Redefining productivity

We are truly productive if there is more forest next year than today, if there is more fish and if the soil is more fertile by the years instead of exhausted and eroded. 

It is a bit puzzling why most agronomists and institutions to such large extent focus on yield of crops per hectare as the main measure of agriculture productivity, when in reality that is not a driving force for farmers who look more into productivity per labor unit, or if they are modern agri-business operations, productivity of capital invested. If we compare farms globally the farms with the highest yield per hectare are rarely the most competitive. European farmers have mostly much higher yields per hectare of wheat than their Argentinean, American or Australian colleagues, still they can’t compete and are dependent on support programs of the European Union, because their general cost level is higher. Similarly in the dairy sector, the world market is dominated by a country with low milk yield per cow. The dairy industry in New Zealand is still primarily built on grazing cows and the production per cow is low in an international perspective. The average production per cow in Israel was 12,500 kg in 2007, while it was less than 4,000 kg in New Zealand , but New Zealanders produce milk a lot cheaper than Israelis.

If we compare efficiency in various systems, e.g. in farming or food processing, it will in most cases show that the bigger and more technological advanced system is more competitive. But are they more efficient and productive? Often, small farms have higher yield per hectare than large farms, still large farms gradually squeeze smaller farms out of the market because of market access, possibilities for rational specialization, economies of scale, better access to credits or simply governmental policy distortions . Larger crop farms perform better financially, on average, than smaller farms. The larger farms don’t have higher revenue or yields per area unit, but they have lower costs. As expressed by the report Farm Size and the Organization of U.S. Crop Farming from USDA: “larger farms appear to be able to realize more production per unit of labor and capital. These financial advantages have persisted over time, which suggests that shifts of production to larger crop farms will likely continue in the future.” Their yield per hectare is mostly the same as on smaller farms but the research shows that farms with more than 2,000 acres spend 2.7 hours of work per acre of corn and have cost for equipment of $432, while a farmer with 100-249 acres will spend more than four times as much labor and double the amount for equipment per acre. In that limited sense the larger farms are more “efficient” or “productive”.

There are many different ways to look at farm productivity and, depending on what we measure and how we measure, we may draw different conclusions. In principle, it is the factor of which there is a shortage that will, and should, determine which factor is the most important. Farms in high-income countries are shaped by high input of energy and low input of human labor (energy). In high-income countries, there is no shortage of labor but it has been costly and therefore productivity per work-hour has been the strongest driver of change. Close to cities, or in very densely populated areas, land is scarce and farms are shaped differently by high land prices. At a certain land price, grain farming is no longer possible and farming will orient itself to higher value crops, or will become playground for the rich, golf courses or paddocks for race horses.

Economists today talk about “total factor productivity” a rather opaque measure which has a scientific air. It does sound like a good idea to combine all the factors of production in one measure. But as this is measured in monetary terms it will just value things by their market value. So if labor is 200 times more expensive in one country than in another you have to produce 200 times more per hour for the same productivity. And if water is for free, the water productivity will not be reflected at all. In this way, productivity comes to mean more or less the same as profitability and is like a circular reasoning and of little value in a big picture discussion, even if it reflects quite well what guides a modern commercial farmer.

We need to redefine productivity. But it is not enough the redefine productivity in our minds, we also need to redesign the economic system which has created this distorted view of what is productive and what is not.  Today, productivity is measured by how many trees one person can cut down with her chainsaw or how much fish a fisherman can scoop up from the sea. But as nature resources dwindle, the real productivity is how these resources re-generate. We are productive if there is more forest next year than today, if there is more fish and if the soil is more fertile by the years instead of exhausted and eroded. 

