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Gunnar Rundgren: The cost of cheap food

02 marzo 2016

Gunnar Rundgren, author and former President, International Federation of Organic Agriculture Movements

Thank you so much. This banana is bought across the street for 36 cents. This banana is bought across the street in the same shop for 66 cents, so how come? Well, this banana is slightly bigger and it is more ripe, but the main reason for why you pay almost double price for this banana is because it is an organic banana. With that in mind, you could ask the question: Is it not a good opportunity for farmers, in particular smallholders, to service the growing organic market? The global organic market is today estimated to be worth something in the range of US$60 billion, and as many small farmers cannot really afford to use a lot of inputs anyway, it seems like a good deal that they could go for the organic market.

With that in mind, I worked between 2002 and 2008 in a development programme in Uganda and Tanzania financed by the Swedish Government. We worked through commercial enterprises and a few cooperatives to organize farmers, all of them smallholders, about 80,000 farmers participated. We worked with a number of crops, but the main focus was on traditional export commodities like coffee, cocoa, cotton, sesame seed, things like that. We did venture into value-addition, and a few high-value crops like herbs and spices, horticulture crops, fresh fruits. What we did was mainly I would say technical assistance, troubleshooting along the whole value chain, all the way from the farmers' inputs, say seeds, maybe biological pest control, knowledge, up to the market in Europe and United States, troubleshooting when there were complaints, miscommunication between the buyer and the seller, participating in the trade fairs, branding – we did all of that because a value chain is not stronger than its weakest link and to put all efforts on one side of the chain is rather misplace energy.

So all-in-all, the programme was very successful and most of the businesses we supported are still operating today, six or seven years after we finished the programme, and I think you know, that is a good indicator of success; that things continue when you pull back your support efforts. The registered farmers got something between 15 and 40 per cent that they paid for their organic products but the result was better than that. The average income per farmer increased with something like 50 per cent. How come? Well, the reason is that in many cases, farmers are not really producing as much as they can, because of lack of market opportunities and low prices. If they get a better fair price, they will divert more of their energy into their farm operation and spend less time on charcoaling or selling soap, whatever they are doing trying to earn income in other ways than farming because many farmers do have a lot of other income streams that they can choose from.

So they invested more in their farming, they got a higher price, they got higher yield and they got better quality which in turn reflected in a better price. The organic market is a demanding market, so you actually have to produce high quality to be able to participate in that market. But can organic farming feed the world, is kind the main objection I hear when I talk about organic. Well, I will tell you why it can. To start with, many of the poor farmers cannot afford a lot of the inputs anyway, so they are using a farming system which is quite low input. With organic farming technologies, it is not only about saying no to chemical pesticides and no fertilizers, it is actually saying yes to a lot of things, to have better crop rotation, better husbandry, better nutrient management, better weeding, a better farm strategy seeing the farm as a whole bio-diverse organism and that will increase yields in almost all cases when it is applied.

In addition, organic farming conserves the biodiversity in the farm but also in the surrounding areas so it produces a more varied and rich nature, and you can increase your sources of food, not only from the main crops but you have secondary crops, you have wild products in the surrounding, or inserted in the farm environment, that gives a much more resilient system so it gives a higher productivity but it also gives a much better diet, because we have to remember that food is not only about quantity, it is also about quality and nutrition, and in that sense, the organic farming can surely feed the world. So the answer is yes, but, there is a but. Overall, the discussion if organic can feed the world or if GMOs can feed the world or if chemical fertilizers can feed the world, is a misplaced discussion, it is missing the real reason for hunger which is poverty and unequal access to resources and we do not fix that by various agronomic technologies.

In order to better understand that, I visited three farms in Zambia in 2012. The first farmer I visited was Susan and Fred Mkandawire. They are very small farmers. They have often what would be referred to as almost subsistence farming. Here is Susan cooking the daily meal, the nsima, which is a maize porridge, supplemented with a few green leaves from their own production, only cooking oil and salt which is brought in, and basically that is the diet year round. They do produce some more vegetables, and they do have some chicken, but those are sold in the market to get cash.

Fred, her husband, is mainly working outside of the farm to try to get some job to get some cash income which they need for school fees, clothes, some tools and things that they need to buy. At the time of my visit, he was a security guard somewhere, so he was not around. These farmers, they grow maize which is the staple food. They grow about less than half a hectare of maize. They use chemical fertilizers, they use seeds supplied by the Zambian Government, so they are benefitting from subsidized inputs, you could say. Still, the yield of maize is only 900 kilograms from this plot of less than half a hectare, per year. This is enough for the family to survive but it does not generate any surplus for the market or anything like that. This farming family is on the brink I would say, they are not starving, they are doing fine as long as income keeps coming in and none of the old people, parents, are sick. Should something like that happen, their fate would be grim and Susan says, I do not want my children to become farmers.

Just close by to Susan and Fred, I met Godfrey and Katherine Boma. These people are old, Godfrey is 81 years old. They have farmed the same number of years as the Mkandawires. Godfrey and Katherine started to farm when he was 67 years old and retired. He retired from a successful business in Lusaka. He could afford to buy quite a lot of land, cattle, oxen, goats, chickens, you name it, he could invest in his farming operation. He and his wife now manage these cows and cattle, sell milk, meat, but they also grow five hectares of maize so they grow more than 10 times the area of maize that Susan does, and they get yields of about five tons per hectare, which is two and a half times as much as Susan Fred, so in total they harvest 25 times as much maize from their fields. They also use chemical fertilizers and subsidized seeds.

In addition, Godfrey has started to do organic farming, not because he wants to sell as organic, but because he thinks it is an interesting method and good for the environment and he says it is equal. I get the same yield from organic as conventional, I have lower costs for inputs with organic but I have slightly higher labour requirements to do organic farming because I have to do more composting and a bit of manual weeding that I do not do in the conventional farming system, so for him, it is not a dramatic difference, but the big difference is between Susan and Fred and him, because they can invest in their farming system.

The third farmer, Sebastian Scott I visited. He has a very small-scale manual operation, but he is quite well-off and well-educated and he does maize cultivation with no tillage, no so-called cultivation and fully organic, in companionship with various kinds of beans and he yields like 7 tons per hectare in his maize, which is three and a half times the Zambian average, and even in an international comparison, a very good yield. In addition, he has chickens, pigs, vegetables which he sells in the local marketplace and he has amazing productivity, and again, proves that you can increase productivity tremendously also with little resources if you do it in the right way.

But what is really the future of smallholders in the global food system driven by agro-business and increasing competition. Well, this is the man, on the picture on that side, Bob Stewart, Illinois, United States in the fertile corn belt of the powerhouse of the agriculture exports of the world. He lives on a family farm, he was raised on that farm, and he runs the farm together with his brother. Of course the farm has grown over the years, so today they manage 3,200 hectares, mainly only maize, a little bit of soy beans as well. They have about four or five helpers in the farm. So in total each worker is managing 400 to 500 hectares of land per person. In addition, they have massive inputs of fertilizers, the seeds are genetically modified, they use huge quantities of pesticides and they reach ten tons maize per hectare, which is a good yield for the United States.

So what does this come up to? Well, one worker I said managed 400 or 500 hectares, and they produced 10 tons per hectare instead of 2 tons per hectare like Susan does, so they produce five times as much per hectare and 500 times as big an area. So in total they produce 5000 times as much maize or two and a half thousand times as much maize as Susan per person. They do that with the assistance of enormous resources. The energy resources put into a farming system like his corresponds to about 1,000 barrels of oil per workers, so each worker commands energy resources corresponding to 1,000 barrels of oil, and basically Susan's muscles have to compete with all of the energy embedded in all these oil barrels, and if you translate the energy in oil to human manpower, 1,000 barrels of oil corresponds to 14,000 man-hours, an enormous quantity of work.

So how can they compete? In addition, the financial investment in farming is very, very high. I come from Sweden. Farming in Sweden is the second-most capital intensive industry next to mining. Forget about car making or this kind of stuff. No capital investment compared to create one job in farming, much more capital. In Denmark, a very good agricultural ?? are very successful. Each farm has a debt of US$1.6 million and that is mostly each farm means one person because that is the only person survives on a farm.

So it is enormous capital needed to run these operations today, and essentially, these farmers are competing in a very, very different game plan, and you can ask the question, can they ever compete? Increasing the pressure of competition is the extremely efficient logistic transportation system you have in the world today. This ship Mærsk Mc-Kinney recently released is the biggest cargo ship in the world, it take 18,000 containers, that equals 1 billion cans of Coca-Cola if they would like to ship it by the ship. These transportation machines that we do not see a lot of because it is in the back all the time, it is making markets more and more equal around the world, but the problem is that the conditions under which the producers are competing are not at all equal, but the market is let us say fair and equal in that sense, or should be.

Low labour cost is seen as a comparative advantage for developing countries and for their farm sector, but that is no longer true. It was true, and it is still to some extent true if you look at very labour intensive crops like horticulture, the green beans and the flowers, the few success stories that everybody points to. Well there, you can be competitive, but when you look at staple food and grains, low labour cost has almost no relevance for the cost of production. Labour cost is two per cent of the production cost in American maize, so what does it matter. It does not matter a lot. If you work for free – Susan can basically work for free, she can still not compete in the globalized market. Therefore, we have to tackle the wider economic and policy framework if we are to improve the conditions of smallholders and if we want to support them, we need to give them serious access to resources, and I mean real resources like land, water and a lot of capital, of course also social capital, human capital, but not the least financial capital.

The paradox we face is that the areas in the world with the highest productivity, like the American corn belt, or for that matter, here in Mato Grosso in Brazil where the real agriculture wonder of the world is taking place at this moment, they are very productive from a very limited agronomic, economic perspective, but as a matter of fact, they are basically dead landscapes. They are ecological and social deserts, and they do not provide a lot of occupation or employment because no people are needed in these fully mechanized agriculture business operations in any place. Paradoxically, these most productive landscapes are even food deserts because there is no food to be found in these production areas of agriculture monocultures, no people – no shops basically. So is this really what we want as a vision for how we want to develop farming systems in the world, whether it is in the south or in the north, or do we look at another model.

This is also from Mato Grosso, it is a cocoa plant in front of Luis Vieira, where he and Maria Vieira were poor farm workers in Brazil through land reform, they got access to land by the Brazilian Government and they set up a fantastic organic agro-forestry operation. They grow 87 different crops, they have cattle, they have pigs, they have chickens, they have fish, all kinds of small animals, and they have solar energy to feed their electric light, a small fridge and the TV. The food they produce is not sold on the global market. The food they produce is eaten by themselves and it is supplied to the local school where it is benefitting the Government Free School Lunch Programme. Is this a model we can work on? Luis and Maria, they cannot compete on price, forget about it, but the produce nutritious food embedded in the local ecology, economy and society and most importantly, they regenerate the resources within the farm. They are not exploiting nature, they are replenishing the soil, they are replenishing nature all of the time.

What all of us eat is a reflection of our farming system. We need to understand better the link between the monocultures in the field and the monocultures on the plate, I would say, the fact that big corporations and food industries and supermarkets are linked up with these huge plantation farming system and churn out – you have 50,000 different products to choose from a supermarket, but most of them are just variations of soybeans, maize, wheat, sugar and palm oil which is reconstituted and blended and perfumed and sold to you with fancy packages, but they are the bulk of what you eat and buy in any shop here today, and we need to recognize that food is cheap because we let nature, poor people, society, and future generations pay the bill for this very efficient system. The question we really should ask is if we can afford cheap food.

Thank you.