Saturday, November 26, 2016

Efficiency and productivity two very deceptive words

Dear readers,
I have been very busy with the launching of the Swedish version of Global Eating Disorder and some consultancies. Now I am soon going to Indonesia to look at palm oil production. Therefore I don't have time to produce much new material for the blog. I offer you a chapter of Global Eating Disorder below, discussing two of the most deceptive words I know. Efficiency and Productivity.

We often hear that ’productivity in farming has increased tremen­dously’, ‘the farmer of today is much more efficient than her ancestor’ and similar expressions. But those are deceptive words. They come with an air of being measurable and objective. And while they can be measured, the yardstick we choose to measure them against already predetermines the outcome. One has to also reflect over who benefits; what is productive or efficient differs depending on who asks the question.[1] Most choices are made on the basis of the profitability for the person or entity that has managed to, with whatever means, control that piece of nature.[2]
Throughout modern times the prevailing measure of grain produc­tivity in Europe was the ‘yield ratio’, i.e. the quantity that could be harvested from a certain quantity of seeds. This ratio was often in the range of five in Scandinavia and Germany, reaching ten under good conditions in England and the Low Countries.[3] For a grain-based culture, with access to rather abundant land and labor resources, this way of measuring makes some sense. And this also explains quite well why the Asian rice based cultures were more advanced than the Europeans, until the industrial revolution; the seed ratio of paddy rice is normally very high. Today, seed is only one of many inputs in farming and most farmers would find it strange to measure productiv­ity in terms of seed use even if it still prevails in some places. 
The size of the area unit itself was often dynamic and linked to the land’s ability to support people. Around the world, the amount of seed that had to be sown to feed a family from the harvest provided a basic measurement of the land. Even in the 20th century, fields in Guang­dong Province next to Hong Kong continued to be measured in dou, roughly equivalent to seven kg of rice seed, while up the mid-19th century land in New Mexico was computed by the fanega, approxi­mately fifty kg of wheat seed. I have also encountered land measurements based on how much land a man could ‘open’ in a days work, common in cultures with swiddening farming. And ’acre’ has similar roots; an acre was the amount of land that could be ploughed in one day with a pair of oxen. When land, labor and food become commodities, most of these localized and subjective measurements fell into disuse.[4]
These examples are good to remember when we discuss productiv­ity and efficiency. Productivity in farming can be measured in many ways. Per area unit; per person-hour; per unit of deployed capital; per energy input or; per water unit. The comparisons can consider total biological production, ecosystem services or only what is directly useful to human beings in the form of food, fiber and fuel. And the results, the useful resources, can also be expressed in different ways, for example, as kg (tons or bushels), as calories, as proteins or simply as money.[5] We can also ask if the productivity is serving to maintain the productive resources or if it is based on extraction of non-renew­able resources, resources which perhaps were abundant but now are increasingly scarce? Can we even talk about productivity if the produc­tion is based on the unsustainable use of irrigation, fossil fuel and soil management practices which erode the soil? 
We can also compare farming with ‘nature’. For example, the biologi­cal production (mass, energy or protein) in a farmed system can be compared with that in the natural system before farming. ‘Productiv­ity’ can have a completely different meaning if we counted the impact on ecosystems and the external costs caused by farming. Studies of a wetland in Canada, a forest in Cameroon and a Mangrove forests in Thailand showed the total value of these ecosystems was much higher than the value of the farming systems to which they were converted.[6] But, importantly, the benefits of the systems accrue to different people. 
In the long term, it is more interesting to increase the productivity relative to a resource that is limited rather than relative to a resource that is abundant. From this perspective, the contemporary obsession with labor productivity is strange, as we never had so many people on the planet and so limited natural resources. But if we look at monetary value we understand why we always try to save on labor as labor is costly and nature is ‘free’.