(extract from Global Eating Disorder, forthcoming)

How increased labour efficiency drives resource consumption

If we compare efficiency on various systems, e.g. in farming or food processing, it will in most cases show that the bigger and more technological advanced system is more efficient. Larger crop farms perform better financially, on average, than smaller farms. The larger farms don’t have higher revenue or yields per acre, but they simply have lower costs. As expressed by the report (Farm Size and the Organization of U.S. Crop Farming) from USDA: “larger farms appear to be able to realize more production per unit of labor and capital. These financial advantages have persisted over time, which suggests that shifts of production to larger crop farms will likely continue in the future.” Their yield per acres is mostly the same as on smaller farms but the research shows that farms with more than 2,000 acres spend 2.7 hours of work per acre of corn and have cost for equipment of $432, while a farmer with 100-249 acres will spend more than four times as much labor and double the amount for equipment per acre. In that sense the larger farms are more “efficient” or “productive”

The same goes for a farmer who drives his pickup to the farmer market compared to the lorries supplying the supermarkets; she will use more fuel and more machine capital per kg of goods. And embedded in the machine capital are many other resources, metals, more energy and other peoples’ work. But despite all this efficiency our society neither reduce the number of hours worked nor the resources used, not in total and not per capita. This is not even the case for societies that have moved towards more services, as agriculture and manufacturing declines. How come? 

Try this discussion: If we compare the resource use of big, highly mechanized farmer with a small scale farmer, we have ascertained that per kg harvested yield, the labor efficiency of the bigger farm is higher. This is also the case for use of most other resources for area unit. But what happens if we look at resource use per labor-hour? Then it is clear that the big farmer in his 400 hp tractor use an awful lot more resources than the farmer with a small tractor, or oxen, not to speak about the half a billion farmers still working with their own labor as the main resource. The same goes for the driver of the delivery truck to Walmart, he uses a lot more resources per hour than the farmer loading her pickup to drive to the market. 

Now, you could say that nature doesn’t care about this discussion, if we are efficient per hour, per kg or per acre; nature only cares about the absolute use of resources or the total emissions. That is correct. But almost all people have a job of some kind, and in each job the same logic applies, i.e. that the more efficient each person is, he or she uses less resources per produced unit but more resources per hour of labor[1]. The total resource use in society is thus bound to increase despite of, or perhaps because of, increased labor efficiency. After all, as long as we all continue to work so much, our total resource use is determined by how much resources we use at work and how much we use as consumers together. 

This is a summary of a longer article I published a while ago, and which I now revised. Read the full article here: Jevons paradox - why efficiency is a liar word 

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[1] It is likely that there are some exceptions to this, but I believe that they are just that, exceptions.

Is farming efficient?

Farming means favoring a few species in the environment, giving them more space and nurturing them. And even for those plants that are selected, we favor the parts that are useful for us, i.e. we favor the grain over the straw and roots, we favor the meat of a chicken over its bones, which is the reason for why many broilers can’t even walk properly. In this way, we can use a higher proportion of the biological production from a farmed system than from a ‘wild’ system. Despite all the efforts in farming, and the tremendous progress in seed breeding, the advances in farming are all about the control of the factors and the favoring of a certain crop. The basic energy-transformation has not improved; the efficiency of the green leave to convert sunlight to calories has not improved.

In essence the primary biological production is more or less the same for a farmed system as for a wild system. Compare a pasture that is established in place of a rainforest or a field that forms when a swamp is drained. In both cases, the biological production is likely to be higher in the original, natural, system than in the farmed system. Biological production increases mainly when external resources are brought into the system; for example, when irrigation is introduced to drylands or when greenhouses are heated in cool climate or when nutrients are brought from outside the system, productivity can in­crease a lot.

In many ‘marginal’ areas, farmed systems are often not very com­petitive and in many cases directly harmful. Carl Linnaeus, the founder of modern classification in biology, noted more than two hundred and fifty years ago that the ‘Swedish’ settlers had a miserable life—and couldn’t pay any taxes—in the mountains whereas the non-farming, reindeer-keeping Sami people did well under the same conditions. Jarred Diamond observes a similar situation for the Viking settlers in Greenland. When the climate changed, their farming system was inferior to the economy of the Greenland Inuits that was based on extraction of wild resources (Diamond 2005). And this is not restricted only to cold areas. The livestock expert R. N. B. Kay says that humans over the centuries have made clumsy attempts to introduce domestic species of plants or animals into arid regions with catastrophic collapse of the ecosystem as a result. He finds that the East African acacia savannah and bushland can carry roughly a five times greater biomass of wild ungulates than of domestic animals (1970: 271–72).

