I attended the annual US Department of Agriculture conference this week in Washington DC. My job was to participate on a panel with The Savory Institute, organized by the Risk Management Agency of the USDA. Our topic was “Critical Thinking: The Best Risk Management Tool.” My message was about systems thinking, and how the financial system collapse should be understood as the “canary in the coal mine” for our unsustainable industrial agriculture industry. The parallels are eerie, but I could tell many in the audience were having trouble seeing the connection. Like the financial system, our food system has been on a multi decade quest to increase efficiency at the expense of resiliency, all in the name of “productivity improvements”. By and large it appears to be working, and with crop prices reaching record levels, the euphoria at the conference was palpable. It reminded me of 2006 in finance. The erosion of resiliency in our agriculture system is more transparent than it was in finance. It can be seen in the statistics of soil loss – during the past forty years of continued productivity improvements, we have made 30% of farmland unproductive. We lose as much soil every year as we emit carbon into the atmosphere. And then there is the issue of aquifer depletion due to intensive irrigation. Technology, scale, and concentration of capital and power appear to be driving both the productivity gains and the resiliency losses. Just like in finance. My message seemed to lack resonance until a woman (who said she married a farmer) asked a question in response to our panel’s discussion of using the holistic decision making process to better manage agriculture’s innate complexity and to enhance resiliency. She asked: “How can we expect a farmer to shift production methods when what he is doing is working, and we’re churning out record profits?” My response was to remind her of Citicorp’s disgraced CEO Chuck Prince’s infamous quip: “so long as the music is playing, we’ll continue to dance.” Mr. Prince lost the farm. And the nation is still suffering terribly. Restoring resiliency, which may well entail short-term “efficiency” costs, is far easier during a boom than it will be after collapse. Again, the financial system provides all the evidence we need. A principal reason Treasury is not serious about breaking up the too big to fail banks is a recognition of our dependency on them for the core credit function in the real economy at a time when the core economy is so vulnerable. How much easier it would have been had we had the foresight and courage in 2005. With the collapse of the financial system, and subsequent government rescue, we understand what happens when complex systems collapse. As we enter the second “food crisis” in three years, alleviated only by the greatest economic contraction since the great depression, we would be wise to learn some critical lessons from the financial collapse:
- When collapse happens, it’s not linear and neat. It expands through the interconnections of the complex system in ways that are difficult to anticipate and impossible to manage.
- Systems are vulnerable to their “weakest link” (drawing on Savory’s holistic decision making principles). The obvious weak links of our industrial agriculture are long-term soil depletion, dependence on fossil fuel based fertilizers and pesticides, and depletion of the great non-replenishing aquifers. The decline of rural America and the rising average age of our farmers are additional weak links. Any one of these has the potential to be catastrophic. Together, they should send a powerful signal.
- Restoring resiliency should be the clarion call for US agriculture. Initiatives such as Fred Kirschenmann’s “Ag in the Middle”, and Allan Savory’s holisticmanagement reflect this wisdom. Instead, what I heard from the USDA was mostly the need for continued efficiency to drive exports and grandiose notions of “feeding the world”.
There was a real bright spot of the conference. Bill Clinton delivered the keynote speech after lots of happy talk of efficiency and productivity gains, biotechnology, and the “can do spirit” of America. The former president waxed poetic – he is really very good – about the ethical and practical imperative of building food self-sufficiency around the world, rejecting any notion that this undermines our export markets, or that even if it did, that it should impact this ethical and practical imperative. He also summarized the three great challenges he sees facing the world: grotesque and growing wealth inequality, increased complexity and the resulting uncertainty we live with (sighting current events in the Middle East and North Africa as a recent example), and, the challenge of resource limits and climate change. Resource limits and climate change can be translated to limits on material throughput. Capital Institute seeks to transform finance in order to address growing wealth inequality, tackle the material throughput limits head on, and all in the context of the complex and interdependant world we live in. Clinton spoke with the wisdom of a “critical thinking” man, not a politician needing to please an electorate or a business-person looking to flog his wares. His message is consistent with a call for restoring the resiliency of our economic system, our food system, and of course the financial system that fuels the economy. The science we need in agriculture is not only biotechnology, as important as the breakthroughs there may be. We need to apply systems science to agriculture. It’s ironic and alarming, that in the area where natural systems are most obviously in control, our “industrial agriculture” paradigm neglects the key principles of sustainable systems as taught to us by our understanding of natural systems themselves. The central tenant is the need to balance efficiency with resiliency. As we’ve learned that lesson in finance, we must also understand the implications for agriculture itself. Despite the expanded $90 Billion in USDA subsidized liability coverage for US crops (we should take notice that it is not insurable in the private sector), there is no bailout for agricultural collapse.