The total energy harvested per hectare can increase with increased use of ancillary energy; in many situations one can increase yield per hectare fivefold (or more) by using more energy. This energy can be used for better (and timelier) soil preparation, irrigation, fertilizers, etc. The ratio between energy output and energy input (i.e. efficiency in the use of energy) seems to be fairly constant up to a certain level, after which it rapidly deteriorates. Industrial farming systems, have long since passed the optimal energy use level.[7] According to FAO, industrial farming methods require 6,000 MJ of fossil energy (corre­sponding to a barrel of oil) to produce a ton of maize but traditional methods in Mexico only require 180 MJ (corresponding to 4.8 liters of oil) to produce the same. This calculation includes the energy needed for chemical fertilizers, irrigation and running machinery, but not the ‘shadow energy’, the energy used for making the machinery, for transporting products to and from the farm and for constructing the farm buildings. The energy ratio is below one – i.e. more energy is consumed than produced – for modern rice farming and just above one for modern maize farming, whereas traditional production of rice and maize gives a 60-70-fold return on energy used.[8] In light of this, to make statements that ‘productivity has increased tremendously in farming the last hundred years,’ is simply misleading. 
Yield per area unit has increased considerably, both in developed and developing countries. For example, in the United States, maize yield increased from around 3,700 kg per hectare in 1961 to around 9,500 kg in 2011. Wheat yields in Sweden tripled between 1900 and 2000. Global rice yields increased by one third in the twenty years between the end of the 1970s and the end of the 1990s. The most dramatic increases can be accomplished in highly regulated systems. In greenhouses with climate and water control, productivity per hectare is up to more than ten times that in an open field. The more advanced producers in the Netherlands take more than 60 kg of tomatoes per square meter, whereas open-field production may only reach some 5 kg per square meter. Still, the profitability of Dutch greenhouse tomato production is very low and largely rests on them getting very favorable gas prices. One should not forget that in many cases yield per hectare is low just because it doesn’t pay to increase it. 
Land price is a factor that greatly influences productivity per area unit. To some extent, it works both ways. Land with high yield poten­tial has a higher price than land with low potential and when you pay a lot for land you have to get a high yield per area unit. But in many countries and places, the correlation between land productivity and land prices is weak and land prices are influenced also by alternative uses (conversion to forest, industries, and housing), status and culture. 
Farming today is very capital intensive. In Sweden, it comes only after utilities and real estate in capital intensity; car-making has less than half the capital costs for a full-time job,[9] and in United States US$1.2 million is invested in each full-time agricultural job.[10] Yet at the same time the return on invested capital in farming is mostly low. The real return is often realized when the farm is sold. As the saying goes ’farmers live poor and die rich’: they reinvest most of their profits in their farms. For most farms, especially family farms, the concept of return on capital is somewhat alien. Families invest their capital and their labor on the same farm and there is no distinction in their way of thinking or in their books (if they have any) between the return on capital and the return on labor. One way to assess return on capital is to look at land rents. In the highly commercialized agricultural sector in the Nether­lands, land rents are administratively defined on a level of 2% of the calculated production value of the land. If this was not the case, if the farms had to render a commercial rent of say 4% of the land price, farming would not be profitable.[11] Land rents in the United States have fallen from around 7% of the productive value in the 1970s to a low of 3.4% in 2008.[12]
A lot of the support to farms in high-income countries is ’capital­ized’ in the form of higher land prices. This means that the subsidies increase the cost of the land and this makes it more difficult for new farmers to establish themselves. Depending on the nature of support other production factors can also be affected. In 2006, milk quotas (if you produce more you face a levy) in the Netherlands were valued at an astonishing €20 billion, whereas the gross annual value of milk production was around €3 billion. The right to produce milk thus became a commodity, more important than actual milk production[13] (due to changes in EU agriculture policies the prices of the quotas have dropped recently, and they are about to be abolished in the future). The right to direct support from the EU’s CAP (the ‘single farm payment entitlement’) has also become a tradable commodity. Buying and selling these rights has become a business in itself; ’buying an entitlement to a stream of future payments is an investment decision’, according to one analyst.[14]
Contrary to what many may believe, return on capital in farming in developing countries is high. There is very little available capital and even less is invested in farming, but that which is invested is often borrowed at rates of 20-40%, a return on capital which few investors in high-income countries can dream of. Despite this, international capital is not rushing to support the farming sectors in developing countries, at least not in the shape of credits to small farms. The risks involved are also high; farmers can be unreliable borrowers who often can get away with not paying their debts, or delaying payment for years.[15]

While a human being needs a few liters of water to drink, at least one thousand times as much water is used to produce food.[16] The water needed for different foods varies tremendously and even varies for the same product grown under different conditions. Often the figures used mix different kinds of water with no clear distinction. There is ‘blue’ water – water in rivers and lakes, ‘green’ water – water in rainfall and in the soil, and ‘grey’ water – the water that is needed to absorb or purify the waste. Together these make up our ’water footprint’. The Water Footprint Network broke down the water footprint of a mar­gherita pizza (one topped with tomato, mozzarella and basil). They found that it takes 333 gallons (1,260 liters) of water, enough to fill almost ten bathtubs to make a single pizza.[17]
But statistics can be presented in many ways. The water footprint of beef is big, ten times bigger than for grain and fifty times bigger than for (some) vegetables. On the other hand it is smaller than the water footprint of sesame oil, olive oil, coffee, cocoa and a number of other crops. Rainfall is also not the same as the water in lakes or wells. In all dryland areas, except where there are irrigation possibilities, livestock keeping has been the traditional way to get food from the land. And this for very obvious reasons; it is more water-efficient to raise live­stock than to try to grow crops that don’t get enough water. In Namibia – one of the driest countries on the planet – most of the water falls on the dry rangeland as rain and only a small part is supplied as drinking water for the animals. A borehole for cattle with a solar pump and a capacity of 2 m3 per hour (20 m3 per day) can service some 250 cattle. They will produce in the range of 20 tons of meat per year. The same quantity of water would be enough to irrigate approximately a hectare of farm land, which would produce considerable less food (say 3-7 tons of maize) and a lot less money. If we calculate the total water use of the land and include the rainfall, we arrive at a high water foot print. But this rangeland cannot be used for cropping as the rainfall is to low. The only other alternative use of the land would be to have game roaming there.[18] Therefore, we cannot conclude that cattle-breeding, under those conditions is wasteful of water. 
Also, water footprint per kg is a dubious measurement. We eat very different quantities of food, and the concentration of useful nutrients that they contain differs widely. As an example, we have to eat 10 kg of broccoli for our daily calorific needs, but only 0.5 kg of bacon. If we look at the use of blue and green water per calorie, nuts have the lowest efficiency in water use and root crops the highest, according to research­ers Mekonnen and Hoekstra. Most vegetables and meat rank quite similarly. In terms of blue and grey water use for protein, oil crops are the best, followed by milk, lamb, root crops and grains. Nuts and vegetables are the least efficient.[19] Seen on a larger scale, attempts to increase yield per hectare mostly also increase water productivity. An unirrigated hectare of wheat uses more or less the same quantity of water when it produces 1500 kg as when it produces 5000 kg.[20] If irrigation is introduced into the sys­tems, the effect is, perhaps sur­prisingly, that water productivity increases; that is, the increased yield resulting from irrigation uses less water per kilogram than the original yield based on rainwater. In a situation where the annual rainfall is around 400 mm, water stress poses a real limitation to crops, adding some 100 mm of water at critical moments can easily double yields.[21]. According to researchers at the Stockholm Environment Institute there is a large potential to improve water productivity through using improved, existing, water management practices. They predict that, globally, we will need to increase water usage by around two thirds of present levels (7000 km3/yr) in order to feed the world in 2050 but that water produc­tivity improvements could save up half of that quantity.[22]