‘Productivity’ can have a completely different meaning if one counted the impact on ecosystems and the external costs caused by farming. Studies of a wetland in Canada, forests in Cameroon and Mangrove forests in Thailand all showed the total value of these ecosystems hugely surpassed the value of the farming systems once they were converted. But, importantly, the benefits of the systems accrue to different people. Choices are made on the basis of the profitability for the person or entity that has managed to, with whatever means, control that piece of nature (MEA 2005).

So the answer to the question in the title is: Who asks?

(this blog post is part of the process of writing my new book, which still hasn't got a title
A new book is emerging).

Who says gaps are closing?

I just wrote about the distribution of wealth in the world. Below you can see the development of agriculture value added per worker. As you can see the gap between the rich countries and the poor countries is increasing a lot. Not even China has kept pace in agriculture productivity with the OECD countries. It has indeed increased value added per worker three times in thirty years, but France increased it 5.5 times in the same period. In Africa it was more or less constant for thirty years.



The development is perhaps better visible in a logarithmic diagram:


Apart from debunking the myth that "business-as-usual" will help the poor, it also puts into question who is benefiting from the increased global competition in agriculture commodities.


Agriculture value added per worker is a measure of agricultural productivity. Value added in agriculture measures the output of the agricultural sector (ISIC divisions 1-5) less the value of intermediate inputs. Agriculture comprises value added from forestry, hunting, and fishing as well as cultivation of crops and livestock production. Data are in constant 2000 U.S. dollars.

Looking at yield per hectare the picture is not as straight-forward. But then again, yield per hectare has never been a strong indicator of development, even if some agronomists are obsessed by it. 
Check here how it looks at Gapminder 

Read also: 

Stop pretending there are only winners in the global market

Agriculture: How cheap energy (and capitalism) increased the gaps between rich and poor

 

We get richer also without growth

World manufacturing output grows much quicker than GDP. This is shown quite convincingly by Peter Marsh in his recent book "The New Industrial Revolution" which I am currently reading. His main point is that manufacturing is still very important, contrary to what we may believe when we live in a post-industrial society. He also states that the notion of "de-industrialization" of western econonmies is exaggerated.

While I agree with his point, the book raised some other thoughts. I picked the graph above from the book. Between 1800 and 2010, world manufacturing increased 200 times, while the GDP increased "only" some 60 times (for those interested in the effect of rather small differences in growth rate, this means that manufacturing output grew with 2.6% per year against 2% for GDP - not a big difference is it?)

This means that we don't only have more money today than ever before, we also get a lot more "stuff" for that money. E.g. between 1900 and 2000 US residential prices fell by approximately 94 %, adjusted for inflation - and people say energy has become expensive!
In the early industrialization of textile manufacturing productivity in spinning increased 1000-fold in two generations from the end of the eighteenth century in England (Ayres 1989). The increase in productivity is not unique for manufacturing. As a matter of fact the productivity gains in farming are equally impressive if not more. In the areas with lowest productivity, where farmers produce with more or less the same technology as 200 years ago, one person can produce not even 1 ton of grain per year, whereas the most productive farms exceed 2000 tons per person-year (Rundgren, Garden Earth, 2012). 150 years ago it took Swedish farms 250 hours of work to get one ton of barley from the field into the barn - today it takes five minutes with a combine harvester (Jordbruk och skogsbruk i Sverige sedan år 1900).

 

Endless fields of corn in Mato Grosso

There are many different observations possible from this. 

1) One obvious observation is that manufacturing will go in the same direction of farming, albeit slower. That is, the relative importance of manufacturing in the GDP will continue to decrease.Our needs of manufactured good certainly is not as easily saturated as our needs for food, but clearly there are limits to how many new "things" we need, and want to buy all the time.

