economy

Capitalism Must Price Carbon - Or Die

This was a speech I gave at the Harmony in Food and Farming conference in Llandovery, Wales in July 2017.

Please click here to see video clips of the Prince of Wales, Patrick Holden and myself during the conference, which was organized by The Sustainable Food Trust. It aimed to develop an agricultural perspective on the ideas propounded in the book 'Harmony' by HRH The Prince of Wales and Tony Juniper.

In 1967 Joni Mitchell wrote a song called Woodstock that included these lines:

“We are stardust, We are golden

We are billion year old carbon

And we got to get ourselves

back to the garden”

We are indeed ‘billion year old carbon’ – the average person of about 80kgs/176lbs  contains about 15kgs/33lbs of carbon.  That ancient carbon is in our bones, our muscle, our fat and our bloodstream, as carbohydrate, fat, protein and other compounds.  The carbon in our bodies may have been previously in soil, in trees, in charcoal, in dinosaur turds, in mosquitoes, in honey...  It was everywhere before it ‘reincarbonated’ in us.  Carbon is immortal.   And it is stardust.

A billion or so years ago a very hot star kept getting hotter.  As it got hotter, it formed hydrogen, then carbon, then oxygen and then the other elements that we know.Sir Fred Hoyle, the great astrophysicist, described this as ‘stellar nucleogenesis’ – stars creating atoms.

When that star got too hot it exploded, became a ‘supernova’ and blasted its carbon, oxygen, hydrogen and rock into space.  Those chunks of rock and elements consolidated to form our solar system, with a sun that is still burning today with the remaining heat of the star that formed it a billion years ago.

Carbon is a promiscuous atom, it has 4 points where it can ‘mate’ with other elements.  That’s why there are so many carbon-based molecules and why carbon is the foundation of all living things.  Where there’s life, there’s carbon.

 According to Hoyle, life, in primitive form, was everywhere. This was called ‘Panspermia.’

Life in rock was called ‘Lithopanspermia.’

Life was fungi. That life bumbled along, depending on acid rain from the very CO2-rich atmosphere a billion years ago to break down carbon that was stored in rock. Then a miracle happened that changed everything.

Bacteria called cyanobacteria became able to combine carbon dioxide CO2 from the atmosphere with H2O water, using sunlight energy, to make carbohydrate C6H12O6, whilst excreting oxygen.  That carbohydrate was the sugar that is the basis of all living energy in plants and, eventually, in animal life too.

Once this happened, one can speculate that the rock-eating fungi saw their chance and organised the cyanobacteria into chain gangs, maximising their potential to capture carbon from the carbon dioxide-rich atmosphere, then at about 95% CO2.

These became algae, then simple plants, all busy making sugar to feed their own growth and, more importantly, to nourish the growth of the fungi that created them.

The fungi worked with other microbes in the soil, thriving on the sugar coming from the plants and delivering back to 'their' sugar-making plant all the mineral nutrients that they needed to grow.  Plants died and decomposed.  Fungi and bacteria died and decomposed. The carbon-rich detritus of their existence rotted down to become what we know as ‘soil’ – a most precious resource because it is the perfect habitat for fungi and bacteria and a rich source of recycled nutrients for plants.

This soil built up over millions of years, producing rich plant growth that eventually could support the large life forms such as dinosaurs and brontosaurs that existed in the ‘Carboniferous’ age.

This was the soil that early pioneers found in the American Midwest, rich in organic matter that ran very deep thanks to the 3 metre roots of prairie grasses.

When my great grandfather began to plough virgin prairie in Nebraska back in 1885, the soil on our farm contained over 100 tonnes of carbon as organic matter (organic matter in soil is approximately 50% carbon).  By the time I was born in 1944 this was down to about 20 and now it is closer to 10, totally dependent on fertilizer and pesticides.

Farmers are frugal, on our farm we grew and processed almost all the food that we ate, only buying in commodities like flour, salt, sugar and soap that we couldn't make on the farm.  Old calico flour sacks were washed and recycled as clothing, overalls for the boys and dresses for the girls.

Some enterprising flour companies printed pretty patterns on their flour bags when they realised this was happening.  My mother and her sister Thelma wore Nell Rose flour sack dresses.

The men were frugal too, but they were unwittingly wasting the most precious resource on the farm, the soil.  As the poet Wendell Berry put it:

 "We didn't know what we were doing because we didn't know what we were undoing." 

What we were undoing was all the decomposed plant matter that had been accumulating ever since those first Cyanobacteria sped up the process of life on Earth.

The destroyed soil lost its water holding capacity and lost its structure and integrity.  The result was the great Mississippi floods of 1927 when the river was 60 miles wide from April to October, sparking the Great Migration of African-Americans to northern cities as their farms were submerged for half a year.

Then in the 1930s the Dust Bowl triggered another migration, of "Okies" from their farms in Oklahoma, Kansas and western Nebraska as their farms became submerged in dust and dirt.  Richard St. Barbe Baker, an Englishman who founded Men of The Trees in 1926 and was a founder member or the Soil Association, helped restore the broken soils of the Midwest.  Operating under the banner of President Roosevelt's Civilian Conservation Corps he oversaw 3 million men who planted 10 billion trees between 1933 and 1940.  (These men also made good soldiers in WW2).

