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hi this is economics professor timothy hamilton and this is part two of my video sequence on how an economist can save the family farm these videos are being produced because i come from a long line of small kansas farmers and small farms have been taking a beating in video one of this sequence i talked about the structural reasons why the current system is financially rigged against the small farm and give solution number one which is to allow farmers to harvest their seeds so if you haven't seen video one please go back and check that out this video outlines reasons two three and four on how to save the small farm so solution number two is to legalize cannabis and hemp so that farmers small farmers can produce cannabis and hemp now why is that a big deal for small farmers in particular well let's run the numbers let's take an example of a small farm 250 acres okay so if a small farm is planting weight fifty at 68.50 acre profit they would receive seventeen thousand one hundred and twenty five dollars for that particular crop of wheat if that same farmer planted cannabis they would receive fifty thousand eight hundred and ninety five dollars per acre yeah quite a bit different one acre you make more money than you did planting all 250 acres a week if you did go plant 250 acres you would receive 12 million seven hundred twenty three thousand seven hundred and fifty dollars for that harvest seventeen thousand dollars or twelve point seven million dollars big big difference if it's hemp instead of cannabis it would be 16 775 dollars per acre multiplying that times the 250 acres that would be planted by a small farm that would be basically four million one hundred and ninety three thousand seven hundred and fifty dollars is what the small farmer would make if they planted hemp now the difference between cannabis and hemp is a subtle distinction cannabis has high levels of thc in it it's what you see in medical marijuana it's what you see in the recreational marijuana in colorado in amsterdam and washington state california places where it's uh where it's legal so people putting the brownies that's what is smoked and is used a lot for people who have cancer and want to get get away from the nausea so that's the cannabis hemp on the other hand is where the cbd oil comes from so most hemp if i understand correctly has very minimal or smaller amounts of thc but it has cannabioids that will actually help with arthritis and other things like that that's why a lot of people like cbd oil so hemp produces the cbd cannabis is the more smokable medical grade marijuana as it is now under federal law both of those are listed under the control substances act and what that means is it's illegal under federal law now federal law was passed was changed i'm sorry this last year in 2019 to allow lower grades of hemp to be planted so those lower grades of hemp have come off of the federal register but the higher grades of the thc hemp and cannabis is not being allowed and those are the real big paydays that the small farm wants to have an opportunity to to receive now i have to comment if you're one of those who believes that oh my god we're going to legalize marijuana that's what this guy is talking about and it's going to escalate the drug problem in the united states well i'm a disciple of milton friedman and milton friedman was advocating this decades ago nobel prize winning economist from the university of chicago and milton friedman makes the argument very persuasively that the main benefactor of having cannabis having marijuana illegal in the united states are the drug cartels in mexico because if you believe that marijuana is going to be consumed in the united states then and your goal is to reduce consumption then what you want to do is to legalize it take control of it and then you can start to tax it now dr friedman was very much an advocate of the free market and he believes the free market gives the opportunity to do that bottom line is this if marijuana is going to continue to be illegal on the federal register then the only two sources of cannabis are going to be those states where it's legal and those state farmers are violating that federal law or the mexican drug cartels so sort of take your pick here's why it's a big deal for the farmer to get that off of the federal controlled substances list it's expensive to grow cannabis in hemp it's about ten thousand dollars an acre if we're planting our 250 acres at 10 000 an acre it's going to cost a farmer 2.5 million dollars to plant that cannabis that's a lot of money most small farmers don't just happen to have a suitcase of you know two and a half million dollars lying around that they can invest in in a crop they can't get crop insurance they can't get financing and that's what if that's what is being prevented by keeping this illegal on the federal register open up the opportunity for banking open up the opportunity for crop insurance as well as herbicides and other pesticides and other agrochemical companies that up till now have had no incentive to basically go out and help try and further the development of this particular crop so taking it off the federal register would do that now if you are a small farmer and you are deadly opposed to planting marijuana you don't want to do it you're an old traditionalist and you just believe that's an it should be an illegal substance you don't want to have anything to do with it let me tell you a reason why you might want to see that taken off the federal register because even if you don't plan on planting marijuana your neighbor does a lot of farmers small farmers would switch to growing cannabis and hemp because of the high price tag and as a result they're going to stop growing corn stop with wheat and stop with soybeans as a result the supply of those grains is going to go down that means supply and demand the price of those grain crops is going to elevate so even if you're a farmer who doesn't plan on planting cannabis or hemp you would get a benefit because your grain prices are going to go up as a result of this so if you are a wheat farmer let me give you some numbers here so that you