A farmer in Zambia working manually

2) Because of productivity gains quicker than economic growth we can actually increase our standard of living (measured in "things") even without any economic growth, we get richer even if we don't get more money. Every year the same money buys us more things. This seams to be a rather strong argument for a non-growth economy.


3) Because of saturation in markets for manufacturing, and increasing competition, there are small possibilities to make profit from manufacturing:

"Stagnating demand will affect large segments of the industry in a similar way as agriculture suffered from lack of demand and falling prices for 100 years, despite an enormous population growth. The combination of increased competition, increased productivity and automation means constantly falling prices up to point where there is no profit to be made." (Garden Earth). Capital and capitalists need to find new arenas, and they find them today in three areas: 

• In privatization of society functions (schools, utilities, railroads etc.). I don't think i need to give any examples, they are everywhere in European countries and elsewhere
• In financial capital. The value of swaps and derivatives at the end of 2007 was US$ 454 trillion (ISDA 2009). This corresponded to some eight times the world GDP and around four times the global household wealth (Davies et al. 2008). The value of stocks in the 54 biggest markets in 2007 was more or less on par with the world GDP and the value of currency trading amounted to more than US$ 2 trillion per day (Reuters 2007), that is, more than 10 times the world GDP in a year.
• and in ecosystem services - measures to reduce carbon emissions or to compensate for emissions already represented a market worth US$ 143 billion in 2009 (World Bank 2010b). Following this path, we see more and more ecosystem services being regulated by market mechanisms, which is a euphemism for privatization.

4) That manufacturing output grows quicker than GDP contributes to the understanding why there is still such a strong link between GDP and use of energy and other nature resources. It is the production side of the so called "rebound effect" or "Jevons paradox", i.e. that saving are offset by increased consumption.

Taking care of the garden

Acceptance speech for the honorary doctorate in Science at Uganda Martyrs University 20th November 2009


Your Lordship Chancellor, ladies and Gentlemen,

I am honoured and humbled by this award. I have visited Uganda many times over the last fifteen years and I am happy to have contributed in making Uganda a leading country for organic in Africa. I am also happy to have assisted the Uganda Martyrs University in becoming a leading institution for organic agriculture in Africa. It is a special pleasure to congratulate the first Bachelors of Science in Organic Agriculture. Of course there are many more than me that have contributed. I think of my life companion over 33 years, Kari Örjavik and our friends and partners at the Torfolk farm in Sweden, but also of people in Uganda such as Moses Mwanga, Alan Tulip, Charles Walaga and Alastair Taylor.

Organic Agriculture has come a long way. Many people have understood organic as being pesticide free and free from synthetic inputs. And it is that, but it is a lot more. The origin of the word organic is the perception of the soil as a living organism, but organic is more than just the soil, it is about the plans, animals and people. During my presidency of the International Federation of Organic Agriculture Movement we developed a widened understanding of organic agriculture by stating the four principles of organic farming.
The principle of Health – that organic farming is about health of the plants and the eco-system and ultimately of the human beings. Our health and the health of nature are forever connected.
The principle of Ecology – that we in organic farming work in accordance with the same principles as most eco-systems, circulation of nutrients, diversity, balance.
The principle of Fairness – that our responsibility extends to how we treat animals in the farm, surrounding eco-systems and our fellow human beings.
The principle of Care – that we take a precautionary attitude and see ourselves as stewards of the parts of the planet under our responsibility

Organic agriculture is presently recognised for
- that it is environmentally friendly
- contributing to bio-diversity
- providing eco-systems services, such as soil-building, water purification and climate regulation
- being less energy demanding
- being well adapted to the conditions for African small-holders
- being culturally appropriate, building on long traditions
- providing food security

