Category: Finance

Issues with creating a sustainable regenerative agriculture in America

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Issues (Not in any particular order of importance)

  • Price Manipulation

The price of vegetables and other specialty crops – even certified organic vegetables and specialty crops – is driven by a cheap (in many cases illegal) farm and food processing labor system. USDA in 2017 estimated that approximately 50 percent of specialty vegetables were grown by illegal immigrant labor.

It is, for all practical purposes, a pirate economy – heavily defended by large agri-business enterprises.

There have been recent efforts in Congress to further manipulate this illegal system by granting undocumented farm workers special immigration status (not as an effective method to reform immigration laws, but as a legislative ‘gimmick’ to allow a manipulated and exploitive economy to continue without political criticism).

Small scale certified organic producers using sustainable practices are at a severe pricing disadvantage. Many resort to various forms of volunteer labor to supplement their production systems and allow them to financially survive.

  • Nutrition and Food Health

A major (and inobvious) contributing factor to declines in global biodiversity has been changes in diet (and demand for food by type) driven by the green revolution. The green revolution globally saved many from starvation and nutrition deficient disease. It also narrowed diets and replaced diverse whole foods with foods derived from grains.

  1. Issues with lack of diversity in agro-ecology.
    1. American agriculture (and the political economy of American agriculture) has become narrowly focused – grains and confined animal operations.
    2. Diverse, specialty farming has lacked significant support from both USDA and congress.
    3. Knowledge of diverse agro-ecology has declined precipitously with the concentration of crops and ownership in agriculture.
    4. Issues with nutrition education.
      1. Nutrition education in the early public education system has been neglected.
      2. A large body of historical and current nutritional knowledge seems to find little educational support.
    5. Issues with medicine’s knowledge of nutrition.
      1. General medicine has, until recently, neglected nutrition as part of general healthcare practice.
      2. Historical knowledge of nutrition and the benefits of various plant based remedies has also been neglected.
  • Land Access…Cost of Land…Real Estate Appraisal of Agricultural Land

A major issue limiting the expansion of sustainable, regenerative farm practice has been the cost of land. This varies regionally, but is generally at the top of local ag advocates’ list:

  1. Midwestern lands and western lands have ‘some’ limited standard real estate appraisal methods to evaluate the agricultural qualities of land as a factor in financial valuation. Even in those highly agricultural areas the ability to evaluate agro-ecological factors is severely limited. In many parts of the country agricultural lands receive standard comparable price analysis. For example, the real estate appraisal for our 91 acre Rhode Island purchase in late 2017 compared the property to other open land with vary dissimilar agro-ecological properties (and no comparison of soils).
  2. Most landowners allow lease periods that are too short for agricultural planning purposes. The interest in potential development of land – and a chance to sell property into development at a high price – drive the interest of landowners to constrain lease periods. Also, many times land trusts and governments also constrain their land use leases (I have never researched the underlying issues.).
  3. Much of the national and regional political interest has been with distribution and food hubs. The needs to increase organic, sustainable production and expand value-added processing related to that expansion has been politically and financially neglected in my opinion. I have seen examples of food hubs that immediately have sourcing issues and react by compromising their initial regional mission. Our local farmer’s market organizer and distribution group, Farm Fresh RI, has needed to reinvent both who they serve and how broadly they serve in order to maintain their political role in the community. They are developing a $16M food hub building …in the end It appears to me it will look like a conventional food distributor and real estate lease agent….a completely different ethic than the original intent of the socially responsible Brown University students that founded the organization.
  • Cultural issues

Twenty-five years of work on environmental issues, agro-ecology, ecological economics, and agriculture have led me to the sense that the major impediments to evolving a more robust sustainable, regenerative agriculture are cultural[KE4] .

