Is It the Jetsons or Karl Marx

People of a certain vintage will remember that everyone was supposed to be into an "age of leisure" right now, that the biggest challenge would be finding creative things to do with our time. Technology was moving ahead so quickly in the 50'/60's that productivity gains would allow fewer and fewer people to create the goods and services, the wealth needed to properly feed, cloth and house everyone. Instead we're neck-deep in the capitalist downside of what Karl Marx first hinted at, something called creative destruction. 

From Wikipedia:

"... the idea of creative destruction or annihilation (German: Vernichtung) implies not only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselessly devalue existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the ground for the creation of new wealth...."


Almost all industries including farming, fishing, even the fixed link have followed a familiar path: capital (in the form of new technology, hard assets like bridges, combines, and forest harvesters) replaces labour, with the promise of more efficiency and cheaper consumer goods.   The current obsession of economists and business writers here is Canada's lagging productivity. That's a fancy way of saying it takes too many people to produce Canada's goods and services, and somehow we'd all be better off if businesspeople  use the high Canadian dollar to import the technology and machines (usually from Germany or the United States) needed to produce more with less (people that is). 


The problem of course is that it's the producer of things that takes on the debt to finance these advancements, but the benefits (cheaper whatevers) always seems to flow up the marketing chain to the to retailer/consumer. Ironically the only exception to this are companies using cheap overseas labour.


There's no question that farmers have taken a big bite of the productivity apple, believing that making investments (taking on debt really) in new technology is necessary, but then finding they don't have the economic clout to capture the benefits.  Half of Canadians farmed in the 1950's, now it's about 2%. Here on PEI farm debt loads since 2000 have risen from about 200 million dollars, and are now approaching 700 million, and it's a similar story throughout Eastern Canada. The boom in grains and oilseeds (pushed by ethanol production, and yes big machinery) in the western prairies of North America have helped farmers there make some money.

Here's the thing. every Canadian province has its wealth producing sectors, in the West and the East linked to whatever natural resources it has (forests, farmland, minerals, oil, etc.)  On PEI its the land, water, now wind, and transfer payments.  The economy continues to benefit from these sectors even if they're losing money (primary producers simply take on more debt to finance the fishing season or the crop). The risk is that can't go on forever, the banks won't allow it.   The continuing problem is how do primary producers get a fairer share of the consumer dollar. If that can't be fixed then the rest of us are in trouble too.  And maybe that's what we're seeing with all the "creative destruction- the re-configuring of an old economic order" going on in the rest of the economy. It's just that farmers and fishermen felt it first. 

My hope is that it gets better for everyone, and quickly. Henry Ford, Karl Marx,  and now economists like the New York Time's Paul Krugman, recognize the economic imperative, the dignity even,  of people working, and that there won't be any sustained recovery until more people have a job. And I know anti-poverty groups in the Maritimes would add, jobs with a reasonable wage.  All of this is a long way from the Jetsons, and an age of leisure.




A couple of pieces this week on the difficult times we live in:


http://www.truth-out.org/capitalisms-new-era/1313769455




Capitalism's New Era

Sunday 28 August 2011

by: Shamus Cooke, Truthout | News Analysis

"Karl Marx got it right, at some point capitalism can destroy itself," said Mr. Roubini, in an interview with The Wall Street Journal. "We thought markets worked. They're not working."

The world economy is in shambles and about to get worse, according to even mainstream economists. How bad is anybody's guess. Some things, however, are certain: the recovery that politicians have been promising for years existed only in their heads. The reality of the situation is now apparent to millions of people across the globe, who, before, clung to the empty promises of economic recovery. This newfound consciousness will inevitably find expression in the political realm and, more importantly, the streets.

A key aspect of this sudden mass awareness is in response to high unemployment and the deeply unpopular measures that politicians are forcing upon working people, both byproducts of the Great Recession. Politicians are blaming "the markets" for demanding austerity measures, but "markets" are simply places where wealthy people invest their money. To guarantee a profitable return on their money these investors demand that labor laws be squashed and social programs be eliminated, all over the world.

Spain, for example, is one of many countries having austerity measures forced down their throats. Reuters reports:

    "Analysts see the shaking up of the country's inflexible labor laws [laws that protect workers] and the easing of hiring and firing [so older, activist, or slower workers can be fired] as vital to restoring the country's competitiveness. The labor reforms are crucial. They will help to restore growth [profits] in the long term. Growth is the only way out of these adverse fiscal trends,' said Luigi Speranza, analyst at BNP Paribas." [May 27, 2010]

To summarize, creating new laws that enable Spanish corporations to work their workers harder will be better for profits.

Greece faces a similar austerity plan, according to The Guardian UK:

    "Tax increases, spending cuts and wage reductions and a sweeping privatisation programme have led to violent protests in Greece, with many arguing that the International Monetary Fund and European Union have demanded too high a price for their financial support." [August 2, 2011]

In the United States, these policies find expression in the attack against public-sector unions and the targeting of Social Security, Medicare and Medicaid for cuts, while mass unemployment is allowed to act as a very efficient way to lower wages for all workers.

Politicians have made it clear that economic growth, especially corporate profits, will increase in response to these anti-worker policies. They are only partially right. Corporate profits in fact have been on the rise, but the austerity measures have been responsible for the depressed economies throughout Europe and the US. When workers' wages are lowered and social programs are decimated, working people and the poor are left with little money for any purchases other than the bare necessities. Without consumer demand for their products, corporations curtail operations even more. This global dynamic has been decades in the making, with the recession having finally forced the issue into the forefront.

The Reagan and Thatcher administrations were the first Western representatives during the post-World War II era of this now dominant trend, which aimed at pushing back the social programs and wages won by the labor movements. Their policies were in response to the lower corporate growth rates that began in the 1970s and continue to this day. Now, all of Europe is suffering because banks and corporations demand a more profit-friendly business environment: universal health care and education programs are in jeopardy, plus wages and other benefits are under attack.

For the wealthy and corporations this is a life-and-death struggle. The Great Recession has already bankrupted the banks and corporations who were not fit enough to survive under a crumbling market economy. The existing companies are thus forced to squeeze more work for less pay out of their workers, since labor is the most flexible cost of any business. Pushing labor costs down - and by extension cutting social programs - is thus the priority of the corporations and their paid-for politicians across the globe, since the global economy is tightly connected and they all play by the vicious rules of the market. In fact, the intensity with which the corporate elite is pursuing these policies is a reflection of their negative outlook for the global economy.

This constitutes a new era in global capitalism, one that mimics the market economy of past generations. The 2008 recession was not a temporary phenomenon, but the ushering in of a new period in which the corporate elite attempt to restructure social relations, meaning that past assumptions regarding wages and social programs must be destroyed, as a new, more profitable equilibrium is sought between the corporate elite and working people.

Implied in this nation-by-nation restructuring is a restriction of democracy, since these anti-worker policies negatively affect the vast majority of the population. The riots in London are an expression of this, as are the mass demonstrations throughout Europe as well as the Middle East. In the United States, democracy is circumvented via the so-called Super Congress, whose duty it is to cut Medicare, Medicaid and Social Security. Austerity programs throughout Europe are being implemented against the wishes of the general working populations.

Also included in this attack on working people is the corporate elite's doubled efforts to divert the working-class anger toward fake populist movements - like the Tea Party in the US - or against minorities, such as Muslims and immigrants in the US.

This will require that working people stay focused on who exactly is attacking them, while focusing on measures that can serve as alternatives to what the corporate elite are forcefully implementing.

The most immediate and important demand of working people must be taxing the rich and corporations, since social programs need to be funded and expanded and a massive jobs program with a strong green component is desperately overdue. It's not by coincidence that taxing the rich is rarely used in austerity plans; and when, on rare occasions, the rich are taxed, it's at low levels with high publicity, so the angry public will think the illusion of "shared sacrifice" is a reality.

For example, in the US, President Obama is again calling to end the Bush tax cuts for the rich (after allowing them to continue less than a year ago). It is doubtful that the Bush tax cuts will be ended, but if they were, it would be insufficient. Working people must demand that taxes on the rich be raised to at least pre-Reagan levels (70 percent), while President Eisenhower levels would be best (90 percent). Over the decades, the tax burden has shifted dramatically, causing wealth to accumulate into the bank accounts of the top 1 percent of the population, the same people who are now demanding that social programs be destroyed so that their investments are secured and their corporate profits remain high.

Since illusions of an economic recovery have now been shattered, it's up to working people to demand that their labor unions and community groups unite to tax the rich and corporations in order to finance a massive jobs program. Fortunately, the AFL-CIO is organizing actions for the first week of October to demand jobs and oppose cuts to Social Security, Medicare and Medicaid. Many within the labor movement are calling for massive demonstrations across the country for October 1. It will take these types of actions to unite working people to fight for a positive solution to the economic crisis.


 
http://www.guardian.co.uk/commentisfree/2011/aug/22/economic-growth-environment


Even when times are supposedly good, neither society nor the environment can take the strain of an ever-expanding economy

          o George Monbiot
          o guardian.co.uk, Monday 22 August 2011 22.00 BST
 
How much of this is real? How much of the economic growth of the past 60 years? Of the wealth and comfort, the salaries and pensions that older people accept as normal, even necessary? How much of it is an illusion, created by levels of borrowing – financial and ecological – that cannot be sustained? Go to Ireland and you'll see that even bricks and mortar are a mirage: the marvels of the new economy, built on debt, stand empty and worthless.