Because labor costs represent a very high share of farm costs, pro­ductiv­ity per person-hour or per person-day has been central in leading to the increased mechanization of farming. Labor productivity is also very important from a broader societal perspective as increased productivity of agricultural has released people to work in other sectors. Industrialization could not have taken place unless labor had been released from farming. One person in the United States occupied in farming can now produce food for some 300 people, in some devel­oping countries one farm worker can only feed a few. Another way of looking at labor productivity is to see how much grain can be pro­duced per person-year. Grains are the most important foods in the world, are grown in most places and as such are used as a proxy for general agriculture development. In the areas with lowest productiv­ity, one person can produce not even 1 ton of grain per year, whereas the most productive farms produce up to 5000 tons per person-year as is the case on Bob Stewart’s farm in Illinois. 
Of course, these comparisons mask the fact that a modern farmer doesn’t even ‘feed’ him or herself or the family or their animals. A modern farm is a company where other people’s goods and services are bought and sold. There are accountants, repairmen, consultants, machine operators, computer service technicians and meteorologists, all in the service of the modern farmer. All this work is embedded in the farm produce. Earlier generations of farmers, and still many farmers in developing countries, produced not only food and fodder for themselves and their animals, but also fiber for clothing, leather for shoes and most of their own tools and medicines from their farms. But even when we have taken that into account, the difference in labor productivity between farms in high-income and low-income countries is still staggering. Energy use is the single most important determining factor here as there is a very strong correlation between the energy resources commanded by one person and that person’s productivity.
Productivity, measured in added value per worker, is quite natu­rally much higher in high-income countries than in developing countries. For instance, a farmer or farm worker in Malawi produced an added value of just US$130 per annum in 2001-2003, a Chinese farmer US$368 while their French and American colleagues produced US$39,000 and US$36,000 respectively. Even more worrying is that this gap is widening. The OECD countries had an agricultural labor productiv­ity that was 25 times higher than that in Sub-Saharan Africa in 1971. By 2005 this had increased to 68 times.[23] A report to the FAO projects that revenue per agriculture worker in Sub-Saharan Africa will increase by a meager 50% between 2010 and 2050. Growth in productivity in South Asia (India and its neighbors) will also be slow, and Latin America is the only region likely to catch up with developments in the OECD countries.[24]
Those figures come close to what farmers earn and give an idea of what farm workers are – and can be – paid. It works both ways; if workers are productive they can get a good salary which in turn means that there are incentives for saving labor, which in turn means that income per worker will increase. In addition, if wages in other sectors are high, agriculture wages will follow (even if they mostly stay comparatively low). A particularity of farm labor is that, in most parts of the world, it is markedly seasonal. When it is too cold, to dry, too hot or too wet, there is simply not much to be done in the fields. This means that farm labor often is underemployed, or that seasonal workers take up the jobs. Farm work is also considered to be ‘un­skilled’ even though I personally object to this categorization. In my former role as farmer and employer I can assure the reader that the productivity of people weeding or making bundles of parsley can easily differ by a factor of three or four, depending on their skills. Taking good care of animals also requires a huge amount of skill, know-how and ability. And modern farm work is certainly highly sophisticated. 
It is somewhat puzzling why most agronomists and institutions focus so much on yields of crops per hectare as the main measure of agriculture productivity, when in reality that is not a driving force for farmers who look more at productivity per labor unit, or if they are modern agri-business operations, the productivity of capital invested. If we compare farms globally the farms with the highest yields per hectare are rarely the most competitive. European farmers generally have much higher yields per hectare of wheat than their Argentinean, American or Australian colleagues, still they cannot compete and are dependent on support programs of the European Union, because their general cost levels are higher. Similarly in the dairy sector, the world market is dominated by a country with a low milk yield per cow. The dairy industry in New Zealand is still primarily built on grazing cows and production per cow is low by international standards. The average production per cow in Israel was 12,500 kg in 2007, while it was less than 4,000 kg in New Zealand,[25] but New Zealanders produce milk a lot cheaper than Israelis. 
If we compare efficiency in various systems, e.g. in farming or food processing, in most cases this will show that the bigger and more technological advanced system is more competitive. But are they more efficient and productive? Often, small farms have a higher yield per hectare than large farms, but large farms are still gradually squeezing smaller farms out of the market, because of market access, possibilities for rational specialization, economies of scale, better access to credits or governmental policy distor­tions.[26] Larger crop farms perform better financially, on average, than smaller farms. This is not because the larger farms have higher revenues or yields per area unit, but because they have lower costs. As expressed in the report Farm Size and the Organization of U.S. Crop Farming from USDA: “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.” Their yield per hectare is mostly the same as on smaller farms but USDA’s research shows that farms with more than 2,000 acres spend 2.7 hours of work per acre of maize and have equipment costs of US$432, while a farmer less than 249 acres will spend more than four times as much labor and twice the amount for equipment per acre. In this limited sense the larger farms are indeed more ’efficient’ and ’produc­tive’.

