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.

 

13 Comments

  1. This is excellent Neal; thanks for articulating it. PDLA is the essence of what I envisioned for the business model of our nut butter company, The Philosopher’s Stoneground, called “Nourishing the Roots.” http://thephilosophersstoneground.com/nourishing-the-roots-business-model/

    We are starting with an experimental regenerative almond orchard in the Capay Valley to see if regenerative dry farmed almond agriculture is both possible and multi-capital profitable. Then, in the future we will move to a cacao/coconut guild model in the tropics for our Ostara stone ground coconut butter and Cocotella products. Maya Mountain research center has likely done some useful looking at this realm.

    Two years into testing this thought experiment with my food business, I’m finding that step 3 is a lot harder than I imagined. Becoming profitable is its own issue, which requires intense volume or a business model outside the current food distribution system.

    Once you do that, at least in the food industry, you need to constantly reinvest just to grow and sustain the food business itself. The margins in this industry are so slim. It’s even slimmer for the farmers, as we know. The food system is a tough nut to crack, especially in a country where we spend the lowest percentage of income on food out of any country in the world.

    You have to be a pretty massive food company to be able to start to make enough profit to be able to afford land. Cosmetics companies are different beasts and have margins that the food industry could only dream of. The folks I bought Ostara from mentioned that if they could do it over again, they’d use the stone grinders for cosmetics, not food.

    An alternative model I’ve been thinking about is to make the orchards non-profit entitles (possibly still vertically integrated) that can seek their own funding as well as receive excess profits from the companies they supply (so no money beyond the basics for income/payroll taxes goes to the Pentagon).

    The orchards could still sell products at a profit to companies and also direct to consumers, but the mission would be the regeneration of land rather than the creation of product to sell at a profit (that latter which I think is the reason behind why agriculture is so screwed up as it is – ecology and business don’t yet work in the same way, and farming is a hybrid of the two). Of course, this results in nutrient-dense yields that you can sell at a profit.

    The other idea that has come to me is a “corporately supported agriculture” model where a company (or ecology of companies) can subsidize regenerative farmers to do their thing at a great living wage and receive high-quality affordable price crops in exchange. Essentially the companies are subsidizing regenerative agriculture, which results in them meeting their supply chain needs and the regenerative farmers being able to focus on what they do best – regeneration – rather than having to try to also be business/salespeople.

    Ethan Roland and Gregory Landua discuss the Regenerative Enterprise Ecology concept in their booklet “Regenerative Enterprise: Optimizing for Multi-Capital Abundance.” I’d recommend giving that a read if you haven’t yet.

    There’s a lot to unpack and model here. There’s a massive gap between the system vision, which is elegant and beautiful, and implementing it in this reality, which is gnarly but starting to happen on a small scale in several places! Thanks for sharing your thoughts; looking forward to discussing more.

    Reply
    • Tim, thanks so much for your input on this. There has always been a gap between theory and practice, and each different step on here is going to be a challenge. Designing an ecology that is both environmentally sound and economically profitable is a complex thing. Running a succesful business is also a complex thing. So having an ecology of businesses based off an environmental ecology in theory is just a question of good design, but in practice is going to require some very high caliber people to pull off.

      Your idea about breaking it into parts so that people can specialize is probably necessary; I suspect the tricky part is probably getting the incentives right in that kind of structure.

      Reply
  2. This is a really interesting angle Neal. Permaculture seems to attract a lot of people trying to escape from consumer society and the exhausting competition of generating profit—it’s great to have your voice as a strong counter-example. I’d love to see these ideas tried.

    Reply
  3. Thanks for the thoughtful article. One suggestion would be to place another intermediary step between getting Hemp sourced in China to politically lobbying for legal Hemp production in Montana. Go to Oregon or another state where Hemp cultivation is legal and lease land to produce American made Hemp. Then approach Montana, if that’s where your heart is set on, while already producing American Hemp. You could get bogged down for years trying to shift the politics in Montana before actually acquiring a land base. Seems like it makes more sense and is more of a path of least resistance to start the American production in an area where you don’t need to afford a lobbyist, so you can demonstrate the regenerative cultivation sooner in the process.

    Take care,
    Andrew

    Reply
    • Hi Andrew

      My heart isn’t set on hemp, per se. It’s just an example I came up with to illustrate the model. That’s cool that Oregon allows it though, i would skip the China sourcing altogether then if possible.

      Reply
  4. Thanks for bringing up this point. I was recently thinking about similar things. Its good to look outward and see what’s already being done and connect privileged permies with ways they can support and join efforts already tested and tried. Here are a couple of examples of profitable companies that have already been putting some of their profits into partnerships with international ngo’s and full-time farmers who do have access to land and who make their livelihoods from it. There are thousands of dollars of food crops being grown presently under destructive big ag scenarios, and yet some of the big companies are trying to find better ways forward because their very existence as companies will depend on that because they are among the most vulnerable financially from the climate chaos that is affecting their supplying farmers as well as along all their shipping channels that depend on sea ports that are more and more vulnerable as well. If the permaculture movement got organized or even just some individuals put their mind to it, permaculture ethics, principles and practices could fairly easily be integrated into these existing, well financed and growing projects that have proven to be successful after years of hard work. http://www.greenbiz.com/blog/2014/09/24/how-coffee-can-change-world-nespresso-style and
    http://www.greenbiz.com/sites/default/files/media-inline/vsl15_eventslides.pdf

