Wednesday, July 29, 2015

Agriculture and the inefficiency of the market

Richard Mellor
Afscme Local 444, retired

In the capitalist mode of production in which the means of producing the necessities of life is owned by private individuals or groups of individuals, the capital needed to set this process in motion is allocated only if its profitable to do so, only when the investment returns value over and above that which the capitalist lays out. The end goal of this production process which might appear in the form of shoes, cars or some other commodity, is a secondary factor in the capitalists’ mind; the rapacious striving for profits is what drives them, the added value, created through the production process and realized with he stale of the commodity.

Cows raised industrially, are fed growth hormones and all the equally destructive chemicals that end up in our bodies for no reason other than the cow is a commodity that has to be sold in order to realize the added value contained within this living creature. The quicker it reaches maturity, the quicker it gets to market and hopefully sold the quicker the investment plus the added value is returned so the whole process can repeat itself. The profit does not stem from selling the cow above it’s value but in the process of production itself as the capital the capitalist doles out for labor power (the workers wages) is less than the value that labor power creates.

This is obviously a very inefficient way of producing the necessities of life for a global population. In fact, this system of production has failed miserably when it comes to producing basic needs for hundreds of millions of the world’s people.  Basic human needs like water, food, medicine, health care, shelter and education are denied a couple of billion people every day simply because it’s not profitable to do so. In other epochs we starved because agricultural production had not developed to the point where we could feed ourselves. We died from diseases we now control or have eliminated because the science behind them had not yet been discovered and public health was not advanced enough.  In the capitalist mode of production we die amid plenty, we die despite the means of saving life being present. But if investing in sewage systems, water plants, health care or social infrastructure is not profitable capital will not find its way there.

Jo Craven McGinty had a column in the WSJ recently about California’s drought and water usage in the state.  There has been much about this subject given that we are in a four-year of one.  Mother Jones Magazine has covered the issue extensively and pointed out the massive amount of water that the now trendy and very popular Almond consumes.  Ms McGinty crunches some of these numbers in her column. Using figures from UC Davies she points out that in the Southern Sacramento Valley mature almond trees use about 3.5 feet of water on average per year which is about the state average. In the San Joaquin Valley that climbs to more than 50”.

She points out that “One cubic foot holds 7.48 gallons of water, and one acre measures 43,560 square feet. Irrigating a full acre to a depth of 3.5 feet over one growing season would consume 1,140,401 gallons of water.”

In California, an acre of land supports about 124 almond trees and although crop yields vary, in 2014 an acre produced close to 2,270 pounds of almonds which works out at about 520 gallons of water for a pound of nuts. Almond production in California occupies 860,000 acres of farmland.

Almonds were not always this abundant in California.  While they’ve been grown here since the mid 19th century they have become a major profitable crop. A trendy marketing campaign and a growing middle class in China in search of a higher protein diet has boosted production also. Increased production is also due to fertilization (Nitrogen, Zinc eg) and irrigation. California produces about 84% of global almond consumption. 

Hedge funds and investors have moved in to the Almond producing business where returns have hit 30% in some cases. There have been extensive marketing campaigns pushing almonds that have driven almond production to new highs and the California almond market hit 4.8 billion in 2012.  One farmer explained that he quit raisins for almonds which are more profitable.

TIAA-CREF, a NY investment fund owns 37,000 acres of California farmland and has been pushing its investors in to almond production; it’s an "attractive long-term investment theme" the company tells its clients. Numerous institutional investment companies own huge tracts of California farmland.  Stewart Resnick, who made money in real estate is one of the largest private producers. In an earlier piece I wrote on Resnick and his dealings, there’s more information about this waster.

Irrigation, fertilization, mass marketing and advertising------ industrial for profit farming is what we are witnessing here. In fact the pollination of California’s almonds is what Mother Jones’ Tom Phillpot refers to as the “….largest annual managed pollination event in the world…” as one million bee hives (almost half the hives in the US) are trucked in to the area in February. Philpott also points out that the Resnicks hired Korean rapper Psy and Stephen Colbert to push the commodity for them.

In 2010, a typical year, the Journal’s Ms Mcginty writes,  California agriculture consumed 33 million acre feet of irrigated water, while urban uses, including landscaping, consumed 8.3 million acre feet. One acre foot is 326,000 gallons. The state’s total agricultural and urban consumption, then, exceeded an incomprehensible 13.4 trillion gallons of water.”

 “How can we grow more food with less water?” one so-called expert asks. “Here’s the deal,” Daniel A. Sumner, an agricultural economist at the University of California at Davis tells the Journal. “Plants use lots of water. They breathe it in.”

But there is no solution to this problem that offers anything but continued environmental degradation and catastrophe. The market may find a more profitable use of capital and almonds and other crops may well decline in production, but the destructive process will continue. And as a grower commented to Resnick; “The sound of money is when a harvester goes next to a tree in an orchard with 7000 pounds of pistachios and shakes it. That sound, when the pistachios hit the catch frame, that’s the sound of money.” “It’s like a Vegas slot machine,”

Does this sound like a person whose mind is absorbed with producing food for the world’s hungry? Of course not. He could be producing condoms; it is profits that matter to him.

So is there no solution to this destructive market process?  I do not think it is possible to avoid environmental disaster as long as such vital human needs and the production of them is in private hands. What sort of social system allows one man or family to own the water necessary for the production of the food needed to sustain life for millions of people? How is it that What right do a gang of faceless investors, owners of capital, can determine how food is produced, what is produced or whether it’s produced at all?  It’s the laws of the market that allows it, just as it is the law of the market that allows them to own capital that is a collective product or allows them to take your home or destroy the environment.

How capital is allocated in society, as with human labor power, which are both necessary aspects of the production of human needs, must be a conscious, collective democratic process. Not determined by faceless bureaucrats at the apex of a totalitarian social system like the former Stalinists states, but through the participation of human beings as consumers and as workers, whether directly involved in the production process or as scientists, engineers, and all others that contribute to the sustaining of human life. The most illiterate rural peasant had extensive knowledge of weather patterns, soil conditions, animal behavior and other important aspects of agricultural activity, just as an old fisherman does about the ocean. It is not that “experts” are bad and modern technology inherently destructive, it is that they function, as we all do, as hired hands of those whose sole purpose as owners of capital is the rapacious quest for profits, the rate of return on their investment, whether it’s the production of almonds or sneakers.

Transforming the way we produce the necessities of life from a for profit system that is in conflict with the natural world to one based on human need and in harmony with it, is not a Utopian concept, we have lived that way for thousands of years of human history, it is the only way we can avert the destruction of life as we know it which is inevitable as long as capitalism and the market rules.

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