There are many different ways to look at farm productivity and, depending on what and how we measure, we can draw different conclusions. In principle, the factor which is scarcest will, and should, be the most important. Farms in high-income countries are character­ized by a high input of energy and a low input of human labor. They have no shortage of labor but it is costly and therefore productivity per work-hour has been the strongest driver of change. Close to cities, or in very densely populated areas, land is scarce and farms are more shaped by high land prices. At a certain land price, grain farming is no longer viable and farming will move towards higher value crops, or will become a playground for the rich, golf courses or paddocks for race horses. 
Economists talk about ‘total factor productivity’, a rather opaque measure which has a scientific air. It does sound like a good idea to combine all the factors of production in one measure. But as this is measured in monetary terms it will just value things by their market value. So if labor is 200 times more expensive in one country than in another you have to produce 200 times more per hour to achieve the same productivity. And if water is free, water productivity will not be reflected at all. In this way, productivity comes to mean more or less the same as profitability and becomes a circular form of reasoning that is of little value in discussing the big picture, even if it does reflect quite well what guides a modern commercial farmer. 
We need to redefine productivity. But it is not sufficient to theoreti­cally redefine productivity, we also need to redesign the economic system which has created a distorted view of what is productive and what is not. Today, productivity is measured by how many trees one person can cut down with her chainsaw or how much fish a fisherman can scoop up from the sea. But as natural resources dwindle, the real productivity lies in how these resources re-generate. We are produc­tive if there is more forest next year than today, if there are more fish and if the soil becomes more fertile by the years instead of being exhausted and eroded. In a similar way we are efficient if the food we produce and consume is healthy rather than if it is cheap. 

You can read more blog posts on this theme, e.g.
Jevons paradox - why efficiency is a liar wordHow increased labour efficiency drives resource consumption

[1]           Rundgren, G. 2013 Garden Earth - from hunter and gatherers to global capitalism and thereafter Regeneration.
[2]           Millenium Ecosystem Assessment 2005 Millennium Ecosystem Assessment: Ecosystems and human well-being–synthesis World Resource Institute.
[3]           Grigg, D. 1983 The Dynamics of Agricultural Change Palgrave Macmillan.
[4]           Linklater, A 2013 ‘When Pilgrims Privatized America’