To sustain the illusion, we have inflicted more damage since 1950 to the planet's living systems than we achieved in the preceding 100,000 years. The damage will last for centuries; the benefits might not see out the year. Ireland, again, points a withered finger at the future. Among other iniquities, the government forced a motorway through the Gabhra Valley, part of a site – the Hill of Tara complex – comparable in its importance to Stonehenge. It was both an act of wilful vandalism and a notice of intent: no consideration would impede the economic miracle. The road hadn't opened before the miracle collapsed.

Once our needs had been met, continued economic growth did most people few favours. During the second half of the growth frenzy, unemployment rose, inequality rose, social mobility declined, the poor lost amenities (such as housing) while the rich enhanced theirs. In 2004, at the height of the longest boom the UK has ever experienced, the Nuffield Foundation published this extraordinary finding: "Rises in mental health problems seem to be associated with improvements in economic conditions."

Now, bar the shouting, it's over. Last week the Wall Street consultant Nouriel Roubini, one of the few who predicted the financial crash, spelt out the fix we're in. Governments cannot afford to bail out the banks again. Quantitative easing can no longer help, nor can currency depreciation. Italy and Spain will be forced, in effect, to default, and Germany won't pay out any more. The successful capitalist reached this striking conclusion: "Karl Marx, it seems, was partly right in arguing that globalisation, financial intermediation run amok, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct."

Nor can the current economic system address the environmental crisis. Its advocates promised that economic growth and environmental damage could be decoupled: better technology and efficiency would allow us to use fewer resources even while increasing economic output. Nothing remotely like it has happened. In some cases there has been a decline in resource intensity, which means a lower use of materials per dollar of economic output but higher overall consumption. In some cases – such as iron ore, bauxite and cement – even this hasn't happened: resource use per dollar has risen.

So far governments have responded to the renewed crisis of capitalism by frantically seeking to invoke the old magic again, to start the engine of creative destruction once more. The means to do so no longer exist. Even if they did, they would only delay and enlarge the underlying problems.

But now, in the wake of the English riots and faced with possible collapse, we are at last beginning to talk about the issues ignored while the illusion persisted: equality, exclusion, the feral rich and the discarded poor and, in WH Auden's words, about "what the god had wrought / To please her son, the strong / Iron-hearted man-slaying Achilles / Who would not live long."

The most hopeful sign that politicians might now be prepared to ask the big questions was the presence, in Ed Miliband's pile of holiday reading, of Prof Tim Jackson's book Prosperity Without Growth. It's a revolutionary text, now two years old, whose time has come.

It points out that the financial crisis was caused not by isolated malpractice but by the systematic deregulation of the banks by governments, in order to stimulate economic growth by issuing more debt. Growth and the need to encourage it is the problem, and in the rich world it no longer bears any relationship to prosperity.

Jackson accepts that material wellbeing is a crucial component of prosperity, and that growth is essential to the wellbeing of the poorest nations. But in countries such as the UK, continued growth and the policies which promote it undermine prosperity, which he defines as freedom from adversity or affliction. This means, among other blessings, health, happiness, good relationships, strong communities, confidence about the future, a sense of meaning and purpose.

But how do you escape from growth without tanking the economy – and our prosperity? Under the current system, you can't: when growth stops, it collapses. So Jackson has begun developing a macroeconomic model which would allow economic output to be stabilised. He experiments with raising the ratio of investment to consumption, changing the nature and conditions of investment and shifting the balance from private to public spending, while staying within tight constraints on the use of resources. He finds that the redistribution of both income and employment (through shorter working hours) is essential to the project. So is re-regulation of the banks, enhanced taxation of resources and pollution and measures to discourage manic consumption, such as tighter restrictions on advertising.

His system is not wholly different to today's: people will still spend and save, companies will still produce goods and services, governments will still raise taxes and spend money. It requires more government intervention than we're used to; but so does every option we face from now on, especially if we try to sustain the growth illusion. The results, though, are radically different: a stable, growthless economy which avoids both financial and ecological collapse.

From now on, as the old dream dies, nothing is straightforward. But at least we have the beginning of a plan.

It's Not Pretty

There are weeks on PEI (and elsewhere I know) when nature's bounty overwhelms you. Fields are lush and green,  cattle are comfortably moving through pastures, and you desperately want to hold onto that sense of well being.  Towards the end of August that starts to change. Rain and wind start knocking down parts of maturing grain fields, forage fields are stripped for winter feed,  and potato fields all of a sudden start dying.

I remember the first time I saw a potato field that had been "killed down".  I thought don't these fields get sprayed enough controlling insects and late blight, is it really necessary to do this too?   WTF in other words.  I spoke to a couple of farmers I trusted, and an agricultural researcher, and they all told the same story.

There are two main reasons. The most widely grown potato is  a variety I've written about before called russet burbank  (you can put it in the search box at the bottom for more information). It's a long season variety that will keep growing until Santa comes if you let it. It simply won't grow the tough skin necessary for  harvesting  and storage unless it completely runs out of nitrogen, or the plant is killed.  (There are a few different methods: herbicides are the most popular, but a few farmers cut the plants down on small acreages).

The other reason explains why almost all potato varieties are killed down and that's late blight. The fungus spores can survive on live tissue, so if they come in contact with the potatoes being harvested, they'll be ready to reek havoc in storage or even the following season if they're on seed potatoes.  Killing the plants well before harvest means the late blight spores can't survive. Some researchers even recommend a copper spray before harvest as well to make sure the late blight spores are really gone.

I can remember covering a story of late blight in Newfoundland in the mid 1990's that had been caused by overwintering spores on seed potatoes from PEI. The crop was a disgusting mess of black fungus, and PEI's seed potato sector had a real black eye. When a researcher admitted in an interview that this could happen, he and I were roundly condemned for even mentioning the possibility.  I became convinced that whether I liked it or not,  even though it  breaks the spell of nature's beauty, killing down potato fields is a necessity.  My only hope is once  potato fields  are harvested they get some kind of winter cover crop, or straw mulch.   That's when farmers really say to their neighbours I care about where we live too.

I'd written about "dirty dairying" in New Zealand in the last post on supply management. This story came out yesterday.

http://greystar.co.nz/node/96

Dirty dairying shocker
by Laura Mills •

A Whataroa farmer was yesterday hit by one of the largest fines in New Zealand history for dirty dairying. Potae and van der Poel Ltd was stung $120,000 for dairy effluent discharges, as a result of a West Coast Regional Council prosecution in court in Christchurch. It is the largest fine given to a West Coast farmer, and possibly the biggest in the country.

Mary-Anne Potae said this morning she was “still pretty much in shock” but accepted the decision and said they would not appeal.
The company was issued with abatement notices two years ago for dairy effluent discharges from three of their seven farms at Whataroa. Vickers Creek, and tributaries of the Whataroa River were affected.
However, the company did not comply with the abatement notices and the council took court action. It pleaded guilty to eight charges. Regional council consents and compliance manager Colin Dall said Judge Jane Borthwick told the court she considered the matter serious. The sharemilkers were dealt with separately but because of their inability to pay a fine, they each received sentences of 200 hours’ community service.
“She did an initial (fine) calculation, then pulled it back. The total was $120,000, the largest (farming) fine on the West Coast.”
Ms Potae said this morning her husband, Adrianus van der Poel, had farmed in the area for 25 years.
Lawyer Brian Burke said the couple had slowly added more farms since 1985 and now milked about 3000 cows in the Whataroa area.
“It was a family operation and it got too big to manage. They fully accept that they let themselves down and caused harm to the environment.”
A consultant environmental engineer had been employed to put in systems to ensure it would never happen again, he said. Although the couple was shocked at the size of the fine, they thanked the court for pointing out their shortcomings and accepted the decision, he said. Regional council chairman Ross Scarlett, a dairy farmer from Karamea, said the council had always had a conciliatory policy and an unwritten “three strikes and you’re out” rule.
“There comes a point where we have to take action. We’re not a draconian council. But we have to protect the reputation of farmers, and society as a whole demands quite high standards.”
Mr Dall said two more West Coast prosecutions were pending, although court dates had not been set. The company came to council attention because overflows from an effluent reservoir ran directly into a farm drain and on to Vickers Creek in high concentrations. Also, a stormwater bypass was left open so effluent reached an unnamed tributary of the Whataroa River in high concentrations. Earlier this week, Oceana Gold pleaded guilty to breaching its resource consent by discharging sediment into Devils Creek, Reefton, in another West Coast Regional Council prosecution.
The Australian gold miner was directed to meet with the council in a restorative justice conference to find a favourable solution. The council has said it wants the company to restore the creek, which was left lifeless as a result of sediment discharges.

