Touch the Soil – March 2009

In the pre-financial crisis era, urbanization of farmland doesn’t wait for harvest as a healthy wheat crop is bulldozed. Strangely, in order to create and distribute the money needed to by food, our system requires that we must pave the land that raises the food.

Farmland (A casualty of the financial crisis)

By Benjamin Gisin

The financial crisis is teaching us that the process by which banks create money and by which investment bankers distribute money throws off more debt than economic activity. Said in another way, the processes of money creation and distribution throw off more debt than the money those processes created can ever repay. This is why the U.S. Government is being asked to solve the problem of unpayable debts. It’s kind of like trying to get out of debt by getting a new and bigger loan. We wish our lawmakers all the success in the world.

While this sounds like Wizard-of-Oz talk, students of the financial system understand well the nation’s primary money supply is in the form of bank deposits. And a bank deposit is born out of a loan or debt of some kind. This process is explained in volumes of text and charts the Federal Reserve publishes – the reading of which can be more confusing to the uninitiated than Wizard-of-Oz type explanations.

A key ingredient of a loan is its collateral. It is no secret real estate is one of the most preferred forms of collateral for banks and other investors. So voila, the quickest way to create and distribute money, whether for stable economic activity or for housing speculation, is the urbanization of farmland for higher value collateral for loans. Loans that must stand behind the creation and distribution of the nation’s money supply.

Historical estimates by the Federal Reserve bank are that over 70 percent of all bank loans are secured by some form of real estate. And outside of banks, the single largest pool of investments are into bonds secured by home mortgages.

Understanding these concepts, makes it easier to understand that every major financial crises (Savings and Loan crisis, Sub-Prime Lending crisis) are accomplished, in significant part, through rapid and unsustainable loss of farmland for urbanization. Said in another way, to create and distribute the money we use to buy food, we must continually pave the farmland that raises food.

The USDA just released its estimates of land in farms. For 2008, America farmed 330 million acres of primary crops and 590 million acres of pasture and rangeland for a total of 920 million acres (919.9 million acres to be exact).

The peak farmland year for America was 1954, when it farmed 1,206 million acres. In 2008, America farmed 286 million acres less. Of this amount, only 33.6 million acres are in the Conservation Reserve Program where the government pays farmers to idle highly erodible and other environmentally sensitive land.

This loss of farmland is dramatic when calculated on a per-capita basis. In 1954, America farmed 7.39 acres per person. In 2008, America farmed 3.02 acres per person – a 59 percent drop. Compared to 1900, America today farms roughly one fourth of the acreage on a per capita basis.

The world can urbanize in other locations and cook up a new financial system, but it can’t bring back lost farmland.

So while the nation’s lawmakers are working to crank up the credit machine (banking and secondary lending sectors) to make more loans, Efforts at finding ways to direct urbanization around and away from farmland should be re-doubled. It’s just the right food-security thing to do.

Based on programs coming out of Washington D.C., our lawmakers seem convinced that more debt and less farmland are the solution for a stronger America. A sobering realization when the facts speak to the contrary.

Unfolding economic and food realities may well push law makers and policy makers to get a lot more creative. This gives hope for the future.

Benjamin Gisin has visited hundreds of farms in his banking, farm consulting and publishing careers. He writes and lectures extensively on the global and domestic food situation, the banking system and solutions for a more workable economy.

For more information call Ben Gisin at (208) 523-2717

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Touch the Soil – February 2009

Round bales of straw from the 2008 wheat crop are a reminder that prosperity starts at the farm level. Assuring adequate farm income is the most critical element in saving the economy, the financial system and arresting global hunger all in one sweep.

Time to Think Farming (to solve the economic crisis)

By Benjamin Gisin

While the financial industry tries to figure out how to save itself and the economy, perhaps it should take its own advice – it’s in the cash flows.

