Digging into the economics of agriculture

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Emily Davenport: 0:01

Welcome to"Cultivating Curiosity," where we get down and dirty with the experts on all the ways science and agriculture touch our lives, from what we eat to how we live. I'm Emily Davenport.

Jordan Powers: 0:12

And I'm Jordan Powers. And we're from the University of Georgia's College of Agricultural and Environmental Sciences.

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Jordan Powers: 0:21

We're here today talking with Dr. Cesar Escalante in the agricultural economics department at the UGA College of Agricultural and Environmental Sciences. Dr. Escalante, thanks for joining us today.

Cesar Escalante: 0:31

Well, thank you so much, and it's a great pleasure to be part of this project.

Jordan Powers: 0:34

Wonderful. Well, we're gonna dive right in because we have a lot to talk about. And this this first question is a bit of a broad one, can you introduce yourself and a bit about your background, and then how you ended up at UGA?

Cesar Escalante: 0:44

Alright, I'm originally from the Philippines. It was when I wanted to go to graduate school and that was after working in a commercial bank in the Philippines for nine years, working on special types of loans coming from the World Bank, from the Asian Development Bank, USAID and other multilateral institutions that were designed to help small and medium enterprises in the Philippines. And that was actually the motivation that I had when I went to grad school, that I wanted to continue that kind of line of work, that every time I conducted research, I would always insist on issues that I experienced while performing the job in the bank. And that's how I was so happy that I was led into the field of agricultural economics, which actually had a lot of issues, and methodologies and approaches that were very, very consistent or compatible with what I was accustomed to when I was working in the bank. When I finally had the chance to go back to grad school, I had my family then, a very young family, that I had to bring my wife and my 11 month old daughter to Canada for my master's studies. And at that time, the plan was just to finish studying, and then go back to the Philippines to work. But after each segment of our life since then, has always been the product of last-minute opportunities. So after my master's studies, I was encouraged to pursue further studies, and so I decided to go to the U.S. to study, went to the University of Illinois for my PhD. And at the time that I was about to finish my PhD studies, the plan was again to go back to the Philippines to work. But then I had, as a foreign student, the opportunity to work in the U.S. for a year, which was the optional practical training benefit of my student visa. And then a faculty position opening came up at the University of Georgia. I told myself, I'm just gonna give it a try, I'm not going to expect anything. And lo and behold, I got the job. And so I've been here in the University of Georgia for 21 years now. And my family, when they came to Georgia, having been uprooted from the Philippines to North America, specifically Canada and Illinois, when they got to Georgia, they said, "We like the weather here, so we want to stay here, make sure you get your tenure, make sure we live here forever."

Everyone: 3:11

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Jordan Powers: 3:13

And as someone who just moved here from the Midwest, I'm thinking the opposite. I'm going it's too hot, it's too hot!

Cesar Escalante: 3:17

We're the same, I'm from Illinois, I came from Illinois before.

Jordan Powers: 3:20

And there's where I grew up. I'd like to also touch on you know, you've studied in the Philippines, in Canada, in the United States, how has your international education influenced your work and the way that you work?

Cesar Escalante: 3:32

It was both influential and very helpful. It was helpful in the sense that, when I went to grad school and eventually embarked on my career as a faculty member, I brought along a wealth of experiences coming from a different perspective, from the perspective of a person who was exposed to a different environment in a developing country. So I told you that I worked in a bank for nine years in the Philippines. And so that was really very, very helpful when I went to grad school. And now when I'm working as a faculty member of the University of Georgia, then I was also fortunate enough to benefit from supplementary and complementary perspectives, from my mentors, and from my collaborators. We work on the same problem, but we have different perspectives of looking at it. So it's been very helpful, influential, in a sense that since I come from a developing country, I always insist on looking at things in a more sophisticated way, in the sense that I always inject or add additional issues that I thought were important because I am coming from a different perspective.

