Two Views of the Future of Agriculture

A look at the possible future of Australian agriculture, presenting cooperative farming as a viable solution to economic and ecological challenges and as an alternative to inefficient family farms and large-scale agribusiness.

by Dr. Michael Towsey, Prout Institute of Australia

{googleads left} Agriculture in Australia has reached a critical juncture. The combination of severe drought, rising energy costs and exposure to grossly unfair competition in the name of ‘free trade’ has rendered the owner operated farm unviable. The owner operated or family farm has been the norm in Australia since early colonial days but is rapidly giving way to large scale farming dominated by a few large corporations able to command large scale investment funds. So this is my first view of the future - corporate agriculture.

Corporate Agriculture

Corporate agriculture is the official future, promoted by the Australian Commonwealth government through the mechanism of Managed Investment Schemes (MIS). The previous speaker [Robert Belcher] has described MIS in some detail, their inequities and their contribution to driving individual farmers off the land. The government justifies MIS on the grounds that family farms no longer have the economies of scale to survive in a globalised world.

We can gain some insight into the brave new world of the agri-corporates by looking at their websites. The front page of Great Southern [URL1], the largest agri-corporate in Australia, offers a one line description of its activities but nevertheless tells us a lot.

“Great Southern … investment managers, specialising in the agribusiness sector.”

First and foremost Great Southern is an investment manager and only second is it involved in agriculture. This is rather surprising because Great Southern is the largest holder of prime agricultural land in Australia, owning an area more than twice that of greater Sydney and worth billions of dollars. Furthermore it is Great Southern who contracts out the actual farming and therefore determines what is planted where. And yet the company sees itself primarily as an investment manager. This is a hugely important shift in how farming is perceived and organised.

Another agri-corporate, Primary Yield [URL2] is more loquacious.

“Primary Yield is an investment manager specialising in the agricultural sector. For investors and advisors looking to build a well diversified portfolio, Primary Yield offers simple access to a range of quality agribusiness investments managed by industry leading specialists in sectors participating in strong global markets.”

From this website we learn that the motivation to engage in agriculture is not to produce food but to ensure a return on investment. The yield in Primary Yield is not bushels per acre but cents in the dollar. What Primary Yield offers is a good return on your investment and here are their enticements to get you to put your money in their hands:

Reduce your capital gains liability.
Fund your child’s education (I remember when education used to be free).
Reduce your mortgage burden.
Extend your super.
Create an income stream for your retirement.

There is not a lot in this list to do with farming.

Another consequence of corporate agriculture is that farming becomes embroiled in the speculative uncertainty of the finance sector. If this does not worry you, it should. The front page of Timbercorp’s website [URL3] in August 2007 boasted of a takeover bid for another agricultural company. It announced an intention to acquire a 35% stake and was offering 73 cents per share. Yes, this is still small time stuff compared to private equity bids for Qantus and Coles. But it is the thin end of the wedge. The other end of that wedge is the Enron debacle.

In corporate agriculture, food security, landscape management and rural communities are not part of the equation. One produces food only if there is a profit in doing so. Land is just another asset to be bought and sold according to market forces. Community is useful only in so far as it is a source of labour.

Corporate agriculture is a consequence of a major shift in political and economic power in Australia over the past 20 years. Our economy is increasingly controlled by an urban elite, for whom the rural sector is of little importance. A good illustration is an article which appeared in the Hobart Mercury last year [Mercury 2006]. It features the wisdom of a Westpac Senior economist, Justin Smirk.

We read in this article that farm output will plunge 25% in 2006-2007. But this is not a problem because the farming sector represents less than 3% of the economy. Says Justin Smirk, “When one sector turns down, there is a tendency for resources to flow elsewhere.” Finally Smirk notes that “The drought will be catastrophic for rural Australia. However, the RBA [Reserve Bank of Australia] sets monetary policy for the whole economy and not on the fortunes of one industry.” So farming is just another business, of no more significance than the white-goods sector or the production of sports-utility vehicles.

Another view of the future

I want now to turn to a more positive view of the future. I will not call it an alternative future – rather I consider it the more likely future because corporate agriculture is neither economically nor ecologically sustainable. It will inevitably fall flat on its face but unfortunately not before it has done a lot of damage.

I want to offer just three ideas, three snapshots, that I believe will part of the mix of agriculture as it unfolds over the coming decades. The first is to do with landscape and catchment management.

Landscape Management

We all accept sustainability as desirable. But in agriculture, there are competing definitions of sustainability which depend on spatial and temporal scale. Here’s what I mean.