Tractors also played a destructive role, they could plough twice as deep as a horse-drawn plough, bringing up fertility and carbon from deeper in the soil.  My Uncle Floyd (pictured with me in 1947) still used horses to draw his 8-row planter because horses didn't compact the soil. Tractors did, weakening soil structure.

This experience alarmed people in Europe.  In Britain Eve Balfour wrote "The Living Soil" which proposed a new approach to agriculture that worked with nature and became known as 'organic farming.'

Eve Balfour collaborated with Dr. Innes Pearce who had shown at the Pioneer Project in Peckham that low income families did much better if they understood the basics of good nutrition and domestic hygiene.

Together they formed the Soil Association in 1947 on the premise that good farming would produce heathy food to nourish healthy people and create healthy societies.

My introduction to organic food and healthy eating came via the Japanese guru Georges Ohsawa, author of Zen Macrobiotics.  I imported the books to the UK and sold them via various bookshops.

I sold brown rice snacks at the UFO Club, where the Pink Floyd were the house band.  In February 1966 I opened a restaurant in Notting Hill to spread the macrobiotic message.  In 1968 my brother Gregory opened Seed restaurant, our larger restaurant in Bayswater, London.

Getting ourselves back to the garden

ZEN MACROBIOTICS - Taoism

  • Balanced - Yin and Yang
  • Organic - Sustainable
  • Wholegrain
  • Food for health
  • 'Justice' (Fair)
  • Japanese (Miso, Nori, Tamari)
  • No additives, no hormones
  • Avoid sugar
  • Eat only when hungry
  • Exercise and Activity

Like the Stoics mentioned in the Prince of Wales’ book "Harmony" we believed in "an attunement between human nature and the greater scheme of the Cosmos."  We saw this through the prism of Daoist yin and yang philosophy and saw it as the key to a long and happy life ('macro' = 'big, long', 'bios' = 'life').

When we launched a range of macrobiotic food products in 1970 we branded them "Harmony" with a trademark that was a Yin Yang symbol with leaves and roots.

The company went on to become Whole Earth Foods a decade later - unfortunately 'Harmony' was a brand we couldn't register in our key European markets.

When I launched Whole Earth cornflakes in 1997 a friend Dan Morrell, who had founded Future Forests (later to become the Carbon Neutral Company) asked me if I'd like to take the corn flakes 'carbon neutral' -  a term he originally coined. .  He then commissioned  Richard Tipper of the Edinburgh Centre for Carbon Management to measure the carbon footprint of the cornflakes.

To our pleasant surprise we had to plant hardly any trees to offset the carbon used in growing, shipping, processing, packaging and distributing the cereal because the increase in the organic matter on the farms where the corn was grown almost completely offset the carbon emissions from everything else.  That's when I understood that, if we priced carbon into the cost of food, people would farm in a very different way.  It is now urgent that we do so

The UN has said that we only have 60 years of farming left. Farming generates more than a third of the annual increase in greenhouse gas. 

Volkert Engelsmann of IFOAM has calculated that we are losing farmland at the rate of 30 football fields every minute.  None of these losses come from organic farming, which is restorative and regenerative.

Industrial farming wastes energy.  It takes 12 calories of fossil fuel energy to produce one calorie of food energy.  A farmer with a hoe uses 1 calorie of human energy to produce 20 calories of food energy.  On a calorie-for-calorie basis a farmer with a hoe is 240 times more carbon efficient than a farmer with lots of equipment and inputs.  More than 30 years of trials at the Rodale Institute farms in Pennsylvania show that organic farming can sequester 1 tonne of carbon per annum.  They have also shown that once the soil is in good shape, the yields match those of industrial farming.

There is an effort afoot to attempt to bring market forces into bringing an end to this potentially disastrous loss of viable farmland.  Part of this is to attempt to appeal to the self-interest of companies like Unilever and General Mills whose supply chain will suffer if farmland becomes unviable and unavailable.

The French National Institute for Agricultural Research published a report in 2015 that stated that if farmers could sequester 4 parts per 1000 of organic matter,  that’s 0.04%, every year in their soil that would be enough to totally offset the annual increase in greenhouse gas emissions that is causing climate change.  That’s without counting any transition to solar, wind or greater energy efficiency.  As a result the French National Assembly voted a carbon price of €65 per tonne to take effect in 2020 and to include agriculture.  French Agriculture Minister Stéphane Le Foll then announced his ‘4 per 1000’ initiative which became part of the Paris Climate Agreement. It was endorsed at COP 22 in Marrakech and  36 countries so far have signed up to participate in restoring soil, the capital base of every nation.

The Prince of Wales co-authored a children’s book called ‘Climate Change’ that shows how carbon goes into the atmosphere and how it comes back into the earth and the sea.  The net annual increase is 16 billion tonnes.

A 3000 hectare biodynamic farm called Fattoria La Vialla in Tuscany Italy has its carbon measured every year by a team from the University of Siena.  La VIalla are sequestering ‘7 per 1000’ every year.  If everyone farmed like those 3 brilliant brothers  in Italy, whose farm is roughly 1/3 pasture, 1/3 forest and 1/3 everything else (grape vines, cereals, fruit, vegetables), then we would not only cancel out the 16 billion tonne increase in CO2 but would see a 12 billion tonne reduction every year.   Additional benefits would be greater biodiversity, cleaner water, less risk of drought and flooding and safer food.  (Their wine is pretty awesome, too).