Jordan Powers: 4:44

Absolutely. It's important to have all those voices at the table. And I feel like a lot of times we know it's important, but it becomes a bigger challenge to actually act on that than we think it is. So it's wonderful to know that you've been able to do that throughout your work.

Emily Davenport: 4:58

Could you tell us a little bit about what agricultural economics is?

Cesar Escalante: 5:02

Alright. So the whole idea of economics is just the reality that, when you talk about a farm business, a business would usually have very limited available resources. So the business owner would have to make decisions on how to allocate those resources, utilize those resources. And that's where economics comes in. And usually, these decisions would have as an end goal, two types of goals. One is quantitative. The other one is qualitative. And the quantitative set of goals would be – do you want to make a return, you want your business to be profitable? And the qualitative side of it – are your decisions, improving your quality of life, is it increasing your welfare? So economics is like a tool for making the farm business owner make those decisions in such a way that the quantitative and qualitative goals are realized. And I am so fortunate that I was able to really be in the field of agricultural economics, because actually, my background, and I was in my undergraduate studies, I was actually an economics major. And then, I talked about going to grad school. And that was when I got a fellowship that required me to study something related to agriculture. And for a while, I was not too excited about it. But when I got into it, I was really thankful that I was led into agricultural economics. Because agricultural economics is a very applied discipline. We do a lot of applied research. And since then, I started to really appreciate the value of applied research. I am not saying that theoretical research is not important. But, conducting research for knowledges sake, for me, that's not very meaningful. With agricultural economics, I was exposed to a lot of opportunities to be able to see how what I'm doing as a researcher actually becomes useful to other people.

Emily Davenport: 7:08

Can you talk a little bit more about your applied research versus the, like you said, you're not doing theoretical research, but more applied, can you give us some examples of what that looks like?

Cesar Escalante: 7:19

Yes, I will. I told you that I came here in 2001, and was primarily an Extension specialist, Extension faculty. My interactions with my Extension clientele, which would include farmers and lenders, actually opened me up to a rich set of issues happening in the real world. When farmers and lenders come to me to interact with me and tell me their stories, when I go back to Athens, for my fieldwork, I make sure that I develop my research agendas that will address those issues that I just collected from my clientele. And so, when you look at the land grant model--

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Jordan Powers: 7:58

We've mentioned land-grant institutions in previous episodes. But, as a reminder, a land-grant university is an institution in the United States that provides research-based programs and resources for residents within the state. There is at least one land-grant institution in every state and territory of the United States, as well as the District of Columbia. Each institution receives federal benefits as set forth by the Morrill Acts of 1862, 1890 and 1994.

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Cesar Escalante: 8:28

-- extension, research and teaching, they actually complemented each other. Extension is the feeder of issues, my interactions with the clientele would introduce me to some very important issues. Research is the investigative arm. You expound, you examine, you pursue these issues with an academic standpoint, or academic approach, using a lot of the tools that you learned in school. And then teaching would be the dissemination tool. You disseminate what you found in your extension work, and in your research your findings from your research, and you go to teaching and you disseminate that with the hope that the people that you're teaching them to, will continue to work. And I have a lot of wonderful stories about that. And I call it actually a multiplier effect. Like I start something that I got from extension, I do research when I go and teach my students. And when I even interest my students in doing the same thing that I was interested in, I found that the students just are able to like acquire the same passion that I had. They embrace the issues. They liked the issues because some of them, especially minority students, are able to identify with the issues. So they become very interested and passionate about it. And I've been here for more than 20 years already, so I've seen how it worked. And what happened was that long after they have left the university, long after they have graduated, they actually continued to work. I can give you several examples of how this multiplier effect that I am talking about has worked through the years, I had a student who after graduation went to Cameroon as a Peace Corps volunteer, I had a student who joined an NGO in the Northwest and has been traveling to Africa to help women there assert their rights in terms of land ownership. I have a number of students who are now county agents of the Cooperative Extension Service. I have students, former students who are now lending officers, and my hope is that everything that we talked about, because we talked and I know we're going to talk about these issues later, about the lending issues. And I'm my hope is that everything that we worked on, everything that we discussed, everything that we realized, they're also implementing them in their new careers. And many other examples. I'm so excited about this multiplier effect, you always think that as an individual, you are very, very inadequate, you're by yourself, and you cannot make a difference. But it is through the students that you work with, that you influence somehow, and that you entice to acquire the passion, that they're able to continue the job and this really the multiplier effect in play there.