Typically at the paddock level, the dominant constraints to sustainability are agronomic and the goal is to maximise yield over several seasons. At the farm level, the dominant constraints to sustainability are economic – to keep the farm going as a viable business over the farmer’s lifetime. At the landscape or catchment level, the dominant constraints to sustainability are ecological – for example, it is necessary to maintain adequate water and nutrient cycling to sustain life in the catchment. At the regional or national level the main sustainability constraints are macro-economic – that is, to export sufficient produce in order to maintain employment, to import machinery, to sustain rural community life. At the global level, the constraints are once again environmental, with the current focus on climate change

I want to bring your attention to the landscape or catchment level. The western world has evolved social and economic systems where no one person or group takes direct responsibility for what happens in a catchment. Individual farmers answer to their farm and politicians answer to macroeconomic indices. Landscape or catchment management falls through the cracks, as it were, inadequately cared for. The current difficulties in developing an administrative framework for the Murray-Darling Basin are a good example of the problem.

My proposal is that we redefine local government boundaries to coincide with catchment boundaries and that local bodies should be recognised in the Australian constitution as having a landscape management role. Currently the States have the landscape management role (a task in which they are failing). And currently, local bodies are constituted as trading corporations and increasingly they are behaving as such.

There are many ways to approach a hierarchical subdivision of land: for example based on topography or vegetation type or cultural boundaries. I suggest we have to give primary importance to a system based on surface water drainage. This would lead to an administrative hierarchy of local catchments, regional catchments, river basins and drainage divisions. I would suggest an average target population of 100,000 persons per local government area (LGA), less in rural areas, more in the cities. This figure is a compromise between the need for community and the need for administrative efficiency. Demarcation of LGA boundaries would start at the headwaters of a river basin and incorporate catchments until reaching a satisfactory population level.

Landscape management based on catchments does not satisfy all needs. Additional administrative authorities will be required to manage bioregions (the accepted basis for conserving biodiversity) and artesian water basins because their boundaries do not necessarily coincide with surface catchments. However water deserves special status because it is water that most determines the viability of human settlement and it is water mismanagement that has done the most severe damage to our continent. One role of local government would be to draw up water budgets, nutrient budgets and top soil budgets, catchment by catchment.

Farming is Ecosystem Management

My second snapshot of the future concerns farming and ecosystem management. It is extremely unfortunate that farmers and environmentalists all too frequently perceive themselves as having antagonistic interests. I believe this will change and ironically, it is global warming that may help us.

In “Plows, Plagues and Petroleum”, Prof William Ruddiman, a palaeo-climatologist, presents evidence that human beings have had an effect on global climate for at least the past 8000 years. It began not with the industrial revolution and not with the burning of fossil fuels but rather with agriculture. He argues that even small fluctuations in atmospheric CO₂ over the past few thousand years have been linked to changes in agriculture. For example in the 200 years, 1500-1700 A.D., atmospheric CO₂ declined by seven parts per million – a small decrease but quite measurable and against a background upward trend. It contributed to what is now known as the little ice age. Ruddiman says this was a consequence of Europeans colonising the Americas. Some 90% of the indigenous people died from disease, and agriculture on the continent largely came to a halt. Forest re-growth on the untended farms pulled carbon dioxide out of the atmosphere with a consequent effect on average global temperatures. The increased wood biomass cannot in itself account for the drop in CO₂ but Ruddiman argues there was a multiplier effect which we do not yet understand.

Whatever the details, the message is clear. Dealing adequately with climate change in the 21st century will require a massive reafforestation of the planet. Of course there are other reasons to plant trees:

Trees bind the soil and prevent erosion.
Perennial trees provide food for honey bees in the off-season when horticultural plants are dormant.
Trees provide homes for birds – birds that eat insect pests that might otherwise be sprayed with insecticide.
Trees encourage rain – they are vital link in the local and global circulation of water.

Which brings us to a problem – if we need a planet covered in trees, how will we produce the food we need? This question is addressed in a marvellous book by Colin Tudge [Tudge 2005]. He reasons that trees are at the heart of terrestrial ecology and therefore trees must make a vital contribution to feeding the world - in other words agroforestry.

Agroforestry, says Tudge, “offers one of the principle hopes for a sustainable world” - it is “one of the great hopes for the future.”

Tudge considers the overwhelming predominance of cereals in the world’s food basket to be partly an accident of pre-history. It might have been different. Tree crops such as olive, coconut, macadamia, avacado, pistachio, walnut, cashew and almond to mention just a few, offer highly concentrated calories and nutrients. If cereals had not existed, says Tudge, human civilisation would have flourished nonetheless on tree crops. And imagine the possibilities if as much effort had been applied to maximising tree yields as has been devoted to cereal yields. Our challenge, today, is to find ways to integrate trees with farming.

