by Hal Hamilton
— March 1, 2002 —
If you stand just outside the system of commodity agriculture and look in, the wasted opportunities are easy to see. Here at Sustainability Institute we use simulation models, but a drive down country roads is really all that’s needed. You see farmers investing in short-term productivity but rarely in long-term soil fertility. In the face of low commodity prices you see farmers rushing to produce higher volumes, condemning each other to an endless cycle of overproduction and low prices. You see hog farmers in North Carolina struggling with the runoff of too much manure, and you see crop farmers in Iowa paying a bill for nitrogen fertilizer because they grow hundreds of acres of corn without benefit of animal manures.
How can a system filled with intelligent individuals produce such unintelligent behavior? The cause lies in the fact that the economic survival of farms depends on a single variable – the number of bushels or pounds produced each season. Other goals- soil fertility, community health, or water purity –might dictate different actions, but the productivity goal always determines the action chosen because that’s the parameter that short term survival of the farm enterprise depends upon.
The most successful farmers are the first to adopt new technology so they can get higher yields. From the perspective of individual farmers, maximizing productivity is necessary to stay in business. Collectively, however, the net result of each farmer’s drive to increase production is chronic low prices. The most competitive farmers have only a small margin of profit, and the least competitive farmers have to sell out to the most competitive. Farms get bigger, and rural communities and landscapes suffer.
Farmers simplify and specialize their operations in order to increase their economic efficiency. If maximizing short term productivity per unit of time and investment is the goal, that’s much easier to do for one or two crops than to imagine for a complex mix of crops and animals. Such specialization breaks critical closed loops of nutrient flow, but since none of that is measured in the productivity equation, the decision making ignores it.
With short term productivity the only measure by which a farmer stays in business, all other information, consequences and goals might as well not exist. They can’t influence the decision.
Imagine a bowl full of multi-colored marbles. If you say to people, “Remove any marble as long as it is not red,” you will soon have a jar filled with red marbles. The selection process in farming works in much the same way. Farmers get to stay in farming as long as they maximize the number of bushels they can produce in a season. If careful crop rotations, thoughtful nitrogen management, or a desire to keep a farm small are too much of a preoccupation a farm risks becoming something other than maximally productive of bushels of commodity. It may be optimally sized to suit a particular farmer. It may be optimal in its use of nutrients or in its animal husbandry. But, in the current system, none of these are traits that keep a marble in the jar. Such a system might be smart if all we wanted from agriculture was high volumes of bulk commodities and profits for the largest players. To have any other outcome, we need to change the rules so that farmers can take care of land, operate smaller farms, and still stay in business.
There are plenty of ideas for ways to do this. What if government would only subsidize what we need and commit to help farmers shift from what we need less of to what we need more of? And what if we measured what we need more fully?
Political leaders would have to ask people what they want, and the list of answers would be longer than what we could measure in bushels and dollars. The public’s list would probably include clean rivers, working landscapes, and wildlife. Farmers would add soil fertility and opportunities for their children to make a living in rural areas.
If we made decisions from information that was shaped by such a list, we’d do things very differently. We wouldn’t pen all our cattle on congested lots that disgorge mountains of manure, and we wouldn’t grow just corn and soybeans on the same fields year after year. We’d decide that soil, water, and landscapes would be a lot healthier if we put the cows back in the fields, growing grass, clovers, and alfalfa instead of corn some years.
We might have to tax undesirable activities, like polluting. We would definitely need to figure out how to pay for whatever isn’t paid through the market-wildlife habitat or maintaining special landscapes, for example.
If we did a really good job of re-creating incentives based on the right information, we might see that the market would prompt most of the investments that would make better ways of doing things also profitable. If we made sure that all costs, including the real costs of pollution and energy, were part of the price of products, then consumers would be able to buy things with more information shaping their decisions.
Markets do very well at allocating investments to enterprises that have potential to be profitable. If we could adjust purchasing behavior, public support, and taxing authority to reward what we want, the whole production system would shift by itself to produce those things.
We’ll only make smarter systems, though, if we learn to think about more than money on the bottom line. We now act a lot like parents of a budding Olympic athlete. If parents focus exclusively on competitiveness, they can forget all the other needs of a healthy child.
If agriculture only runs without thinking about what makes healthy agriculture and society, we’ll use up the soil and water and people that make it run in the first place.
© Sustainability Institute
