Product Driven Land Acquisition

Lots of people in permaculture want land, and there is a lot of discussion about how to obtain it.  For most this stems from a desire either to be a farmer, or just to produce their own food but have a different kind of career than farming.  Agriculture is going through some major transitions at the moment–demographically, environmentally, and politically.

THE BIG PICTURE

Farming is approaching a generational shift; the average farmer is 60 years old and is going to be looking to turn the farm over to someone else sooner or later.  This is the subject of Joel Salatin’s book “Fields of Farmers.”  Who will take over that land is a big question, and the answer will determine how all that land is managed.

Environmentally, agriculture as a whole needs a revolution.  Current agricultural practices are not just unsustainable, but destructive.  Monocultural cropping systems result in topsoil loss, biodiversity loss (including bees!), and use up more water than nature allows for.  Dead zones in major waterways like the Gulf of Mexico , the Chesapeake Bay, and many others are largely the result of agricultural fertilizer runoff. An agriculture that destroys soil is an agriculture that will inevitably collapse; something that can’t go on forever won’t.

Politically more and more people are becoming aware of the perverse incentives that are part of the US food system–subsidies, water rights and allocations, and commitments to monocultured annuals result in a food system that makes healthy food expensive, and cheap food health-threatening.  It’s also a food system that is fragile to shocks like drought; a system that is breeding superbugs through the overuse of antibiotics; a system that puts many farmers in poverty or de facto indentured servitude.

CHANGING THE SYSTEM:  DISRUPTING INNOVATIVELY & CHANGING LAWS

In the United States, there are only two ways to change the ag system.  The first is by changing the laws.  The general impression I get is that to change the laws in the United States, you either need a popular uprising, or you need to be a big business that can afford to fund political campaigns, lobbyists, lawyers, and propaganda.  If the US is indeed an oligarchy, then oligarchy is the path to follow to change the laws.

The other way to change the system is to make the current one obsolete;  make Monsanto and Bayer and Tyson Foods, and all the other companies that make up the current agricultural oligarchy as relevant as the typewriter.  This requires creating entirely new agricultures that replace the current ones in a way that is more profitable, and establishing patterns for transitioning typical farms from the current system to the disruptively innovative one.

The truth is, both have to happen and they’re interconnected; the laws have to be changed, and a new system needs to disrupt the current one, and it should be simultaneous.  Permaculture and some organization–a super coop or something along those lines–that abides by its precepts have to become the next big agriculture.  If you don’t do that, you’re not going to change the incentives driving the current system, and you will not change the way farmers farm.

PUT THE HORSE IN FRONT OF THE CART

Never in the history of agriculture have farmers been those who were in power and made the laws.  Those that create raw materials historically and currently are those that are also poor and unempowered.  It’s not the diamond miners who own DeBeers;  It’s not the chicken farmers who own Purdue; Pharaoh was never a cotton or wheat farmer, though cotton and wheat were the foundation for much of Egypt’s riches.  No it is those who control those raw materials or traffic in them that can gain power, and this brings us to the crux of the matter:  If money is what’s holding back the permaculture community from obtaining land, then we need a different system.  Saving up money to buy land, and then figuring out regenerative farming and what you’re going to sell is, in my opinion, a failed model.  It’s too slow, and only the most pioneering folks are able to make it work.  That’s not to say the model i’m proposing is easier.  But I think it can be much better.

The next 20 years presents a huge opportunity to gain access to massive amounts of farms as older farmers look to retire, and also presents a huge need to change tack as drought, topsoil loss, drained fossil-water aquifers, and growing dead zones expose the dangers of current agriculture.  How will permaculture as a movement seize these opportunities?

My answer to that is what I am calling Product Driven Land Acquisition (PDLA), which flips our current design order on its head to account for financial and economic issues.  The model for PDLA is as following:

1:  Design and sell a physical product to replace something in everyone’s house that can be perennial based.

2:  Create and sell the product and grow that business.

3:  Once the business is succesful, use the funds to buy land that will grow the perennial ingredients for that product. (ie go vertically integrated on your supply chain)

4:  Design a guild based on the climate and land that grows the foundational product of your business.  This allows you to expand into less profitable areas while relying on the foundational product you’re already selling at volume.  The ecology you plant is based on that product and the climate it will grow in, and then you diversify into other products based on that guild.  Not all of the products have to be value added or niche, but it is the profit of your foundational products driving the financial side of the ecological guild.

5:  In addition to designing an ecological agriculture, you will also have to design an ecology of businesses that account for the different kinds of economic activity you’re involved in.

EXAMPLE:  COTTON

I’m going to give one example:  cotton.  Monocultured cotton is a huge ecological problem.  It was a desire to enter the cotton business that caused Uzbekistan to drain the entire Aral sea.  Now that the sea is gone, the residues of pesticides that ran into the sea from industry & agriculture are being blown across Uzbekistan, causing serious health problems and increasing the rate of salinization of the land.  In other words, growing cotton in Uzbekistan is now causing cotton to fail in Uzbekistan, and just happened to destroy one of the world’s largest sources of fresh water, as well as the fish and tourist industries intricately linked to it.   So here we have a clear ecological problem caused by industrial agriculture.

