in suburban Minneapolis, is a main contributor of pollution to the waterways of Minnesota. In particular, three million tons of toxins were dumped into the Illinois River by Cargill's Meat Solutions' Beardstown processing facility in 2008. The article also places blame on the company Archer Daniels Midland, which produces massive amounts of corn products. ADM has a substantial influence on public policy, particularly concerning what farmers can produce and in what quantities, and ensures that federal subsidies are given for the production of corn, ethanol and sugars. These regulations benefit ADM, but often harm rural farmers and their communities.

The article reports that the main water pollution emissions stem from Midwest corn and soybean productions, which “contribute half of the nitrogen and a quarter of the phosphorus in the Gulf.” Also mentioned is the harm caused by the Federal Farm Bill, which emphasizes wide-scale corn plantations, whose nitrogen and phosphorus emissions have caused dead zones in the US to "increase 30-fold since 1960." Widescale feedlot confinements also cause major water pollution in the state.

As for potential solutions, the article points to "restoring protection of the Clean Water Act," and a Conservation Stewardship Program to encourage sustainable practices. However, a Conservation Stewardship-type program, which seems similar to an emissions subsidy, was already attempted by the state to try to clean up Lake Independence, and only one out of 41 lake-surrounding farmers agreed to participate in the program. Samantha Chadwick, the Preservation Advocate for Environment Minnesota still claims that new policies which can solve these problems are needed to protect all Minnesota waterways. She states, “we need Federal Farm policies such as the Conservation Stewardship Program that reward farmers for producing food in ways the enhance the environment.” Other ideas include more effective permitting systems, enforcement, and accountability mechanisms. The article makes it clear that more needs to be done to ensure that Minnesota's waterways can survive into the future.

[Pose Lake in the Boundary Waters Canoe Area Wilderness. Minnesota. 2006-09-03]

Analysis

This article mainly addresses the issue that industrial agribusiness is directly or indirectly responsible for serious water quality problems in America, especially in the state of Minnesota, which is well known as the “land of 10,000 lakes.” Farming has not always been such a large source for pollution. However, assisted by recent technological developments, many of today's agribusiness practices are concentrating on efficient productivity, which often involves wide-scale animal production, along with their large amounts of animal waste, and chemically intensive crops. These waste residuals are detrimental to water quality if they drain into nearby waterways or underground reservoirs. The article, “Corporate Agribusiness and America’s Waterways—The Role of America’s Biggest Agribusiness Companies in the Pollution of our Rivers, Lakes and Coastal Waters,” lists the following as examples of industrial agribusiness' contributions to mass pollution in its various fields:

1) Chicken farming produces great amounts of nutrient-laden poultry litter that pollutes local waterways. 2) Concentrated hog farming operations have damaged waterways from North Carolina to the Midwest. 3) Massive beef processing facilities add to the environmental toll of agribusiness operations. 4) The dramatic shift to factory dairy farming is polluting local waterways and contributing to the re-emergence of old water quality problems. 5) Massive production of chemical- intensive corn driven by public policies that subsidize corn production is wreaking havoc on waterways, including the Gulf of Mexico.

Tons of emissions are poured into the rivers, lakes, and streams which are near the farms and factories. Evidence shows that agriculture contributes to making more than 100,000 miles of rivers and streams and 2,500 square miles of inland lakes too polluted to sustain important uses such as swimming, fishing, drinking, or the maintenance of healthy populations of wildlife.

It is not the first time for citizens from Minnesota and environmentalists to acknowledge this serious environmental issue. Back in 2008, Minnesota voters overwhelmingly approved the Land and Water Legacy Amendment during the elections. The exact question asked stated "Shall the Minnesota Constitution be amended to dedicate funding to protect our drinking water sources; to protect, enhance, and restore our wetlands, prairies, forests, and fish, game, and wildlife habitat; to preserve our arts and cultural heritage; to support our parks and trails; and to protect, enhance, and restore our lakes, rivers, streams, and groundwater by increasing the sales and use tax rate beginning July 1, 2009, by three-eighths of one percent on taxable sales until the year 2034?" http://www.dnr.state.mn.us/news/features/amendment.html

The fact that this was approved clearly shows people’s willingness to pay to restore waterways in the state. Since the scale of most of the projects taken to clean the waterways will involve these same Minnesota residents, this is a good representation of the benefits that Minnesota residents will gain with cleaner water. However, if the projects receive federal funding, the costs of the programs to people outside of Minnesota would have to be considered, to avoid a situation like the Central Arizona Water Project discussed in class.