Going beyond stopping degeneration is the regeneration movement.  This includes: Regeneration International, an offshoot of the mighty Organic Consumers Association in the US; the UN Food and Agriculture Organisation FAO; Soil and More (Netherlands); People 4 Soils (Slow Food movement); and Save our Soils (UK).

Corporations like General Mills are taking strong initiatives.  They have 100,000 hectares of land from their supply chain to be organic by 2020 as part of their carbon reduction policy.

But we still burn food.  One half of the annual USA corn crop is converted to ethanol using more energy to produce it than is embodied in the ethanol. It is mixed with gasoline to be burned as fuel.  The US is now exporting oil and gas yet still burns vast amounts of food in the name of 'energy security.'

We still destroy forests.  According to HRH the Prince of Wales this is at a rate of 15 football fields per minute.  If we valued the carbon stored in those forests at $20 tonne each hectare would be worth $15000.  Once the forest is cleared and then planted with soybeans it is worth $300 per hectare.  HRH described this in a speech in 2008 as ‘The greatest example of market failure in the history of capitalism.’

We still burn wood.  There is a false virtuousness to burning wood.  200,000 wood burning stoves a year are sold in the UK alone.  Wood smoke is more harmful to health than smoke from coal, oil or gas.  It takes a tree 50 years to sequester the carbon that is then consumed in a wood burning stove in 50 minutes. If a replacement tree is planted, will take 50 years to take that carbon back out of the atmosphere.

Wood has the resilience of steel and the load bearing capacity of concrete.  'Glulam' and other new wood technologies mean that wood can be used in 20 story buildings ('plyscrapers'), sequestering the embodied carbon in the wood for centuries.  We should never burn wood, it's a terribly inefficient waste of carbon.

Biochar, or charcoal made from wood, is a way to convert wood by-products into a carbon rich substance that can be put in the soil and will stay there for decades or even centuries.

It dramatically increases the population of beneficial microbes in soil, delivering a healthier plant immune system,  increased water retention and reduced loss of nutrients from leaching.  It is the best use for woody material that is not suitable for building or furniture making.  It is proven to help restore degraded soils and make them fertile and fit for farming again.  There are many examples of its benefits: tomato growers use it to combat plant diseases and increase yields; it cures honey fungus, ash dieback, chestnut blight, phytophthora and other tree diseases; it helps cocoa farmers overcome the devastating impact of black pod.  Stockholm uses it for all their new urban tree plantings as it enhances survival rates.  In Qatar the Aspire Park now use it for all their new tree plantings, with gratifying results.  Biochar in soil protects the beneficial microbes that are part of a plant’s immune system, its food supply and it’s water supply.

Farming and forestry would be transformed if carbon pricing were to be introduced for their activity.   People would plant trees instead of growing wasteful biofuels.  Prairie grass would replace corn in the Midwest.  Farmers would adopt regenerative methods such as organic and biodynamic farming.

Farmers would profit from farming carbon in 2 ways:

  1.  An annual payment for any increase in soil carbon and a charge for any decrease in soil carbon
  2.  An 'interest' payment on the actual level of soil carbon on the farm. This would be effective at around 10% annually.

A typical organic farm would benefit to the tune of approximately £100 per hectare and an industrial farm would have to pay a carbon tax of as much as £100 per hectare.  Farmers would change behaviour overnight and agribusiness behemoths like Monsanto, Bayer and John Deere would have to rethink their business model.  Taxpayer-funded subsidies to farming could be largely phased out as carbon markets would trade the carbon credits.

Farmers could also insure against catastrophic events such as flood and drought that might impact on their soil carbon.   However, farming with carbon in mind would reduce the likelihood of such damaging events.

Soil is Nature’s capital and the foundation of all life on Earth.  Capitalism is about valuing capital and pricing it.  Capitalism has failed to deal with carbon because industry, transportation and farming have been allowed to pollute freely at no cost.  All other forms of pollution are nowadays strictly controlled for wider social benefit. It is time for carbon to be priced and traded like very other important commodity.

We can get 'back to the garden' - the Garden of Eden.  We just have to price carbon and change the way we farm our beautiful planet.

"We are stardust, We are golden

We are billion year old carbon

And we got to get ourselves

back to the garden"

GETTING THE ECONOMY GOING

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BRITAIN’S FINANCIAL PROBLEMS SOLVED AT A STROKE

As the financial crisis affects everyone in the organic industry here's my take on the situation.  Trust me, I have an economics degree. Every year HM Treasury collects our taxes and lends it to the banks. The banks don’t lend it on because of their precarious position.  Every £1000 that they lend should be backed up by real money in their reserves of £100 - that's fractional reserve banking and a magic way to make money.  Unfortunately for the banks, It cuts both ways.  When banks are bust, they need to borrow £1000 from the government to cover every£100 of cash that they are short if people decide to take out their deposits.

We can’t let the banks go down because they’d drag us all down with them.  If a bank goes bust, you will still owe the money to whoever takes over your debt from the receiver.  Inescapably. But all your deposits will be lost.  Irretrievably.  That’s how we could all go bust. And why we have to save the buggers.