A Thoughtful Challenge to Supply Management and A Response

In the spirit of open minds and hearing all sides I can't ignore a lengthy and thorough essay  against supply management by Maclean's Andrew Coyne.  Far be it for some aging rural failure (we call them ARFYS down this way) like myself  to better Andrew Coyne (I don't often agree with him on anything, but respect his intellectual vigor and consistency),  but I think he's fallen into that economist/consumer trap that the price of something on the supermarket shelf is all that matters. Here's his piece (and I've included it in the end), and I've picked a few points to try to  refute.


http://www2.macleans.ca/2011/08/15/the-25000-cow/



Lets start at his conclusion:

"In the end, however, the question cannot be avoided: why we should have one set of rules for some farms, and another for the rest"

There are just a handful of supply managed products (dairy, eggs, poultry) because these are industries where the supply CAN actually be managed. When eastern Canadian potato growers tried to set up supply management in the late 1980's, Irving owned Cavendish Farms was able to convince a Federal Court judge in Ottawa that it shouldn't be allowed. One of the winning arguments: potato production is tightly linked to weather, and the supply can swing wildly year by year, so controlling supply through acreage quotas just wouldn't work. The same goes for most field crops. Livestock producers have looked at supply management as well, but production in Western Canada is so linked to U.S. exports which would have to be given up, that it's been a  non-starter. 

Coyne portrays the lack of exports of dairy products as an indication of its inefficiency. In fact international trade rules virtually prohibit the export of dairy products (about 2% is exported)  because Canadian farmers do get a higher domestic price,  and that's seen as a "subsidy" by trade panels that would allow Canadian farmers to undercut competitors in export markets.

Yes Canadian do pay more than Americans for  milk and dairy products (the difference varies by location), but there are two important points to be made here. One is that Americans pay twice for milk:  once at the supermarket checkout, and again as taxpayers through the multi-billion dollar  U.S. Farm Bill that sends government support cheques to farmers under a variety of programs (these are actual production subsidies for a list of grains, feedgrains and oilseeds, not the kind of disaster risk management programs in Canada).  Canadians on the other hand just pay the once at checkout. The other point is really made by Coyne himself:

"...... farms in supply-managed sectors are far less likely to fail than their counterparts in other sectors. Just six per cent of dairy farmers, for example, were unprofitable in 2005, according to the Organisation for Economic Co-operation and Development (OECD), versus 33 per cent of all farmers."

I'm sure if a third of (pick any business or industry) was unprofitable someone would say there's something wrong here, yet it's fine for a third of farmers to be losing money because that assures us that consumers aren't being ripped off. 

 Coyne  writes this:

"Since the measure of costs, moreover, tends to be those of the least efficient producer...."

 That's simply not true, or there wouldn't be any dairy farmers losing money, which there are. In fact it's costs of the top tier of efficient dairy farmers that's used, and the price has to meet several tests:

"Support prices are established for butter and skimmed milk powder by the Canadian Dairy Commission. Support prices are based on the following elements: results of the cost of production study, arguments presented by various stakeholders, an evaluation of the processors' margin, economic indicators such as the consumer price index as well as their own experience and knowledge of the industry."


Andrew Coyne is on firmer ground  that the high cost of quota  is an indication of something wrong in the system. It makes it hard for new entrants to get in, and raises questions that consumers are paying too much. When supply management first started in the 1970's then Agriculture Minister Eugene Whelan insisted that the quota belong to the government, and that the quota would have no value. That has slowly changed over the years to the point now the quota contract the dairy farmer has is the most valuable thing on the farm, and can be used as collateral at the bank. Dairy farmers are slowly trying to address these issues. Quota value is not included in the cost of production formula, and most provinces now have programs collecting pools of free quota to allow new entrants into the game.  My only comeback here is that there are many industries that limit entry, which drives up the price of getting into a business (permits or licensing). As well in many professions (lawyers, doctors, accountants) people pay a lot of money for "goodwill" to buy an established business with an assured customer base and some guarantees of income. Do consumers pay for these costs?  Of course they do.


Coyne's arguments about the competitiveness of  dairy export powerhouse New Zealand also has merit.  New Zealand's climate allows livestock farmers to use outdoor pasture year around which does a lot to control their costs.  There are huge processing co-operatives which have geared their business to supplying export markets, but producing cheap commodities does have costs. Here's one example of many from what they call "dirty dairying" in New Zealand:

From: http://www.stuff.co.nz/business/farming/3474039/Minister-turns-hose-on-dirty-dairying

"Dairy farming earned $9.9 billion in exports for the year to March 2008. Tourism earned $9.3b.

Last November, the British Guardian newspaper lambasted the country's green image in an article entitled "New Zealand was a friend to Middle Earth, but it's no friend of the earth" which criticised, among other things, the agricultural sector.

The same month, the Manawatu River was named one of the most polluted rivers in the Western World."


Coyne also mentions that Canada has been excluded from  trade negotiations with Europe and Asia because of Canada's insistence on protecting supply management. Europe in particular insists it wants entry into  Canada's consumer markets. There's a lesson here too. Europe has the most generous production subsidies of any economic block, but with no quotas to limit production, Europe has ended up with huge surpluses of butter and skim milk powder. Would they like to get these into export markets and get some kind of return on the government investment? Of course they would, and this is a good opportunity to twist Canada's arm to do that.

The most important argument for me (don't forget the aging rural failure stuff at the beginning) is the welfare of the dairy cows and to some extent farm families. Most (not all) U.S. dairy producers give their cows daily shots of a dairy hormone called rBST (produced by our pals at Monsanto).  It increases the amount of milk cows produce, so allows farmers to get a cheaper price.  The health risks for consumers is complicated, and I won't pretend to be an expert. What's always horrified me is this: calcium is  a large component of milk, and because cows with rBST produce much more than they naturally would,  the calcium is sucked out of their hooves. This is very painful for the cows in the latter stretch of the lactation cycle.  When Monsanto tried to get rBST into Canada, Eugene Whelan and PEI's Wayne Easter were able to prevent it (after agriculture committee hearings, etc). They made the case that because Canadian dairy farmers are paid properly, there was no need to produce the extra milk. The fact that cows don't have to suffer so that consumers can get milk a little cheaper matters to me. And don't forget there are dairies in Vermont and California at least that produce milk without rBST, and many consumers are more than happy to pay more to get it. Enough said.

My final point is this. It's been changing, but the average dairy herd in Canada is roughly 60 cows. The size of the average herd in the United States is more than double that, with many large U.S. dairy operations milking thousands of cows every day, something we don't see in Canada.  The 60 cows gives a Canadian farm family a reasonable middle-class living. They can take the necessary steps to protect the environment, plan for the future, have something of value to retire on. These are all things most other Canadian farmers can only dream about. 

As I've written before, supply management isn't perfect and needs to be improved, but there are many, many industries in Canada that benefit from government rules and regulations (banks, telecommunications, pharmaceuticals, the auto industry, etc), and to be fair Andrew Coyne complains a lot about them as well. That's why I respect his intellectual integrity, it's just on this I don't think he's telling the whole story.

The $25,000 cow

by Andrew Coyne on Monday, August 15, 2011 10:00am - 0 Comments  •  Aug. 15, 2011

