Re: Sustainable and Profitable -- A bit long
Tue, 23 Jun 98 11:50:39 CST
Elizabeth, Greg, Lei, Rick and others;
I suppose an economist should have something to add to the
sustainability/profitability discussion. First, I fully agree, if it
isn't profitable it isn't sustainable. Profitability alone certainly
doesn't ensure sustainability, but sustainability cannot be achieved
without it. Profit is necessary, but not sufficient.
Second, by their very nature, profits cannot be sustained if one is
producing a generic commodity -- hogs, corn, or green beans -- using
conventional production methods. If anyone else can do the same thing
you are doing, and if it is profitable to do so, they will --
producing more and more until profits are competed away either by
falling prices or rising costs as you and they try to supply the same
markets using the same basic inputs and resources. The only profits
in such enterprises come from adoption on new technologies which
either reduce costs or increase the value of production. Such profits
go only to the innovators, to those who take the risk of moving first.
Such profits are quickly competed away. They are not sustainable.
Economic survival requires continual innovation. Those who fail to
keep pace by cutting costs or increasing value will realize losses
rather than profits. This is the classic "economic treadmill."
The only way to "sustain" profits is to produce something other than a
generic commodity using something other than conventional production
methods. Something other than a generic commodity is something
different, at least in the minds of your customers, from anything
anyone else can produce. Something other than conventional production
methods is something unique -- unique to your land, your family, your
abilities, or your passions. These differences need not be great, but
must be sufficient to give you a margin of profit between your price
and cost of production sufficient to earn you an acceptable total
return from the volume of production you can produce and market. This
is why we hear so many successful farmers in the sustainable
agriculture movement talk about "relationship" markets. People are
unique, and thus, their relationships are unique. But, most will tell
you that it takes "high-quality" products and "low-input,
high-resource" production to sustain relationship markets. This means
fitting your uniqueness as a producer to your unique customer and
If you decide to produce exactly the same thing that someone else is
producing in the same way they are producing it, and if you succeed,
any profits you realize will not be sustainable and neither will
theirs. If you expect someone else to provide you with opportunities,
you are destined to be disappointed. If you expect someone else to
solve your problems, you are destined to be disappointed. You have to
something creative and productive yourself if you expect the market to
reward you for having done it. And, if it's easy to do, it won't be
If someone else provides you with a market, they -- not you,
ultimately will realize the benefit. You didn't create the market --
they did. If someone else provides you with a new pest management or
fertility program, they -- not you, ultimately will realize the
benefit. You didn't increase productivity -- they did. You certainly
can learn from others and can integrate other's marketing and
production services into "your" production/marketing system. But, the
profitability must come from the uniqueness for your system -- not
from the efficiency of its generic components. If the government,
including public universities, create markets or solve problems, the
benefits are supposed to go the general public in the form or lower
food prices or higher food quality. The public is the one that pays
the taxes and expects to reap the benefit. Your uniqueness is the
only source of profitability that will not be competed away, and thus,
is the only source of sustainable profits.
For those of you who want to test my hypotheses, watch what happens
when national standards are adopted for organic production.
Establishment of national standards will transform most organic
production from unique products provided by individual producers to
generic commodities provided by the organic production sector. I am
not saying that national standards will be either good or bad in
general, only that national standards will fundamentally change the
nature and source of profitability.
You can call this "mental gymnastics" or whatever other name you want
to put on it, but it is the hard, cold facts of our current market
economy. I agree that we ought to be able to do better as a society.
Maybe we will, but it is going to take a while. In the meantime, we
all have an opportunity to capture the value of our uniqueness, as
many have already done or are doing.
Some will think, this is easy to say for some tenured professor at
some university because he has all this build in security to protect
himself from the market. But, I gave up all that security nearly ten
years ago in order to capture the value of my uniqueness -- in a
non-tenured, renegotiable contractual relationship. My professional
sustainability has been dependent on my ability to support myself and
others from outside grants and contracts. I have had to take my
uniqueness into the research and education market place several times
a year over the past decade and have sustained a very desirable
quality of professional life doing so. I'm nothing special, so I know
others can do the same.
I have been pushing the national SARE program for some time for the
development of 1,000 mini-case studies of farmer who are successfully
pursuing the economic, ecological, and social goals of sustainability.
They had agreed to let me start the process last winter, but recent
health problems and the nearing of retirement forced me to forego the
opportunity. I wanted others to be able to see the multitude of ways
that farmers are successfully putting the principles of sustainability
into practice on their farms -- not so that other could copy them, but
instead so others could see the uniqueness as well as the commonality
of 1,000 different real-farm situations. I have had a unique
opportunity over the past 10 years to meet these people and learn
about what they are doing, but most others have not.
My understanding is that Jill Auburn is still pursuing the "1,000 Ways
to Sustain Agriculture" idea with other people. For those of you who
are interested in learning from the farmers who are really doing it,
rather than from academics, this might be one way of helping bring
that about. If you would be interested in being one of those case
study farmers, if you would like to be involved in helping develop the
cases, or if you just want to let Jill know that you would like to see
this project done, please contact her.
Jill S. Auburn , SARE Director
Room 3868 South Bldg., Ag Box 2223
Washington, D.C. 20250-2223
(202) 720-5203; (202) 720-6071 (fax)
Nearly all of our past research and education programs have been
developed with an orientation toward producing basic commodities using
technologies that are easily transferable from one farm to another.
We need to change these priorities if we are to help farmers sustain
profitability. But until those priorities are changed, farmers are
going to have to learn much of what they need to know from each other
-- not so one farmer can do it the same way as another, but so they
can each find their own uniqueness.
I am sure that is much too much economics for one day for most people,
but at least I feel better for having done what I think an economist
should have done.
To Unsubscribe: Email firstname.lastname@example.org with "unsubscribe sanet-mg".
To Subscribe to Digest: Email email@example.com with the command