So how on earth can we rebuild the economy and put our banks on a solid footing?  I have 2 ideas: short-dated cash and green jobs

SHORT DATED MONEY

Instead of giving the banks the estimated £800 billion that they need to stay afloat - just put the money into the public domain.  There are 50 million adults in the UK.  If the Treasury had given every adult £16000 over the course of 16 months that would be equivalent to what they did by creating money out of thin air to bail out the banks by‘quantitative easing.’  Forget electronics, just print the stuff on paper and get it into circulation where it counts, among the spending population.  Banks don't shop. People do.

Give every adult in Britain £1000 every month for 16 months.  Give it out in short dated£50 notes that expire 1 month from the date of issue.  That would force every person in the UK to go out and spend money before the notes expire.  It would be like a rush of adrenalin to the economy.  Every time £1000 changes hands it adds another £1000 to our GDP and people’s income and profits, which means more tax take for the Government in the end.  The money would still end up converted to 'real' money in the banks on the day they expire, but at least on the way it would have made a lot of businesses profitable and helped people buy organic muesli and pay off their mortgages.

GREEN JOBS

Another way to pump money into the economy is to create green jobs.  Take the unemployed, double their benefit and set them to work making the world a better place.  It’s been done before and it works

In 1933 the US had terrible unemployment during the Great Depression.  Talk of revolution was in the air.  Then President Roosevelt created the Civilian Conservation Corps.  3 million men, dispersed to camps in the countryside, planted 10 billion trees in what had been the Dust Bowl.  They created the National Parks system of which Americans are now so proud and they build huge hydroelectric projects in the Tennessee Valley that still generate zero carbon electricity.

Why not create a Green Army and pay the unemployed to plant forests on moorland? Then pay farmers to look after trees instead of overgrazing with uneconomic sheep.  The carbon offset value of the trees would make it pay for itself.   The Green Soldiers could help out on organic farms, too, helping to restore biodiversity and reverse soil degradation.

The Civilian Conservation Corps taught a generation to enjoy the outdoor life and the satisfaction of doing meaningful work of enduring value.  The Green Army could do the same for people in Britain who deserve a better future than flipping burgers, waiting for the next wedge of 'social'  and being bored in front of a TV.

The 4 Horsemen of the Apocalypse

In June I was invited to give the keynote speech at the Sustainable Foods Summit in Amsterdam. The conference programme was so advanced it made me blink in disbelief - here were a bunch of corporate executives and sustainability managers from the world's leading corporations all working to create real standards of sustainable growth and methods of measurement in order to comply with their corporate statements of principle. Stalwarts like Clearspring and Whole Foods were there, but the general tone was very mainstream. I spoke about taking an ethical brand mainstream later in the day but for my keynote I thought I'd give it to them with both barrels. Here’s my speech:

"Today I would like to take for my text the New Testament, Chapter 6: 1-8, the Book of Revelation of St. John the Evangelist (I'd give anything for a picture of the audience's horrified faces as they prepared for the worst). You may recall it: it's where Jesus opens the sealed scrolls and summons forth the Four Horsemen of the Apocalypse - War, Plague, Famine and their faithful follower, Death.To understand sustainability we must recognise that the world's economy is still governed by legacy industries who have a massive vested interest in those 4 horsemen. Without them, or the fear of them, their shareholder value would collapse.War enjoys annual capital expenditure of $1.5 trillion. with the US leading the field, devoting 5% of GDP to military spending. As you'd expect with any capital expenditure, the return on investment is many times the value of the outlay - the cost of death and destruction of property in target nations is massive. Of course the at-home social damage is pretty high too as soldiers return home with attitudes to violence that lead to high domestic cost due to healthcare, suicides, crime and psychological problems.Plague enjoys good returns, too. The Avian Flu and Swine Flu panics exposed Big Pharma’s desperate quest for new disease threats. The side effects of medical intervention create a huge subsidiary industry and new diseases like diabetes, cancer, heart disease and high cholesterol create an opportunities for profit. Death from medical errors in the US run at 200,000 a year, while correct intervention claims many more.Famine is perhaps most relevant to this conference. By destroying the natural fertility of the Earth with chemical fertilisers and killing off biodiversity with pesticides, fungicides, herbicides, GMOs and antibiotics agribusiness has created a global dependency on their chemicals to produce our food. 'Feed the world' is their mantra as they progressively starve the world. Now, except for organic farming, we are hooked on the drugs they sell to keep degraded land in production.We have to kick these bad habits but they are entrenched in our socioeconomic system and their proprietors will not give up without a fightSo how can sustainability triumph? It must be in all arenas, we must bring peace and prosperity, to all. It can be done, because things have changed.How have things changed?Debt - Wars, drugs and agribusiness have bankrupted our economies. First rule of a parasite is: don't kill the host. If American taxpayers had to pay for war, medicine and farm subsidies they would never have happened. Instead the Chinese, and Arabs loaned the US the money so they could continue to buy cheap consumer goods and oil. Now that the debt is dragging down our economy we wrongly blame the bankers. The rot started because our governments subsidised war/drug/ag with borrowed money because they were too cowardly to pay for it out of increased taxation.Transparency - the days of the smoke-filled room where a handful of powerful men decide the fate of the rest of us is ending. We know what’s going on.There is no future if there is not a sustainable future. A handful of companies worldwide thrive on war, sickness and a famine. Our governments bow to them. Monsanto's control of the USDA is the most obvious but it's the same everywhere, from the EU to India to Africa and Latin America.It is undeniable that peace brings more prosperity than war and avoids the burden of debtThat the creation of health is better value than the treatment of diseaseThat organic and sustainable farming gives better and more reliable yields than unsustainable petrochemical dependencyWe're right - we know we're right - they know we're right.But they won't give up without a fightIn Britain our new prime minister speaks about The Big Society - people doing it for themselves. The top down model is disintegrating everywhere. When people start doing it for themselves then different choices will be made. Companies that are ready for this seismic change will prosper. There can only be on future and by definition it must be sustainable.