[5]           Rundgren, G. 2013 Garden Earth - from hunter and gatherers to global capitalism and thereafter Regeneration.
[6]           Millenium Ecosystem Assessment 2005 Millennium Ecosystem Assessment: Ecosystems and human well-being–synthesis World Resource Institute.
[7]           Bayliss-Smith, T. P. 1982 The Ecology of Agricultural Systems Cambridge University Press.
[8]           FAO 2000 ‘The Energy and Agriculture Nexus’ Environment and Natural Resources Working Paper No. 4. United Nations Food and Agriculture Organization.
[9]           Malmaeus, M. 2013 Tillväxt Till Varje Pris? Notis.
[10]          Schnepf, R. 2014 US Farm Income United States Congressional Research Service.
[11]          Ploeg, J. D. van der 2009 The New Peasantries: Struggles for autonomy and sustainability in the era of empire and globalization Earthscan.
[12]          Farmdoc 2010 ‘Farmland Price Outlook: Are farmland prices too high relative to returns and interest rates?’ 18 October 2010, University of Illinois.
[13]          Ploeg, J. D. van der 2009 The New Peasantries: struggles for autonomy and sustainability in the era of empire and globalization Earthscan.
[14] 2013 ‘CAP Reform Uncertainty and the Market for Entitlements’
[15]          Rundgren, G. 2013 Garden Earth - from hunter and gatherers to global capitalism and thereafter Regeneration.
[16]          Kijne, J. et al. 2009 Opportunities to Increase Water Productivity in Agriculture with Special Reference to Africa and South Asia Stockholm Environment Institute.
[17]          Grace Communications 2013 Food, Water and Energy, Know the Nexus. Grace Communications.
[18]          Meyer von Bremen, A-H. and G. Rundgren 2012 Jorden vi äter, Swedish Society for Nature Conservation.
[19]          Mekonnen, M.M. and Hoekstra A.Y. 2012 ‘A global assessment of the water, footprint of farm animal products’ Ecosystems (2012) 15: 401–415.
[20]          Rundgren, G. 2013 Garden Earth - from hunter and gatherers to global capitalism and thereafter Regeneration.
[21]          Renault, D. 2002 Value of Virtual Water in Food: Principles and virtues United Nations Food and Agriculture Organization.
[22]          Kijne, J. et al. 2009 Opportunities to Increase Water Productivity in Agriculture with Special Reference to Africa and South Asia Stockholm Environment Institute.
[23]          Sauber, M. 2010 ‘Low agricultural productivity in a monetary economy’ paper to the 12th Annual conference of the AHE Association for Heterodox Economics.
[24]          Schmidhuber J., J. Bruinsma and G. Boedeker 2009 ’Capital requirements for agriculture in developing countries to 2050’, Paper to Expert Meeting on How to Feed the World in 2050 United Nations Food and Agriculture Organization.
[25]          Gerosa, S. and J. Skoet 2012 ‘Milk availability, trends in production and demand and medium-term outlook’ FAO, ESA Working paper No. 12-01.
[26]          Rundgren, G. 2013 Garden Earth - from hunter and gatherers to global capitalism and thereafter Regeneration.

Wednesday, September 28, 2016

Peak Globalization

In my book Garden Earth (2012) I write that there are signs that the pace of globalization is slowing and possibly will reverse. 
The proportion of trade of the GDP is perhaps one of the most straight-forward indicators to look at. 
The WTO reports, that global trade has grown 1.5 times faster than gross domestic product over the long term, and twice as fast when globalization picked up in the 1990s. This year trade will grow only 80 percent as fast as the global economy, the first reversal of globalization since 2001 and only the second since 1982. The WTO sees this as a problem. 

Even if I were a strong supporter in globalization (which I am not) I would find it hard to argue for why trade should take an ever increasing share of the GDP. Where is the limit? Why is it better that trade is half the GDP than 25%?
Other indicators of that we might have reached Peak Globalization are:
  • Fear of global terrorism.
  • Fear of global epidemics (SARS, Zika, Ebola).
  • Brexit.
  • Both main US President candidates oppose the TPP.
  • Popular protests against the TTIP and CETA in Europe.
  • Climate change and awareness that flying is a major culprit for climate change.
  • Financial crisis and how it spread throughout the world.
  • Fear for security and food supplies.
  • Stagnant wages in most early developed countries. 
  • Rise of nationalist parties.
  • Migration crisis (rather the political crisis around migration).
  • Local food movement.
As with globalization itself the reversal of globalization comes with both good and bad things, you have to take the bitter with the sweet.
In Garden Earth I wrote: 

I am not against globalization. I believe that free movement of goods—and of people—are human rights. I believe that, in total, globalization has more benefits than drawbacks, but then I speak about globalization as more than a narrow economic thing. I think of the globalization of human rights, of the Internet, of the fact that dictators all over the world can’t get away so easily any more. I think of globalization as a force undermining the authority of the nation-state and nationalism. So while there are, in general, drawbacks and benefits of globalization, depending on how the rules are bent globalization can be good for one and bad for another. Globalization at present has been driven or, rather, hijacked as a capitalist project, opening up all aspects of human life to exploitation. As such, it deserves the protests.
I am less positive today in the sense that the benefits of globalization seems smaller and the drawbacks bigger.

Tuesday, September 13, 2016

Global Eating Disorder

Global Eating Disorder
Industrial food and farming has been very successful in producing more food, and cheaper food. But it has come at a very high cost. The practices have wrecked havoc in important biological systems, in particular in bio-diversity and the nitrogen and carbon cycles. The food system squanders its own resource base and the most precious resource on the planet, the soil. Animals are treated in a disgraceful way. While food is abundant, the distribution system, the market, fails to reach 1 billion people which are hungry, while equally many eat too much and loads of food are simply wasted. More and more people are opposing the modern food system, a few have the energy to build a new system.

Global Eating Disorder explains how our food and farm system developed into the system we have today, and how interdependent our food system and society are. Gunnar Rundgren demonstrates how farming and food processing technologies have transformed our lives and our relationship not only with nature, the plants we grow and the animals we raise, but also the relationships among ourselves. The book can be read as an evolutionary cookbook as it explains how and why the stuff on our plate reached there.

