The Failed Hog Plant Project

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Hogs paid for our farm. I remember hearing them called “the mortgage-lifter.” Now I know why. They also provided our kids with responsibilities, something my aunt from California says is lacking in urban environments. Looking back, I wouldn’t have changed a thing in the way we raised pigs, or kids.

When we had two hundred market-ready pigs in open lots, they smelled as bad as ten times that many if they had been in a controlled environment. The work was hard and dirty. Luckily for us, our farm was not a place to envy, so nobody tried to sic the government on us.

The failed attempt by Prestage Farms to build a packing plant in Mason City mimics how we now seek an authority to command what we want, rather than finding a way to acquire it ourselves. We look at terrorism or drug abuse and think we can have a higher authority simply whisk them away with force. We view everything like the symptom is the disease. Such short-sightedness doesn’t make things better. Does anyone really think these two wars have cured the problems they address?

The war on the new way to raise hogs didn’t cure the problem either. As we drive around the country we pass confinements that we thank God are not near our home. But occasionally we don’t notice any smell at all. Pit additives and other technologies have made it possible for good-hearted neighbors to have little impact on the ones around them. But the laws were not written to solve a property rights issue any more that the war on terror or war on drugs was meant to eliminate terrorism or drug abuse. The laws are enabling devises for people who are well-connected to the politicians who write them. They give them license to infringe on the rights of others legally by having regulations supersede the right to control our own property.

Law, in general, has gravitated to a regulatory nightmare from a place where it was once intended to protect a person’s right to private property. Make no mistake, a cook-out in the yard accompanied by a neighbor’s hog smell is a matter of trespassing. But when the short-sighted activist organizations lobbied to address the hog smell issue, they accepted the law-as-regulation model as if there was a set distance where the smell goes away. I can’t imagine they thought there would be a predetermined distance that would work for every situation. They compromised in order to gain anything they could because they knew they could never beat the people who didn’t care about their stinky barbeque.

An aspect seldom mentioned regarding the Prestage plant is the government (taxpayer) incentives offered. Property tax rebates of $11.2 million and state tax credits of $15 million would have been money out of our pockets eventually. But the unseen effect would have been the distortion of a free market by such transfers. Over $26 million would have been made unavailable to entrepreneurs in other sectors and if Prestage needed that to build such a facility doesn’t that shed some doubt on the viability of the plant? Whatever happened to business decisions based purely on supply and demand?

Ken Kehrli, a recognized expert in the hog business, suspects we are looking at “a train wreck” when the additional 8 to 9 million head come to market required to keep the five planned additional plants operating in our area.

Iowa State University economist, David Swenson said the Mason City plant would do little to improve workers’ earnings. That sets me to wondering: Will government somehow step in to circumvent the law of supply and demand with an additional 2,000 jobs in a town the size of Mason City? This kind of thinking should alert us the to fallibility of government involvement in business.

It is not true that nothing would happen without top down control. There would be less malinvestment and more capital available for genuinely viable business ventures. We have stagnant wages and the lowest labor force participation rate since the late 1970s. This has not happened through lack of government control.

Lack of incentives doomed the Prestage plant, not the lack of approval of the project itself. With little mention of this in the media, it shows a sad acceptance of incentive practices as being the order of the day. We may have avoided a bubble on a smaller scale than the housing bubble; therefore an inevitable bust. The “kooks,” as Ron Prestage called them, may have unintentionally saved this area from a 2,000 person economic problem.

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