Roll on $200 a barrel oil prices

Much as I hate what Gaddafi is up to and much as I dread any threat to the stability of the Saudi regime, I can’t help hoping that the oil price goes up and stays up.

There are a lot of reasons for this.

Cheap oil is what drives industrial farming. 7 years ago in The Little Food Book I calculated that when the oil price hit $70 a barrel organic food would be cheaper than non-organic. That’s because it take twice as much fossil fuel for an industrial farmer to produce a calorie of food as it does for an organic farmer. Broadly speaking, an industrial farmer uses 12 calories of fossil fuel to produce one calorie of food. Then it takes more fossil fuel to convey the food to the supermarket distribution depot, then to the store, including refrigeration costs. An organic farmer uses 6 calories of fossil fuel to produce one calorie of food and is more likely to sell it at a farmer’s market or to local outlets.

Industrial farming replaces jobs with chemicals. Instead of people planting, weeding and composting chemicals do the job. Nitrate fertilisers are made using natural gas. Gas prices follow oil prices upwards – energy is energy. So nitrates are getting a lot more expensive, but still not expensive enough. They’re killing us by releasing nitrous oxide into the atmosphere, a greenhouse gas 310 times more harmful than carbon dioxide in causing global warming. Nitrates are responsible for the equivalent of 1 billion tonnes of CO2 every year, about 1/6 of the total excess emissions that are turning up the heat on dear old Planet Earth. And farmers need to use more and more as underlying soil fertility dies out, making a bad problem worse. At $200 barrel, even with the current extravagant level of subsidies, farmers would switch to organic in droves. If you can grow your own fertiliser by leaving fields fallow, composting and growing green manures, why pay for a bunch of horrendously expensive chemicals? The price of food will go up as the price of oil goes up, but the impact per calorie on organic food will be half that on industrial.

A lacto-ovo vegetarian consumes half the energy resources for the same nutrition as a non-vegetarian meat-eater. A vegan consumes just one quarter. An organic vegan will consume just 1/8 the fossil fuel inputs of a non-organic non-vegetarian.

The price of carbon offsets goes up with rising oil prices. Companies have to pay for EU carbon emission allowances. They are currently priced at around £12 per tonne. Sir Nicholas Stern, author of the last government’s report on climate change and of the book Blueprint for a Safer Planet, said the real price should be £70 per tonne. (Then he said “I was wrong – the real figure is £140 per tonne”). The higher the price of oil, the higher the price of carbon offsets and the more attractive it is to invest in energy-saving and renewables. A tonne of oil produces more than 3 tonnes of carbon dioxide, so just to offset the cost to the future of this planet, it should cost £140 times 3 or £420. A barrel is 1/5 tonne, so the carbon cost of a barrel should be priced in at about £80, or $120 per barrel. Then the producers need to make a small profit, too, after all it costs anything from $3 (Kuwait) to $9 (Texas) to extract a barrel of oil from the ground. They’ve got used to making $90/barrel profit, add that to the $120 carbon cost and you’re over $200.

When you see the taxis with their engines running queuing up outside railway stations, vans parked with their engines running and people whizzing along at inefficient speeds you can’t help wondering if they would be so wasteful if petrol cost 3 times as much.

Think of the jobs that high oil prices would bring, too. Every time an out of town supermarket opens local employment suffers. Yeah, yeah, I know they claim they are creating jobs but James Lowman of the Association of Convenience Stores did a check last year. Supermarkets created an extra 2.75 million extra square feet of store space and cut their staff levels by 426. So we are gutting the high streets of our towns and putting more people on the unemployment register and forcing people to drive to the supermarket to buy a week’s worth of food, 1/3 of which goes off and ends up being wasted.

When oil prices go up people will shop locally, on an ‘as needed’ basis. They’ll eat organic. They’ll eat less meat. They’ll walk more and drive less. They’ll pay lower insurance premiums as adverse climate events reduce the impact on insurers. They’ll breathe cleaner air as people switch to less polluting transportation. They’ll drink cleaner water as pesticides and

Bio-Fools

Biofuels are causing environmental disaster. Let’s not be biofools...