•

Don Mason/Getty Images

I have a proposal I’d like to run by you. As you’re no doubt aware, the Canadian pundit industry has been going through some difficult times of late, not—God knows!—through any fault of our own, but what with the economy, and fluctuating advertising revenues, and that whole Internet thing . . . Anyway, we’re a resourceful industry with a proud history, so we’re not looking for any handouts, but what I was wondering was if maybe there was some way just to bring some order to the marketplace, so we wouldn’t have to deal with these wild swings in market conditions that, I can tell you, make it impossible to plan.
What I have in mind is some sort of scheme whereby the government would restrict the supply of opinion in magazines and newspapers to some fixed number of column inches per year, with a view to propping up—er, stabilizing—salaries at a target rate. Naturally I am sensitive to the concerns of magazine readers, not to mention magazine owners, but I don’t imagine it would raise the cover price of magazines by more than about 200 per cent or so.
No? Foolish? Extortionary? Outrageous? Then allow me to introduce you to the world of supply management: an actual policy pursued by the governments of Canada and the provinces for the past 40 years. Only I’m not talking about comparative fripperies like magazines (we have our own indefensible support programs, though not, ahem, on the same scale). I’m talking about basic foodstuffs, the kind the typical Canadian family eats every day: dairy products (milk, cheese and butter), eggs, and poultry (chicken and turkey), whose prices are maintained, by means of a strict regime of production quotas, at two and three times their market levels.
If it were proposed today to tax food—even at five per cent, never mind such punitive rates as these—it would be instant political suicide: consider the ruckus that erupts whenever some stray academic suggests the GST should apply to groceries. But because it is the status quo, and because the tax is implicit rather than explicit, and because “it’s to help farmers,” the policy is not only tolerated, it is impossible to remove. Or at least, it has been until now.
The system works much as I have described. Different agencies are responsible, and the programs differ in some details, but in essence the federal government sets a national quota, and divides it up between the provinces; the provinces are responsible for allocating quota among farms. The quota is tailored to support a target price, more or less as a function of farmers’ costs. (In Quebec and Nova Scotia, the price of milk is further regulated at the retail level.) Once upon a time, the aim may well have been merely to stabilize prices. But over time, the effect has been to drive prices of supply-managed products relentlessly skyward.
One way to look at this is to compare prices in Canada with those across the border, where no such restrictions apply. (See chart.) From relative parity 30 years ago, prices in supply-managed goods have risen to between two and three times those in the United States. Another yardstick is provided by the external tariffs required to maintain the domestic quota regime, lest it be undercut by foreign imports. These range from 168 per cent for eggs, to 238 per cent for chicken, 246 per cent for cheese, all the way to 299 per cent for butter. (To be sure, these apply only above certain “minimum access commitments” required by the World Trade Organization (WTO), allowing a certain amount of imports to enter at much lower tariffs. But these are minimum indeed: eight per cent of the domestic market for cheese, for example, or one per cent in the case of yogourt—enough, as the veteran Canadian trade negotiator Michael Hart has written, to supply every Canadian with a rounded teaspoon of yogourt a year.)
Because competition, either within or across national boundaries, is so constrained, there is little incentive to control costs, doubly so when prices are set relative to cost. While the consumer price index rose by about a third over the previous decade, according to the C.D. Howe Institute, prices of dairy, eggs and poultry products rose, respectively, by 51, 54, and 61 per cent. Since the measure of costs, moreover, tends to be those of the least efficient producer, two further consequences follow. One, farms in supply-managed sectors are far less likely to fail than their counterparts in other sectors. Just six per cent of dairy farmers, for example, were unprofitable in 2005, according to the Organisation for Economic Co-operation and Development (OECD), versus 33 per cent of all farmers. And two, profit margins tend to be much wider than the norm: operating profits in the dairy industry, at 25 per cent, are twice the all-farm average.
So: expensive for consumers, but a sweet deal for farmers, right? Well, sort of. To the extent that a quota entitles its possessor to a premium over market prices, it has a market value, much as a stock has value based on the profits a company is expected to earn. Indeed, like stocks, quotas are traded on provincial exchanges; their value need not be guessed at, but can be observed directly. As supply-managed prices have risen, so have the value of the quotas, by nearly 10 per cent per year (though there have been efforts to cap prices in recent years). The right to ship the average cow’s production of a kilogram of butterfat a day is currently worth roughly $25,000, meaning an average dairy farm with 60 cows is sitting on an asset worth $1.5 million. All told, supply-management quotas are worth about $28 billion, three-quarters of that in dairy.
If you’re one of those farms that were around in the early 1970s, when quotas were first handed out, gratis, that’s a nice retirement package. But if you’re a new farmer, it’s a major barrier to entry: as much as 75 per cent of start-up costs. So even with their wider operating margins, supply-managed farmers earn a comparatively meagre return on equity. Moreover, many had to go into debt to purchase quota, leaving them bearing heavy interest costs (though quota, once paid, can also be used as collateral to borrow more—another reason Canadian farmers tend to carry heavier debt loads than their U.S. counterparts).
Partly as a result, the number of farms in supply-managed sectors has been shrinking at a quite extraordinary pace, much faster than for the agricultural sector as a whole. At the end of the Second World War, there were half a million dairy farms in Canada. By 1971, when supply management in dairy went into effect, that figure was down to 122,000. Today, there are fewer than 13,000 dairy farms in Canada, roughly half of them in Quebec, another third in Ontario. (There are just 2,800 farmers in the chicken business, and 550 turkey farms.) A policy that was enacted in the name of saving the family farm has instead led to its near extinction. Those that remain are typically much larger than farms in other sectors.
Such is the industry’s decline that, even with the productivity gains that come from such consolidation, milk production is actually lower than it was four decades ago. Which is fine, in a sense, because consumption of dairy products has been declining steadily for decades, at a rate of one per cent per capita annually—perhaps in response to rising prices, perhaps because of the relative lack of innovation and variety on offer in an industry that is almost entirely cut off from the outside world. Less than five per cent of Canadian dairy shipments are imported; an even smaller proportion is exported. The figures are comparable for other supply-managed commodities. Farmers in these sectors might find they could grow their business by expanding into other countries. Instead, they prefer to hang on to a monopoly of our own shrinking market, their numbers shrinking along with it.
Of course, it isn’t only their own horizons that are limited in the process. Higher prices for primary producers translate into higher costs for those further downstream, who use their products to make processed foods, and who then complain, with some justice, that they cannot compete with their foreign rivals. To be sure, special dispensations are made to accommodate them, for example, allowing the makers of frozen pizza to import more mozzarella than would otherwise be permitted. But that only leads to complaints from their rivals in the pizzeria business. Vast sums are wasted in this way, lobbying and counter-lobbying, putting patches on patches: just another of supply management’s many inefficiencies. Though it costs consumers, according to OECD calculations, nearly $3 billion annually, the benefit to farmers has been estimated at little more than half of that. The rest is what economists call “deadweight loss”: sheer waste.
To sum up: Canada’s system of supply management has led to higher prices, fewer farms, less product innovation, and general inefficiency up and down the value-added chain. Naturally, it enjoys all-party support. And not just all party: every member of every party swore undying support for supply management in a House of Commons vote in 2005.
Small though their numbers may be—supply-managed sectors account for just 10 per cent of Canadian farmers, who are themselves less than three per cent of the workforce—supply-managed farmers, dairy farmers in particular, wield disproportionate support. In part, that’s because rural ridings tend to be overrepresented; in part, it’s because of the Quebec factor. The last time a federal government attempted to rein in dairy supports, in the mid 1970s—remember that picture of Eugene Whelan, federal agriculture minister at the time, splattered with milk—it was credited with helping to elect the first Parti Québécois government. Though it holds only five seats in Quebec, the current Conservative government is as foursquare in support of supply management as any of its predecessors, as is every party in every provincial legislature—east of Manitoba, that is.
This is another oddity of the current regime. Not only does supply management only apply to certain sectors, but these sectors are heavily concentrated in certain parts of the country. This puts the federal government, this one in particular, in a bizarre situation. Even as it is taking up the cause of grain and cattle farmers in the West, who export most of what they produce and desire only to expand their access to world markets, it is attempting to preserve an essentially autarchic regime in the supply-managed sectors of the East. The same government that boasts of its commitment to dismantling the Wheat Board’s monopoly, in the name of allowing farmers to sell on the open market, takes enthusiastic part in preventing other farmers from doing the same. It’s a profoundly hypocritical position—though no more so than the “progressive” opposition’s support for a system that, by driving up the price of food, costs the poor much more, proportionately, than the rich.
And there we would remain, were it not that our trading partners have grown weary of the game. Canada may have been able to exclude supply management from the Canada-U.S. Free Trade Agreement, as it did later in NAFTA. But the continuing attempt on the part of the world’s fourth-largest agricultural exporter to have it both ways, demanding greater access to others’ markets while essentially prohibiting access to ours, has already resulted in our exclusion from negotiations on the new Trans-Pacific Partnership trade area; it contributed to stalling the Doha round at the WTO; and it remains one of the major obstacles to signing trade deals with the European Union and India. Once, when countries like Australia and New Zealand maintained similar regimes, we might have had allies. Today, we are literally alone.
With all of these negotiations on tight timetables—there is a renewed push to complete Doha by year’s end, while the European and Indian agreements are scheduled for each of the next two years—Canadian business is growing alarmed. In an open letter to the new government shortly after the recent election, the president of the Canadian Council of Chief Executives, John Manley, pointedly noted that “the time is right” to phase out supply management. Indeed it is: because, one way or another, it is going to happen. Eventually, Doha will be signed, bringing with it steep cuts in the tariffs on which the system depends. The question is not whether supply management will be reformed, but how: chaotically, amid drastic declines in quota values, or gradually, with appropriate compensation and adjustment times.
Australia and New Zealand have shown it can be done, transforming their formerly supply-managed sectors from protected backwaters into competitive dynamos. (Oddly, this is used as an argument by the farm lobby against reform, as in: “If we let New Zealand’s exports in, they’d ruin us.”) The federal government could, as the C.D. Howe Institute has suggested, sell more quota on the open market, allowing more efficient farmers to earn back some of what they give up in lower prices via higher sales. The proceeds could be used to help others to exit the industry, and to compensate quota holders, with a view to completing the process in 15 to 20 years.
In the end, however, the question cannot be avoided: why we should have one set of rules for some farms, and another for the rest; and why, if our aim is to keep farmers on the land, we should have chosen the most inefficient, unjust, counterproductive, and internationally obnoxious way to go about it.

Mixed Feelings

We've had a big dig here at Red Lane Gardens, about 1500 plants going to a daylilly enthusiast from Quebec. Most of the digging and cleaning was done in the wet and muddy.  We were better off than my neighbour who was trying to get in hay. Some days with sunshine will be welcomed by all. Exhaustion, visiting family, and some angst (great word, difficult feeling)  have kept me away from writing.

My feelings about food and farming are being pulled in completely opposite directions.  Many people that I meet are quite rightly  frustrated and angry about the fishkills in West Prince. Two farmers have now been charged with violations of provincial environment laws that set out buffer zone regulations (fields must be fifteen meters from a waterway). Many are now waiting to see if Environment Canada will also lay charges under the Fisheries Act. If proven this would be much more serious and costly for the farmers. Fines can be as high as a million dollars and six months in jail. Here's the section:

"Subsection 36(3) prohibits the deposit of deleterious substances. Environment Canada is responsible for administering this subsection. Unlike Subsection 35(2), there is no provision to authorize the deposit of deleterious substances except by Regulation or an Order in Council. A deleterious substance is defined by the Fisheries Act as any substance that, if added to water, makes the water deleterious to fish or fish habitat or any water containing a substance in such quantity or concentration or has been changed by heat or other means, that if added to water makes that water deleterious to fish or fish habitat. Currently there are regulations that authorize the deposit of pulp and paper liquid effluent, metal mining liquid effluent, petroleum liquid effluent, and effluents from other industrial sectors."