The last few hundred years, and in an sharply increasing pace, width and depth, the global market revolution fueled by oil and coal, and shaped by endless competition and rent-seeking has been the factor that has determined the whole food system, from the prairies to the supermarket shelf, from the production of margarine to the emergence of fast food chains. It even transformed the act of eating from an act of confirmation of social relations to individual satisfaction of real or imaginary dietary needs. Global Eating Disorder tells the story with a mix of long term historical perspective and plenty of current day experiences from all continents of the world.

But it left us, the animals and the planet unhappy. Most people feel a profound discomfort over how their food is produced and how this affects both the quality of the food and the world we live in. As a response to this organic farming, fair trade and alike has developed. These systems are by and large still subject to the market imperatives of competition, profit and constant labor productivity increase, and increasingly so the more successful they are. This limits their transformational power.

Real change of our farm and food system must be linked also to changes in social institutions, in particular the market. This has already started with efforts such as community supported agriculture, transition movements, local food movements, participatory guarantee systems and urban farming. A truly regenerative food and farm system will close loops of flow of energy, nutrients and most importantly meaning and culture. It will also have to reflect the role of our agriculture system for management of the planet at large and recreate links between city and land.

Global Eating Disorder shows a path forward. A path of regeneration and co-production of resources, innovation, knowledge and meaning embedded in new social and economic relationships.

Order Global Eating Disorder  for a 10% discount at: using the code: GWDZZD8D. It can also be bought from Amazon and many other market places.

See some of the articles on the blog associated to this book

Published by Regeneration 

The book is reworked to Swedish and is published by Ordfront (September 2016). 

Friday, August 12, 2016

Are cows eating the Amazon?

Land clearing in tropical countries for production of export crops gets a lot of attention, and rightly so. However, the understanding of the mechanisms involved and how to allocate the effects of deforestation in terms of environmental damage or carbon emissions, is still very low. While it is true that exports are important for this, most deforestation are driven by domestic factors.  A study by Henders et al (2015) show that in Argentina, Bolivia, Brazil, Paraguay, Indonesia, Malaysia, and Papua New Guinea one third of deforestation was embodied in exports in 2011, up from a fifth in 2000. This means that two thirds of the deforestation is driven by domestic factors.

In the study beef was identified as the main driver of forest loss in the seven countries, accounting for nearly 60 percent of embodied deforestation and just over half of embodied emissions. Soybean production was the second largest source of embodied deforestation area whereas oil palm was the second largest source of embodied emissions.

But one can argue against how to allocate emissions and land use changes. For instance, pasture areas in Brazil have been stable in the last decade, while grazing has moved towards the forested areas because it is more profitable to plow and farm crops in the pasturelands than to graze them. It might be more correct to allocate impacts of land use changes based on the relative expansion of agriculture area for different crops or production in a country. In the case of Brazil, it would mean that soy production would still be a major cause of deforestation, but sugar cane cultivation would carry 20 % of the burden of deforestation and associated carbon emissions while beef from pasture would carry almost none of this, This would be the case despite that there is very little sugar grown in the recently deforested zones and a there are a lot of animals grazing there.

A study of de Ruiter et al (2016) goes a step further and state that “all global LUC [Land Use Change] emissions should be allocated to agricultural land itself, not only to recently cleared land, resulting in a calculated average emission of LUC for every hectare in agricultural use.” This means that an average hectare in Europe would have the same emission factor as a recently cleared patch in the Amazon – LUC emissions of 1.18 tonne of CO2e for every hectare of agricultural land.

One can of course argue back and forth; it is simply not the case that we can say that one way of counting is the correct one. But it can hardly be correct to let any “meat” carry the burden of deforestation in the Amazon; it is not primarily the consumption of Amazonian pastured beef, nor the fact that European pigs eat Brazilian soy beans that drive Brazilian deforestation. It is simply cheaper to import Brazilian soy than to feed European animals with European protein feed. Europe has taken much bigger areas of farm land and pasture out of production than Brazil has opened. It is still correct to allocate the emissions caused by deforestation to the agricultural system, but rather to the globalized trade than to the consumption of any particular commodity. One can make a similar argument about soy bean oil from Brazil or palm oil from Indonesia or Malaysia.

Another complication with all these calculations is that they are based on a rather static view of developments, while the reality is a lot more dynamic. For example in our farm we are now clearing 10 hectares of secondary forest for making pasture for cattle. If we allocate carbon emissions from deforestation per kg meat for a ten year period in a similar way as is mostly done in LCA analysis our meat will be responsible for several hundred kilograms of carbon dioxide equivalents per kg! But the wood will, perhaps, replace other wood in the paper pulp industry, or will be used for renewable energy. And regardless of that, the land was open and grazed some fifty years ago, even earlier it was a wetland (emitting a lot of methane). Sweden has lost more than a million hectares of pasture land in hundred years, and previously cattle, sheep and goat also grazed the forest which was not at al as dense as it is now. None of these aspects are covered well with the current approaches, neither with LCA analysis of a particular production, nor with macro-level studies as the ones referred to above. We actually get government (EU) support for restoring this pasture.

de Ruiter H, Macdiarmid JI, Matthews RB, Kastner T, Smith P. 2016 Global cropland and greenhouse gas impacts of UK food supply are increasingly located overseas. J. R. Soc.  Interface 13: 20151001.