Last year the average price of a food basket rose by 12%. There are legitimate reasons for this including rising oil prices and more demand for meat. Another cause, which concerns me here, is biofuels - the so-called ‘green’ saviour. The rush into biofuels is a scam to get rid of food surpluses by burning them. Instead of downsizing our cars, we are burning food for oil. Ethanol plants are taking one third of the entire US corn crop and turning it into alcohol for mixing with gasoline. It’s terribly inefficient, but the government gives ethanol plants a $1 gallon subsidy and charges less tax on biofuels at the service station. Many US states now require 15% ethanol to be added to gasoline at service station pumps. It’s another scam to waste taxpayers’ money on inefficient GM and industrial farming, this time under the guise of doing something to fight climate change. The US and the EU are both promoting biofuels as an eco-solution. Don’t be fooled. Two recently published groups of US research found that farming biofuels actually increases greenhouse gas emissions. Clearing carbon-rich peatland and rainforests to plant fuel crops releases even more carbon dioxide into the atmosphere. The industrial manufacturing process only adds to biofuels’ carbon footprint. Grown on an industrial scale, biofuels end up accelerating climate change, not reducing it. Worst of all, the fundamental principle is flawed. If you put £1 million in the bank in July and then withdrew it in August and burned it, would you say you were £1 million better off? Of course not, but the crazy economics of biofuels do just that. When biofuels are burnt, carbon that has just been taken out of the atmosphere in the summer goes right back into the atmosphere as carbon dioxide, later in the autumn. How on earth is that doing something good for the planet? If we really want to reduce greenhouse gases, then we need to put carbon into the soil and keep it there by farming organically. Carbon does far more good in the soil then it does harm in the air (as carbon dioxide). The soil on organic farms contains up to 6 times as much carbon (as humus) as on non-organic farms. Humus fertilises the soil naturally, retaining moisture and nutrients. But instead of turning land into carbon-rich stores, the EU Commission is calling for energy-intensive, greenhouse gas-forming biofuels. It has recently made new targets: 10% biofuels by 2010 at a pump near you. This will exhaust what little carbon remains in our once humus-rich fertiles soils, all to keep agribusiness going.If the US and EU paid farmers to turn their farms into carbon-capturing meadows and forests, we could add billions of tonnes of carbon to the soil carbon bank annually. But agribusiness doesn’t make money out of set-aside land – no market for chemicals, equipment or fertilisers - it makes money out of land relentlessly farmed to destruction. So we pay more for food as well as, through our taxes, for biofuels. And global warming gets worse.This has terrible social consequences as well as environmental ones. Most of Europe’s palm oil bio-diesel is imported from Indonesia, destroying the orangutan’s habitat and precious rain forest and its human inhabitants. Ethanol from Brazil comes from sugar cane that replaces Brazilian rainforest. We are converting other people’s land and food into fuel for us. EU policies subsidise the theft of land from forest-dwelling people. Nobody, not even Parliament, ever asked for or voted for this.Not in my name, please.

 

Let's Have a Nation of Shopkeepers

The other day I was thumbing through Pigot’s 1839 Directory of Sussex (as one does) when I found that in Hastings Old Town there were once 5 operating bakeries on High Street and 8 on neighbouring All Saints Street. Now only Judges Bakery our new enterprise, survives. The rest of the bread comes from factories and supermarkets. While I don’t lament the absence of competition it does seem sad that where there were once a baker’s dozen of jolly bakers, there is now just one. Those bakers were jolly because they were part of what Adam Smith and later Napoleon described as a ‘nation of shopkeepers.’ Why England in particular? Is it something to do with the individualistic and freedom-loving temperament of this culture? Or is it a natural human instinct to favour things local, fresh, privately-owned and directly answerable? Shumacher argued eloquently in ‘Small is Beautiful’ that this was so.

In early February I went to Syria to accompany a Soil Association inspector on a visit to an olive oil supplier. On the way back I did a bit of tourism and wandered for a day through the vast labyrinthine souks of Damascus. I found a bakery every few hundred yards, bakers and ovens in full view, churning out freshly-baked large flat breads seemingly endlessly. There were no supermarkets to be seen, anywhere. Thanks to the fertile oasis in which it sits and the mild climate, most of the produce is local and fresh. Specialist shops selling pickled vegetables, fish, meat, wooden utensils, household utensils, hardware, clothes, spices, sweets, pastries, preserved fruit, carpets, and all your other needs thrived amidst a total absence of department stores.

How did this small shopkeepers’ paradise survive in Syria when it the once-proud high street has suffered so much in Britain from centralised production, distribution and retailing? What difference does it make, anyway?

Jeffersonian democracy asserts that government should be small, military spending and taxes low and that small landowner or tradesperson should rule supreme. “40 acres and a mule” was given to liberated slaves in South Carolina to ensure they had the economic basis for a truly free future; Margaret Thatcher sought to create a ‘property-owning democracy’ by privatising state-owned industries and encouraging home ownership; the US Homestead Act of 1862 tempted people like my great grandparents with the offer of land ownership free to those who would work the land.

People with an economic stake in society such as the owners of a business are empowered, they can think what they like and say what they like and do what they like without fear of losing their income. They are answerable to nobody except their customers and as long as they provide what their customers want they can prosper. They are, in a word, free.

As corporations merge and acquire, as giant retailers systematically destroy the independent retail sector and as government’s share of the economy relentlessly increases, what are the implications for our freedom? A lot of people blame Tony Blair for being arrogant, taking a reluctant nation to war on false pretexts and running this country like a private fiefdom. But why not? If you could get away with it, you’d do it, too, if you were Prime Minister. The weakness of Parliament reflects the disempowerment of the people that is the result of the loss of individual freedom that comes from losing ownership and control of one’s own life.