 One question would be whether agriculture is an "industrial sector".  I hope it isn't considered that (and I have no indication that it is)  because that would seriously jeopardize any effort to keep waterways safe for fish or people.

There is a lot of relief amongst farm organizations that charges have been laid. It puts the focus on individuals who have ignored the minimal rules laid out by the province, rather than the broad brush condemning all farmers. If there had been no violations then the fifteen meter rules itself would have been in doubt (and as I've written earlier I'd like to see at least five meters used as a riparian zone with trees and shrubs).  There have been a lot of heavy rains this summer and many waterways where fish continue to thrive, so a lot of farmers are responsibly managing fields. It's long past time that those that aren't play by the rules.

I've also spent time hosting some cooking demonstrations for the Certified Organic Producers Association at Old Home Week.  The farmers I've met are enthusiastic about what they're doing, and deeply committed to farming sustainably. There's an almost religious fervor when they talk about soil, that if it's healthy then everything else will work properly too. These are farmers who have a very direct relationship with their customers (through CSA.. community supported agriculture, or at farmer's markets).  Some are adding value (milling buckwheat into flour for example, or making tofu from soybeans). Chefs from the Merchantman's Pub have been doing the cooking, and their enthusiasm for local food is infectious. Many more people now know about the health benefits of sprouts, and that buckwheat is not a grain so doesn't have any gluten (who knew??).  This experience has definitely taken the edge off for me that we're falling off a cliff when it comes to producing food.

Here's a bit more on the local food movement in Canada:


http://www.theglobeandmail.com/life/food-and-wine/bare-shelves-in-canadas-breadbasket/article2130739/


Bare shelves in Canadas breadbasket
by JESSICA LEEDER — GLOBAL FOOD REPORTER  •  Aug. 16, 2011 •

With the local food movement booming across Canada and the United States, farmers’ markets have been cropping up everywhere, from office buildings to hospital lobbies and even remote communities.

The heart of Canada’s breadbasket, though, is becoming the country’s most unfortunate place to be a foodie: In Manitoba and Saskatchewan, two of the nation’s most agriculturally oriented provinces, reams of requests for new farm markets are being turned down, and some markets regularly have dozens of empty stalls despite the crowds they draw.

The reason is paradoxical but simple: there aren’t enough farmers to go around.

“Because of the local food movement having this huge momentum now … I have calls on a regular basis from people wanting to start a farmers’ market. [But] we haven’t figured out a plan to recruit farmers’ market vendors,” said Dianna Mae Hocaluk, director of the Farmers’ Market Association of Manitoba. “There is a lack of affordable farmland for small scale farms,” she said. “We have a lot of large, corporate farms. They’ve taken over most of the land.”

With more than 7.7 million hectares devoted to farming (picture a sprawl of about 19 million football fields) Manitoba ranks third among provinces with the most agricultural land. Most of that has historically been devoted to cash crops such as corn and grain, and while small-scale farms have begun to increase, demand has outpaced them. In 2007, the province had just 13 farm markets; now there are 48.

The story in Saskatchewan is similar: The province leads the country with more than 26 million hectares of farmland, but struggles to entice large operators to local markets, which are running well below capacity.

“I know there’s good spice production in this province, but they [producers] are too big to consider doing some portion at a small scale and getting the product right into the hands of the people that live here,” said Debra Claude, manager of operations for Saskatchewan Farmers’ Markets.

“We’d love to run more markets,” she said. “We just don’t have enough people that are really taking on market gardening.”

Making a sustainable living from small-scale farming can be a slog, especially during the early years when many farmers still work regular jobs to make ends meet. Between these jobs and work on-farm, people have to be strategic about where they sell.

“We have to be selective about the markets we choose,” said Kim Shukla, an agrologist and co-owner of Stoneland Orchard, a fruit and vegetable operation near Steinbach, Man. Ms. Shukla and her husband, Richard Whitehead, bought their farm 10 years ago. Now, they vend at two markets a week and operate a successful community-supported agriculture operation (consumers pay a fixed weekly fee for a box of bounty that is heavier in good seasons and lighter in bad ones, sharing both risk and rewards with farmers). Expanding sales to more markets, particularly at new and unproven locations, upsets their balance sheet, Ms. Shukla said.

“Last year, we did three markets. We ended up just working to pay the staff,” she said.

Ms. Shukla said she needs to take in $2,000 to $10,000 to make a market day worth her time.

Numbers like that are easiest to hit in areas with more density than the Prairie sprawl. A cross-country survey conducted in 2008 by Farmers’ Markets Canada showed that 64 per cent of farm market sales occur in Ontario, which has about 150 of the country’s 500 markets. Despite ranking fourth in terms of the amount of land farmed, the province has the most farms in Canada, more than 57,000. In the populous Greater Toronto Area, small-scale farmers have dozens of options each week.

Bert Andrews runs a pick-your-own berry operation west of Toronto at his farm, Andrews Scenic Acres. He also sends staff and a fleet of rented trucks packed with produce to 11 markets across the GTA each week. The vast exposure, he said, helps drive people to the picking operation at his farm, boosting the overall viability of his business.

“We go to four on Saturday morning alone,” he said. “If we had the ability, we’d go to more.”

More Asking the Right Questions

I've often pointed to articles by UK Guardian commentator George Monbiot. He thinks things through from the beginning, and can't easily be labeled. His conclusions are often discouraging and not what we want, but thoughtful and intelligent. Here are two from this week on tough issues as important here as in Europe.



http://www.guardian.co.uk/environment/georgemonbiot/2011/aug/08/greens-renewables-climate-change

Greens must not prioritise renewables over climate change

Abandoning nuclear at a time of escalating emissions is far more dangerous than maintaining it

Before considering the case that Jonathon Porritt makes, "Why the UK must choose renewables over nuclear: an answer to Monbiot", we should ask ourselves what our aim is. Is it to stop climate breakdown, or is it to engineer the maximum roll-out of renewable power? Sometimes it seems to me that greens are putting renewables first, climate change second.

We have no obligation to support the renewables industry – or any other industry – against its competitors. Our obligation is to persuade policy-makers to bring down emissions and reduce other environmental impacts as quickly and effectively as possible. The moment we start saying we won't accept one technology under any circumstances, or we must use another technology whether it's appropriate or not, is the moment at which we make that aim harder to achieve.

Porritt is right to say that we could meet all our electricity needs through renewables. But it would take longer and cost more. He acknowledges this by setting his date for decarbonising the electricity supply through renewables and efficiency alone at 2050, while the Committee on Climate Change is seeking to do so, through nuclear, renewables, efficiency and some carbon capture and storage, by 2030. When the government's statutory advisers propose a shorter timescale for cutting emissions than one of Britain's leading greens, we should ask ourselves some hard questions about our priorities. The longer it takes, the less likely we are to prevent runaway climate change.

If we shut the door on nuclear power, we create a generation gap. As the committee points out, the maximum likely contribution to our electricity supply from renewables by 2030 is 45%, and the maximum likely contribution from carbon capture and storage is 15%. Where will the balance come from?

To my utter amazement, Porritt's answer appears to be unabated fossil fuel.

I say "appears", because something odd happens in the paragraph in which he discusses it. He first proposes that the generation gap should be filled by more gas plants with carbon capture and storage (CCS), but then acknowledges that CCS is "hugely expensive … and still unproven at scale." He then points out that "gas is relatively cheap, relatively easily available, and relatively easy to build." This, as he has just acknowledged, applies only to gas without CCS. So what exactly is he calling for as his "generating bridge"? Gas with or without CCS? It looks as if a fudge has taken place here.

He talks of "frittering away at least another decade in pursuit of some unattainable nuclear dream". But nuclear power is eminently attainable. Unlike CCS, it has already been proven at scale and will produce low-carbon electricity from the outset. The likely outcome of Jonathon's contradictory bridge proposal is that we fritter away another 40 years, in which CO2 emissions rise because we shut down and failed to replace our nuclear power plants.

In one respect we in the UK are fortunate: someone else is making these mistakes, and we have an opportunity to learn from them. The someone else is Germany.

In last week's New Scientist, David Strahan points out that Germany's decision to shut its nuclear plants will, despite its massive investment in new renewables, create an extra 300m tonnes of carbon dioxide between now and 2020. That will cancel out almost all the savings (335Mt) brought about in the entire European Union by the new Energy Efficiency Directive.

In June, Angela Merkel announced that she would bridge the generation gap caused by shutting down nuclear plants by doubling the volume of coal-fired power stations Germany will build over the next 10 years. Outrageously, her government will help pay for them with a fund originally intended to reduce greenhouse gas emissions. This shows what a fix you can get yourself into when getting rid of nuclear power takes precedence over dealing with climate change.

This isn't the only respect in which Porritt suggests we should follow Germany's disastrous precedent. He also wants us to repeat its experiment with solar power. He claims that "Germany plans to generate 50% of its daytime electricity from solar by 2020 – with installed capacity of 52 GW."