Henders S. et al 2015, Trading forests: land-use change and carbon emissions embodied in production and exports of forest-risk commodities, Environ. Res. Lett. 10 (2015)

Sunday, August 7, 2016

Trade in food: It’s the competition, stupid

I have written four posts about trade in food and agriculture commodities.

In the first one I gave an overview of the changing role and scope of international trade. Global food production increased with over 50% between 1986 and 2009. Meanwhile the trade in food for direct human consumption has increased from 15% of total production in 1986 to 23% in 2009, thus about one fourth of food production is traded. Half of the net exports 2010 were originating from just five countries. 

Rich countries are increasingly using land in other regions for their food production. Trade fills an important role for moving produce from areas with excess to areas with deficit. There are, however, many mechanisms in trade which leads countries not to produce food even if they could do so. Europe has let almost 100 million hectares of farm land revert to forest or lying idle, while European farmers buy protein rich feed stuffs from developing countries and European food industries buy palm oil from Malaysia and Indonesia. Europe could produce those within its own territory. Only a quarter of the trade is with crops which could not be grown in the importing country.

The increase in trade has big environmental repercussions as well as a big social and cultural impact. For instance, the large flows of agriculture products embed a lot of nutrients such as nitrogen and phosphorus. This means that soils in the exporting areas are depleted while importing regions suffer from eutrophication, algal blooms and dead seas.  In the second post I argue that the increasing distance makes it easier for market actors to externalize costs and more difficult to citizens and the political system to influence the way things are produced. Trade is not only a response to market demand, it creates demand and therefore recreates the need for it; trade becomes its own justification. 

Competition drives farmers in to more and more specialization and larger scale in order to cut costs. This leads to that farms go into monocropping and, ultimately, economies of scale will turn whole landscapes to one or a few lines of production/commodities. The implication on bio-diversity is huge and ironically some of these bread baskets are increasingly becoming food deserts. The harmonization of standards which follows liberalized trade has a number of non-desirable side effects, and will lead to sub-optimal production in most parts of the world.

On the level of the individual farmer trade is keeping up the pressure. In the third post, I explain how mechanization has crushed the comparative advantage of poor countries and poor producers. Poor farmers can only be competitive in crops which have not yet been successfully mechanized, such as coffee, tea, flowers, avocados and green beans. Because of productivity gains in developed countries, agriculture prices dropped by some 60% in the period 1960-2000. As the productivity of the poorest farmers remained much the same, it is obvious that they have lost out. Their value of production, regardless if they eat it themselves or sell it, has gone down considerably, making them poorer both in relative and absolute terms. 

The fourth post starts on a positive note with my experiences from linking African small-holder to global organic markets. Only limited numbers of farmers can benefit from that, however. First because poor farmers are only competitive in a limited number of crops and second because only a small share of the farmers will benefit from linking into modern value chains (be they organic, fair trade or normal) - and it will be those with the greatest assets. Of the farmers forced off their farms, some will become farm laborers at the farms of the more successful, or in huge agri-business plantations, others will only get a better life if there is some place for them to go – but in many places the prospects in the cities are not too promising and the future as an economic migrant is uncertain.

The effect of of trade is complex and depends on a variety factors, which makes it difficult to generalize. The theory of comparative advantage which underpins the arguments for international trade builds on assumptions that do not hold in today’s global economy. Capital and labour is highly mobile between countries through global value chains while the agriculture sector is highly inflexible, and mobility of agricultural labour and capital is low.  Meanwhile, self-sufficiency is not feasible for all countries and agriculture protection measures may have extraterritorial impacts that can harm food security of others, i.e. when countries exports surpluses with subsidies, they might undercut local producers.

Of course there are many other aspects of trade, for instance if it is based on a fair exchange. There are clear signs that trade is not only based on difference in production factors or endowments but also in power, leading to a unequal exchange. For instance, there are more people engaged in producing coffee for the Swedish market than the total number of people employed in the whole Swedish food and agriculture sector. This is obviously only possible because the work of the coffee picker is valued very low.

It is difficult to sum all this up. Large scale trade in agricultural goods has clearly a number of huge disadvantages. And the economic blessings are mixed. There are some potential positive aspects, such as the possibility to move goods to areas of shortage, the possible improvement of diets and a better ecological adaptation of farming. Modern food trade doesn’t, however, deliver much in terms of those advantages. 

The higher proportion of food that is globally traded, the bigger dependencies will be created when regions that could produce their own food cease to do that. More and more people will be structurally dependent on global trade. The possibility to move food from areas of surplus to areas of shortage (food aid) should be a backup measure which will not be supplied by the market but by governments. The food security argument for global trade is therefore not valid. 

Fresh fruits and vegetables and high protein food, such as meat, is nowadays readily available for those that can afford it. Meanwhile, it is hard to argue that global trade in foods have improved diets for most people if we look at what people actually eat. 

