Paul M. Jakus: 'The tradeoffs associated with alfalfa production in Box Elder and Sanpete counties are different, and economic analysis should reflect these differences.'
Alfalfa processor Keith Bailey in a barn filled with alfalfa at Bailey Farms International in Ephraim, where bales are compressed for export to Asian dairies, on Thursday, March 2, 2023.The Salt Lake Tribune’s recent front page article, “,” has quotes from University of California, Davis, economist Dan Sumner and Utah alfalfa grower Keith Bailey that demand some context.
Sumner has had an impressive career, but his comments reflect a reliance on simplistic economic theory to arrive at his “theorem.” Economic markets do an excellent job of efficiently producing and allocating goods and services as long as no costs and benefits occur outside of market transactions, i.e., no externalities. The absence of externalities seems to have been his implicit assumption.
Consider Bailey’s 3,700 irrigated acres in Box Elder county. One alternative use for water used to irrigate alfalfa is to let that water flow instead to the Great Salt Lake. Though water law is changing slowly, environmental uses have not historically been considered beneficial, and a farmer’s right to such water could have been lost had water been used for non-commercial purposes.
Bailey states that he wants his production to be as “efficient as possible.” I am absolutely sure that, given the prices he encounters in input and output markets that he is, indeed, a highly efficient producer. But remember, water is underpriced and does not reflect its full opportunity cost. That means the market for alfalfa is inefficient. We produce too much alfalfa in places like Box Elder county.
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