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Unlimited Competition Is Not Sustainable

by Gunnar Rundgren

Large farms are increasingly dominating crop production in the United States. In the early 1980s, most farms produced crops on less than 600 acres, but the majority of today’s farms grow crops on at least 1,100 acres. And many farms are ten times that size. Furthermore, in 1987 the midpoint dairy herd size was 80 cows; by 2007 it was 570 cows. The change in hogs is even more striking, from 1,200 hogs produced per year to 30,000. This long-term shift in farm size has been accompanied by greater specialization. Beginning in the latter half of the twentieth century, livestock operations were moved to sites away from crops. In 1900 there were dairy cows and hogs on three-fourths of all farms, but in 2005 only one farm in twenty had either dairy cows or hogs. This separation has allowed crop farmers to devote more time and resources to crop production and gradually increase yields and acreages.

Larger crop farms perform better financially, on average, than smaller farms. The difference is mainly in the cost of production. According to a report of the U.S. Department of Agriculture:

Larger farms appear to be able to realize more production per unit of labor and capital. These financial advantages have persisted over time, which suggests that shifts of production to larger crop farms will likely continue in the future.

Research shows that farms with more than 2,000 acres use 2.7 hours of work per acre of corn and pay equipment costs of $432. In contrast, farms with 100 to 249 acres require more than four times as much labor and spend double the amount for equipment.

This scaling-up of farms causes a seldom recognized paradox in agriculture. Increases in farm productivity coincide with periods of poor returns for farmers. The U.S. Secretary of Agriculture, in his 1910 annual report, wrote, “Year after year it has been my privilege to record another prosperous year in agriculture.” What has been called a golden age for American agriculture — the period between 1900 and 1914 — was a period of almost no growth in the sector. Output per worker increased by only one percent between 1900 and 1910, and total farm output by only eight percent. Meanwhile the population increased by a whopping 21 percent. The result was higher food prices and thus the prosperous years.

Conversely in the 1950s, agricultural output increased at a rapid pace as a result of increased productivity. However, the decade is remembered as a time of hardship for most farm families. Input prices went up and farm product prices fell. A million and a half families ultimately gave up farming in this decade as they couldn’t make ends meet. Those that survived were able to buy up the land from those that lost out. A similar period came in the 1980s when productivity grew three percent annually, product prices fell, and input prices and interest rates soared. Willard Cochrane writes, “In terms of agricultural development for the national economy the decade of 1980s was a huge success; in terms of the financial well-being of most farmers it was an economic nightmare.”

Combines on a big farm

Can the benefits of increasing scale on farms cover the social and environmental costs? (photo credit: T.P. Martins)

Farmers are stuck on a treadmill. Competition forces them to increase productivity, but the increased productivity leads to lower prices and economic hardship for the farmers. This treadmill is the reason for enormous increases in both farm size and productivity. The vanguard farmers adapt, mostly by increasing size, at the expense of their less successful colleagues.

For farmers who can’t compete, there is no way out — or rather there is only one way out — get out! This weeding out of small farms has happened locally and regionally, but the system ultimately works the same way globally, where all farmers compete with each other. Compare, for instance, conditions in Europe to the largest grain-growing areas around the world. For a European farmer, the landscape is varied, and roads, rivulets, hills, and buildings cause fields to be small. Because of land scarcity, land prices are also high and not determined primarily by agricultural productivity. The scale of acreage and machinery can never be as large as on the plains of the United States, Russia, or Argentina. European costs will be higher, even if European farmers can intensify production and get higher yields per acre.

The treadmill is driven by specialization and drives further specialization, filling each farm with just one or two crops or huge livestock operations. The economic and social implications are huge, but the environmental implications are even bigger. Large-scale landscapes get stripped of variation and biodiversity. These lands don’t produce the ecosystem services we need, and we’re left to try producing them elsewhere at high costs, assuming that’s possible.

This large-scale, linear, industrial model of farming has replaced a local, cyclical, and ecological model. The new model has yielded undeniable short-term economic success as measured by financial figures, but unlimited competition will never be sustainable. It’s amazing how running in place on a treadmill can lead us further and further astray.

Gunnar Rundgren has worked in organic farming for more than thirty years. He established the Torfolk farm together with Kari Örjavik, and he is the author of Garden Earth – From Hunter and Gatherer to Global Capitalism and Thereafter.

Technological Progress for Dummies, Part II

More than One Kind of Nut

by Brian Czech

“Failure breeds success,” I hope some famous person once said. For I have failed to accomplish the goal set out in Part 1 of Technological Progress for Dummies. The goal was to summarize an article — in plain language and in less than a thousand words — that described why technological progress cannot reconcile the conflict between economic growth and environmental protection. I found I couldn’t do it without several thousand words, and too much plain language is as difficult to digest as a dollop of jargon. As for the article itself, it’s long and full of jargon.