Ultimately, the agriculture system is linked to our human social and economic systems and to ecology. In my current study, Garden Earth, I take this discussion further. It is due for publication in Swedish in April and in English towards the end of the year. In that study I look at the big picture developments.
We can look at agriculture productivity per area; per unit water; per invested dollar; per man – or woman – hour or food per energy unity. For some reason most agriculture studies and statistics focus productivity per area unit, but in the same time we know that the most competitive farmers are not the one having the highest yields, on contrary we find that the cheapest wheat is from Argentina, Australia and USA where yields often are less than half of those in Europe. As a matter of fact Bangladesh is the country in the world that produces most food per area unit and not the industrial countries. The reason is mainly that land is scarce in Bangladesh. In the same way capital productivity is often very high in poor countries, as capital is so limited. The most productive agriculture in arid areas is often not farming at all but pastoralism. By grazing, e.g. goats, we can utilise nature areas which would be too dry for any cultivation. In that sense the water productivity is very high under those conditions. Taking into account the increased prices of oil and a energy-scarce future, we certainly have to look a lot more into the energy productivity of farming. Through the use of external energy we have increased productivity tremendously, first by using animals for draught and wind for pumping and milling, but the real revolution was the introduction of fossil fuel. If we “translate” the energy content in oil into the man-power of a human, each person in the world has now some 30-40 energy slaves working for her, in the rich countries this amounts to some two hundred. So there is really nothing magic with how much we can produce.

The fundamental food equation was always that a farmer had to produce enough food to feed him or herself and a number of dependants, children, elderly and sick as well as number of people living on the back of the farmers, priests, soldiers, lords and governments. So each farmer need to keep perhaps 3-5 other people alive. And it goes without saying that a farmer has to produce enough food energy to sustain these people and herself. An energy deficient food production system was simply impossible before fossil fuel. With ample supply of fossil fuels this all changed and modern food systems actually consume some ten to twenty times as much energy than they produce. Some will now object and say we can’t compare energy in oil with energy in food. Of course they are not the same, we can’t eat oil, at least not yet, but all over the world there is a discussion about bio-fuels, that we should grow crops for fuel. And suddenly we see that there is a strong relationship between energy in food and energy in oil. The highest energy productivity is found in improved, intensive traditional systems. It is on those systems we need to build the agriculture for the future.

My discussion about productivity has so far been mainly about the production of food and energy. We all know, however, that farming produces many other things such as eco-system services; culture; meaning and connectedness to nature and we need to look at productivity also for those public goods.

Sir, let me expand my discussion beyond agriculture. The industrial capitalist production system has created unprecedented productivity and wealth. It has also contributed to the increase of human rights and liberation of women and other oppressed groups compared to the preceding feudal societies. But it has also come with a price. The price is depletion of natural resources; squeezing out other organisms and ecosystems to such an extent that we are endangering our own survival; causing climate change and chemical and medical contamination, to mention just a few. Further, there is no evidence that this growth has delivered more human well-being. Is not well-being that we should be striving for rather then GDP figures? Our society has also failed in creating wealth for the many. Big parts of humanity are as poor today as they were fifty years ago, despite unprecedented growth worldwide markets. We have failed to create an equitable society. In addition, the economic system,

The capitalist economy and its associated values – such as the vision of constant growth, risk-taking and competition – were perhaps appropriate for a world bent on expansion and colonization. But we have now colonized what there is to colonize and spread ourselves over all parts of the globe. Economic growth is still possible (we can always create new ‘virtual’ globes on the internet, can’t we? Biological, physical and geographic growth isn’t possible. Therefore, we need new values and paradigms. Most likely we also need a new economy and new forms of social capital. Population growth also needs to be checked.

We have changed the globe so much that Nature can’t make it without us anymore and more and more wild life is dependent on us for its survival. There is no point in looking back to the time when we were equal to the giraffe, the carrot or the sheep. Today, whether we like it or not, we must act as gardeners for the whole Garden Earth. In that garden we have to look after the other parts of nature, not as resources to exploit or sinks were we can dump our waste, but as integral parts of the web of life,
of our Garden
Earth
Eden