How to disruptively innovate cotton?  Many people say the answer is hemp.  Hemp requires 1/2 the water cotton does, grows in much colder and more temperate climates, and can be grown without the use of pesticides.  Hemp textiles are objectively stronger and last longer than cotton ones, and hemp is also valuable as a paper crop and a seed crop.

The problem is, I can’t find a single hemp clothing company that makes clothes that actually look like real clothes.  You can’t wear hemp clothes without looking like a hippie.  So how would I disrupt cotton?  I’d start a jeans company that makes hemp jeans that actually look good.  Start in the higher end jeans markets until you’re moving volume and have decent revenue, and start out by sourcing my hemp from China where it’s not illegal to grow it.

Once I could afford a lobbyist, i’d hire one to go to Montana and start showing the state government how much profit it’s losing by now allowing hemp to be grown, and that that my company would love to source its hemp from Montana rather than China because we want to put a “grown in America/Made in America” tag on it.  I’d show how many jobs this would create and how much economic activity would result.  I’d partner up with other groups that want to legalize pot and hemp and get the state law changed.  Once the law is changed, I’d have proven revenues and cash flow that would allow me to vertically integrate and buy a few thousand acres in Montana.  Then I’d design my permaculture guild around hemp and start diversifying my products based on that guild, creating other companies to account for them.  I’d end up with a perennial ecology in Montana that competes with cotton on the global supply chain, eliminates demand for pesticides, herbicides, and fungicides, and have an ecology of businesses developing market power and providing value to lots of people.

This is my idea of product driven land acquisition.  Rather than trying to buy land and then figuring out how to farm it, I think it would be better to  create a product that reliably supplies revenue & creates demand for a particular type of farm, and then vertically integrate my supply chain by buying farms to supply that product.

This may seem very idealistic, and some steps in this process are relatively untested.  Ecological agriculture leading to an ecology of businesses is a big idea with little practice behind it, and as far as I know very little conversation around it up to this point.  I think it’s the direction we have to go in if permaculture is ever going to move from being predominantly in peoples’ backyards to being predominantly how people farm.

 

KSA Water II:  The Gordian knot of Economy, Energy, Water, & Food

KSA Water II: The Gordian knot of Economy, Energy, Water, & Food

In Part 1 we just looked at some current data about supply and consumption of water in Saudi Arabia on a broad scale.  In part II we are going to get a little more granular on the data and tie it into the broader picture.

THE COST OF DESALINATION

Desalinated water provides just 7% of the national supply currently, but when it comes to urban water, desalination is supplying 61%, and at massive cost.  In 2013, desalination in Saudi Arabia required 1.5 million barrels of oil per day,  or approximately 547 million barrels of oil per year.  At the current rate of 56$ per barrel, this presents an opportunity cost of 30.6 billion USD.

The projections from the water ministry are that domestic consumption of water & electricity could consume 50% of the country’s oil & gas production by 2030 if there are no changes made in national water policy.

 

A breakdown of groundwater vs. desal by governorate.  Without major changes to policy, by 2030 KSA could be using 50% of all its oil production just to supply water and energy.

A breakdown of groundwater vs. desal by governorate. Without major changes to policy, by 2030 KSA could be using 50% of all its oil production just to supply water and energy.

 

The cost of desalination, however, is not just financial.  In the UAE, salinity of the persian gulf has increased from 35,000 ppm to as high as 56,000 ppm.  As salinity increases in the gulf, it may balance the pH of the acidifying sea, but the sea’s corals and fisheries will be “highly stressed,” which is a sanitized way of saying decimated (link is to pdf).   Furthermore, the technical difficulty of removing so much salt will make desalination either technically impossible, (a possibility) or simply much more expensive (guaranteed).  That situation is exacerbated by the fact that both the persian gulf and the red sea have very small inlets; both are largely self contained, with water that changes over from the ocean once every 8-9 years.  In other words, even with advances in desalination technology, it’s still going to become more expensive to desalinate a liter of water as time goes on.

CONSUMPTION & POPULATION TRENDS

Saudi Arabia’s population is growing at around 2%, but its consumption of water and electricity have been tracking around double that amount.

population growth rates have swung over the decades but currently around 1.5%

population growth rates have swung over the decades but currently around 2%  Source:  World Bank

Meanwhile, water consumption per household is increasing at a rate of 7.5% per year, and demand for electricity is increasing at 8% per year.  If both trends continue, demand for water and power per capita will double in a decade, and the number of capitas will increase from 35 million to 45 million.

