Politicians say they will support "family farms" ... and why not? It sounds heart-warming. In practice, of course, there are always unintended consequences -- and I covered a few of these consequences in my latest Fox News special, Politicians' Top 10 Promises Gone Wrong (airs again on Fox Business next weekend -- on New Years' Eve, Friday Dec 31st at 11pm ET and Sunday, January 2nd at 10pm ET).
In this week's syndicated column, I explain how tax breaks have led to a boom in alpaca breeding. Twenty-five years ago, there were 150 alpacas in America. Now, there are 150,000:
Rose Mogerman raises alpacas in New Jersey, the most densely populated state. "I fell in love with them," she said.
But she fell in love with the tax break first.
"Yes. I have to be honest," she said. "I might have had two. I wouldn't have had 100. ... I was looking for a tax shelter."
The Alpaca Breeders Association asked its members, on a scale of 1 to 10, what motivated them to get into alpaca breeding. More than half rated "tax benefits" a 10.
... Economists at the University of California, Davis warn that the industry is in a speculative bubble. "Alpacas sold today as breeding stock have values wildly in excess of even the most optimistic scenarios based upon current fiber prices and production costs," Tina L. Saitone and Richard J. Sexton write.
"(C)urrent prices are not supportable by economic fundamentals and, thus, are not sustainable," the UC Davis economists write. Their paper was originally published in the Review of Agricultural Economics in 2007 with the great title "Alpaca Lies? Speculative Bubbles in Agriculture."
Full column here.