  1. We now have acutely deteriorated rural communities and rural community institutions –decline in societal institutions that maintain social cohesion (decline in churches, small business and small business organizations, etc.)
    1. Public educational institutions have focused on ‘measured’ education…at the expense of a deeper understanding of civics, culture, home economics, etc. My older daughter at this point in her life is a third grade teacher in a public school system. She graduated from Skidmore College with a double major in child development and American studies. She did her teacher training in a Waldorf school…then began a community school in a poor area of Providence with four other women. She loves her work at developing young minds and bodies – she tolerates all the ‘measurements’ and finds it harmful in certain cases.
    2. State and local governments have become increasingly materialistic and bureaucratic – utilizing statutes and law to counter profound cultural issues. This becomes sadly troubling and petty in many cases. They are, governmentally, sincere attempts to encourage healthier behaviors – the problem is the ethical dilemma that occurs with legislating personal behavior.
    3. I am a strong advocate of free, just markets – but do not see how we survive long as a society with our current concentrations of politico-economic power.
    4. All of the above has led to a significant number of culturally narrow and poorly educated citizens with little ability to make thoughtful, healthful decisions.
  • Equipment issues

Because of the small scale of organic certified vegetable and specialty crop farming there is limited innovation in equipment (not enough demand for equipment manufacturers to invest).

Needs

  1. A large capital pool for landholding – a partnership between farmers and pool management – structured as some form of quasi-governmental ‘charity’ because it will need for many years to subsidize land costs.
  2. A national effort to reform land grant universities and other technical colleges – to broader their curriculum, reevaluate their applied science education, and expand healthy methods for their experimental/trial farms and nutrition programs. Some have made changes to their trial farms and nutrition education…which is great…but I do not think it broad (this needs a study). As an aside, for two years I have been engaged with my undergraduate engineering and science school to utilize the food program… expanding it to a working farm…as an early stage method to broaden engineering education.
  3. Equitable Compensation Methods…breaking through a pricing structure based upon cheap (and in many cases illegal) labor. This is an extremely complex political issue with much of the agricultural capital invested in maintaining the status quo of concentrated ownership.
  4. Seasonal capital for farms and seasonal value added food production.
  5. A subsidized capital pool to provide incentives to equipment manufacturers and technical colleges to develop a new generation of farm equipment.

A Final Observation

There are two current societal positions I find false:

  1. That the best wealth creation occurs by limiting ownership and driving down costs. I believe broad ownership – and dynamic interaction between owners – creates the best environment for wealth creation.
  2. That an agriculture based upon small scale landowners cannot ‘feed the world’. There are a number of studies that show diverse, distirbuted farm operations can feed an ex0panding population with a more resilient, disease resiilient, disease resistant agriculture.

Wage-for-Hire and the Pandemic

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The Covid-19 pandemic has become a classic case study in the shortcomings of wage-for-hire in America.

One-third of renters did not pay their rent for April.

The unemployment insurance system is deeply stressed.

Many, many companies ‘laid off’ their workforce when the pandemic hit and governments began to take appropriate steps to save lives.

Most of those workers were wage-for-hire employees. The fortunate ones had some benefits – many did not.

Most of those workers do not have any ownership in the companies that employ them – therefore no underlying personal asset attached to their work.

Most of them, because their wages are only adequate for their necessary expenses, do not have any savings.

I read where a majority of American workers cannot afford an $1000 emergency.

Wage-for-hire makes a good part of our economic disaster.

It’s a great system to concentrate wealth.

It’s a great system to specialize work in a manner that demeans vocation.

It promotes some old idea of economic efficiency that arose as a slightly more humane version of slavery.

I am not a fan.

The underpinnings of wage-for-hire and non-equity corporate structures are a gimmick.

If we really want a wealthy America we also want every worker to have a share of wealth.

If we really want to diversify risks in companies, we also want every worker to have a stake in ‘risk sharing’.

We just found out our economy does not adapt to system-wide adjustments for national health and safety emergencies.

I’d like to see us rethink how we financially work together.

A Troubled Economy

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For me, the most dramatic thing in our current ‘coronavirus political economy’ is how troubled we seem to be as a society.

There are a number of factors:

  1. It is a VERY contagious virus….so good reason to curtail activities outside the home.
  2. To curtail activities outside the home is hugely traumatic for our political economy.
  3. Local communities are extremely dependent on global logistics.
  4. Our economy is financially dominated by large corporations that depend on global logistics, cheap labor, and local residents going about purchasing their goods.
  5. The stability of financial markets depends on trust in large corporations. If investors no longer financially trust the corporations they are going to flee the market.
  6. Once investors begin to flee the markets all of the derivative financial instruments become suspect – even the derivative markets meant to protect certain industry segments (commodity futures, for example).