FOOD TRENDS

Over that same decade, conventional agricultures in Saudi Arabia may face a major collapse.  With some 100,000 million cubic meters (mcm) of water left in the fossil aquifers (based on National Geographic’s estimate), and an annual withdrawal from those aquifers of 14,500 mcm per year for irrigation (taken from the Water Ministry’s 2025 National Water Strategy), time is short on this front.

A truck hauling imported alfalfa to feed camels & goats.  I see these every day at work.

A truck hauling imported alfalfa to feed camels & goats. I see these every day on my commute to work.

The pain associated with these collapses will be real, as farming communities  abandon their land to the desert.  The removal of water subsidies already had some farming communities in Hail turning to other employment in 2012.  As subsidies for wheat end, and eventually alfalfa, whole agricultural communities will have to look elsewhere.  So while it may seem to someone from outside that growing wheat or alfalfa in the desert is neither environmentally nor financially sound, there are now 40+ years of history in some of these places with wheat as the economic base.

Putting It All Together

Saudi Arabia faces a gordian knot entangling its economy, energy, water, food, & population growth.  Its rentier economy continues to depend almost singlehandedly on oil and oil derivatives, which provide 90% of the country’s revenues.   But in the coming decades, it faces enormous decisions dealing with water, agriculture, energy, economy, and increasing costs:

  • The fossil water will run out eventually, which will lead to a collapse of all KSA’s conventional agricultures, leading to greater food imports (which are currently 80%) and a fragile dependence on global food prices.
  • Demand for electricity and urban water are set to double over the next 10 years.
  • In that time the population will probably increase by some 10 million people.

These are some of the reasons why Citigroup estimated that Saudi Arabia could become a net oil importer by 2030.  Whether or not Saudi Arabia can weather these changes quickly enough and untangle its gordian knot will depend entirely on what actions it takes until then.  But it will require nothing less than massive changes in pricing structures, subsidies, gains in efficiency, and the creation of new economies to replace one based almost entirely on oil.

On an ending note, I want to emphasize that I do not have an apocalyptic viewpoint of KSA’s future.  It is rarely the case that when trends point to disaster that people in charge don’t take action to avert those disasters, and so trends that seem alarming now rarely play out the way they might appear to.  Thus, the purpose of this post is not to spread fear; it is to lay the groundwork for understanding the current situation, so that the critical nature of the solutions’ designs are apparent.

Conventional Water & Saudi Arabia I

Conventional Water & Saudi Arabia I

In a previous post I wrote about food security in Saudi Arabia and its relation to global food production patterns.  I have hesitated to write about the specifics of water here, because i didn’t have many up to date sources, and the data I had was quite suspect.  However recently I got access to the 2025 National Water Strategy, written in 2014 by Dr. Mohammad Al-Saud, who is the Deputy Minister for Water Affairs for the Ministry of Water & Electricity (MOWE).  It has very recent numbers, and should paint the most accurate picture available.

CURRENT WATER CONSUMPTION

In terms of consumption, in 2012 nearly 81% of the country’s water went to irrigation.  12% went to urban use, and the other 7% was split between industrial, mining, thermodynamic electric, and aquaculture.

Total water in 2012 use was 21,100 million cubic meters (mcm)

CURRENT WATER SUPPLY

Of that 21.1 billion cm, 72%, or 14,550 mcm was sourced from non-renewable fossil aquifers.  8% was desalinated, and 19% came from surface water flows & renewable shallow aquifers.  1% of the water supply came from recycled, treated wastewater.

It is important to note that water withdrawal from renewable sources is 400% the rate of replenishment, and that reliance on the fossil aquifers is what makes up the difference.  Those aquifers initially had 500 cubic kilometers of water in the 1960s, and according to National Geographic, 400 of those had been used up by 2008.  (for reference, 1 cubic kilometer = 1,000 mcm) Since consumption rates have been increasing year over year, it is now likely that 0ver 90% of the water in the fossil aquifers has been depleted, almost all of which went to massive agricultural projects aimed at achieving food self-sufficiency.

groundwater abstraction ksa

Source: KSA 2025 National Water Strategy

 

Extraction of fossil water began in 1974, peaked in the early 2000s, and is expected to fall at least in the short term due to a removal of subsidies on wheat , which occurred this year despite some serious issues with wheat farmers.

I personally doubt those expectations  because many farmers are turning to alfalfa (source in Arabic) instead of wheat, which uses 4 to 5 times more water than wheat production.  I have heard that there are plans to end alfalfa subsidies as well, but I can’t find a good source for that so it’s in the rumor pile for now.

THE BOTTOM LINE

Saudi Arabia is currently sourcing 72% of its water from fossil water aquifers, 90% of which have been used up in agricultural projects in the last generation.  80% of all water goes to agriculture, which is largely sourced from those aquifers.  What will happen when the fossil water is gone, which could happen in the next 20 years?   That depends on what happens between now and then.

In Part II we’ll tie the agricultural issue into other current trends in KSA, revolving around the economy, population growth, and consumption trends in water, food, and energy.