Keep an eye on that word "daytime". Daytime on certain hot sunny days perhaps, but this does next to nothing to solve the supply problem. In 2010 Germany had an installed capacity of 17.3GW of solar power. This produces about 2% of its year-round electricity. So 52GW, which will be installed at an astronomical cost, is likely to produce around 6% of its total supply.

What's more, much of the electricity it generates will be of little use. Peak electricity demand in the UK (and presumably in other northern European nations) takes place at 5-7pm on a winter's evening, when solar panels are producing nothing. Peak solar output takes place in the middle of hot summer days, when demand is much lower. Solar electricity in a cold, high-latitude country displaces none of the coal and gas plants currently producing electricity on winter evenings. The money being spent on it is largely wasted.

An analysis by the Breakthrough Institute finds that the entire German solar sector produces less than half the power that Fukushima Daiichi – a single nuclear complex – generated before it was hit by the tsunami. To build a Fukushima-sized solar industry in Germany would, it estimates, cost $155bn. To build a Fukushima-sized nuclear plant would cost $53.5bn. And the power would be there on winter evenings.

Porritt dismisses the detailed cost estimates produced by the Committee on Climate Change. In doing so, he relies on the strangest of sources: a note of just 400 words written by Andrew Broadbent, a man whose job is "modelling the competition between shopping locations across Great Britain, to predict where people will shop in the next few years."

This would be an odd choice under any circumstances. It's stranger still when you find that the two main claims Porritt extracts from Broadbent's note – that "the principal source for the committee's estimates" is the figures prepared by its consultants Mott MacDonald in June 2010, and that "Mott MacDonald produced a new report in May 2011 which pretty much contradicts its own 2010 report" – are flat wrong. The cost estimates the committee uses actually come from Mott MacDonald's 2011 report.

This shows the importance of reading the source material, and not relying on other people's interpretation of it. If you are going to accuse someone else of "inadequate research" and "untrustworthy sources", your own work needs to be a lot more robust than this.

Porritt warns that "considerable scepticism is warranted in assessing the reliability of estimates from the industry". He's right, and this is why I avoid them in favour of figures from independent bodies. If only he did the same. He relies for his estimates of solar costs on a study (by Ernst & Young) commissioned by the UK Solar Trade Association. Worse still, the study's predictions for the reduction in solar costs come from "UK solar industry data". If ever there was a case for "considerable scepticism in assessing the reliability of estimates from the industry", here it is.

Porritt goes on to discuss the hidden subsidy nuclear power enjoys as a result of the lack of insured liabilities. The figures he uses are, to say the least, very odd. The study he cites prices a worst-case (level 7) disaster in Germany at over €6 trillion, whereas the maximum projected cost of the level 7 Fukushima disaster, even assuming that the government buys all the land and property within 20 km of the plant, is $245bn. Could the study's scientifically-groundless estimate have anything to do with the fact that it was commissioned by the German Renewable Energy Federation? What happened to that "considerable scepticism in assessing the reliability of estimates from the industry"?

But if unfunded liabilities are a killer argument, where does this leave the extra CO2 that will be produced by abandoning nuclear power? Who's insuring us against the impacts that will cause? With nuclear power you get a small chance that things will go badly wrong. If they do, a small number of people could – in the worst possible case - die, and several hundred square kilometres would need to be evacuated. Beyond a certain level of climate change there is a very high chance – approaching certainty – that things will go badly wrong. When they do, they have the potential to kill hundreds of millions of people, and to necessitate the evacuation of much of the earth's surface. No one's insuring us against that.

There's plenty more I could say on all the points Porritt raises, but I've already gone on for far too long. My point is that abandoning nuclear power at a time of escalating greenhouse gas emissions is far more dangerous than maintaining it. To abandon it in the knowledge that much of that power will be replaced with unabated fossil fuel is even worse. It is hard to think of any issue with greater moral consequences. We have a duty to get this right, using reliable evidence, not wishful thinking.

http://www.guardian.co.uk/commentisfree/2011/aug/08/eu-fishing-quotas-feeding-frenzy


EU and fish quotas: Who will protect these fish from our feeding frenzy?

The EU tells Iceland and the Faroes to stop their fishing frenzy of mackerel, but only because it wants to plunder the stock itself

    * George Monbiot
    * guardian.co.uk, Monday 8 August 2011


Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a year, after which no one will ever eat fish again. Almost everywhere fish stocks are collapsing through catastrophic mismanagement. But no one in the rich world has managed them as badly as the European Union.

So when the EU tells Iceland and the Faroes that they should engage in "responsible, modern fisheries management", it's like being lectured by Attila the Hun on human rights. They could be forgiven for telling us to sod off until we've cleaned up our own mess. Unfortunately, this is just what they've done, with catastrophic results.

A feeding frenzy is taking place in their territorial waters, as they rip into the North Atlantic's last great stock: mackerel. As the seas have warmed, the fish have moved north. When they arrived in Icelandic and Faroese waters, those nations argued that their mackerel fishing agreement with Norway and the EU should be changed to allow them to catch more. Norway and the EU refused, so Iceland and the Faroes tore the agreement up and each awarded themselves a unilateral quota of 150,000 tonnes. As a result, the north-east Atlantic mackerel catch has risen almost 50%, and is now well beyond the replacement rate. If the mackerel go, so do the many links of the food chain which depend on them.

No one is negotiating. The EU and Norway argue that Iceland and the Faroes are stealing our fish. But the mackerel migrating around the North Atlantic belong to everyone and no one. What matters is that the harvest is small enough to sustain the stock, regardless of who catches it, and at the moment no one's blinking. Iceland and the Faroes will reduce their quotas when the EU and Norway are prepared to reduce theirs. Brinkmanship by all four parties is trashing our last super-abundant food species.

Tonight, Channel 4 broadcast the latest instalment of Fish Fight, presented by Hugh Fearnley-Whittingstall. It urges us to switch from what supermarkets call the big five – cod, haddock, salmon, tuna and prawns – towards more viable stocks, in particular mackerel.

It's an engaging and powerful programme, and its attempt to prevent discards – throwing a large proportion of the catch overboard because of EU rules – is one that everyone should support. But what about its call to change species?

Our obsession with cod and haddock is trashing the seabed and many of the other species which live there. Species such as mackerel, herring and sardines reproduce quickly. Because they live in mid-water, catching them involves scarcely any bycatch or damage to the seafloor. "The Iceland and Faroes situation has given us a headache," Fearnley-Whittingstall told me. "But are we going to punish local Cornish handliners for doing the right thing?"

I started work on this article in the belief that he was wrong: that switching to less popular species merely transfers pressure onto new stocks. But the research I've done has changed my mind. His campaign would make good ecological sense, were it not for the insanity of a fishing policy which cannot sustain even our fastest-growing fish. The new pressure on mackerel stocks has nothing to do with Channel 4's attempt to persuade us to broaden our tastes, which has not so far been successful. An analysis of sales by Maria McLean at Surrey University suggests no significant or lasting impact on any species. People have stuck with the big five. You wonder what it takes.

The new mackerel fisheries are finding markets far beyond Channel 4's audience. Jogvan Jespersen of the Faroese Pelagic Organisation told me most of the fish his members catch are sold to Nigeria and eastern Europe. There's nothing wrong with this: the Nigerians have as much right to eat fish as we do. Jespersen says the Faroese catch is being sold only for human consumption.

Iceland's industry is another matter. The chart its fisheries ministry sent me shows that over one-third of the mackerel that ships in its waters caught last year weren't fed to people at all. Instead they were turned into fishmeal, which is sold to feed chickens, pigs, other fish and pets and – even worse – to fertilise crops. It's a disgusting, astonishing waste. Already that country has more or less wiped out its blue whiting stocks and killed huge volumes of herring and capelin for the same purpose.

But the government's website tells us something else of interest: that most of the fishmeal and fish oil Iceland sells is bought by Norway and the European Union: the very parties complaining about Iceland's plunder. Any nation which really cared about fish stocks would ban both the production and consumption of meal and oil, except from the waste produced by fish processing factories. A basic principle of marine conservation is that fish should be caught only for human consumption.

As for the UK government, if it wants to establish any credibility in this debate, it should start by sacking its fisheries minister. In Channel 4's programme, Richard Benyon gave the impression of a man without the slightest interest in his brief, let alone any mastery of it. He was unable to identify the common fish species he's supposed to be protecting. After admitting that he's never been on a trawler, he wormed his way out of an invitation.

It would also implement the royal commission on environmental pollution's proposal: that by 2010, 30% of British seas should be no-take zones in which fish could reproduce safely, greatly increasing the size of stocks. The score so far is 0.3%, and this government's contribution has been to abolish the royal commission. It would address the issue highlighted by Emma Cardwell last week: that in 1999 the UK's quotas were handed, free, to anonymous cronies, who then leased them for a fortune to big fishing conglomerates, wiping out the smaller boats.

Yes, let's demand that Iceland and the Faroes stop wrecking our common stocks. But let's not give the impression that we're doing so only in order to wreck them ourselves.