Add to that list:

  1. We have grown much more secular as a society; therefore our basis for faith and trust is now much more material.
  2. Our national government has grown extremely superficial and unable to collaborate on important issues.
  3. Our heroic figures are predominantly athletes…along with some media and film personalities.

All of those items are good reason to be troubled.

I would hope that we become more clearheaded on an economy that is locally sustainable while marketing local surplus.

Who Owns America?

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“When democracy goes down before monopoly capitalism,” Agar writes, “the result has been a greedy tyranny, preserving all the vices of capitalism and extinguishing its virtues.”

Russell Mokhiber, editor of the Washington, D.C.-based Corporate Crime Reporter, and Robert Weissman, editor of the Washington, D.C.-based Multinational Monitor in 2000 wrote the following about the 1936 published book Who Owns America?

The other day, at our local bookstore, we passed a book. And then doubled back.The book is titled Who Owns America?: A Declaration of Independence. Sounded like it was written by people we should know. But on further investigation, we recognized none of the names on the cover.Who Owns America? was written by 21 “conservative” decentralists. And it was first published in 1936.Re-released this year, with a new introduction by Seton Hall University History Professor Edward S. Shapiro, Who Owns America? (ISI Books, Wilmington, Delaware, 1999), is highly critical of large corporate institutions that controlled the political economy in 1930s America. Its publisher believes the book is as relevant today as the day it was published.Edited by Pulitizer Prize winning Louisville Courier-Journal columnist Herbert Agar and southern poet Allen Tate, Who Owns America? puts forth the type of scathing critique that you just can’t find in today’s political debates.Like today’s corporatist conservatives — George Will, James Glassman and Charles Krauthammer — the conservatives who wrote Who Owns America? believed that the specter of big government threatened individual freedom and the ideal America.But unlike the corporatists of today, Agar, Tate and their colleagues understood that public authority was the only antidote to the excesses of big corporate power.Agar, Tate and their colleagues argued that to attain the conservative goal of less government, you’d first have to limit the size and power of the large corporate institutions that were roaming the land. Typical of the 1930s conservatives writing in this volume is the pro-decentralist economist Richard Ransom.”The permanent lease on life which corporations possess tends more and more to concentrate within a few hands the ownership and control of general property,” wrote Ransom in a chapter titled Corporate and Individual Persons. “The disproportionate distribution of the national wealth is very evidently due in large part to the corporate tendency to mass larger and larger aggregates of ownership which are held together by corporate permanence and corporate inertia. …”Ransom’s solution to the problem of corporate control of the national wealth? Federal chartering of corporations doing interstate business.And what should the states do about excessive corporate power? The states should limit the “profitable business life of the corporations which they charter.”And how could the states accomplish this end?”This could perhaps be done by means of heavy selective inheritance taxation on the transfer of corporate shares or assets,” Ransom answers. And what would this achieve?”Such a shorter term of corporate life, either accomplished indirectly as suggested here or accomplished by more immediate means, will produce a more direct personal responsibility in corporate managements,” Ransom says. Once interstate corporations are federally chartered, Ransom proposes that the personal liability of stockholders should be extended to an amount at least equal to twice the proportionate investment of each stockholder (currently, you can only lose what you put in.)  Can you imagine Will or Krauthammer contemplating these thoughts? Lyle Lanier, a professor of psychology at Vanderbilt University, wrote a chapter titled “Big Business in the Property State,” in which he observed that “the American people have long recognized the danger to democracy of economic power concentrated in the hands of big corporations.”Lawmakers passed the antitrust laws at the turn of the century, “but these laws have been impotent to stem the rising tide of big business organization,” Lanier wrote. Industrial capitalism, Lanier wrote, “has followed a course of development which is both self-destructive and dangerous to democratic institutions.”Lanier, like his co-authors, finds hope in a Jeffersonian ideal of small business and small farmers. The publication of this volume today makes George Will, James Glassman and their conservative contemporaries look like empty suits compared those who wrote Who Owns America?. Big corporations still roam the land and still threaten a fragile democracy. But there is no Agar on the right to challenge them. Needless to say, we cannot and do not agree with everything written by these 21 self-proclaimed “conservatives” of the 1930s. We do agree with the conservative sentiment put forth in the book, as summarized by Agar, that corporate concentration and democracy are at odds.”When democracy goes down before monopoly capitalism,” Agar writes, “the result has been a greedy tyranny, preserving all the vices of capitalism and extinguishing its virtues.”