Every farmer that has ever applied for credit was approved primarily on one condition – the farm’s cash flows. The farm had to have cash flowing through the farm on one end as income and going out the other end to pay expenses. The economy is no exception.

The economy’s failure is due to insufficient cash flowing between businesses and consumers and the financial industry’s failure to provide a means of exchange capable of doing such. The financial industry should be the first to understand that bailing out banks is one of the least effective solutions to creating cash flows. It is money, robustly moving through the economy, that sustains jobs and people’s ability to pay their loans.

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Touch the Soil – October

Leslie Outhier, an intern at City Slicker Farms utilizes a flat-bed bike to move materials between urban food garden sites. (Photo Credit: Touch the Soil)

City Slicker Farms – Giving the Nation More Vision

By: Benjamin Gisin

For more information visit Touch the Soil magazine: www.touchthesoil.com

Fifty years ago, the community of West Oakland, Calif., was vibrant with community grocery stores, vegetable gardens and fruit trees in people’s yards. There were good jobs at the railroad, shipyards and war industries. West Oakland was the hub of African American culture and booming with life and activity. Over the years, as cash flows moved to serve other communities and endeavors, West Oakland turned into a food and economic desert. Today, with some 30,000 residents, there are 53 liquor stores, but no grocery stores.

The nation’s food-security consciousness has taken root in West Oakland as nonprofit City Slicker Farms uses local food production to re-invent local economics and access to food.

“Growing affordable fresh organic food for West Oakland is one of our visions,” said Barbara Finnin, executive director of City Slicker Farms. “The local people have skills, but there are less jobs to utilize those skills. We are working to create a food and farming economy to make use of those skills.”

“We accomplish what we do with interns, local volunteers, businesses that donate materials and non-profit fund-raising efforts” Finnin said.

City Slicker Farms raises food and provides on-the-job training for future local food entrepreneurs. Making the most of five small-plot city farms, fresh produce is collected each week and brought to a neighborhood farm stand for sale at sliding prices ranging from free to making above-cost donations.

City Slicker Farms has constructed over 80 raised-bed backyard gardens at individual homes. Once constructed, interns work with families for three years until they are self-sufficient in raising meaningful portions of their own food.

“It is wonderful how people respond when their plants start producing,” Finnin said. “One of our goals is to teach people how to raise food in the city so they can eventually start their own farm stands.”

“The outpouring from local businesses to provide building materials for the raised beds and volunteers to put them in has been tremendous,” said Finnin.

City Slicker interns stay for one year in exchange for a learning opportunity, a small stipend and housing. Most interns come and work because they believe in what they are doing and want to develop their urban farming skills.

City Slicker Farms offers workshops on gardening, herbs, composting and cooking in addition to all of the hands-on volunteer opportunities. Local residents are encouraged to drop off their kitchen scraps, which are combined with spent plant material from the gardens to create compost for the urban farms.

“We raise food vertically whenever possible and use the Biointensive method of raising food that was developed by John Jeavons and used in over 130 countries,” Finnin said. “This allows us to produce a lot of food in a small space.”

Portable raised beds are placed outside the urban farm plots where locals can pick off food as they walk by – it’s great advertising.

City Slicker Farms is introducing chickens for eggs and meat to be accompanied with training and ready-to-use chicken coops. The goal is to begin developing urban livestock enterprises to further local food and the local economy.

City Slicker Farms offers an model for inner cities as well as for furthering other concepts like local energy or local home and neighborhood improvement. Despite national energy and financial problems, we all have that self-preservation drive to rise from the ashes – something City Slicker Farms demonstrates well.

“Everyone can make a difference by helping out a little,” said Finnin. “Even small donations of $10 or $20 dollars can make a difference to City Slicker Farms success or any nonprofit of your choice.” ■  www.cityslickerfarms.org

Benjamin Gisin has visited hundreds of farms in his banking, farm consulting and publishing careers. He writes and lectures extensively on the global and domestic food situation, the promise of local food first and grass-roots economic issues.