Jordan Powers: 11:13

Absolutely and hearing you talk about this multiplier effect, it almost seems for you that there's almost a fourth pillar that kind of comes after teaching and in that mentorship of students. Can you tell us a little bit about what mentorship has meant to you throughout your career at UGA?

Cesar Escalante: 11:27

It's meant so much to me, I mentioned to you that I was once a foreign student. And I mentioned to you also that I brought along a young family with me when I was going to school. There was so much hardship when I was going to school, trying to maintain my family, at the same time also making sure that I was doing well in my studies. The hardships came from various sources. Cultural, social, and especially financial. Subsisting on a graduate student assistantship to raise a family. And, you know, eventually in Illinois, we had our second child, so the family was growing, was becoming larger, was very, very, very challenging. Now, the reason why I brought that up is because when I became a faculty member, myself, I promised myself that every time I am able to identify specific student situations that mirror the same situations that I went through that I would help that student. Now, there's also like a precondition to that. If I identify potential in the student, and I identify, or I'm able to validate, that this student has the willingness to really work hard, but there were just like obstacles or impediments surrounding that student, which were like the same impediments that I had, then I'm going to step in and say, I'm going to help you, there is no way that you will not succeed, because you have the potential, you have the willingness to work hard. There's no way that you will not succeed, so let's help each other transcend all those limitations. So one of the popular limitations would always be social adjustment. Talking about minority students, they come here, they think that they do not belong. But then, as I said, I'm able to validate that they actually had like the potential and the willingness to work. So I tell them, we're going to help you adjust socially, I went through that myself, as well. So that has always been the motivation. The other thing about mentorship is that, since I derived my research from my extension work, they usually come out as very socially relevant research projects. And they serve as recruitment and retention tools for the students. When they see the research that I'm doing, they're actually lured into the things that I'm doing, because they're interested in it, they identify with the issues that I'm working on. And so, usually, we are able to collaborate really well and turn in really meaningful outputs from our collaborations. And then the other third one, of course, I already talked about, which is the multiplier effect, that, that's the one that excites. So all these three things about being able to identify with students, the recruitment and retention tool in my socially relevant research and multiplier effect. These are the major motivations of why I always like to mentor students.

Emily Davenport: 14:11

That's really great to have that experience that you can provide with your students to have those experiences inform both your research and your experiences with your students. I think that's really cool. Could you talk a bit about your research focus in maybe specifically about gender and racial bias in agricultural lending?