But the appetite for freedom is there. Private equity capital encourages more and more managers to borrow and buy their businesses and there is a trend towards breaking up unwieldy corporations that is far more sophisticated than the ‘asset-stripping’ of yesteryear. The natural foods retail sector shows that it is possible for a small retailer of food to enjoy vibrant growth. The big stores face a challenge as rising oil prices make their whole business model look increasingly shaky, dependent as they are on car travel and long distance distribution. Big farmers are terminally dependent on subsidies already - with agrichemical prices and distribution costs soaring, fragmentation of big holdings is inevitable. Cheap oil enabled the pendulum to swing too far to the remote, unanswerable and huge. The pendulum is swinging back and gathering momentum. Can we anticipate that the erosion of human rights and democratic freedoms will also start to go the other way?

Subsidised Theft

In 2005, the US government paid $180 billion in direct and indirect subsidies to American farmers.

MY GREAT-GREAT-grandfather Lars Dugstad emigrated to America from Norway in 1842. He lived in a dug-out cave for fifteen years while he cleared eighty acres of virgin Koshkonong Prairie land in Wisconsin. His was the typical pioneer experience.

His son Ole, my great-grandfather, went to Nebraska in 1887 and broke the prairie sod on 160 acres of land in Dakota County. Ole’s son Lewis, my grandfather, farmed it until I was born there in 1944. Lewis’ only son, my Uncle Floyd, sold it and went on to become one of the first beef feedlot operators on the farm he bought across the Missouri River in Iowa.

Floyd offered me 625 acres in 1966, but I didn’t like the idea of sticking diethylstilbestrol hormones behind the ears of cattle, and I made the fateful decision to come to London instead and open a macrobiotic restaurant. That led on to a career in the retail, manufacturing and marketing of organic foods that included Whole Earth Foods and Green & Black’s chocolate, and also my work with the Soil Association.

Uncle Floyd’s son now farms those 625 acres as part of an expanded total of 1,600 acres – all farmed with just one assistant. Last year he lost $40,000 on sales of $300,000 but ended up with a net farm income of $110,000, thanks to a hefty $150,000 subsidy from the US government.

So from Thomas Jefferson’s dream of a rural democracy, where every self- sufficient and prosperous family had a small farm or business, we have reached – in three generations – a corporate state where a viable family farmer needs 1,600 acres, a lot of machinery and GM crops and still operates at a huge annual loss that has to be made up by subsidies.

In 1944 Charles Erwin Wilson, President of General Motors and Director of the War Production Board, called for a Permanent War Economy to prevent a post-war return to the Great Depression. The Permanent War Economy, in giving birth to the military-industrial complex, also gave birth to the military-agricultural complex. Both operated on the same principle – if the free market wouldn’t take everything that was produced, the government would take up the slack, keeping the economy humming. The same companies that made tanks for the war could make tractors and pick-up trucks; the same companies that made nitroglycerine explosives could make nitrogen fertilisers.

The problem was that farmers weren’t up for it. Either a command economy or false economic signals were needed to force them to industrialise and adopt chemical inputs.

In the UK, the Soil Association was lobbying hard for a sustainable post-war agriculture based around rural communities and the avoidance of chemical fertilisers. ICI lobbied hard for increased nitrate use and eventually, with the Agriculture Act of 1947, ICI won the argument and the British government fell in line with the policy of its European and US counterparts by introducing a direct cash subsidy of ten shillings on every bag of nitrate fertiliser.

This subsidy made all the difference to farm economics: once nitrates were in use weeds thrived on the extra nutrients and created a market for herbicides, fungal infections proliferated on the densely packed plants and created a market for fungicides, and the elimination of fertility-building rotations created a market for insecticides to deal with the inevitable build-up of pest populations. CO2 emissions from the soil escalated, as soil structure and carbon-rich humus collapsed under the onslaught of chemical fertilisers.

Subsidies set land prices and farm incomes from then on. Agriculture had, in effect, been nationalised and was part of the Permanent War Economy that has been the economic model of the West and of Russia ever since. From the start, US farmers saw what was coming and formed leagues in which they all faithfully promised each other never to accept subsidies. But once some farmers took the subsidy, they could sell their crops more cheaply; the rest had to follow suit if they were to be competitive. The inherent bias of government policy towards larger producers led to the steady extinction of small farms.

The same thing happened in industry. The US Government pays out $167 billion a year to support the US’s largest corporations. In 1950, 25% of US tax income came from corporations. That figure is now 10%.

In 2005 the US government paid out more than $30 billion in direct payments to US farmers and an estimated further $150 billion in indirect subsidies including tax breaks on fuel and equipment, tariffs, protective pricing, drought loss payments and purchasing surpluses.

The biggest recipients of this support are the largest corporate farmers and commodity giants like Cargill and ADM (Archer Daniels Midland), agrichemical and seed suppliers like Monsanto and Dupont, and huge corporations such as the Fanjul family’s Florida Crystals sugar empire and meat producers Tyson and Smithfield.

The real damage from this subsidy policy is not just the financial cost to the US economy, though the numbers are significant. The real cost is to the health of the global economy, to the stability of our climate and to human health.