Barbara Finnin, executive director of City Slicker Farms, oversees operations helping West Oakland, Calif. overcome its food desert status. (Photo Credit: Touch the Soil)

For more information visit Touch the Soil magazine: www.touchthesoil.com

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Touch the Soil

As a new monthly feature on this blog we’ll be syndicating the free column produced by Touch the Soil magazine, a publication dedicated to “raising agricultural awareness for households of the future”. This month we’re happy to share with you a piece by Benjamin Grissin on the global economics of agriculture. For more information please visit www.touchthesoil.com.

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Food Security Takes Precedence over Global Free Trade

Benjamin Gisin

Global food tremors over the last 12 months have given many governments the jitters. At the heart of the issue is that global free trade, under World Trade Organization protocols, limits what a nation can do to protect its farmers and national food production. The practice of limiting agricultural imports, in an effort to protect a nation’s farmers, is something the WTO wants to eliminate.

As dozens of governments nearly collapsed due to internal food shortages made worse by high prices, riots and demonstrations, other governments, particularly India and China took notice. Who is next?

The WTO mission – global free trade by reducing tariffs particularly in agriculture – backfired. Nation after nation saw it’s domestic stability threatened by food issues. Either they could not find a source to import from, prices were too high or the dramatic global price hikes infected their own countries unsustainable food inflation. In addition, food prices were rocked by hundreds of billions of dollars moving into commodity speculation that added volatility to prices and political stability.

This year has seen a new consciousness emerge – membership in the WTO and following its protocols does not ensure access to food.

While proponents of free trade argue high agricultural prices are good in that they will give agriculture an incentive to produce more, their argument is suspect. The free market waited too long to give farmers their due until food shortages and high prices threatened the stability of the world’s two largest nations – India and China.

It is not that farmers don’t deserve better prices for feeding us, the question is about how its done. And global free-trade got a failing grade from many nations for its performance during the recent global food crisis. Free trade left them high and dry as major wheat and rice exporting countries limited or stopped exports to protect their own food security – something the WTO should have addressed long ago. Both the USDA and FAO (Food and Agriculture Organization) have consistently issued reports on the ongoing collapse of global grain reserves for the last 10 years.

The International Herald Tribune (July 31st) reported that growing worries in China about the adequacy of its food supply now appear to have overridden the country’s previous commitment to free trade. In a shocking move of solidarity, China joined India at the Doha round of global trade talks in Geneva demanding safeguard rules for agriculture including implementation of high tariffs as a way to protect farmers in poor countries and increase national food output.

The unyielding position of China and India in protecting domestic food security ended up collapsing seven years of ongoing WTO negotiations on further trade harmonization. We must remember the WTO is not a democratic institution and is not accessible by the average citizen. So poor people can only go to their governments for redress leading to protectionism. Perhaps if the global free market did not wait so long to give farmers their due, before the world fell into a global food crises, things may have been different.

The obvious goal of India and China is to insulate their countries from the uncertainty of foreign food imports, unaffordable prices and from Western-style commodity speculation that artificially raises food prices – causing additional starvation and political instability.

China has some 300 million small farmers and hundreds of millions of poor people. Having access to a reliable and affordable food supply has erupted as China’s number one national security issue.

There is yet another element that underlies the growing disappointment with the WTO – its glaring lack of oversight and warning as global grain stocks collapsed to levels insufficient to protect the world from shortages and price spikes.

The future success of the world’s farming sectors in producing enough food and the global free market in distributing that food may well determine the future of WTO negotiations, if not the WTO itself.

Farmers must stop being economically punished for producing a surplus that helps the world cope between farming seasons. If that means building national, regional and local food stocks, the time has come to get our checkbooks out. ■

Benjamin Gisin has visited hundreds of farms in his banking, farm consulting and publishing careers. He writes and lectures extensively on the global and domestic food situation, the promise of local food first and grass-roots economic issues.

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