If much of Australia’s agricultural land is to be covered with trees, how do we grow our wheat, barley, oats and other annual crops? According to Peter Andrews [Andrews 2006], we have to make more efficient use of the land under annual crops. Probably Peter Andrews does not need an introduction to this audience as he was featured on the ABC’s Australian Story in 2005 [ABC 1]. He has controversial things to say about landscape management and weeds, but he has had enough success on his own property that CSIRO is researching his ideas and government grants are available to farmers who want to set up his system of landscape management. I want to take just one of his proposals – natural sequence farming.

Natural sequence farming is based on a theory of how nutrients are carried by water through the landscape. Andrews believes that by careful management of water and nutrients it is possible to recreate healthy landscapes that also produce food. The primary mechanism is to slow the passage of water through the landscape and to retain nutrients within catchments. The ideal farm layout according to Andrews, divides the land into thirds:

one third forest on the high ground and ridges accumulating fertility under trees,
one-third cropping on the mid-slopes exploiting fertility carried down by water from the high ground and
one-third recovery area where trees, grasses etc capture passing nutrients before they are lost from the catchment.

Water carries nutrients downhill. Hay and shrubs etc are harvested from the bottom third and carried back up hill (Figure 2). Properly managed, Andrews claims that the one third of land under cultivation will deliver five times the yield of land under conventional cultivation. Andrews is strongly in favour of mulching and this brings us to the topic of organic farming.

It is impossible to talk about the future of agriculture without referring to organic farming. Many of Peter Andrews’ suggestions are consistent with organic farming without being religious about it. I will not go into the organic farming debate because the issues are well known to this audience. However the theme of this conference also includes health – public health. Therefore, for the sake of completeness and the coming discussion, I will draw attention in passing to the work of Professor Marion Nestle, one person who is at the centre of the organic debate. Her books have pointed to the positive connection between organic farming and public health. And because she comes under attack from the large agribusiness companies, she is acutely aware of the politics of food [Nestle 2003].

Cooperative Farming

Finally my third snapshot of the future. It concerns cooperative farming. The proposal is that groups of owner operator farmers can farm cooperatively on a catchment or landscape scale. This will allow them to achieve economies of scale while still retaining ownership of their land.

One of the motivating issues here is self-sufficiency. The increasing cost of oil has highlighted the dependence of western agriculture on fossil fuels. Ian McClintock, chairman of the Fuel Price Taskforce at NSW Farmers Association said on ABC radio last year [ABC2] that growing your own biodiesel offers the possibility of complete self-sufficiency on the farm. "In the old days when you had horses, you'd set aside a paddock," he says. "In a similar way, if you have a paddock of canola or mustard, you will be able to harvest that and produce your biodiesel," says McClintock.

I am not convinced by this argument. Growing a canola crop is a far more complex undertaking than putting a horse in a paddock. Farming today, has become a very complex business.

The ultimate in both self-sufficiency and ecosystem management is permaculture. The cover of Bill Mollison’s book (Figure 3) gives you a sense of the complexity and local scale of permaculture design. I am far from convinced that family owned farms can be self-sufficient using these methods and produce surpluses sufficient to feed the world. The economies of scale are just not there. And as Robert Belcher noted in his talk, we do have a duty to take seriously the necessity to feed the world.

However if groups of farmers work together and plan their farms on a landscape scale, then I do believe that they can achieve all three objectives – that is, enjoy economies of scale, create healthy ecosystems and produce a surplus. Someone produces bio-diesel for the catchment. Dairy farms can provide manure to fertilise other crops. Wetlands can be managed to improve water quality for all farms. The critical requirement is that farmers produce first for local and regional needs and for each other. This guarantees a market for their produce. Their surplus can be exported.

A letter from Rick Rockliff to the editor of Hobart Mercury (24th September 2005) summarises an excellent case for the cooperative approach to farming. In fact an entire conference could be devoted to this letter alone – it contains the essence of very many good ideas.

He urges that we should

“…. examine new business models by which groups of willing farmers could farm co-operatively together as districts, ensuring greater economies of scale. The natural resources of the regions such as water, drainage and topography could be used more effectively.”

Clearly cooperative farms will require a new kind of legal arrangement, whereby farmers manage cooperatively but get returns based on some combination of land area they have contributed, its productivity and their labour contribution.

To summarise:

Family farms no longer satisfy the demands of economics. And they no longer satisfy the requirements of ecology.
Corporate farms may satisfy economies of scale in the short term, but they will never satisfy the requirements of ecology because their first loyalty is to maximise profits.
Cooperative agriculture can achieve both economies of scale and promote environmental health.

Cooperatives offer additional advantages including:

A farmer cooperative will have more success in lobbying for major infrastructure such as irrigation systems and processing plants.
They are locally owned and therefore have a commitment to the local community.
The profits earned by the worker-owners stay in the community. By contrast, large corporations are typically net exporters of wealth from small communities.