And now for the successful offspring of such abject failure. (Drumroll, please.) I can successfully say that most folks have tightened a nut or two.

In the old days you would have used a monkey wrench. Then a tidbit of technological progress happened and you had a box wrench, which allowed you to tighten that nut a tad more efficiently. When they finally invented the ratcheting socket wrench, you were really in business. It seemed like you could tighten far more nuts with the same amount of elbow grease; five nuts to one when you threw in some coffee!

Such is the basic pattern of technological progress. Invention and innovation allow you to do more with less. Well ok, maybe not actually “less.” If you tighten five nuts to one, you’re prone to using five times the nuts. And the ratchet set is something you have to add to the toolbox. But you can definitely tighten more nuts without working harder, so in workaday parlance, you’re doing “more with less.” If you want to get technical about it, you could say you’re producing more output per unit input. Your productivity is increasing.

For the economy as a whole, productivity increases with technological progress. It’s an impressive process; nearly awesome at some points in history. It makes us proud of the human race, boosts our confidence, makes us think the sky is the limit. Many are even led to believe we can grow the economy without impacting the environment. After all, if we can do more with less, how about doing more with a lot less?

And why stop there? If we invent and innovate enough, maybe we can do more with no more! We can just keep growing GDP without using any more wood, water, minerals, petroleum — natural resources in general. No more steel, nuts, or tools. No more stuff, no more energy.

It’s reminiscent of the alcoholic announcing, “I’m not drinkin’ any more, but just as much.” We may not be using more natural resources to produce more goods and services, but if we’re still using the same amount we can’t really say we’ve stopped impacting the environment, can we? Especially since we had to dig deeper for the minerals, drill deeper for the petroleum, etc. And notice we haven’t even mentioned the flow of pollution (and won’t, to keep things simpler.)

So it’s time for the really big guns. Now we’re going to produce more, not only with way less, not only with no more, but with nothing at all! We’ll just beam it all up. Why not? After all, research and development expenditures in the United States alone are some $300 billion per year. That oughta buy us out of any problem, including this one! That’s why economists like Robert L. Bradley, Jr. announce, “Natural resources originate from the mind, not from the ground, and therefore are not depletable.”

Now if you’re a scientist worth your stellarator, you can see through the subterfuge in a nanosecond. The first law of thermodynamics tells you there’s no producing something from nothing. You can’t even get perfectly efficient with the resources you do use, because that would violate the second law of thermodynamics. So there’s a limit to technological progress — doing more with less — as it applies to the full collection of materials at our disposal along with the energy we receive from the sun.

The problem remains, however, that for purposes of plain language, the laws of thermodynamics and even the phrase “laws of thermodynamics” don’t cut it. Only in plain language can we make a difference in everyday life and public policy. That’s why President Obama signed the Plain Language Act of 2010.

So here’s some more nuts and bolts. Remember how doing “more with less” leads to five times the nuts? Tell your local Robert L. Bradley, Jr. that we shall all refuse to tighten five times the nuts without five times the bolts and washers, along with additional material to be tightened. And if we’re assembling things for market — quite necessary for GDP growth — we’re now assembling more of them. That leads to more transportation, storage, and retail services. More electricity all around, too, along with the wiring, fuses, bulbs and such. Plus that power plant in the background, with all the nuts and bolts therein.

Now with this type of expansion going on everywhere that the proverbial nuts are tightened (all around the world, in other words), information services help to orchestrate it all. Everybody better have a computer, cell phone, and Twitter feed. Operating at this level, you may as well start advertising, too. Banking, insurance, and other service sectors will also play an expanded role.

Notice that, in addition to not even mentioning the flow of pollution, we also haven’t mentioned the agricultural sector — farming in plain language. But of course we’re going to need plenty of it, to feed all the folks with the manufacturing and service jobs. With all the food they’ll have to produce, they’ll need cell phones and GPS units in the air-conditioned cabs of those 30-foot-wide combines. And plenty of extra nuts and bolts.

So that old ’90’s notion that we could keep growing the “Information Economy” without using more resources — and without any more environmental impact — was like a highly productive conversion of grass into bullpies. All that information, which was supposed to beam us up to Shangri-La, was nothing if not tied into the regular old economy down on the farm and everywhere else in the Land of Nuts and Bolts. The computer was nothing more than the ratcheting socket wrench of the IT sector, which was distributing marching orders for an ever-larger ecological footprint.

At a thousand words now, I’m thinking this is all the success my failure can breed. Enough for one column at least. Someday I may also find a way to convert that earlier-mentioned article, condensing concepts such as niche breadth, trophic levels, and economies of scale into plain language of a thousand words or less, refuting the macroeconomic environmental Kuznets curve and solving the Jevons paradox (which really isn’t so paradoxical) in the process.

But it’ll drive some nuts. In fact, many more nuts, albeit more efficiently.