A Biofuel That Makes Sense

I did promise some upbeat news from time to time, and here's some. There's been a lot of thinking and  innovation (some from Europe, more being designed and built in the Maritimes) about boilers that use agricultural and forestry waste to burn for space heating: poor quality grain, hay that's been spoiled, straw, and poor quality wood.  The most recent development comes from Nova Scotia  where a Pictou company has just started to manufacture hay burners and a machine to turn hay into pellets.

Biofuels have gotten a bad name recently and for good reason. There's no doubt that turning corn and soybean into ethanol and biodiesel in  developed countries has had a serious impact on food prices, which in turn disproportionately devastates the poor.  Biofuels like hay and straw, and grain that's been spoiled by moisture or disease are something quite different, they're simply not suitable for people or livestock. I think at this moment hay has some real advantages. Grain and the straw that comes from grain (its what's left after the grain kernel has been separated from the stock) is an annual row crop that has to be planted every Spring.  Hay (made up of various legumes and grasses) is a perennial crop that doesn't allow any soil erosion and can last for years.

The decline of the livestock industry in the Maritimes means there's a lot less demand for hay, and  once productive fields are already reverting to alders and spruce, not what much-needed tourists expect to see, and costly to renovate if and when farm incomes start to improve.

If farmers could derive some income from these  abandoned hay fields, and homes and businesses kept warm by a local product that could be delivered pelletized in bags, much like wood chips now, there would be a lot of benefits.

Biofuels are regarded as much more carbon neutral than petroleum products. Plants and trees use carbon dioxide to grow, and then release it when its burned or decomposed.

There are a number of people and companies throughout the Maritimes working to use what's generally called biomass (wood and plant waste). It's something we should all pay attention to.

Here's more on the hay burner.

 http://cleantechnica.com/2011/08/01/making-hay-heating-homes-clean-renewable-homegrown-cheaper-than-coal/


Hay for Heating Homes: Clean, Renewable, Cheaper than Coal


As CEO and co-founder of LST Energy1 Jim Trussler is a man on a mission: to tout the benefits of growing and using hay, or rather concentrated hay pellets, to heat homes across North America. A Nova Scotia-based start-up, LST has built a patented device that turns hay into pellets that burn efficiently in a range of burners that the company is now manufacturing.

“The hay farmers of North America will one day out-produce the oil sands,” Trussler quoted Roger Samson, a biomass energy expert, while speaking at a TEDx2 event in Nova Scotia in June. They “can produce the energy equivalent of 7.2% of the world’s oil supply (82 million barrels of oil/day).”

Growing crops for energy has been blamed for driving up basic food costs in countries around the world. Examining the case of hay in North America, however, Samson and colleagues determined that there are 90 million hectares of land area suitable for hay production out of a total 450 million hectares of agricultural land across the continent.

Growing hay on this land and using the biomass for energy could done “without interrupting the food chain for animals, or for humans,” Trussler noted, producing enough heat for 69 million homes.

Hay Pellets for Home Heating

Trussler and his partner have invented and built a simple, straightforward device that takes in hay, grinds it up into a “sawdust-type consistency,” and turns that into concentrated, dense and stable pellets that can be burned efficiently and create no pollution. They’re also manufacturing a line of burners of various size and capacity for home heating.

Trussler pointed out that “the same thing can be done from leftover biomass from sunflower crops, as well as corn…or sugar beets, or potatoes.” “Even the skins and cores of apple make great fuel pellets,” he waxed enthusiastically. “But it’ll be mostly hay because we can grow an enormous amount of it.”

Why hay? One reason is what you get out of it, in terms of energy, compared to what’s put in to grow and process it. Hay pellets have a surprisingly high energy input-to-output ratio of 20:1. That compares to 10:1 for wood, 5:1 for biodiesel and an extremely low 1.5:1 for corn ethanol, according to Trussler.

One pound of hay will produce almost 8,000 BTUs, “that’s almost exactly equal to hardwood, and frankly, quite close to what coal produces when it burns, so it’s a fantastic heat source,” he noted.

Clean, Cheap, Predictable & Local

In addition, hay is cheap to produce and plentiful, requiring relatively little in the way of added inputs. And it’s supply is predictable. That holds out another substantial promise: low, steady, predictable costs for consumers. That’s a stark contrast to the cost volatility inherent in fossil fuels.

“The crop yields are predictable from year to year to year; it doesn’t really depend that much on the weather, and it requires so few inputs that the costs are well-known and quite low,” Trussler noted.

“And so consumers can look forward to having a consistent supply of heating materials at consistent prices, and that’s something that you can’t get from fossil fuels. And frankly, that concerns a lot of us, and businesses, because of the unpredictability of that.”

At current prices, consumers could cut their home heating costs in half by installing the sort of equipment LST is manufacturing and burning concentrated hay pellets in them to heat their homes, Trussler said.

Then there are the environmental advantages. Burning hay pellets in an efficient burner has the same lifetime GHG footprint as wind, according to an Ontario government study.

Burning hay pellets for home heating as opposed to the current mix of home heating fuels in North America would cut greenhouse gas emissions by 90%. What’s left is almost completely reabsorbed in next year’s crop, according to Trussler.

Boosting Local, Rural Economies

Finally, going down this path would also have significant, positive impacts in terms of rural economic development, stimulating local economies by boosting rural incomes and job growth. And it would preserve land, according to Trussler.

Much of the money flow associated with this business model would be kept within the local community, he notes. “It’s not going to be a business where you’re going to ship this stuff across the country; it just doesn’t make any sense.” In addition, farmers could supplement their income by qualifying for carbon credits.

In terms of preserving land, “we have excess capacity farmland, and it’s just going dormant. If we’re not careful, that dormant farmland will just turn back into bush and not be easily usable for agricultural purposes again,” he said.

“If you put hay crops on it, it saves it from any erosion problems, and keeps it in tip-top shape until you do want to use it again for agricultural purposes, and it pays for itself while you’re doing that.”




http://thechronicleherald.ca/Business/1257150.html


Rural Nova Scotia hay projects fertilize grassroots energy industry
by RACHEL BRIGHTON JUST BUSINESS •

A grassroots green energy industry is being cultivated in rural Nova Scotia as people warm to the idea of burning hay as a new biofuel.

The catalyst for the renewed interest in the ancient crop is the design and manufacture of a multi-fuel furnace by LST Energy Inc. in Pictou. Their furnace avoids a common problem that comes with burning hay.

As it burns, nutrient-rich hay releases minerals that melt and merge into rock-like formations called clinkers, which douse the fire and must be constantly removed.

Farmer and inventor Gus Swanson, one of three partners in LST Energy, designed a furnace to agitate the fuel and prevent the formation of clinkers.

His two business partners are Jim Trussler, a chartered accountant who heads the company, and Philip Landry, the owner of SteelPro Mechanical Services in Pictou, where the furnaces are being made.

"We are just getting started and we’re just getting the first ones out," Trussler said this week.

The company has had more than half a dozen orders for the industrial-sized furnaces that are being built and shipped to farms in Nova Scotia, Ontario and New England.

Two of them are due to be delivered soon to West Nova Agro Commodities Ltd. in Lawrencetown in Annapolis County.

One furnace will be used to burn hay as a supplementary source of fuel for drying grain. The other will be hauled around the Valley to various locations to promote and test the use of hay pellets or briquettes as an alternative source of fuel.

West Nova Agro Commodities is a community-owned enterprise with about 90 farmers and community members as its shareholders. It operates a grain elevator and is seeking to diversify its business, explained general manager Jonathan McClelland.

McClelland and his board are working to develop a local market for low-grade hay that could be made into pellets and burned for fuel. This would encourage farmers who already make hay for livestock to bring fallow fields back into production for a second hay crop for biofuel.

But before they can produce the pellets, they need to stoke the demand.

As part of their market research, West Nova Agro Commodities will transport the industrial-sized demonstration furnace inside a container and park it at test locations for a couple of months, said McClelland.

"We could, say, go to the Bridgetown Town Hall or a local poultry farm or a Canadian Tire store, hook the furnace up into their hot water heating system and show people how it works before they have to make a big commitment."

As well as letting people take the furnace for a test run, potential purchasers could learn from other people who have tested the furnace.

McClelland and Trussler say burning locally sourced hay promises to reduce fuel and transportation costs and greenhouse gas emissions for early adopters of the new technology, while putting something back into the local economy.

Their efforts should also demonstrate how agricultural ingenuity can stimulate grassroots growth in rural Nova Scotia.

Rachel Brighton is a freelance journalist and a former business editor and magazine publisher.

Asking the Right Questions

The CBC's Ira Basin has done some excellent reporting on the difficult relationship between public relations experts and the media. According to Basin there are now more public relations graduates working in industry and government than there are journalists working in what are increasingly becoming media sweatshops.  The problem is the product of one (public relations missives) can make the job of the other ( people who have to fill newspapers and the airwaves) a little easier.  Digging deeper into anything these days (the time to do it, cultivating sources who can help) has become almost impossible.

One important PR job is to respond to newspaper headlines, and TOP STORIES in TV. Two very different responses to the recent fishkills on PEI this week, one that in my mind misses the point completely, the other is very productive.

