Megafarm legislation: trade protection or environmental protection?

By Ralph Frasca, posted February 1, 2000

The warm smell of a pork roast coming from the oven on a chilly day pleases most of us. The smell of fresh hog manure, on the other hand, pleases almost no one. But this is the trade-off we face between
environmental pollution and desirable consumer goods.

Economists argue that we make the best choices when all costs of production, including negative impacts on the environment, are included in the final price of the product. Government bureaucrats, on the other hand, often employ command and control techniques that rely upon regulations and standards imposed from above.[1] Moreover, vested interest groups often influence the bureaucrats to pursue objectives that are unrelated to the stated purpose of the regulation.

Recently, both federal and state legislation has moved toward singling out large "megafarms" for special attention that may be more for the purposes of trade protection than environmental protection. Over the past decade large farms have been increasingly perceived as a threat to the survival of smaller operations. Currently, hog farms with less than 1,000 head comprise 97% of all such farms, but only produce 40% of the inventory. The other 3% of farms produce the remaining 60%.[2] Similar figures can be cited in the beef and poultry industries.[3] 

The reason for the growth in large livestock operations, of course, is that they are more efficient. Consequently, they can provide the consumer with a better quality product at a lower price. They do, however, threaten the survival of less efficient local farms and the labor that is dependent upon the labor-intensive techniques employed by those farmers. It is these groups that have been the most vociferous in their opposition to the growth of megafarms.

The principal advantage that megafarms have over smaller rivals is in their ability to introduce new technology in production and genetics.[4] Ironically, their ability to introduce the latest production techniques may also result in better use of the environment.

In North Carolina, where growth of megafarms has led to a large increase in hog production, the U.S. Department of Agriculture found that "a larger percentage of [environmental] violations have tended to occur on smaller [livestock] operations."[5] Megafarms, the U.S.D.A recognized, were able to pursue clean environment practices by spreading the costs over their larger herds of pigs or cattle.[6] 

In Ohio, State Senator Larry Mumper (R-Marion) has sponsored the Ohio Rural Responsibility Act (Senate Bill 141) to regulate animal waste management at concentrated animal feeding operations (CAFO), farms that contain more than 1,000 animal units.[7] About 100 livestock facilities in Ohio currently exceed this size.[8]

The new law would strengthen the regulatory requirements and transfer the permitting process from the Ohio EPA to the Ohio Department of Agriculture, a bureaucracy concerned with promoting the agriculture industry. This change is favored by owners of small farms who believe that the EPA issues permits too freely.[9] Naturally, the proposed legislation is supported by the Ohio Farm Bureau and the Ohio Livestock Coalition.[10]

The proposed legislation, however, imposes a Byzantine set of rules and regulations that may reduce animal waste pollution at an exorbitant cost. Command and control approaches, such as S.B. 141, that regulate the environment are generally much more costly than market-based approaches.[11] 

CAFOs must receive a permit from the Director of the Department of Agriculture before they may operate. To receive a permit they must first file an acceptable animal waste management plan, with the rules and the fines yet to be determined by the Director. The proposed act states that operators must employ "best management practices," however defined. Thus, this legislation provides the Director with considerable discretionary authority.

The permitting process is even more difficult for farms that exceed 10,000 animal units, known as "major concentrated feeding operations." On such large farms only professionals licensed to handle manure will be allowed to dispose of it. These individuals must first obtain "livestock manager certification" by attending classes on proper manure disposal and passing a written exam.[12] We can only surmise how this new class of certified managers might attempt to protect their vested interests in the future.

Livestock operators who pollute the environment should be made to pay the damage they impose upon others. To fail to do so would erode our system of property rights.[13] However, environmental regulation should not be used as a tool for favoring one group of farmers over another, or one industry over another as long as producers pay all the associated private and social costs of production. Proposed regulations of megafarms seem to have more to do with protecting inefficient producers than the environment.

Notes

[1] These arguments can be found in any basic text on environmental economics. For example, see Scott J. Callan and Janet M. Thomas, Environmental Economics and Management: Theory, Policy and Applications (New York: Irwin Publishing Co., 1996).

[2] USDA, Economic Research Service, "Livestock manure: foe or fertilizer," Agricultural Outlook (June 1996). Less than 1% of hog operations have 2,000 swine but account for 43% of all hog inventory.

[3] These statistics are cited in Claudia Copeland and Jeffrey Zinn, Report to Congress, Animal Waste Management and the Environment: Background on the Issues, Congressional Research Service, updated May 12, 1998.

[4] Gary L. Benjamin, "Industrialization in Hog Production: Implications for Midwest Agriculture," Economic Perspectives, Federal Reserve Bank of Chicago, January/February 1997, pp. 2-13

[5] USDA, "Livestock manure: foe or fertilizer," p. 35.

[6] Ibid.

[7] One thousand animals units equals 1,000 beef cattle, 700 mature dairy cattle; 700 dairy cows; 2,500 hogs (each weighing at least 55 pounds); 55,000 turkeys; 5,000 ducks; or 100,000 chickens.

[8] "Ohio EPA Significantly Expands Public Notification and Involvement in Permitting of Large-Scale Farms," Ohio EPA New Release, (June 15, 1998). http://www.epa.state.oh.us/pic/nr/1998/june/livestoc.html

[9] "EPA Attacked about Buckeye Egg Permits," Associated Press State and Local Wire, August 26, 1998.

[10] "Bills Would Shine Light on Growing Concern," The Columbus Dispatch, May 23, 1999, p. 10H.

[11] Callan and Thomas, Environmental Economics and Management, p. 364.

[12] Jeff Grimm, Bill Analysis S. 141, Legislative Service Commission, p. 11.

[13] A free-market environmental perspective is discussed by Terry L. Anderson and Donald R. Leal, Free Market Environmentalism (San Francisco: Pacific Research Institute, 1991); Enviro-Capitalists: Doing Good While Doing Well (Lanham, Maryland: Rowman & Littlefield, 1997); and Terry L. Anderson, ed., Breaking the Environmental Policy Gridlock (Stanford, California: Hoover Institution Press, 1997).

Ralph Frasca, Ph.D., is a professor of environmental economics at the University of Dayton and a research adviser for The Buckeye Institute for Public Policy Solutions.