can do some quick math in your head think about whatever your last pay day was for your last wheat crop i'm in kansas so i use wheat as an example if you switch from wheat to hemp take whatever your last crop is multiply that times 245 that tells you how much money you would receive if you're planting hemp instead of wheat if on the other hand you switch to cannabis multiply it times 743 and that will at least give you an idea of how much more money is available if you switch from planning wheat to planning cannabis now speaking of taxes the state of colorado last year in 2019 received 302 million dollars from revenue tax revenues from the marijuana and from the time that colorado legalized it until now they have received 1.37 billion dollars in tax revenues so for state governments boy just think of the think of the nice equipment and the football field for the high school think of the new roads you can build think of the tax breaks you can give here in kansas where i am we get reassessment all the time because the government's so short of money wouldn't it be nice to have your taxes go down which could happen if uh you have 1.37 billion dollars in the coffers uh back in the state house and there you have it the solution number two is to legalize cannabis and hemp so economist suggestion number three is to subsidize organics as it is now there is federal money that is spent uh that is available for farmers to get certified and to go through all the paperwork to be become organic and the organic market has sort of taken off on its own and i think that's a lot of the reason why legislators sort of left it alone as they say oh well there's obviously a payday there automatically so farmers really don't need our help well if we want to save the small farm small farms are perfectly positioned for organics because organics because of their operation aren't going to use those the mammoth heavy equipment you know half acre long sprayers that are going to be utilized and they're not going to use the genetically modified seeds and and have basically an urban crop going where there's a wheat plant every eight inches or something like that it's very labor intensive so the the small farm is perfectly positioned for these but the subsidies aren't there and what that means is organic still have a very high price tag for consumers so consumers have to pay more money and it would be nice particularly in a pandemic when people are very worried about their health already to be able to afford good food good naturally made organic food if we're going to subsidize high fructose corn syrup which is basically what comes from yellow dent number one which is the corn that gets subsidized and that's what goes into our sugary drinks and our sugary products which ends up creating diabetes just think of all the money that's spent on that we could have healthy cucumbers and carrots and spinach and all of those other uh products that would be much much less expensive if the subsidies were available and trust me the kansas farmer or these i can't speak for other states you give the kansas farmer the opportunity and take the chains off and let him produce organics and make it worthwhile you will see plenty of organics and the more organics that we see the lower the price because the plot supply expands and more and more people are able to afford those healthy vegetables and fruits so there it is solution number three subsidize organics now one of the trends that's going on in farming now is that farms are getting bigger and bigger and bigger which is another way of saying the small farm is going by the wayside and currently the trend is about 1.6 increase in size per year for the uh average farm in the united states and this is true with every state in the union that agriculture is a main industry that farms just get bigger and bigger small farms can't make a go of it they sell out and then as a result the big mega corporate farm is the one who has the big heavy equipment and has the economies of scale they're able to price at a lower per unit than the small farm is and as a result that becomes the source of our food well right now many of those agribusiness companies are looking at robotics so the robot will drive the tractor around the field and we'll do the planting and the spraying and the harvesting so think about that do you really want your food source to come from a robot but that's kind of where we're headed if we lose the small farm now the final solution here is probably the one that is the most controversial in economic terms because as an economist economists are always worried about efficiency and trying to make a market allocatively efficient which means people get good prices and there's plenty of options for consumers so we typically don't like to incentivize or reward inefficiency but in this case i'm going to deviate from my fellow economists and say we need a separate category for small farms and what i'm advocating for is that a classification system be put in place so that a small farm picked the size i think it ought to be 250 acres or less receives a designation of a small farm so that when subsidies come down the pike that small farm gets a 20 boost in whatever the subsidy is so it's an extra payday to sort of make it worth their while to stay in the business of farming we could scale it and it could be progressive so that we could have small farms from 250 acres and less get a 20 boost and maybe farms from 251 to 500 acres get a 15 boost however we want to do it but the bottom line is we need to assist the small farmer and give them a hand up not a handout and this would be a good way to do it because the subsidies are going to be there anyway when they're when they come out of congress with whatever farm bill but let's get the small farmer that extra designation that gives them that assistance so there you go four suggestions by an economist on how to assist the small farms to become more profitable so please pass this along to any farmers that you know any sons or daughters or spouses or friends of farmers pass this along to congressmen to your senators and let's see if we can get some federal legislation change and save the small farm you