Cesar Escalante: 14:30

Yes. When I came in, in 2001, at that time, the conversations I had with farmers especially revolved around bias because, a few years before that, in the late 1990s, the African American farmers succeeded in getting a lot of their lawsuits to be collectively regarded as a class action lawsuit, which was a big victory for them. And at that time, the discussions on bias discrimination in lending decisions by the Farm Service Agency, which is the government's lending arm to the farm sector and which is under the U.S. Department of Agriculture, there were a lot of lawsuits lodged against them because of claims of discrimination or biased lending decisions. The African American farmers were the most prominent group, in, in that lawsuit issue. But then came the Hispanic farmers, came the Native American farmers, and also came the women farmers, they also followed the example of the African American farmers. So when I came in, in 2001, and I was doing a lot of extension work from 2001, till like around 2010, most of the discussions were about this complaint that they had. They told me a lot of stories about their experiences. And their concern was always that they experienced a high rejection rate, these minority farmers and disagreement farmers. Their assertion or their allegation was that they were discriminated because of their race, and or gender. So that was how I came to do a lot of work on bias in lending. But I also do not forget the fact that I am a university faculty and I need to be impartial. So here is my extension work. I'm gathering a lot of evidence from farmers. But I also need to hear the side of the government, I also need to hear the side of the lender. So when I conducted research, I always made sure that I was impartial. And the results of my research were really very, very interesting, because I started with an investigation on the credit access problem, with that bias there or discrimination. And then when I tied that up with how lenders make decisions, and also considering that over the years, the USDA has actually implemented reforms to minimize bias. So, putting all those into consideration led me to an important realization that even if USDA through FSA has implemented reforms to increase the objectivity of the loan decision process, so that bias will be out of the picture, even if that resolves the credit access problem, that's still not the end of the story. Because when you look at minority farmers, women farmers, they operate farm businesses that are actually financially inferior compared to the majority. Minority farms, or ones operated by women farmers, they're usually small, they're usually not as profitable as the larger businesses operated by the majority. They're not as liquid. And so they have like some operating issues that they need to resolve. So even if you give them the loan that they thought they needed to get, if you take out discrimination from the picture, there's still a problem about how to make these farms of minority farmers and women farmers competitive or equally viable compared to the farms operated by the majority. So I started my investigation with the credit access issue. I even extended that to look at how loan packaging terms or interest rates or loan maturity or loan amounts, those decisions were made. But then, even after addressing those important issues about loans, we realized that more has to be done. If you want farm businesses operated by minority and women farmers to succeed, for them to succeed, what I mean is that for them to become equally viable, sustainable, and are able to compete with the rest of the industry. Going back to my discussion about the credit access problems, and the lenders have started to introduce a lot of objectivity in their loan decision process so that bias will be out of the picture. So they develop models, okay, loan application, or loan evaluation models. But then when you input the numbers coming from the minority farms, and the farms operated by women into those models, they will naturally score low in those models, because of the very fact that I told you about they have smaller businesses, they have less profitable businesses and all those types of issues. So that's why I came to the conclusion that there's more to the credit access problem, which is that if you want to help these farms, it should be a coordinated effort from a lot of institutions surrounding these businesses that will help address deficiencies in all fronts. Like for example, when you try to figure out where these farms are, they usually are located in very remote places. So transportation, you need to address that, and, for them to be able to market their products. When they get to the markets. You also have to make sure that there's no bias there. I'm not aware of any study done on this one about bias in the marketplace. But the hunch of these producers, there farmers who talked to me, were that when they start selling their products, they probably are not able to command the most favorable prices because of the way they look, of their accents. And you know if those allegations are true, then we need also to address that. So a lot of other fronts of business operation need to be addressed. If we want these farms to succeed. Can you imagine if like all those fronts are addressed? If you have a farm operated by a minority or women farmer who has been assisted to operate viable businesses, then when they go to the lender, they're not going to have a credit access issue anymore. You know, especially if the lender has already eliminated bias and subjectivity there. Because for sure that their businesses will now really fare well in those models that are used to make loan application approval or rejection decisions. And also models that are used to determine how much the interest rate should be, or how long is the repayment period.

Jordan Powers: 20:46

It goes so much further and beyond the scope of the loan itself.

Cesar Escalante: 20:50

Yes. And we thought that it was just the issue. But then, as I said, because of what I have done, we realize that it's more than that. But it doesn't mean that it doesn't need to be addressed, you start addressing that issue. But then you move on from that and continue to like make sure that the other infrastructure surrounding it would be also improved.

Jordan Powers: 21:10

Can you tell us how immigration ties into this work specifically?

