Author: rickpace1

Young Farmers Break The Bank…Continued

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At the same time that – across the country – restaurants and thoughtful households are demanding local, nutritious, sustainably-grown food, the economy and financial infrastructure for small farmers is feeble and immature. That is especially true for new and socially disadvantaged farmers.

Changing the small farm financial infrastructure is critical to expanding local food production, improving household nutrition, and reducing healthcare costs. USDA through the Farm Service Administration has rethought the FSA loan program to provide more opportunities for small and new farmers. USDA Rural Development has become much more sensitive and helpful to the needs of socially disadvantaged small farmers.

What else can we do?…a few thoughts and suggestions:

1) Small farmers need routes to ownership for their land (we’re doing a tiny bit here with a RI farmland fund). Communities across the nation need to rediscover their small bank infrastructure and use it to build local farm assets.

2) We should pay small farmers for the environmental goods they produce. I’m not talking about correcting resource problems…I’m advocating for local systems for incentive payments to small farmers that build ecosystem assets for themselves and their neighbors.

3) Communities need to begin rebuilding the small farm services infrastructure that existed until perhaps fifty years ago. It’s not a romantic notion to rebuild small farm economies in every community in America…it’s good economic sense!

4) Eat thoughtfully (I’m borrowing from Wendell Berry on this one). We can be the best advocate for the local farm community by buying food and farm products in a thoughtful manner.

5) Establish the educational infrastructure necessary to use the talents of refugee socially disadvantaged populations – who many times have significant farming skills. Language and business/financial education is critical to the success of these new citizens.

6) Rethink how your savings, investments, pensions, etc. are being utilized. Most conventional investment mechanisms used by Wall Street do little to diversify wealth and expand social equity (many would say today’s financial markets do quite the opposite – they are, in essence, wealth concentrators). Invest 3% of your wealth in local farmers and food enterprises….and advocate that your community’s institutions, foundations, etc. do the same!

7) Resist working in thoughtless environments. If your work is not meaningful and honest, find a local farmer or food provider and hook up!

8) Demand honest, sincere, timely decisions from your government representatives. If they are not honest, sincere, and timely, elect someone else. Our current American governmental institutions resist meaningful, important changes that will make us all healthier and happier…we need to work with our neighbors to demand new social policies and institutions that better ensure opportunity for all!

Young Farmers Break The Bank Before They Get To The Field

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As the average age of the American farmer has crept up to 60, fewer young people are filling in the ranks behind them. That’s prompted some to ask if young people even want to farm anymore.

The quick answer is yes, just not in the same numbers as they used to. And surveys indicate many of them don’t want to farm in conventional ways.

A 2011 from the National Young Farmers Coalition showed access to land and capital to be the single biggest factors keeping young people from getting into farming or ranching. The survey also indicated young people are concerned about the environment — they’re “generation organic” — and interested in small-scale operations.

But it can be difficult to turn dreams of a farm life into reality.

The NPR Article

Another Article on the Effect of ‘No Strings’ Cash to the Poor

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Not only do people often know best what they themselves need, but there are huge emotional and health benefits that result from people feeling some degree of control over their lives — agency. The very poor deserve that as much as those of us better off do. I love this initiative — similar to microcredit but more radical.

Now if only we could roll back the enforced helplessness that people in the US often feel in relation to health insurance companies, telephone and internet monopolies, big corporations that don’t respond to individuals and even have machines answer their telephone hotlines, and the paternalism of US nanny-state laws, and we might also do better economically and feel more in control of our own lives.

The Article

Paul Krugman’s Interesting Analysis

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In an era of economic analysis hyperactivity, Paul Krugman debunks another economic doctrine!

It appears, from a sociological perspective, that it is reasonable to assume that wealthy corporations and wealthy individuals oppose government job creating spending increases for the simple fact it reduces their already substantial political influence. The basic notion: if the government is a significant job creator, and folks broadly are employed and successful, it reduces the influence of the wealthy….thus all the phony money-driven economic theories about the harm of government incentive spending.

The Article

Climate Change

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I continue to publish blogs and articles on climate change because the scientific projections are personally frightening…my grandchildren will experience a much changed climate.

From the recent article:

The scientists also projected the velocity of climate change, defined as the distance per year that species of plants and animals would need to migrate to live in annual temperatures similar to current conditions. Around the world, including much of the United States, species face needing to move toward the poles or higher in the mountains by at least one kilometer per year. Many parts of the world face much larger changes.

Read more at: http://phys.org/news/2013-08-climate-faster-million-years.html#jCp

Owning Nashville

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For some insight on Owning Nashville…a new Exchange Traded Fund based upon equity in Nashville based corporations.