This is remarkable, very relevant to our current economy/society.

I also find their notion of limiting the lifespan of corporations extremely insightful (and, by the way, a very Christ-like perspective on society).

Fake News, Internet and Communication Tech Companies, and American Society

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This post diverges from agriculture and food…but not really

…and excuse the following generalizations (there are good folk in all the places I criticize).

Apple’s CEO made a recent statement on Fake News.

Article on the Statement

Apple has more historical credibility here than the others…but…

He states the need to create methods to ‘find’ fake news without stepping on freedom of speech.

Excuse my frankness, but if Google and Facebook and Twitter and all these other social media entities had – in the beginning – collaborated with publishers and newspapers (rather than intellectually and economically demeaning them for a buck to be the hot new technology) …this entire episode would not have happened….

AND Facebook and Google and Twitter..etc. would today have had a much better business model.

Watch what happens now….

It’s a huge mess…I disagree with Cook that it is going away quickly…will NOT go away without better business models for Internet companies. The advertising model has all the integrity …and ‘spendability’…of a wooden nickel.

I’d even suggest Google is only marginally on firm financial ground.

Facebook, Twitter…even certain aspects of Amazon….are in the bulls-eye of the coming information reformation.

The peripheral companies like Yahoo are already seeing their ephemeral balance sheets crash.

Google and others (like Bezos and Musk) also constantly scramble to get into other businesses…I wonder if this is just ‘expansionist’ capital… or fear of the fragility of the core business financial model?

I was, for 20 + years, in publishing …loved it and was extremely good professionally (information graphics and descriptive communications at the most sophisticated and intelligent levels of the industry….sorry for the ‘personal back-slapping’…but I was pretty darn successful).

In 1994 I left the field because I no longer saw a route to practicing with an ethic similar to my practice at The University of Chicago Press and Scientific American. Fortunately The University of Chicago Press is still robust (do not know about Scientific American).

In many ways the industries of publishing and journalism (and the integrity of those industries) were ‘stolen’ by the Internet’s ephemeral models.

Our society had also…for the previous 30 years (60s through 80s) evolved a culture and law of hyper-individualism….where personal rights in law supercede the rights of family, community.

It is also the period where ‘individual rights’, ‘rights to aggregate’ and  ‘rights to be corporate’ superceded traditional ideals of justice for all….even superceded BASIC rights enumerated in the U.S. Constitution. We now have an entire set of inane laws that are fundamentally and profoundly contradictory.

We are now seeing the results of the changes in law and culture from the 60s to the present:

  1. We have a PRESIDENT OF THE UNITED STATES who has built a career (since the 60s) on the manipulation of information/communication for his own “individual’ gain (and his need for attention). He does not see any moral, ethical, or cultural connection/contradiction with his severely dishonest actions. I am not a psychiatrist and do not know what his diagnosis would be…but am certain he is not healthy.
  2. We have forty years of law based upon the idea that an individual is more important than a community or a family. The political dialogue seldom even acknowledges the complexity of the laws created…the ultimate absurdity being the public discussion and laws related to abortion, sexual rights, etc.
  3. We have forty years of financial corporations and financial professionals whose goal is the personal acquisition of money (not wealth in the traditional sense). Not that America was ever without sin (remember the American Indian, the African slave)…but we originally created law – with our country’s formation – meant to alleviate oppression, respect one another, and allow for the pursuit of happiness (I would have used the word ‘health’ rather than ‘happiness’…but the intentions were sterling). Those formation documents are simple, straightforward, understandable, and consistent with my understanding of human behavior.
  4. We have also created an agriculture economy based upon the aggregation of ownership and money at the expense of farming integrity…an agriculture that has deteriorated the fundamental means of production (the soil and the reproduction of animals) based upon someone’s or some corporation’s ‘individual rights’.
  5. We have created food that reflects the aggregation of money by debasing ingredients and quality of raw materials.