Cesar Escalante: 21:15

Well, the immigration issue also came up while I was doing extension work. After 9/11, the country and several states launched aggressive immigration control policies. We had already had amendments to the National Immigration Law. But then several states also came up with their own additional or supplementary immigration policies, which were all designed to enforce more strictly the immigration control activities. I always wanted to clarify that I was not conducting research on immigration, because I'm a foreigner myself. I ended up doing research on immigration-related issues, especially relating to farm labor. Because when I talked to farmers, especially small farmers, they actually had problems with labor procurement, labor employment when stricter immigration laws were enforced. The rationale behind immigration control in the late 2000s, and we should recall that at that time, we were going through a recession, so in a recession, what usually happens there is lack of jobs. So they thought,"Oh, this is just the right time to really push for immigration control. We need jobs for our local residents, for domestic residents. So let those unauthorized immigrants leave so they can vacate those jobs, and our local people can take over those jobs. And that will solve the employment problem." That's very, very logical. That really makes a lot of sense. It worked, but not in the farm sector. Because in the farm sector, local people do not want to take on those jobs, because local people, domestic workers, they find farm work to be very difficult, physically exhausting, low pay and lack of protection, lack of fringe benefits, there are health risks, environmental risks, and a lot of other issues there. So I did a lot of studies that validated this, that showed that a lot of our domestic workers are actually biased towards non-farm jobs. They would always be hesitant to work in farms because of reasons that I just mentioned. So when I was doing extension work, I came across farmers who are having these problems. They did not have workers who were willing local workers were willing to work in their farms. Some of them have already exhausted their family labor. I remember several cases where they even asked their children to stop going to school, they were already in college, they asked children to stop going to school so they can work full-time in the farm. And all these accounts that I gathered from individual farmers, they actually were eventually validated by one very controversial news that came out in the spring, I think in 2010. When Georgia's governor, I think Governor Perdue at the time, and the Georgia Department of Agriculture made a controversial statement saying our crop farms are actually losing millions of dollars, because a lot of the crops that are in the field are just rotting away, they cannot be harvested because we do not have workers. And then we have our Center for Agribusiness and Economic Development, which is actually in our college, they were commissioned to do a validation survey. And indeed, there were 1000s of unfilled positions because local workers do not want to take on those jobs, that led to millions of crop losses. So, back to my earlier statement, I did not end up working on a research related to immigration because I'm a foreigner myself, but because my clientele the farms that I was working with the small farms, they were the ones who had problems. What do you do when you have a labor problem if you're a farm business owner? You mechanize. You replace labor with machines. But when you're talking about small farms, they cannot afford to mechanize because mechanization is very, very expensive. So they have to rely on labor. If they have already exhausted all their family members working in the farms, where else can they turn to. So that's when they came to me and they discussed the problems. And so I did a lot of research. And I actually ended up going into another area, which is like looking at the government's H2A guest farm worker visa program as a way to help these farms source their workers, foreign workers on a contractual basis. But then again, it's a continuing work, because that program is not a perfect program. In fact, some farms also have issues with that program. So we continue to do research in this area for the sake of like opening eyes to the need for reforms, for changes, so that the very people, the very businesses that need to use this program will be able to use them. And so the labor problem will be resolved.

Emily Davenport: 26:04

Wow, a lot to think about. You mentioned the recession in the early 2000s. And right now our economy is changing again, can you talk a bit about how agriculture is impacted by a changing economy?

Cesar Escalante: 26:18

Everything that happens in our economy, they're actually interrelated. So any decision that's made by a particular member of the economy will always have a direct and or indirect impact on the farm. We have policymakers who formulate laws. And so those laws, they will have always repercussions on different sectors on the farm, their effects would actually be varied. Some will benefit, some will not. People like us, individual consumers, the decisions that we make based on our personal behavior, they will affect the individual farms. We actually can dictate to them what they need to do through our choices through our tastes through our preferences. So, the pandemic, because I know you're referring to the changes in the times, has actually led to a lot of solutions or policies that the government has tried to implement with a particular goal in mind. That goal would sometimes address a particular sector of the society, but that doesn't mean that just because it's a policy that's addressed towards health care, it's not going to affect the farm. My point in saying is that any decision made in our society, in our economy, would always have the direct and indirect effect on the farm. And the pandemic has definitely modified a lot of the decisions and how, how businesses would operate their farms. Conditions that are modified from time to time, they actually induce farm business owners to adapt and make adjustments. And in the process, they're able to assimilate a different way of doing things. That's probably a little bit too abstract, but what I can just say is that the farm sector has always been an important supplier of basic commodities, regardless of whether it's a recession or not. So during the recession, the farm sector was only able to realize how important the sector was because, whether you are under a recession or not, people still need to eat. So we just adapt to the needs of the times. And also realizing that there are additional constraints in the way we operate our businesses, because of the changing times, will make us modify our business strategies.