People’s Economy and Commercial Economy

Before finishing, I want to come back to the big picture – which is that we live in a globalised world. There are people who sneer at the idea of rural communities and working the land. The new world, they say, is global, it is fast, it is efficient and it is exciting. Well yes – the globalised world is exciting – I find it so. But local community is just as necessary – it is not something that goes out of date. Question is can we have both? Yes I believe we can.

To address this question I want to turn to the Indian philosopher, P.R. Sarkar and his socio-economic theory, Prout [Sarkar 1990]. Traditional western economics makes the distinction between micro- and macro economics. Sarkar makes an additional distinction between what he calls people’s economy and commercial economy. We may think of it as a two tier economy.

The bottom tier is people’s economy. It is local, it is decentralised and community based. The dominant business model is the cooperative [Towsey 2005, 2006]. The primary purpose of people’s economy is to produce the minimum requirements of life. The agricultural system Sarkar describes, known as integrated farming, has elements of permaculture and agroforestry [Sarkar 1992]. I picture an edible landscape, but one which also produces basic medicines, textiles and housing materials for local use. The top tier of a Proutist economy is the commercial economy. It links all parts of the world and provides the global infrastructure to facilitate communications and trade. It enables local communities to trade their surplus in markets around the world.

People often ask me if there is an example of this system anywhere in the world? With much caution, I would offer Cuba as a successful example of people’s economy and the USA is an obvious example commercial economy. But both are incomplete. Cuba actively suppresses the flowering of a commercial economy and Walmarts in the USA has sucked the life out of people’s economy.

Cuba deserves another mention as the first country in the world to adopt organic agriculture, a measure forced on it by the collapse of the Soviet Union and the US trade blockade. A friend of mine, Robin Clayfield was one of an early group of Australians who went to Cuba under the auspices of the Australian Conservation Foundation to help set up a system of urban agriculture based on permaculture principles.

You might ask if there is a country anywhere in the world that has achieved a balance of people’s economy and commercial economy. With very much caution I might point to Bavaria in Southern Germany. I worked there for two years and the region in which I lived was a patchwork quilt of farm, forest and human habitation (Figure 4). There was no sharp demarcation between town and country as exists in Australia.

The two tier economy of Sarkar has at least two requirements – a strong community culture and a limit on the ability of global corporations to suck the life out of local economies. Bavaria has the first of these. I was struck last year by an observation of Tasmanian forester, Frank Strie, that Germany has a strong cultural attachment to its forests, compared for example to Britain. This was also obvious to me during my two years in Bavaria. They even have TV soapies with the focus on forests!

Culture

Finally, the necessity for a supportive culture. Administrative systems for landscape and environmental management mean nothing without a supportive culture. A few years ago I came across Wisdom of the Elders, a book on the culture of indigenous people around the world [Knudtson and Suzuki 1993]. One sentence struck a chord with me ….

Indigenous people have a distinctive culture "in which, at least traditionally, they have a profound and deeply rooted sense of place and relationship with the entirety of the natural world."

I thought to myself, what would Australia look like if this sentiment were part of our culture? How would it affect farming? I believe that some of the vision which I have described in this talk would help to build such a culture in Australia.

Thank you.

References

ABC 1 (2005) <http://www.abc.net.au/austory/content/2005/s1383562.htm>

ABC 2 (2006) <http://www.abc.net.au/rural/qld/content/2006/s1756402.htm>

Andrews, Peter (2006) Back from the Brink. Pub. Australian Broadcasting Corporation. ISBN 978-0-7333-1962-4

Knudtson, P. & D. Suzuli (1993) Wisdom of the Elders. Pub. Bantam, ISBN-10: 0553372637

Mercury (2006) Drought Proof Economy, in the Mercury On Saturday, October 21st, 2006, p26

Mollison, Bill (1997) Introduction to Permaculture. Tagari Publications. ISBN-13: 978-0908228089

Nestle, Marion (2003) Food Politics. Pub. University of California, ISBN 0 520 240677

Rocklif, Rick (2005) Bury the Sacred Cows, Letter to the Editor, 24th September 2005.

Ruddiman, William (2005) Plows, Plague & Petroleum. Princeton University Press. ISBN-13: 978-0691121642

Sarkar, P. R. (1990) Ideal Farming. AMPS Publications, Calcutta.

Sarkar, P. R. (1992) Proutist Economics. AMPS Publications, Calcutta.

Towsey, Michael (2005) A new economics, for people, for communities, for life. <http://pia.org.au/towsey/hobart2005.htm>

Towsey, Michael (2006) Climate Change: Food and economics. <http://pia.org.au/ towsey/hobart2006.htm>

Tudge, Colin (2005) The Secret Life of Trees. Pub. Penguin Books, ISBN-13:978-0-141-01293-3

URL1 < http://www.great-southern.com.au/ >

URL2 < http://www.primaryyield.com.au/ >

URL3 < http://www.timbercorp.com.au/ >