Thursday, September 02, 2010

Self-promotion and self-regulation...

In an curious coincidence, the same conclusion is being reached in disparate corners of our economy.

First, in an round-robin of regret, some of my favorite econo-bloggers are admitting past mistakes and/or advice.
2)  I believed in the "Great Moderation".  That is, I believed that the Fed and prudent fiscal policy had, to a large extent, tamed the business cycle.  I did not believe that there was even a small risk of another Great Depression; I believed that the Fed could and would prevent the contagion from spreading.  Arguably they (and the Treasury) did, but I did not imagine anything close to that level of intervention being necessary.

3)  I believed regulators were smarter than they were.  In 2004, when the SEC decided to let the investment banks lever up to 30-to-1 instead of 12-to-1, because after all, the SEC had the tools to quickly identify and stop any contagion, I would have said they were probably right.  (I'm not sure I was aware of it).

4)  I believed bankers were smarter than they were.  Or rather, I believed the system was smarter than it was.  Individual bankers making idiotic mistakes?  Absolutely.  The occasional bank being brought low?  Sure--it happens pretty regularly, in fact.  But the whole banking system taking its entire balance sheet to the roulette table and laying it all down on a single bet? Ridiculous.  [More]

Here in agriculture we are looking a a small train wreck in the egg industry, and seeing one of the same failures in the system that we saw in banking: the reluctance to enforce professional standards of conduct within a profession.

Chris Clayton nails it.
These groups established by various producer organizations and allied industries to defend agriculture don't want to talk about how ag should respond to the recall and the large business at the center of the federal health probe and possible criminal investigation.
The recall focuses on two farm operations in Iowa, one of which is owned by Austin "Jack" DeCoster, 75, who has a long history of environmental and labor violations not just in Iowa, but in Maine and Ohio as well.
State and federal health officials have reported roughly 1,470 cases of salmonella illness since the spring. That suggests potentially 55,800 salmonella cases nationally because FDA officials told industry representatives in public hearings on the egg-quality rule last year that each reported salmonella case can have a multiplied factor of 38 unreported cases.
FDA officials cited earlier this week that the farms implicated in the recall, DeCoster's Wright County Farms and another farm, Hillandale Farms, showed "significant deviations" from how those farms should be operating and were clearly violating the egg-quality rule implemented by FDA in July. FDA officials cited large piles of manure and infestations of flies, maggots and rodents.
The report from the FDA on DeCoster's operation "speaks for itself," Sen. Charles Grassley, R-Iowa, a farmer as well, said Tuesday to reporters in a weekly call.
Grassley said the recall and reports about the conditions have been difficult for Iowans to accept, "particularly for people who live in Wright County." Grassley said he was at a Farmers Union meeting where producers expressed their worries about the problems.
"When consumers don't have confidence in their food supply, even if that lack of confidence comes from one product, in this case eggs, it still has an impact on all of agriculture and if consumers don't have confidence it's going to hurt the income of farm families," he said. 
While lawmakers such as Grassley are becoming more vocal, the groups created within agriculture to address perceptions about agriculture are shying away from talking about the DeCoster fiasco.[More]

(Sen. Grassley's concern for consumers who actually ate the cotmainated eggs is remarkably muted, while his pity for other producers obviously keeps him up at night. That alone says volumes about how ag and its outspoken proponents prioritize.)

Although he beat me to it, Chris admirably points out that ag cheerleaders are seem to be little more than spinmeisters trying to use distraction to avoid tackling the hard problems.
This is the "safest" food in the world we're always bragging about?  DeCoster has been a bad actor for years and our industry was OK with it, until they really screwed up. One wonders what it would take for some to admit industrial ag could use some improvement.

To be fair (or try) mistake admission is now a signal for piling on. And lawsuits.  But without the willingness to own up and redress errors - and call them out in our professional community - we are hardly more than tribes with the same occupation.

Correcting that won't happen from within.  Since the Industrial Revolution, it has been shown that banks, egg-farms, unions, lawyers, medicine, etc. just can't seem to overcome solidarity to enforce discipline.  That's why we reluctantly end up with enforcement from outside.

Ideally, I would like to see this regulation via an industry-financed independent third party (oxymoron alert), such as licensing boards or auditors.  But having learned from Enron that even those setups are susceptible to influence if not outright subversion, the task almost always fall to government. 
Plus it gives another reason to hate the bureaucracies we build. 

My guess is ag organizations' likely strategy is to depend on the news cycle to bury this and help the public move on.  It's not like Fox News will be running constant stories on it, after all.  This one is really, really hard to link to Obama - although given enough time...

Talking the talk about how great we in ag are should require some effort to make sure we are great or aspire to greatness.  That includes taking responsibility for the mistakes we make collectively.  So far in this sad story, we are professionally AWOL.

1 comment:

Anonymous said...

I would love to see Jack Decoster wearing an orange jumpsuit. Farm organizations are trained to "circle the wagons". It is their default. If this is the face of modern agriculture it is not worth defending. I live 15 miles from these facilities, and I am not surprised at all.