As for the ecological adaptation argument, there seems to be some merit in this as considerable areas of marginal land has been taken out of production and reverted to forests. But as the mechanization and specialization continues the ecological conditions in agriculture deteriorates rapidly, so any possible advantages are erased by much bigger damage.


In order to get a better understanding and perhaps a strategy for intervention, I believe we should disentangle the components of trade. There is a physical component, the movement of goods, there is a profit component, i.e. trade will only take place if there is a potential profit in it (which is why food aid is not trade but public distribution), there is a component of competition and there is a component of exchange (that is I exchange my labor, or other goods for the stuff I want to buy).

All components have their set of issues. The displacement of nutrients is a problem with the movement of goods, regardless if there is a profit motive or not. Profit and the terms of exchange are related to accumulation of capital and terms of trade and therefore with the whole economic hierarchy of societies.

The carrot for trade is profit, but the much bigger driver is the stick of competition. On the level of the individual basic actor in the food system, the farmer, the main influence of trade is competition. It is competition that drives mechanization and structural transformation of the farm sector, it is competition which makes it necessary for farmers to externalize costs to the environment, to workers or to livestock. It seems to me that reducing competition would be an important objective for a food trade policy.

Tuesday, June 28, 2016

Food: trading away our future? - path IV

In the period 1996 to 2011 I worked a lot with various efforts to link smallholder farmers to markets, mainly organic, in developed countries. The biggest engagement was in EPOPA. By 2008, 80,000 farmers in the programme sold organic products to exporters for approximately US$ 15 million per year. All farmers received higher prices due to the organic premium, which ranges from 10-25% over the conventional price. Taking into account the size of households, 600,000 people have benefited from the programme. You can read a whole book about this successful project here. Overall EPOPA was a success. 

Today, linking farmers to markets is an overarching policy for almost all development agencies as well as governments. It also fits very well with a development model that assumes that more markets and more capitalism is the best path to development. While I do think it works quite well under certain conditions, it has, unfortunately, been oversold.

A report from Hivos, Small Producer Agency in the Globalized Market, looks deeper into if and how smallholders can benefit from globalized markets. In short the answer is that a few of them will - and they will soon not be smallholders as the recipe for success is to grow, mechanize and buy up your neighbours farms. This should be no surprise, this is how the farm sector developed in other parts of the world. The report estimates that linking farmers into modern value chains (be they organic, fair trade or normal) may benefit only about 2-10 percent of the farms - and it will be those with the greatest assets. Of the farmers forced off their farms, some will become farm labourers at the farms of the more successful, or in huge agri-business plantations, others will only get a better life if there is some place for them to go – but in many places the prospects in the cities are not too promising and the future as an economic migrant is uncertain.

A recent report from the FAO, The State of Agriculturarl Commodity Markets, does a good job in untangling the contradictory views on the impacts of agricultural trade on food security. Trade affects each of the four dimensions of food security: food availability,  food access, food utilization and stability of food suply. The effect of of trade is complex and depends on a variety factors, which makes it difficult to generalize. Among others it is influenced by the way food markets work, by the ability and willingness of producers to respond to the changing incentives that trade can bring, and by the geography of food insecurity, each of which needs to be accounted for in the formulation of trade policy interventions.

The report clarifies that theory of comparative advantage builds on assumptions that
do not hold in today’s global economy. Capital and labour is highly mobile between countries through global value chains while the agriculture sector is highly inflexible, and mobility of agricultural labour and capital is low.  Competitive advantage prioritizes short-term conditions versus long-term structural transformation and efficiency gains are prioritized over other social goals. Meanwhile, self-sufficiency is not feasible for all countries and agriculture protection measures may have extraterritorial impacts that can harm food security of others.

Perhaps surprisingly to some, the majority of hungry people live in rural areas; many of them are farmers, others are landless laborers. According to the FAO, 50% of those suffering from hunger and mal­nutrition are small-scale peasants, 20% are landless, 10% are pastoralists or fishermen and 20% live in city slums. Clearly these groups are affected differently by the increasing globalization of food. Low food prices may initially look like a good proposition for the poor as it makes food more affordable. Falling prices, however, can lead to a worse situation for the rural poor, who make up the majority of those hun­gry. Most of them are dependent on farm incomes, either as small­holders or as landless individuals seeking employment by farmers. A surplus of food, with falling prices, creates a bigger prob­lem as it drives small farmers off the market so that they cannot buy the things they need for produc­tion or for their families. 

There are many side effects of the integration of farming in global markets, and those side effects may have far reaching implications. For instance, modern markets and global competition force farmers to adopt uniform high-yielding types of plant or animal. But when food produc­ers abandon diversity, valuable traditional varieties and breeds may die out, along with their specialized traits. For the poorest farmers, the diversity of life can be their best protection against starvation.

There is no silver bullet that in itself can guarantee food security. It seems clear to me that food security, poverty and equality are intrinsi­cally linked, and that the root cause of food insecurity is found in an unjust society and unequal access to resources. As such, the main path to food security involves correcting those injustices. 

This is the fourth post on the trade theme.