Season 3 Available Now
AEI.AG
PRESENTS
Hosted by Brent Gloy, David Widmar, & Sarah Mock
The award-winning podcast series dives into agricultural issues through the lens of history and economics to consider what we can learn and how to think about the challenges faced today and in the future.
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Ep 1: Is Farm History Repeating Itself?
What happened in the 1980s was neither the first farm financial crisis nor the last, but for many farmers who are alive today, it was the most economically devastating time of their lives. The way we remember the ’80s informs the way we think about today. But to figure out if today is as bad as the 1980s, we have to start by answering a different question… what, exactly, happened during the 1980s?
- Recommended Reading: Farm Income During the 80s
Ep 2: The Boom
Every farm crisis is unique, although they all follow a common trajectory of stability, boom, bust and recovery. But where does the “boom” end and the “bust” start? In this episode, we dig into what happened to the farm economy during the 1970s to better understand where we might be headed today. Houston, we have a problem.
- Recommended Reading: The Farm Economy, Inflation and the 1970s
Ep 3: The Slide
In the wider economy, two oil shocks hit the U.S. in the 1970s, leading to economic and political disruption and turmoil. The effect was global, national, regional, and local, and led not only to gas rationing and unprecedented lines at the pump, but also to deep financial and psychological impacts that would nudge the farm economy over the edge. Wade into the murky waters of the broader U.S. and global economy to understand how causes well outside the agriculture sector started to push an industry at its peak toward a long slide into crisis.
Ep 4: Bottoming Out
At the lowest points of the 1980s, farmland prices had collapsed by 60% and thousands of farmers were underwater and losing their farms. Excessive leverage and too much financing came up against spiking interest rates, and the combination became incredibly unsustainable. We dig deeper into what today’s more stable farmland prices mean for today’s farm economy, and whether they’re really a good indicator of economic health.
Ep 5: USDA Steps In
Dig deep into the farm policy response of the 1980s, which represented some of the biggest direct payments and government programs ever attempted in the farm economy, and better understand how today’s farm policies, within the Farm Bill and without, might play out in the coming years.
Ep 6: Stability
We’re going to put the crisis of the 1980s to bed, understand how the farm economy clawed its way out of peril, and evaluate how close we are today to achieving the same end: stability. But what exactly does “stability” mean?
Ep 7: Escaping 2020
We’re training our gaze on the horizon, armed with a solid understanding of what happened during the last farm crisis. The 1980s and today are not perfect foils for one another, but there are certainly similarities. And though the differences might offer some comforts, those similarities should give us pause. Dig into where we are now, where the biggest risks lie in for the modern farm economy, and how to prepare your thinking for a less predictable world.
Ep 1: Are Carbon Markets the New Ethanol
Fifteen years ago, corn ethanol was a wunderkind, set to cure the U.S.’ addiction to foreign oil, reduce the pollution caused by driving, and revitalize American agriculture and rural economies. In the intervening years, the problems evolved while ethanol remained, and today many question what the future of the sector might look like. Today the U.S. is facing a different set of challenges, particularly around climate change, and the search for a solution – perhaps a silver bullet – remains. Ag carbon markets look promising, and advocates and entrepreneurs are flocking to them in the hopes that saving the planet might be a lucrative endeavor. Might the history of ethanol, ag’s past environmental policy, offer insight on what might be ahead for carbon markets?
Ep 2: Origin Story
Corn alcohol has a long history as a fuel, going back well into the 19th century. Over time, it’s fallen in and out of favor, from being a pet project of Henry Ford’s to being outlawed during prohibition. By the 1970s, an oil crisis prompted farmers and lawmakers to take ethanol off the shelf, but it would languish until environmental concerns in the 1990s brought it back into the agricultural mainstream. Carbon markets are still very much experiencing their origin story, but by understanding how ethanol rose to prominence, we can gain a new understanding of what the next several years might look like for ag carbon markets.
Ep 3: Chosen One
Ethanol’s rise was fueled by the introduction of the Renewable Fuels Standard (RFS). Often lost in debates about implementing RFS has been the motivation, political shuffling, and history of two historic pieces of legislation. How exactly did RFS come to be, and what can we learn as it applies to the voluntary programs proposed for carbon?
Ep 4: Chosen Too
Though the amount of enthusiasm and excitement around voluntary ag carbon markets might make you believe that we’ve already determined that it’ll be the best way to involve agriculture in climate action, it’s definitely not the only, and likely not the best solution out there. In fact, there are several ways policymakers could create or motivate change, with various carrots and sticks, in the way that agriculture operates. Adding to the complication, even within a general policy solution – such as carbon markets – there are many details and nuances about how the program works.
Ep 5: If You Build It, They Will Come
The Renewable Fuels Standard (RFS) bolstered the market for corn-based ethanol, but also fueled a frenzy to build ethanol plants. Proposed plants got larger, building costs jumped higher, and a surge of potential projects created a regulatory and construction logjam. But just as fast as the mania turned red hot, the prospects of an even better technology and the ripples of the Great Recession shuttered projects that were years into planning.
Ep 6: Hitting the Wall
The goals of every policy are eventually tested in the real world. For ethanol, the challenges came in the form of the “blend wall,” which effectively capped the growth of this formerly booming sector. Even the best-designed policies will struggle to navigate conditions that were uncertain or difficult to predict when legislation was passed. For carbon, detecting those potential limits on future growth is critical, and making sure our eyes are open to the possible pitfalls in terms of policy and market growth that might be on the horizon.