    Our permaculture business model is to utilize the tremendous leverage point of the global agricultural supply chain to shift dollars and practices into more eco-socially regenerative and far more resilient global supply webs. For me, a big part of that work is helping those who are “over consumers” understand how to truely address their psycological “needs and wants” in healthier ways than thoughtless consumption patterns, and help those who are barely able to survive, meet their daily needs with greater joy justice and abundance. http://www.terra-genesis.com

    Reply
  5. Again, the problem is the solution. It would be almost impossible to do regenerative farming with a single cash crop. It’s all about diversity and diversifying. When the margins are thin, you have to stack functions. The new model has been emerging for a while now. It seems that one business model that works well is the Co-op, where each farmer specializes in a certain aspect and a secondary product is produced. Market farming and ranching might embrace buyers clubs for capital formation and a stable market. This approach would decentralize the entire agricultural economy and something tells me that the Monsantos of the world do not want to share. After more diversified operations are in place maybe the subsidies could be eliminated and market forces would eventually restructure the industrialization of big agriculture into a more sustainable quality driven model.
    Carbon farmers will be the mainstay of the new economy and the more carbon they inject back into the soils, the more fertility and profit margin will be available. With enough support, small farms could again be encouraged and give hope to those people who are stuck in urban centers. More and more “new” farmers are needed to become producers and not just consumers. Quality of life will increase and the planet will continue to heal and produce life.

    Reply
    • Hi Mark welcome to the blog. I agree that the co-op has potential to serve individual needs for liberty and autonomy while allowing for massive growth as an organization. You portray a great vision we share; hopefully we can make it happen.

      Reply
  6. Since Hemp is already being grown in KY, and KY farmers are actively seeking replacement crops for the lost tobacco revenue, why wait to go to Montana? Moreover, a US flag made of hemp was flown over the US Capital earlier this month. Why not start with the flag business then branch to pants, etc. Footholds are already there…

    Reply
  7. I think, it is a big shift in itself to see the economy as an ecological system instead of a machine. But this shift is happening right now (see investors Nick Hanauer, George Soros, economists Bernard Lietaer and Ken Arrow, also Fritjof Capra with his book ‘The Systems View of Life’). It becomes more and more obvious, that the old models in economy simply don’t work. But what works is capitalism as an evolutionary process to solve problems! It rewards people for solving other peoples problems. My impression is, that Bill Mollison and David Holmgren missed out on that a little bit, because they saw only the destructive potential here. On the other hand, they encourage people to be entrepreneurs, which is good.
    A major problem of the current economic system as also, that it is so disconnected from nature. It only takes, extracts value and does not give something valuable back.

    I like your approach, because it bridges the gap between the self-employed-small-farmer model to a larger system. With a convincing business model someone could attract investments, which would allow to build up the enterprise much quicker. Although most companies fail (1 of 10 succeeds), that does not necessarily mean, the entrepreneur is broke afterwards. As a company, the financial risk can be much lower than as an individual.

    Reply
  8. About cotton in Uzbekistan: I think it’s a wrong perception to call this development a “desire by Uzbekistan to enter the cotton business”. At the time the decision was made this was entirely due to central planning in Moscow, and was part of a country-wide plan in the Soviet Union to industrialize. In case of Uzbekistan they built large canals to divert most of the water from the rivers Amudarya and Syrdarya to build up industrial agriculture. In other areas (in Siberia) huge hydro-electric dams were built together with aluminum smelters and cities for the workers. It was the time of mega-projects, also in other countries. The Soviet Union had this plan to industrialize the whole country from the beginning. It wasn’t until much later the negative effects became apparent: The vanishing Aral Sea, huge salt pans, where there were fields of cotton before and so on.

    Reply
  9. Uwe thanks for the info on the historical background on the Aral. It’s an interesting case, one that I obviously oversimplified. As for attracting investments and making these changes more quickly, I think we have to use the political-economic system we’ve got to change agriculture instead of fantasizing about overthrowing all of it in one fell swoop.

    Reply
  10. No problem. I think, the question is always: What works?
    What I learned from talks by Bernard Lietaer and based on research by Robert Ulanowicz, is that natural ecosystems develop between the two poles of resilience (based on diversity) and efficiency (the throughput of material and energy). Bernard Lietaer uses that to point out, that our money system is a monoculture, a very brittle system based only on efficiency. Natural ecosystems have developed to a state of about 75% resilience and 25% efficiency, while Western economy currently focuses mainly on efficiency.
    What I’m not sure about is, what this means for permaculture. Is it less efficient than monoculture ag? Certainly, when it comes to harvesting, because there are no machines yet, which can automatically harvest from woody polycultures. Maybe small robots could do that in the future, when they got better pattern recognition. They could be solar powered and they could be flying or climbing…
    I grew up in East Germany, btw, therefore a probably closer contact to what happened in the Soviet Union.

    Reply

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