Fortunately, a more and more robust sector of our society sees the problem, understands the problem, and has some pretty spectacular start-up suggestions on how to reform our culture.

A subset of that group also has amazingly high moral, ethical, and religious values at a young age – remarkable in our current economy.

They are going to need a strong stomach and sturdy limbs…prophetic action will be resisted.

 

The Ergonomics of Specialty Farming

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Farming is hard physical work….particularly the planting and harvesting of vegetable crops.

Given we are developing an investment fund that will own both farm and value-added production facilities, I’ve begun thinking how we might diversify any given farmer’s work – diversify it in a manner that is healthier for the farmer and increases productivity.

Thinking of this opens a number of business structure questions:

How can a farmer own parts of diverse enterprises? (Co-op, Shareholder, etc.).

How to analyze improvements in farm and food enterprise operations that result from diversifying work and tasks?

How to manage such a structure?

What are the farming opportunities and limitations?

We will put together some financial models for this for investor conversations.

Losers

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I consider Wendell Berry a prophet.

Penguin Books has recently published a new collection of his essays (do not see a contents…but think them all previously published???).

It is titled The World-Ending Fire.

He often refers to our present economy as being built on combustion and toxins…so the title is aptly put.

In an interview related to the book’s publication he was asked about his opinion on the recent election of Donald Trump as our American President.

His response was…it didn’t matter if it was Hillary Clinton or Donald Trump….either way he (Wendell Berry) was a loser.

I am personally in the same sinking boat….and over the past few years a number of folks have (very definitely) called me a loser.

Wendell has, for a long time, had both of his feet solidly planted in the compassion based, soil conserving, community building loser class.

I, for a similarly long time, had both my ‘moral’ feet in his space. It is just I had one economic foot  in the ‘combustion and toxin’ economy.

Over the past few years I’ve liquidated the ‘combustion and toxin’ assets to work with younger folks on another economy.

Now – at this point – I diverge a bit from Mr. Berry.

I’ve had a great deal more day-to-day business experience than he, so I see an opportunity to change the economy…and change it pretty rapidly in food enterprises.

Even think I know how to do it!

The previous post on An Enterprise Ethic starts to publish some of the work over the past three years that has helped solidify my reputation as a loser.

The Value of Knowledge

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I am starting to revisit work done over fifteen years ago on the financial value of knowledge.

Interestingly, the period when I was first analyzing valuation methods for intellectual property/knowledge was coincident to Internet enterprises devaluing knowledge/information.

It was a period where social media, Google, and other Internet enterprises were building advertising financial models. Those enterprises were both devaluing information/knowledge as well as condescending to longstanding academic and publishing ethics on knowledge creation/evolution.

Currently (20 years later) we have the result of their ephemeral business model and condescension…fake news.

It was inevitable.

It was also the result of complex cultural changes that were evolving because of our highly individualistic society.. and much of the petty social action that results from that self-absorption.

I now confront another harmful cultural outgrowth of those events.

How do you financially appraise the value of sound, rigorous knowledge creation in a society that has very few tools for analyzing those assets?

In a few narrow fields (mostly linked to progressing self-interest – human aiding biotechnology, personal computational technology, etc.) those knowledge developments are highly (and I might add artificially) valued.

In most other fields the basis for valuation is only linked to current cash flow generated by those knowledge creations or – in some rare cases – projected cash flows from comparable analysis.

Neither of those approaches allow for analysis of asset value based upon historical, cultural, scientific comparisons that accommodate for externalities…. and natural elegance (more on that in another post) .

I’m in process on further research to address some of the issues/problems that I encountered 20 years ago when we began our agro-ecological work.

More to come.