Ep 7: Over Promised, Under Delivered
Just as corn-based ethanol production was surging to fulfill the mandates of the 2007 RFS, enthusiasm began shifting to the new kid on the block: cellulosic ethanol. With the help of the government – including mandated usage- the even better renewable fuel made from switchgrass, corn stover, or other biomass feedstocks was just around the corner, or so we thought. This raises important questions for carbon markets, what happens if the technologies needed, despite the enthusiasm and investments, don’t materialize?
Ep 8: Shift Happens
What happens when a demand shift pushes commodity prices and farm incomes higher? To answer this, we have to consider the short-run and long-run implications. Just as the challenges that ethanol faced evolved and shifted, so will the future of carbon and carbon markets.
Ep 9: Does Ethanol Have a Future?
From policy to electric vehicles, the future of ethanol is arguable as uncertain as it has ever been. Have the seeds for ethanol’s demise already been sown, or is the outlook less dire than it initially seems?
Ep 10: Corn Always Wins
For the final episode, Sarah, Brent, and David reflect on the season and key lessons. From biases to mental models, it’s important to consider how our own thought processes can impact our conclusions about ethanol and shape our expectations about carbon.
Ep 1: Forever in Your (Farm) Debt
Conditions in the farm economy have changed rapidly since season one of the AEI.ag Presents podcast explored the 1980s farm crisis, and in sometimes contradictory ways. You may have heard that there is way less leverage and debt today than there was back then. Yet, farming has also gotten more capital-intensive. Interest rates and inflation are also adding to growing uncertainty in 2022. So how much debt is there, really, in today’s agriculture economy? And what might be in store for the farm sector as the U.S. economy barrels toward an uncertain future?
Featured guest: Mike Boehlje (Purdue University Department of Agricultural Economics).
Show notes: Read more about farm financial management (here) and the book A Short History of Financial Euphoria (here)
Ep 2: Earning Extra Credit
Dig deep into the history of agricultural lending, back to the days of the gold standard, the Wizard of Oz as allegory, and one particularly memorable speech by William Jennings Bryan. When you think of a banker, what image comes to mind? Learn why your perceptions might not match reality, especially when it comes to ag lending.
Featured guest: John Blanchfield (Agricultural Banking Advisory Services).
Show notes:
- Cyrus Hall McCormick, His Life and Work
- William Jennings Bryan’s “Cross of Gold” speech, in full
- Henry Littlefield, The Wizard of Oz: Parable on Populism, American Quarterly, 1964
- Hugh Rockoff of Rutgers University, ‘The “Wizard of Oz” as a Monetary Allegory,’ Journal of Political Economy, Vol. 98, 1990, pp. 739-760
Ep 3: A Loan Walks into a Bank
Ep 4: Where Credit is Due
Get to know the story of Farm Credit: why it was founded, how it works, and how it has both failed and succeeded. How is the Farm Credit system different from banks? What really sets Farm Credit apart is not how it lends its money, but how it gets funds in the first place. Plus: the story behind the bail-out.
Featured guests: Jim Farrell (Farrell Growth Group), Jim Knuth (Farm Credit Services of America), Curt Covington (AgAmerica), Mike Boehlje (Purdue University Department of Agricultural Economics).
Show notes:
Ep 5: Move Fast and Farmer Mac
How does Farmer Mac fit into the big picture of ag lending? Its story is still being written.
Featured guests: Brad Nordholm (Farmer Mac), John Blanchfield (Agricultural Banking Advisory Services), Jeff Conrad (AgIS Capital LLC).
Ep 6: The Dark Side of the Ledger
Vendor financing is nothing new in agriculture. But it has come a long way since the days of Cyrus McCormick. Explore how non-bank credit works, how it has changed, and what risks and opportunities it might pose to the overall agriculture finance system as we move out of two decades of low interest rates.
Featured guests: John Blanchfield (Agricultural Banking Advisory Services), Curt Covington (AgAmerica), Mike Boehlji (Purdue University Department of Agricultural Economics), Nate Franzen (First Dakota National Bank), Jim Farrell (Farrell Growth Group LLC)
Ep 7: Lender of Last Resort
Why is the U.S. government, and the Department of Agriculture in particular, involved in lending? Dive into how USDA’s ag lending programs have shaped the ag economy and farming in general over the last hundred years, and learn what this can tell us about the overall health of the farm financial system.
Featured guests: Jonathan Coppess (Associate Professor, University of Illinois), Heather Malcom (Bank of the Rockies), Mike Boehlje (Purdue University Department of Agricultural Economics).
Show Notes:
- Executive Order Establishing the Resettlement Administration
- USDA Loan Programs History – Origins
- History of USDA Loans – Part 3
- ‘Rampant issues’: Black farmers are still left out at USDA
- Do farm service agency borrowers’ double minority labels lead to more unfavorable loan packaging terms?
- Black farmers in the US: The opportunity for addressing racial disparities in farming
Ep 8: Kansas City, We Have a Problem
How does a bank fail? What does “too big to fail” mean? Who audits the Fed? Dive into the connection between money supply and local loans.
Featured guests: Jim Farrell (Farrell Growth Group), Thomas M. Hoenig (Former President, Federal Reserve Bank of Kansas City)
Ep 9: Farmland is Blowing Up
Ep 10: Batten Down the Hatches
We shift our focus from understanding the past and present to trying to predict and prepare for the future. Experts weigh in with actions that producers can take now as we enter uncharted financial waters… but will they?
Featured guests: Curt Covington (AgAmerica), Thomas Hoenig (Former President, Federal Reserve Bank of Kansas City), Jim Knuth (Farm Credit Services of America)
Show notes: