Economics – ECOSYSTEMS UNITED

5 things to consider before buying hybrid seeds

Hybrid plants are a crossing between two selected parent plants achieved via controlled pollination (see how are plants propagated). The seeds produced by this process are called F1 or F1 Hybrids. These hybrids will exhibit very specific qualities. Hybrids have quickly come to dominate the seed market. However, in spite of their increased market presence of hybrids, there are several factors to be considered. They can be summarized as follows:

Loss of Genetic Diversity

The massive shift to the use of hybrids has resulted in a severe reduction in seed varieties. Between 1984 and 1987, 54 of the 230 American and Canadian mail-order seed companies went out of business. With their closure, 943 non-hybrid varieties, or approximately 19% of all varieties, were lost. This trend continues based on the evolving demands of the agriculture industry, i.e. extreme consolidation and the globalization of supply chains. However, genetic diversity must be maintained as it is essential to the survival and adaptability of any given species (see crop wild relatives), something that will be increasingly relevant as a result of changes in climate and pest adaptations.

Higher Prices

Hybrid seeds are typically more expensive due to the financial investment required by the seed companies in order to develop new strains. Investment in this respect relates to finding two suitable partner plants and hand-pollination. The higher cost is passed on to growers. Growers who are producing for the market must then pass on the costs to consumers.

Non-saveable Seeds

Seeds from hybrids cannot be saved as the offspring will be genetically unpredictable. As a result, growers are forced to purchase new seeds each year. This puts undue financial stress on small-scale growers, which further contributes to the consolidation of the agricultural system. Further consolidation means more extreme shifts to mechanization which requires the use of chemicals that typically harm the environment and erode the relationship between food producer and consumer.

Private Property Rights

Unlike open-pollinated seeds, hybrid seeds are patented. This means that the genetic rights to the plants belong to the company producing the seeds rather than being a public good. With seed companies becoming increasingly consolidated, the power and control continue to become concentrated. In 2007, three companies – Monsanto, Dupont and Syngenta – controlled 47% of the world’s seed market with Monsanto alone controlling one-quarter of the market. Since that time, Monsanto has merged with Bayer, Dupont merged with Dow, and Syngenta merged with ChemChina. These mergers resulted in the development of an extremely powerful oligarchy that has a stronghold on the world’s seed market. This chokehold means diminished autonomy and a world subjected to subversive tactics designed to broaden the companies’ influence in the world’s economy.

Commercial Focus

The hybrid varieties produced are typically designed for commercial growers. Therefore, the primary focus of plant breeders is tolerance for machine harvesting and processing, with flavor and texture being of minimal importance. Likewise, hybrid varieties are designed to ripen uniformly which is not necessarily of benefit to home or smaller producers who seek to extend the growing season over as long of a period as possible.

Sources:

Ashworth, S. (2002). Seed to seed: Seed saving techniques for the vegetable gardener. Decorah, IA: Seed Savers Exchange.
https://extension.illinois.edu/hortihints/0102a.html
https://garden.org/courseweb/course2/week2/page18.htm
http://news.agropages.com/News/NewsDetail—21186.htm

biofuels explained

A biofuel is a form of fuel that is produced from renewable organic materials, such as sugar crops, oil seed crops, and animal fats. They are considered to be potential substitutes for carbon-based fuels, i.e. extremely old, biofuels. There are two varieties: plant-based and animal-based.

The plant-based products are fermented sugars which create the fuels like ethanol.

rfa-dry-mill-ethanol-process-web — Courtesy of: http://www.ethanolrfa.org

The animal-based products are processed by combining an alcohol with an animal fat in order to create biodiesel.

how_biodiesel_is_made — Courtesy of http://www.enginebuildermag.com

At present, biofuels are a hot topic in modern society. As carbon-based fuels become more expensive and scarce and political tensions rise, biofuels appear to be a viable replacement and potential source of energy independence. In the United Sates, it has been asserted that most vehicles can use gasoline with up to 10 percent ethanol – the most widely produced and used biofuel. However, consumers take issue with the effect of the ethanol on motors as well as increases in gas prices associated with biofuel production. There are also demands to stop government subsidies for the production of crops for fuel production. Globally, there are issues with the destruction of rainforest for the production of raw material for biofuel, e.g. sugarcane or palm

Likewise, there is controversy as to whether the finite resources necessary for producing biofuels should be allocated to fuel rather than food when an estimated billion people are faced with hunger on a yearly basis. However, this issue is in the process of being solved via the use of waste products for biofuel production, rather than the edible portion of the product. Alternative options, such as the use of algae, are also being explored in an effort to reduce the environmental impact of biofuels.

What role ethanol and other biofuels will play in the future of energy production is uncertain, although the Energy Independence Act of 2007 encourages the production of biofuels to reach 36 billion gallons by 2022. If their use continues to expand, potential benefits include increases in domestic energy productions, a reduction in some air pollutants, the opportunity for a new source of income for farmers, and the possibility that production can be developed in a sustainable manner. Biofuels also emit fewer greenhouse gasses when burned. Conversely, biofuels may result in land-use changes, an increased need for agricultural subsidies, greater use of pesticides, herbicides and fertilizers that can compromise water, soil and air quality, and prices for food crops may increase because of shifts in production.

biofuels-chart — Courtesy of: http://www.americanprogress.org

sources:

https://www.epa.gov/environmental-economics/economics-biofuels
https://ec.europa.eu/energy/en/topics/renewable-energy/biofuels
https://www.nrel.gov/workingwithus/re-biofuels.html
http://www.nationalgeographic.com/environment/global-warming/biofuel/

the circular economy explained

Much of the economy in the industrialized world is dependent on cheap and easily-available resources as well as fossil energy. Such a dependency is largely grounded in the belief that continuous economic growth is not only possible but also necessary. Accordingly, consumption is intended to perpetually expand. The products generated by such a system lack the durability of products from previous decades as they are not designed to last, rather they are designed to promote consumerism. In turn, massive amounts of waste are generated as a part of a ‘throwaway’ society that is always searching for the next new thing, regardless of need or whether the same old thing is still perfectly good. The waste that is generated by the norms associated with a linear economic system is then poorly managed – ending up in landfills, the ocean, or burned. However, new economic strategies are being developed in order to more intelligently use existing resources.

One strategy is the implementation of a circular economy, which is an industrial system that is designed to remove waste from the system and to promote regenerative or restorative practices that encourage the use of superior design, materials, products, systems and business models in order to encourage a shift towards the use of renewable energies and the elimination of chemicals that negatively impact the environment. The practices employed are designed to optimize a system rooted in a cycle of disassembly and reuse that go beyond both disposal and recycling in order to avoid wasting the energy and labor typically lost in a linear economic system.

Within a circular economy, the components are differentiated between consumable and durable components of any given product. There is an attempt to integrate non-toxic or even beneficial biological replacements for the non-durable components so that they can safely be directly reintegrated into the environment or via a cascade of uses. The durable components in a circular economy are designed to be reusable or upgradeable – dependent on the type of technology associated with the product. By taking such steps, economic systems become more resilient and less resource-dependent.

Similarly, in a circular economy, the concept of users replaces that of consumers. In turn, new types of contracts that are more long-term in nature and based on reputation can emerge. Such contracts can be tailored to the needs of both consumers and businesses. It is also possible for manufacturers or retailers to remain the owners of the rented or leased products. In turn, the owners would be responsible for maintenance costs which would encourage the development of longer-lasting products of better quality. This form of benefit has the potential to be particularly important because prices are predicted to rise as competition for resources intensifies. The energy required to manufacture new products is augmented and valuable resources can be reserved. Common examples of items in a circular economy include car sharing services and cellphone contracts that encourage trade-ins.

sources:
https://reports.weforum.org/toward-the-circular-economy-accelerating-the-scale-up-across-global-supply-chains/from-linear-to-circular-accelerating-a-proven-concept/
https://www.ellenmacarthurfoundation.org/circular-economy

an introduction to community supported agriculture (csa)

First introduced in Japan and Switzerland in the 1970s, community supported agriculture (CSA) is a form of partnership between farmer and consumer. They enter into a contract which provides consumers with a certain number of ‘shares’ in the farm. Each share provides the consumer a box (or bag or bucket or …) of vegetables or other products at a regular interval.

There are four basic components of a CSA:

Partnership: a mutual agreement between the producer and the consumer is established for the growing season
Local Production: the exchange is local, i.e. a part of the community, in order to facilitate the relocalizing of the human-food relationship
Solidarity: a unifying relationship is developed that is beneficial to both producer and consumer
A Producer/Consumer Tandem: the direct person-to-person relationship, i.e. no intermediaries or hierarchies, is established

The establishment and execution of a CSA have several benefits and challenges for producers and consumers that are summarized below.

Challenges

Opportunities

Producers

Potential for a bad worth of mouth
Increased management requirements
Time demands → customer relations
Packaging and distribution costs

Consumers

May feel like they are not getting their money’s worth
Lack of choice
May be expensive
‘Long-term’ commitment
Short shelf life (no preservatives)
A significant amount of produce that requires cooking

Producers

Marketing before the growing season
Consistent cash flow
Development of customer relationships → loyalty
Shared risk
Cuts out the ‘middleman’
Little capital investment
Word of mouth advertising

Consumers

Access to super fresh produce
Development of relationship with producer
Contact with the farm

Society

Reduced environmental impact of food(?)

For the implementation of a successful CSA, the participants – both farmers and consumers – must have the ‘right’ type of personality, i.e. committed and patient. However, if such a relationship can be established, CSAs are a very viable marketing strategies that can be used by small farmers to remain competitive in an environment largely dominated by industrialized agriculture.

sources:

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex3482?opendocument
http://edis.ifas.ufl.edu/fy597

7 tips for the successful implementation of direct marketing strategies by small farmers

Direct marketing is a form of marketing that is drastically different than commodity selling. Where commodity selling is based on a market-determined price and generally focused on standardized, large-scale sales that are impersonal in nature, direct marketing involves 1:1 selling between an individual/group and the seller. In doing so, trust is established and alternative forms of value are created. The value created in this respect enables small farmers to remain competitive against agribusiness as they are able to provide alternative benefits, for example, novelty or flavor, for consumers.

Accordingly, the expansion of direct marketing strategies is grounded in the trend towards embracing consumer preference. Examples of prevalent consumers demands include:

Authenticity: consumers are interested in the simpler things in life
Community: consumers want to support local businesses
Family: consumers want activities that the whole household can enjoy together
Security: consumers desire to have food that is safe for consumption
Convenience: consumers seek out food that tastes good and is readily available
Balance: consumers want a balance between work and recreation

When deciding to implement a direct marketing strategy, there are 7 basic keys to success:

Involve all ‘players’: develop a strong and diverse network in order to enjoy the benefits of different skills and talents
Start small: Smaller operations are easier to manage and can more easily adapt to any challenges and opportunities that may present themselves.
Grow naturally: Once a plan has been proven successful, it can be expanded at a healthy rate.
Keep (good) records: Quality information is required in order to evaluate progress and determine whether goals are being met. Records are needed not only for financials but also for product interests and on-farm productivity.
Make decisions based on recorded success: The information gathered through record keeping allows for more informed and intelligent decisions to be reached.
Find and develop the niche market: Sellers should think like consumers in order to determine what products and services consumers desire. Once consumer preferences have been determined and/or a loyal consumer base has been developed, it is essential to continue to interact with customers and offer incentives, e.g. tastings, to maintain loyalty.
Develop a toolset for information: Information is a key to success. Being prepared can aid in the development of new customers and help to maintain the loyalty of existing ones.
- Examples: Business cards, price lists, product information sheet, recipes/prep tips, website

sources:

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex3482?opendocument
http://edis.ifas.ufl.edu/fy597
http://www.investopedia.com/terms/c/commodity.asp

question: what strategies can small farmers use to better compete in a challenging market environment?

Small farmers are an integral part of society. They produce food, provide rural employment, and contribute to diversity in both ownership and societal structure. However, they are also faced with a number of struggles, particularly when it comes to market entry and competition with large-scale agribusiness. In order to address these issues and maintain profitability, small farmers must be innovative and adaptive. This implies the use of new marketing strategies to protect their existing market share, and, if possible, expand it. There are three main types of new marketing strategies. They are as follows:

Differentiation: providing a product that is clearly different from that which is offered by conventional producers. Conventional production can offer mass quantities of goods at a low price, but this is often at the expense of other desirable qualities or services. This presents small farmers with an opportunity to fill identified market gaps. Differentiation can take the form of, for example, offering heirloom varieties or personalized service.
Specialization: choosing a specific product or group of products and fine-tuning the production process to reduce costs. When specializing, it is essential not to fall into a low-value monoculture trap, as it will not prove economically or environmentally sustainable. Instead, specialization should focus on high-value products, e.g. berries which can be sold fresh, as jams or other processed products, and wine. Specialization may also take the form of vertical integration or functional upgrading. Vertical integration refers to the process of internalizing multiple steps of the production and distribution process. Functional upgrading refers to the introduction of a new, higher value product.
Diversification: integrating different activities, processes, or methods to add value, e.g. growing several types of crops including some perennials and raising some dairy producing ruminants. In doing so, farmers are able to mitigate some risk in that the likelihood of total crop loss in the event of an inclement weather or pest event is reduced. Likewise, it can support biological diversity and support a more stable farm ecosystem. From a different perspective, diversification can take the form of services provided, e.g. partnering with local schools to provide educational opportunities or senior citizen centers to provide elderly care in exchange for low-impact assistance.

sources:

Alberta Agriculture and Forestry. (2017) Farm Direct Marketing for Rural Producers. Retrieved from http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex3482?opendocument
Fromm, I. (2007). Upgrading in Agricultural Value Chains: The Case of Small Producers in Honduras. GIGA Research Programme: Transformation in the Process of Globalisation. Retrieved from https://www.giga-hamburg.de/de/system/files/publications/wp64_fromm.pdf
Mitchell, J., Coles, C., and Keane, J. (2009). Upgrading Along Value Chains: Strategies for Poverty Reduction in Latin America. Retrieved from https://www.odi.org/resources/docs/5654.pdf
Rethink. (n.d.) Resilient Food Systems and Market Differentiation. Retrieved from www.rethink-net.eu/fileadmin/user_upload/Pictures…/RETHINK_CS-leaflet_LT.pdf
Rosset, P. R. (1999). The Multiple Benefits and Functions of Small Farms. Food First The Institute for Food and Development Policy.

question: what are small farms, how do they contribute to society, and what challenges are they faced with?

Producing a vast amount of the world’s food, small farms are valuable assets that contribute to long-term economic sustainability and food security. What actually constitutes a small farm is hard to specify as there are extreme variations in societal structure, ergo many definitions exist. In the United States, a small farm is defined as any farm earning a minimum of $1,000 and a maximum of $250,000. In Canada, a small farm is considered a farm that doesn’t sell commodities in a market with set prices. The FAO has a much more complicated definition: “small farms are complex interrelationships between animals, crops and farming families, involving small land holdings and minimum resources of labour and capital, from which small farmers may or may not be able to derive a regular and adequate supply of food or an acceptable income and standard of living”, while the European Union has no concrete definition.

Despite a lack of a universal definition, small farms contribute a great deal to society – even beyond food production. It could even be argued that small farmers are some of the most underappreciated members of society even though they add genuine and unselfish value to the world. For example, small farms support rural employment as well as maintain and accommodate social connections in rural areas. This is especially important in an age of widespread urbanization as it contributes to the goal of more balanced development. Likewise, it provides diversity in societal structural. Such diversity is particularly essential to maintaining diversity in ownership in an era when the consolidation of power is a major issue facing society. In this respect, they provide also a basis for community empowerment. In doing so, small farms are a symbol of regional identity.

The benefits provided by these farms are threatened by a variety of factors, with the aforementioned issue of the consolidation of ownership and power being at the forefront of concern. This issue is catalyzed by unfavorable government policies (see Everything I Want to Do Is Illegal by Joel Salatin) that have been developed in favor of large agricultural conglomerates with the financial resources to influence government officials. A lack of societal sympathy and support for small farms due to false perceptions, for example, the belief that small farms are unproductive, further contributes to the problems faced by small farmers.