First, the NPR Article

Next, the Wikipedia Definition of an Exchange Traded Fund (I did not include the citations, but the link):

ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer. Unlike traditional mutual funds, ETFs do not sell or redeem their individual shares at net asset value, or NAV. Instead, financial institutions purchase and redeem ETF shares directly from the ETF, but only in large blocks, varying in size by ETF from 25,000 to 200,000 shares, called “creation units”. Purchases and redemptions of the creation units generally are in kind, with the institutional investor contributing or receiving a basket of securities of the same type and proportion held by the ETF, although some ETFs may require or permit a purchasing or redeeming shareholder to substitute cash for some or all of the securities in the basket of assets.[4]

The ability to purchase and redeem creation units gives ETFs an arbitrage mechanism intended to minimize the potential deviation between the market price and the net asset value of ETF shares. Existing ETFs have transparent portfolios, so institutional investors will know exactly what portfolio assets they must assemble if they wish to purchase a creation unit, and the exchange disseminates the updated net asset value of the shares throughout the trading day, typically at 15-second intervals.[4]

If there is strong investor demand for an ETF, its share price will (temporarily) rise above its net asset value per share, giving arbitrageurs an incentive to purchase additional creation units from the ETF and sell the component ETF shares in the open market. The additional supply of ETF shares reduces the market price per share, generally eliminating the premium over net asset value. A similar process applies when there is weak demand for an ETF and its shares trade at a discount from net asset value.

In the United States, most ETFs are structured as open-end management investment companies (the same structure used by mutual funds and money market funds), although a few ETFs, including some of the largest ones, are structured as unit investment trusts. ETFs structured as open-end funds have greater flexibility in constructing a portfolio and are not prohibited from participating in securities lending programs or from using futures and options in achieving their investment objectives.[5]

Under existing regulations, a new ETF must receive an order from the Securities and Exchange Commission, or SEC, giving it relief from provisions of the Investment Company Act of 1940 that would not otherwise allow the ETF structure. In 2008, however, the SEC proposed rules that would allow the creation of ETFs without the need for exemptive orders. Under the SEC proposal, an ETF would be defined as a registered open-end management investment company that:

Issues (or redeems) creation units in exchange for the deposit (or delivery) of basket assets the current value of which is disseminated per share by a national securities exchange at regular intervals during the trading day;
Identifies itself as an ETF in any sales literature;
Issues shares that are approved for listing and trading on a securities exchange;
Discloses each business day on its publicly available web site the prior business day’s net asset value and closing market price of the fund’s shares, and the premium or discount of the closing market price against the net asset value of the fund’s shares as a percentage of net asset value; and
Either is an index fund, or discloses each business day on its publicly available web site the identities and weighting of the component securities and other assets held by the fund.[4]

The SEC rule proposal would allow ETFs either to be index funds or to be fully transparent actively managed funds. Historically, all ETFs in the United States have been index funds. In 2008, however, the SEC began issuing exemptive orders to fully transparent actively managed ETFs. The first such order was to PowerShares Actively Managed Exchange-Traded Fund Trust,[6] and the first actively managed ETF in the United States was the Bear Stearns Current Yield Fund, a short-term income fund that began trading on the American Stock Exchange under the symbol YYY on 25 March 2008.[7] The SEC rule proposal indicates that the SEC may still consider future applications for exemptive orders for actively managed ETFs that do not satisfy the proposed rule’s transparency requirements.[4]

Some ETFs invest primarily in commodities or commodity-based instruments, such as crude oil and precious metals. Although these commodity ETFs are similar in practice to ETFs that invest in securities, they are not “investment companies” under the Investment Company Act of 1940.[4]

Publicly traded grantor trusts, such as Merrill Lynch’s HOLDRs securities, are sometimes considered to be ETFs, although they lack many of the characteristics of other ETFs. Investors in a grantor trust have a direct interest in the underlying basket of securities, which does not change except to reflect corporate actions such as stock splits and mergers. Funds of this type are not “investment companies” under the Investment Company Act of 1940.[8]

As of 2009, there were approximately 1,500 exchange-traded funds traded on US exchanges.[9] This count uses the wider definition of ETF, including HOLDRs and closed-end funds.

Why it is so difficult to develop a robust economy of small farmers…

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I’ve not been as much concerned about income inequality in America as I am the lack of opportunity….and the petty use of money that appears to be the result of income inequality combined with government and civil behaviors that enable great concentrations of wealth.

Those petty behaviors – and the resulting wealth concentration – make it extremely difficult to provide adequate capital to rebuild America’s small farms.

I just read a weblog entry from a farm commentator (whom I know to be intelligent) who was suggesting that the only way in the future for young folks to ‘get into farming’ is to become a worker in a ‘farm corporation’.

That is an environmentally and economically hopeless notion!

Is Income Inequality ‘Morally Wrong’?