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The collapse of farming

James Howard Kunstler is predicting that farming could be the next industry to go down

The net effect of the failures in banking is that a lot of people have less money than they expected they would have a year ago. This is bad enough, given our habits and practices of modern life. But what happens when farming collapses? The prospect for that is closer than most of us might realize. The way we produce our food has been organized at a scale that has ruinous consequences, not least its addiction to capital. Now that banking is in collapse, capital will be extremely scarce. Nobody in the cities reads farm news, or listens to farm reports on the radio. Guess what, though: we are entering the planting season. It will be interesting to learn how many farmers "out there" in the Cheez Doodle belt are not able to secure loans for this year’s crop.

My guess is that the disorder in agriculture will be pretty severe this year, especially since some of the world’s most productive places — California, northern China, Argentina, the Australian grain belt — are caught in extremes of drought on top of capital shortages. If the US government is going to try to make remedial policy for anything, it better start with agriculture, to promote local, smaller-scaled farming using methods that are much less dependent on oil byproducts and capital injections.

This will, of course, require a re-allocation of lands suitable for growing food. Our real estate market mechanisms could conceivably enable this to happen, but not without a coherent consensus that it is imperative to do so. If agri-business as currently practiced doesn’t founder on capital shortages, it will surely collapse on disruptions in the oil markets. President Obama at least made a start in the right direction by proposing to eliminate further subsidies to farmers above the $250,000 level. But the situation is really more acute. Surely the US Department of Agriculture already knows about it, but the public may not be interested until the shelves in the Piggly-Wiggly are bare — and then, of course, they’ll go apeshit.

I don’t know if I agree with him and maybe it is the context I am in that governments would allow crops to go unseeded because banks won’t give farmers operating loans.  Nothing would bring bank nationalization on quicker than banks choosing stock price over people going hungry. While I like Kunstler enough to have read almost every book he has written, I tend to think he underestimates our ability to overcome.  Then again I watch more than 10 minutes of CNBC and listen to the talking heads and I wonder if he might know what he is talking about.

One Comment

  1. Mike O says:

    Sadly, Kuntsler’s profanity detracts from what seems to be well-researched analysis.

    As far as farmer loans, I’m a beans and corn guy, and seed suppliers like Pioneer Hi-Bredseem to still have their business model of loans and crop insurance.

    The Commodity Credit Corp.does loans for grains and oilseeds. Any grain farmers (and for that matter, Canadian farmers) with more perspective?