Sadly, since the amendment, no proper and efficient measures have been taken to limit the pollution. There are several barriers that have resulted in the inefficiency of the waterway protections. First, due to the substantial political power of Archer Daniels Midland, a leading processor of corn-products in the United State, the government is only carrying out ADM-supported policies. The article states that the entire US corn market has been shaped by ADM to maintain policies which benefit the company rather than society as a whole. These policies could be taken out, which would be considered a "no-cost improvement," as the policies seem like they are not socially efficient. However, the enormous profits generated from these companies allow them to spend a lot of money to financially back politicians in their campaigns and hire lobbyists to ensure that these kinds of no-cost improvements never materialize. Also, since the changes would impact the entire industry, there would be a potential for some social loss in addition to the large private loss to the companies if the changes were implemented. Although, if the changes would benefit the environment and rural communities as much as the article suggests, the social benefits would outweigh the costs.

Also, evidence provided from the report address that “midwest corn production is a major factor in the development of the dead zone in the Gulf of Mexico each year. Corn and soybeans contribute half of the nitrogen and a quarter of the phosphorus in the Gulf.” Here, companies like ADM benefit from more efficient operations in corn production yet avoid paying the costs born to the environment from their waste. Industrial agribusiness needs to be given an incentive to take these external costs into account when deciding how much to pollute. The article seems to suggest that the firms are hardly abating at all in the current situation, so the level of abatement is likely not socially efficient. Possible solutions to this would include a dumping tax, or permits for the amount of pollution a firm could dump, but these would have to be strongly enforced, and enforcement has already been noted in the article as severely lacking. It states that thousands of agriculture operations in the state aren't complying with current laws, but there is little enforcement or consequences for firms that aren't complying.

It is also clear that the multinational corporations, and the farmers that they buy produce from, need stronger incentives to keep the surrounding waterways clean. It seems like an emission subsidy would work well, but this was attempted in the case of Lake Independence, and only one farmer out of 41 agreed to participate. This seems to suggest that the subsidy wasn't high enough, because the farmers would have equated the subsidy with their marginal abatement costs, and their marginal abatement costs must have been higher than the subsidy even for low levels of pollution abatement. It is possible that a higher subsidy would help the situation. It is also possible that the farmers were offered a lump-sum subsidy, which wouldn't have affected their marginal abatement costs and also would have resulted in the farmers not taking up the government's offer. In this case, the government would have to change the subsidy so that it was given after each unit of emissions was reduced.

Without a new policy from the government to change the situation, who would have to take the consequence or pay money to cleanup the water? It is the people who are living around the polluted rivers or lakes. They either take the consequence by giving up swimming, fishing or drinking from the polluted water. Otherwise, they have to take their own money to pay for clean water restoring if they want to enjoy this public good. This, however, is unlikely, due to the free-rider problem of public goods. Rivers and lakes are non-excludable (in this case, they are rival, because the usage of water from corn production makes others less enjoy water using). People are not able to exclude corn producers from water using. In this case, government needs to take its responsibility to encourage better agricultural practices with healthy food and less pollution rather than only focuses on profit earning and productivity. Otherwise, the government will pay much more than it receives from the profit benefit if it waits for the environment get worse.

Here, it is necessary for the government to take specific actions to protect the environment. The government should either build up proper laws to push agribusiness operations to meet specific limits on pollution or create incentive based programs so the firms meet environmental goals themselves. Water pollution regulations also need to be more carefully monitored and enforced. In addition, the government should give citizens access to detailed data and information about water protection program. Therefore, public can take the role to supervise their work. Through these actions, the amount of water pollution in Minnesota could reach a more efficient level.

Prof's Comments

You've done lots of work. One important issue with agricultural pollution is that much of it is nonpoint source, making it hard to properly link ambient pollution with emissions. There is also the potential to influence the behavior of these large firms through reports like the one discussed, shaming them into better behavior.

9/10