Monday, December 04, 2006

The Disconnect

Here on the plains south of the Moose Mountains, there are two main industries: agriculture and oil. When you need money to keep farming, you go work on the rigs.

There are some proud farmers and ranchers who get by with what they can earn from their land, and sometimes fight a losing battle to keep the oil wells off it. There are some people here only for the oilfield work, who have little or no connection to any farm in the area. But for many people, the two industries have formed interwoven strands of their lifestyle for generations.

Recently I have heard of people quitting farming to work full time in the oilfield. One said his only regret was that he didn't do it sooner. Others carry on, quite literally using their oilfield income to keep their farms going.

The problem is the rising cost of just about everything except farm produce. A farm can't be run as a stable business if the costs keep going up while the revenue stays flat. Some farmers have been coping by expanding their acreage, spreading some of their costs over a larger area of production and hoping the per-acre costs don't overwhelm the per-acre revenue. How long will that hope hold?

And why the squeeze?

I just finished reading an overview of similar problems in Montana (in Part One of Jared Diamond's book, Collapse). Diamond related a story to highlight the difficulty farmers face. At one time, if a farmer wanted to buy a truck, he would sell two cows. Now, to buy a truck, he must sell 25 cows.

To an urban person accustomed to inflation, that might not seem wrong. Prices go up. But why hasn't the price of cows gone up? Sure, the urban cost of living goes up, but so does the average wage. Back on the farm, when the cost of living and of farming goes up, what is the farmer to do? He can't just grow more cows on the same amount of land.

Reflecting on this, I realized that the problem is built into the foundations of our economy. Because our economic growth is fueled by oil (and coal and natural gas) and not by growth in biological production, there is a disconnect between the performance of the overall economy and the returns to agriculture. If the overall economy was dependent on biological production for its fuel, then the price of biological products would keep pace. Grain would be valued for the energy stored in its carbohydrates; that value would be reflected in the price of a grain-fed cow; and a farmer selling two cows could still get the same return in material goods as his father did. Instead, fossil fuels are used to squeeze more and more biological production out of less and less human labour, holding the price of those biological products low. Meanwhile all the rest of the economy is allowed to surge along on the power of fossil fuels, effectively disconnected from the reality of biological limits - for a while.

In Montana, the problem is much more acute than in this area, because land prices are rising steeply due to demand for homes and acreages in the beautiful mountain landscapes. Farmers cannot expand their operations to spread costs, because the land costs more than they can earn back by farming it, even over a lifetime. In the desirable mountain valley areas, farming is on its way out.

When I read this, I remembered Eleutheros's post, "Unlike Coin," and wondered whether a farmer who focused on direct use - growing food and fibre for his own needs rather than for the money it could earn - could persist in those Montana mountains. Rising property taxes would be a challenge. That might be overcome, but what about estate taxes? How would a direct-use homesteader pass that homestead on to a child?

How ironic that we have structured our economy to grow and grow and grow - at the expense of growing food. We are running an enormous gamble, that the unknown jackpot will contain some sort of unlimited supply of clean energy (pdf), that we will win it before the existing energy sources become inadequate or intolerable, and that energy alone will be enough of a foundation when we finally turn our attention to coping with the limits of soils, water, oceans, and climate.

UPDATE: Eleutheros has a new post about our response to limits - depressing or bracing, depending on how you want to take it.


Madcap said...

About the estate taxes being unbearable... I don't imagine that would hold true so much for a smaller parcel of land, say a single quarter. Even in a pricey area, the estate taxes on a piece like that would be quite manageable. So, is he talking about huge tracts of land, pieces so enormous that you'd have to have a fleet of tractors to farm it?

arcolaura said...

He is talking about the Bitterroot Valley in southwest Montana, and I get the impression that these are not huge farms. While farmland in other areas was being amalgamated into enormous holdings, land in the Bitterroot was already starting to be subdivided. But he is talking about astronomical land values. These lots are being bought up by people who commute by plane to work out of state, or build a second, third, or even a fourth home. Horses that will never work, 6000 square foot "cabins," gated communities with six-figure club membership initiation fees. And this in an area with a short growing season and very little rainfall - nothing but sagebrush growing where it isn't irrigated.

Direct use can insulate a family from the compulsion to "maximize return," but if the surrounding culture goes mad, what can they do? I've been wondering if it's wise to look for a farm in the hills here, or if we should look for some place more plain and drab. (But then again, by wider standards, maybe my dear hills are plain and drab enough - wink!)

Saskboy said...

There certainly is a disturbing disconnect between human food production, and the costs associated with generating and transporting it to where it is mostly used - the cities. People tend not to believe me when I say how easy it would be to have a catastrophe in North America even when it comes to our food supply. Why worry about what's likely to happen, eh? ;-)

arcolaura said...

Maybe that's it. If it seems inevitable, it's too uncomfortable to think about it, so we just won't.

I wish I could figure out why I am more comfortable thinking about it than not, and share some of that.

arcolaura said...

Btw, yeoman's work you're doing over at SDA. How do you keep it up?

I don't fully share your optimism about technological fixes, though. I frankly think we will sooner or later have to face the harder questions of how to say "this much is enough," and choose to limit both population and per capita ecological footprints.

Anonymous said...

I am immune to stupidity? No, but I don't know why I suppose.

arcolaura said...

I am trying to decide whether I would do more good overall by just staying away from SDA and thus staying more cheerful. Don't know yet. Can't seem to stay away long enough to find out!

Anonymous said...

I went and got my face plastered on the front of SDA this morning, so...

Anonymous said...

And now I see you got linked on SDA too. Good for you? ;-)

arcolaura said...

Hehehe! Got me thinking. I'm a kinder, happier, more productive person when I don't read that blog. Tradeoffs.