Crop Life Canada is an industry organization representing the handful of companies that produce pesticides. It would be easy to say that its only interest is protecting the ability of its members to sell product and make money, but that's a little unfair. I was asked to speak to a regional meeting of Crop Life Canada and I "encouraged" them to take the concerns of the public much more seriously, because farmers are starting to be seen (unfairly in most cases) as "threats to the environment" rather than "stewards of the soil". No one clapped when I finished.  I was impressed however with some of the research presented by scientists  who do work for Crop Life under the heading  " the right time, in the right place, in the right way", including using the least  amount of pesticide necessary to do the job. Whether the sales people in the audience liked the message I'm not sure, but the researchers made their case very well.  I think Crop Life was off the mark however in responding to the recent fishkills:

Pesticides get thorough review before they're approved for sale

by The Guardian Weeklies  •  Aug. 4, 2011

•

Editor:
Re ‘Why is government not listening?' (The Guardian, July 29, 2011): Why would the government of Prince Edward Island listen to activists like Lisa Gallant when the federal government already regulates pesticides through Health Canada's Pest Management Regulatory Agency?
What readers should know is that before any pesticide can be sold in Canada it must undergo a comprehensive scientific review and risk assessment by Health Canada. Through this process, pesticides receive a greater breadth of scrutiny than any other regulated product and only those products that meet Health Canada's strict health and safety standards are registered for sale and use. The Quebec government, which Gallant uses as an example of a government that knows what it is doing, recently repositioned its stance by stating that "products containing 2,4-D do not pose an unacceptable risk to human health or the environment." This is exactly what the expert scientists at Health Canada have said all along.
The reality is that the Canadian Cancer Society and numerous other activist groups will continue to want more products banned, for more uses. This is just the thin edge of a wedge that leads to bans where the repercussions are more threatening to our overall health and well-being because they deny people access to safe living conditions and an abundant supply of healthy food.
The divisive debates about pesticide bans will continue as long as municipalities and provinces continue to arbitrarily ban products that have been approved for use by Health Canada. The uncertainty created by these various levels of government mean that new products will not be brought forward for approval and the public will have fewer and fewer options for controlling the numerous insect and weed infestations affecting their properties. It's high time that science-based decisions be re-introduced into the pesticides debate.
Lorne Hepworth,
president,
CropLife Canada,
representing the plant science industry"

_____________________________________________



Most people (not all) are not questioning the right of farmers to use pesticides as Lorne Hepworth argues, but keeping those pesticides out of waterways where they can do so much damage.   That's what PEI's Watershed Alliance (with no help from PR gurus)  has taken on and I think it offers a much more constructive argument.


"PEI Watershed Alliance says Western PEI fish kills unacceptable
by Jim Brown  •  Aug. 4, 2011 •

The recent fish kills in western PEI have proven to be some of the worst in Island history, according to the PEI Watershed Alliance.

Alliance chairperson Fred Cheverie stated: “While the exact cause of the recent fish kills remains unknown, pesticide runoff from local fields is suspected.

“The streams involved in the fish kills offered optimal temperatures for fish habitat and were teeming with aquatic life, which suddenly disappeared as a result of a combination of torrential rain and agricultural operations with little safe guarding against soil erosion.

“Recent scientific research indicates that we will be experiencing more frequent severe weather events; therefore, it is now time for us as stewards of our land and streams to adapt our practices to the changing climate. We simply cannot keep blaming the weather for devastating events like this,”  he stated.

Mr Cheverie went on to say: “Soil erosion remains a very serious issue on PEI, and when agricultural soil enters streams following heavy rainfall events, it can carry agricultural chemicals with it. 

“We (Watershed Alliance) applaud the many agricultural producers who have made significant inroads in changing their practices to help prevent agricultural soils from ending up in our streams. However, the problems surrounding soil conservation cannot be solved by only some producers practicing innovative techniques; agricultural producers all across PEI must adopt new methods to prevent soil erosion.”

According to Alliance Vice-Chair, Mark Bishop, “Agriculture remains the single most important industry in the province. Streams and farms can co-exist well as producers on PEI have proven this. The timing of these recent events could not be worse given the fact that there have been substantial positive conservation efforts made by many PEI producers over the last decade.”

He said the rivers hit in the most recent fish kills - Trout River (Coleman), Mill River and Big Pierre Jacques - will take years to recover.

“The Mill and Trout Rivers were second to none on Prince Edward Island in terms of their contributions to sport fishing.  The video footage of the dead brook trout shows what PEI streams are capable of producing. 

“And to make matters worse, the Mill and Trout River were also among the few wild Atlantic salmon bearing streams left on PEI.  With these recent events, the continued presence of wild Atlantic salmon in Western Prince Edward Island is unlikely.”

Mr Bishop went on to state: “While these events are certainly a huge setback for the Prince Edward Island, we need to ensure the public is aware of all of the good work agricultural producers and watershed groups are doing across the Province to enhance and conserve our environment. Cooperation from all sectors is imperative if we are to continue to move forward in addressing these issues.”
________________________________

Well said.

It's Not Just the Food That Matters

I do think organically produced  food, meat in particular,  is safer to eat (no sub-therapeutic use of antibiotics is particularly important),  but perhaps even more important for long term sustainability are the soil management practices of organic farmers, longer rotations, continuous cover, high organic matter. Now a new study is showing that  organic farming has a smaller carbon footprint as well. This isn't an easy thing to measure given that a lot of the organic food sold in Canada comes from California, but researchers took a very systematic approach to counting the energy used to get food on consumers plates, and the savings for most organic farming systems is considerable.

http://www.atlanticfarmfocus.ca/Opinion/Organic%20Agriculture%20Centre%20of%20Canada/2011-08-04/article-2692223/Organic-farming-systems-yield-energy-savings-of-20-or-more/1




Organic farming systems yield energy savings of 20% or more
by Farm Focus Weeklies  •  Aug. 4, 2011 •

After a review of 130 studies, researchers have concluded that organic farming systems use significantly less nonrenewable energy than conventional farming.

The farm energy savings for organic are often 20 per cent or more.

"We concluded that the evidence strongly favours organic farming with respect to whole-farm energy use and energy efficiency both on a per hectare and per farm product basis," states the study. Possible exceptions are the poultry, hog and fruit sectors.

The findings validate the opinions of many organic famers, says Derek Lynch of the Nova Scotia Agricultural College (NSAC) in Truro, lead author of the "The Carbon and Global Warming Potential Impacts of Organic Farming: Does It Have a Significant Role in an Energy Constrained World?" study, published in Sustainability.

"Many organic farmers are convinced their farming system… is just as important as the product in terms of promotion of organic," said Lynch in a phone interview.

"And this is just another bit of evidence that our environmentally conscientious farmer manages a farm with a much lower footprint in terms of energy, and global warming to a lesser degree."

One of the differences in this study was that rather than considering only the energy use of farm fuel and electricity, a much broader approach was taken. The study authors, who included Rod MacRae of York University and Ralph Martin of NSAC, looked at all energy used within the life cycle of the whole farm system. "This means you have to include the embedded energy of any farm input," says Lynch.

Comparisons of farm-level energy use and global warming potential (GWP) were made of organic and conventional production. 

For example, nitrogen fertilizer and some herbicides and pesticides all have an embedded energy content that has to be considered. "That's well established. We're not stretching things by doing that."

The study also compared farm energy savings with that used across the entire food chain, including packaging, processing, distribution, storage, preparation and waste disposal. Other major energy users in the food chain are wholesale and retail, for services such as cooling and packaging, and processing.

Based on the study's estimate that farm energy use accounts for an average 35 per cent of the total energy used in the food chain, a 20% reduction at the organic farm level would result in a 7% cut for the whole food chain.

Though the study came up with average estimates there were significant variances for different sectors. For example, some field crops, fruits and vegetables and livestock, such as hogs, were outside the 20% threshold for energy savings.

Referring to a recent United States Department of Agriculture report, the study noted that transportation accounted for an average of 11% energy use, though some sectors were higher.

The study also found that tillage methods used by organic farmers "does not appear to be a significant contributor with respect to on-farm energy use, in contrast to common assumptions of organic critics."

Lynch says the study provides organic farmers with more information to promote their farming systems and products.

"You're trying to say the farm itself is value added," says Lynch. "It's value added to society and consumers. Now whether consumers and policy makers see that yet, is of course the million dollar question."

One of the key audiences for the study is policy makers. More evidence on the energy benefits of organic farming could lead to greater support for this type of farming.

The study was initiated by a market-development working group of the national Organic Value Chain Roundtable. "They felt that a closer look at organic farming on an energy use and energy intensity basis would be worthwhile," says Lynch.

One of the strengths of organic farming is its resilience, says Lynch. "If you've got a farming system that can be moderately productive with less energy requirements, you've got a more resilient farming system."

In a world of uncertain energy prices and supply, which will lead to higher synthetic fertilizer prices, "you've defined a farming system that is robust in those situations."

This article was written by Steve Harder on behalf of the OACC with funding provided by Canada's Organic Science Cluster1 (a part of the Canadian Agri-Science Clusters Initiative of Agriculture and Agri-Food Canada's Growing Forward Policy Framework).  The Organic Science Cluster is a collaborative effort led jointly by the OACC, the Organic Federation of Canada and industry partners. OACC newspaper articles are archived at www.oacc.info2 one month after publication.  For more information: 902-893-7256 or oacc@nsac.ca3.