THE COST TO THE health of the American people has been spelt out by such authorities as the Harvard School of Public Health. The fast-food industry has contributed directly to the epidemic of obesity, diabetes, heart disease and osteoporosis. These degenerative diseases threaten the future capacity of Western economies to finance health care. If subsidies on corn and soybeans alone were removed, the cost of a cheap hamburger would be forced up from $1 to $3. This would directly affect rates of junk food consumption. If the subsidised rangeland that supports the production of cheap calves were charged at a market price and if the externalised costs of the beef industry such as unsustainable levels of water pollution, environmental degradation and greenhouse-gas production were taken into account, the same hamburger would cost closer to $5 or $6. At this level hamburger consumption would be reduced to the healthier levels that public health authorities urgently recommend. The cost of obesity to the US is estimated at $117 billion just in lost work days and in additional health-care costs, a high price to pay for unfeasibly cheap burgers.

But the real harm of the subsidy system is to the global economy. So, the question is: How do US subsidies cause world poverty?

US farmers grow maize at a cost of 6¢ per pound. A Mexican farmer can grow maize at a cost of 4¢ per pound. So you would think that Mexico would export corn to the US – and at the very least would dominate the US domestic market. But the world market price is set at 3¢ per pound on the Chicago Board of Trade on the basis of subsidised US farmers. If the Mexican farmers seek to make a profit over their cost of 4¢ per pound, grain traders around the world will import or, more importantly, threaten to import US corn in order to continue to purchase at a price of 3¢ per pound. In the cruel world of subsidised agriculture, the so-called inefficient Mexican farmers go out of business trying to compete with truly inefficient US farmers whose cost of production is really 6¢ per pound, but who have the mighty US taxpayer prepared to subsidise their farm-gate price down to 3¢ per pound. In recent years 100,000 Mexican farmers have been driven off the land, denied access to their domestic market by US imports. Real trade justice would be to either abolish the subsidies or allow farmers all around the world to get the same subsidies from Uncle Sam.

Subsidies in the US determine the commodity prices quoted on the Chicago Board of Trade, which are the benchmark for commodity prices worldwide. It is not the actual exports as much as the fact that a phoney price is the global standard that causes the damage.

Majority world farmers, if they were allowed to benefit from their greater efficiency, would prosper from both increased income and land values, their countries would prosper, and problems of disease, overpopulation and poverty would be greatly alleviated by the increased domestic and foreign income. We also know that, as family income increases, family size decreases: it’s the paradox of wealth but another good reason to liberate food prices in order to non-coercively stabilise global population growth.

So can we quantify the actual cost of subsidies to the world economy?

A simple calculation can be made on the basis of the US and EU current subsidy levels. James Wolfensohn, President of the World Bank, sets the total annual subsidy spend at $350 billion – nearly $1 billion a day. Subsidies now represent 50% of net farm income in the US and the EU.

This means that, if subsidies were not in place, US farmers would need to double their prices to make a living.

On the basis that the US and the EU represent one-sixth of the world’s food production, we can assume that, if commodity prices doubled worldwide, the increased income for the majority world would be $2.4 trillion per annum. Total foreign aid amounts to $50 billion, or just 2%, which is paid back to the victims of what amounts to global theft from farmers outside the industrial countries that benefit from the rigging of market prices.

However, because the producers of the majority world operate on lower cost bases, are more efficient and have a higher real productivity level, the price of agricultural commodities would probably not double, as market forces would come into play at this stage. US and EU production of cereals and oilseeds would fall dramatically if faced with global competition and a level playing field.

THERE IS ANOTHER factor. The price of oil is going up. It was $12 a barrel in 1998, George Bush came to power in 2000, and it has now touched $70 a barrel and shows little sign of falling. The increase in the price of natural gas has already led to the closure of half of North America’s fertiliser manufacturing capacity in the past four years.

Demand for our diminishing reserves of natural gas for domestic heating and cooking or as motor fuel will ensure that natural gas, which generates tax income, will always be, as a priority, used in those applications where it can bear the extra cost of being taxed. This does not include fertiliser manufacture, where it is already too expensive. People are prepared to pay a 300% tax on petrol and diesel for their cars, because consumers put a high value on personal transportation. When similar taxes are imposed on bunker oil, aviation fuel, heating oil, natural gas and power generation, people’s subsequent choices will reflect the real cost of fossil fuels.

Growing food needs energy. To produce a calorie of food using fossil-fuel-dependent industrial farming takes fifteen calories of energy input. To produce a calorie of food organically still uses five calories of energy input. A gardener with a hoe uses one calorie to produce twenty calories of food. Organic farmers are closest to optimising energy use with productivity, and since their only fossil-fuel use is in running tractors and equipment, they will have the economic advantage as energy prices increase. When the oil price reaches $100 per barrel farmers will no longer be able to justify the use of inputs such as fertilisers and pesticides. On a global scale, the farmer who is ‘carbon-frugal’ is due for big rewards.

Carbon isn’t the only greenhouse gas we get from agriculture. Intensive cattle-rearing also leads to increased methane emissions. Feeding a cow on corn and soybeans leads to an acid rumen, incomplete digestion, and methane emissions several times more than from a cow fed on grass and hay. When you consider that the combined weight of cattle on this planet exceeds that of human beings, that’s a lot of gas. The widespread use of nitrogen fertilisers is the main source of atmospheric nitrous oxide, a gas that is nearly 300 times more warming in its effects than CO2.

As the price of oil-based inputs rises, farming on a small scale will become more attractive. Hobby farming, where farmers have other sources of income but use their farmland to augment that income, will expand. We will see more diversity in the countryside, and more vibrant local economies.

This article is based on the Martin

Radcliffe Lecture 2006. www.brookes.ac.uk/public_lectures