Last month, I was discussing the risks of genetic engineering at a meeting of the Glengarry Soil & Crop Improvement Association. We observed how many farmers eagerly adopt various technologies to increase production. “Why do we do it?” asked one farmer; “because of greed!” he then answered!
I am not so sure! It has more to do with an obsession over yield and production: bigger is better! Input vendors usually highlight increased production and yield in their advertising for GMO seed, pesticides, fertilizers, hormones, antibiotics, machinery, capital loans, etc. However, the number of mouths to feed in the industrialized world is relatively constant; the American food market grows around 1% per year. Prices come down as production exceeds demand and we seek cheep export markets for our excess. So I wonder: are farmers greedy or gullible?
For the sake of discussion, let us assume that a moderate dose of greed means a healthy desire to improve one’s condition or to conduct business in a way that will maximize net returns. Yield and production volume are only two factors of net return. We also have input costs, variable and fixed production costs, capital, interest, overhead, etc.
A greedy farmer would keep his/her money! That means reducing costs faster than revenues. Organic principles minimize the purchase of off-farm inputs. That frees the farmer from a dependency on vendors and reduces cash expenses. In exchange, the farmer invests time to understand and manage the basic natural processes. He/she puts natural resources to work through crop rotations and bio-diversity to fix nitrogen, release unavailable minerals, compete with weeds and pests. He/she makes low-cash investments in soil fertility with green manure, composted manure, and fallow periods.
A greedy farmer would raise the price! Agriculture is a rare industry where production increases in response to lower prices, and thus aggravates the problem. What is the point if technology helps increase production while lowering prices? We work harder for less money! Through solidarity, greedy farmers would manage their production levels to rebalance supply and demand. Some have accomplished it with marketing boards and quotas. Others could do likewise by negotiating voluntary restraints such as a 10% land withdrawal or a widespread refusal of a new technology.
Like any market, the organic market is subject to the pressure of supply and demand. Hence, organic prices are at a strong premium today because of consumer demand and because of relatively small economies of scale. But the values surrounding organic food also support fair prices to farmers: small family farms, high quality and freshness, sustainable farm income, more labour intensive operations and less automation.
A greedy farmer would change the rules! There are basically two business models in most industries: a) large volumes and standardization with low unit margins, or b) small volumes with superior quality, distinctiveness, service and higher unit margins. To succeed in either model, you need determination and skill. Have you fallen into either model by default?
Small mixed farmers, especially organic farms, compete on quality and service, not quantity and price. The attention to detail, the development of skills and knowledge, and the investment of time versus machinery lead to the production of a product of superior quality that fetches a superior price. Sure, there are protein premiums on wheat. But what about the value of vegetables with superior taste, nutritional value and freshness?
A greedy farmer would cut out the middle man! Farming today has become a low value commodity business that supplies a very long chain before the food reaches the consumer. A few large corporations control that chain and exert negotiating power over thousands of farmers. In recent years, we have seen the chain push down the price paid to farmers but we have not seen a corresponding decrease in prices at the grocery store.
An important value in organic farming is direct contact with the consumer. Small mixed farms can offer a variety of food items including meat, eggs, grains, preserves, vegetables direct to consumers either on the farm, in a farmer’s market or at the consumer’s home. The price is affordable to the consumer and fair to the producer by providing quality and freshness, minimizing packaging and processing, avoiding the distribution channels, and reducing transportation costs It leads to sustainable local economies, a reduced environmental impact, better nutrition and a better understanding between farmers and consumers.
A farmer produces food and a farmer is a business person. He/she must balance greed with sound marketing and financial skills. That does not mean bragging about tonnes per acre and listening to the next salesperson promoting a new gadget. The greedy farmer does not fall prey to the greedy vendor; he/she takes control of the situation and makes his/her own decisions.
A contribution by Tom Manley