Jordan Powers: 28:40

There's a lot to unpack there, I feel like we could have a whole next episode just on those topics. But I want to turn the conversation to a little bit more of a celebratory tone. You recently received the Ketchum Prize from the FINRA Foundation. Congratulations on this huge honor! Can you tell us what receiving the Ketchum Prize means to you and your work?

Cesar Escalante: 29:00

Ketchum Prize was something that was unexpected. They said that the Ketchum Prize is the highest prize that the Financial Industry Regulatory Authority, or FINRA, would actually award each year. And it recognizes outstanding work in service and research that would advance financial capability, financial inclusion, and investor protection. I believe that they recognized me not for all those three, but specifically for two of those three, which would be financial capability and financial inclusion. And they zeroed in on my work on the racial and gender bias in lending. And I cannot express how humbling and how overwhelming this recognition was. Because when I do my job, I just do it because I thought that it was necessary. I never realized that I was actually contributing something The award actually made me realize that I somehow contributed to the commotion or the voice that all this minority farmers, and the women farmers were making since the 1990s. I thought that I was just a bystander observing things, and then doing things in my own limited capacity without even realizing that it was making sense. So for the Ketchum Prize, to remind me that I somehow was able to help is just too humbling and too flattering. And I am glad that they did, not for my sake, but for the fact that such recognition will only develop greater awareness of the issue. Because even if I told you that the racial and gender issues were more prevalent in the late 1990s, when there was so much going on in that area, and then reforms were already made over the years, the issue of bias and discrimination lives on, I mean, it still prevails in some forms. So to be able to generate some attention towards that issue would only remind everybody that nothing beats a society that operates in an equitable, fair and just way, and that ideal is always something that everyone should try to help to promote.

Emily Davenport: 31:23

Definitely, always striving towards that ideal, and congratulations again on that incredible achievement.

Cesar Escalante: 31:30

Thank you so much.

Emily Davenport: 31:31

And I know the FINRA Foundation recently interviewed you for a podcast episode that goes further in-depth on this particular aspect of your work, so we'll link that for our listeners in the show notes. Was there anything else that you wanted to share with us today that you feel like we missed?

Cesar Escalante: 31:46

Even though I have been here for 21 years already at the University of Georgia, I always am compelled to always try my very best to create an impact. Georgia has been my home for two decades, the place where I live the longest. And as a home, I feel like acclimated here, I feel really comfortable. And then maybe the reason why I feel this way is because year after year, I welcome a new batch of people coming from different places. And then that experience will always remind me of my beginnings. And when I'm reminded of my origins as like when I too was a foreign student, and it was trying to fit in, the more I'm pressured, the more I am compelled to always assert myself in a way that I make sure that I do things that are worthwhile, and that will contribute to the ideals of my employer. So, my point is that I don't know when this experience of fitting in will end. I know that I already fit in I know that I'm already a legitimate or a permanent member of this community. But every now and then I'm just reminded that I need to do more because, because I'm still a minority.

Jordan Powers: 33:02

Well Dr. Escalante, thank you for joining us today. Your passion is inspirational is contagious. And we're very grateful for your time.

Cesar Escalante: 33:12

Oh, thank you so much. I feel honored that you selected me for this project.

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Emily Davenport: 33:17

Thanks for listening to "Cultivating Curiosity," a podcast produced by the UGA College of Agricultural and Environmental Sciences. A special thanks to Mason McClintock for our music and sound effects. Find more episodes wherever you get your podcasts.