Since the birth of the Convention on Biological Diversity (CBD) at the Rio Earth Summit in 1992, there has been a welcome transformation in the language of global conservation. Policymakers and even some businesses have started to express a view of nature as a store of wealth””or “natural capital”. Talk of “ecosystem services” now draws attention to the helpful things that nature does unbidden, such as providing fresh soil and clean water.
This approach not only has the advantage of moving conservation from the domain of lofty morality down to earth, reflecting a pragmatism more likely to support and sustain action.
I’ll give you an idea of how terribly complex this is — what is the value of an extra one-tenth of one percent organic matter in farmland soil?
Leave aside for the moment that equilibrium soil OM levels shift with annual average temperature, by about 2% OM per 5 degrees Celsius, with higher temperatures unsurprisingly burning more OM in the natural course of things. What that means is that a Texas farmer with 4% soil OM is doing great, but in Saskatchewan that level is proof of sustained soil abuse.
Here’s why this matters. If you farm your soil hard — lots of corn and other row crops — it will give you more cash at the end of each season, but soil OM drifts ever lower. In accounting terms, natural capital is being liquidated to generate extra cash; the proverbial burning the furniture to stay warm.
Crop rotations with more soil-building crops and fewer soil-destroying crops (like corn) tend to generate lower Free Cash Flow most years. Until there’s a drought. More sustainable systems will sacrifice some FCF over the years in anticipation that the natural strength of that system will buffer the effects of extreme weather.
Unfortunately two factors distort the dynamic, often irreparably over even the medium term. First are the whole regime of subsidies, which reward production of row crops and compensate for the logical bad-year consequences of pushing the system too hard.
Secondly, the entire banking system has long been structured to reward systems generating higher FCF regardless of the methods or ecological cost to farm system health.
Let us define the functional value of one-tenth of one percent soil organic matter in Iowa as $100 per acre. As a soil chemist I can easily justify every bit of that amount, and I could argue for more.
If you take a 640 acre farm — one square mile, which is rather small in Iowa these days — that generates $50K in FCF but destroys one-tenth percent soil OM every two or three years. Using three years for the calculations, $150K in total FCF comes at the cost of $64K damage to the soil.
The [i]real[/i] net is $86K for the three years.
By contrast, a neighbor managing the farm as a true steward may only see annual FCF of $40K, but he builds soil OM by one-tenth percent every five years. The bank sees FCF of $120K over three years, and there are another $9K of soil building.
The real net is $129K for the same three years — 50% more profitable overall — but nobody in the system views it that way. He’s described as “inefficient” and a “poor manager.” The bank cuts back his line of credit and may even call his loan.
Now. Contemplate all the other aspects of our economy that could be analysed in the same way. You begin to see how many things are working against those of us attempting to care for our land, our forests, our fisheries … and on, and on, and on.
Bart Hall, Can a farmer ever eliminate the bank with all the big expensive equipment and irrigation needed to farm these days?
When I was a child, some were still remember farming with mules and then the move to small tractors, when field workers were hired to augment what the farmer’s family could handle. Debt was the farmer’s enemy then.
Debt, and taxes, have always been the farmer’s enemy.
Consider the Old Testament ‘jubilee’ every fifty years in the time of David. Debts were wiped away and everyone started over. Greek farms were so overwhelmed by debt that in 594 BC Solon simply declared all debts void and asked everyone to start over without using debt.
Excess debt and taxation overwhelmed the formerly productive [i]latifundia[/i] system in 4th Century Rome, so nearly all farmers reverted to self-sufficiency production, stopped paying taxes, and Rome had to recruit Germanic troops willing to be paid in plunder. John Galt has a very long pedigree.
In the 11th Century, excess debt, contracted by farmers during an early inflationary period, became unsupportable. Rather than lose their land completely, huge numbers of them gave their land to the church and became part of the growing monastic movement. Which was largely debt-driven, even in cities.
Fourteenth Century, same thing, vastly worsened by plague. Or late 19th Century America, largely farmed by mules. In fact most rural American counties have been losing population for over a century.
It’s nothing new, and the current dilemma will not be the last.