The ongoing agricultural revolution

At last I am moved by a story to write: German Urban Farms the company's website is here.

The Frisch vom Dach, or Fresh from the Roof project, plans to create a 7,000-square-meter roof garden, complete with a fish farm, to provide Berliners with sustainable, locally-grown food....

The fish will be sold as food and, crucially, their excretions, especially the ammonia excreted through the gills, will be converted into nitrates. That will serve as fertilizer for the plants growing in green houses above the fish tanks. In turn, the plants will purify the water for the fish. The system for sustainable food production is known as "aquaponics."

The first instance of vertical farming, or industrial farming. Bringing the countryside into the city. As the Spiegel article points out, this model is low energy, unlike the more science fictional dreams of vertical farms. It also fits in with the permaculture crowd. That said, it does offer the prospect of advancing the cause of re-wilding (and of driving urbanisation faster).

I'd be interested in how much their prototype container farm manages to produce, since the idea of mass producing and distributing a container/greenhouse strikes me as being an efficient way to spread food production massively.

Speculative hunger

Much like I said in my recent postings about Total Factor Productivity, the absence of profitability in certain sectors of the economy leads to investors chasing the last refuges of security and profitability. Everyone has been talking about gold (although, its rise in price in an effect of inflationary printing of money).

Now, the Spiegel has a report on speculation in food that is well worth the read.

The result of the team's efforts bears the innocuous title: "Price Formation in Financialized Commodity Markets: The Role of Information." But the contents are explosive. The UNCTAD experts conclude that the commodities market isn't functioning properly, or at least not the way a market is supposed to function in economic models, where prices are shaped by supply and demand. But the activities of financial participants, according to the study, "drive commodity prices away from levels justified by market fundamentals.
[...]
Most investors involved in the commodities business today have little understanding of the actual products. "Market participants also make trading decisions based on factors that are totally unrelated to the respective commodity, such as portfolio considerations, or they may be following a trend," the UNCTAD report concludes, describing the dangerous herd mentality of investors. According to the report, such behavior has nothing to do with objective pricing."

In other words, purveyors of effective demand are seizing upon the carrier signal and in the process distorting it, a bit like someone confusing the words for the poem - if I have more words, my poem is better."(From the UNCTAD report).

Essentially, the Efficient Markets Hypothesis is exploded - the idea that "all publicly available information is immediately reflected in prices. In its strong form, the EMH contends that even private information – available only to individual market participants – is reflected in the price through the effects of the transactions of the persons in possession of the information."

Market actors move as a heard, and react to one another (and the price signals) despite any other objective knowledge. The report calls for more transparency and regulation - but really, total transparency requires opening the books, which in turn requires common ownership, rather than the game of market smoke and mirrors for private advantage.

"The financialization of commodity trading has made the functioning of commodity exchanges controversial. Their traditional functions have been to facilitate price discovery and allow the transfer of price risk from producers and consumers to other agents that are prepared to assume the price risk. These functions are impaired to the extent that trading by financial investors increases price volatility and drives prices away from levels that would be determined by physical commodity supply and demand relationships. As a result, commodity price developments no longer merely reflect changes in fundamentals; they also become subject to influences from financial markets. Consequently, market participants with a commercial interest in physical commodities (i.e. producers, merchants and consumers) face greater uncertainty about the reliability of signals emanating from commodity exchanges. Thus, managing the risk of market positions and making storage, investment and trading decisions become more complex. This may discourage long-term hedging by commercial users. Moreover, with greater price volatility, hedging becomes more expensive, and perhaps unaffordable for developing-country users, as well as riskier."

Fed up

Uncle Charley Marx once wrote about ending the divide between town and countryside. Following a reference in Ken Macleod's latest, I found this interesting stuff on vertical farming:

It seems crazy to talk about farming in a hi-rise; the vision it gives rise to is of a kind of student-residence crammed with pot-smoking hippies who've traded their carpets for wheat. In fact, the approach is pretty hard-nosed and industrial, with very high outputs as its aim. And here's where it gets interesting from the point of view of our ambition to rewild the country: in the study entitled "Feeding 50,000 People, Anisa Buck, Stacy Goldberg and others conclude that a single building covering one city block, and up to 48 stories high depending on the design, can grow enough food to sustain 50,000 people. This calculation doesn't require any magical technology; there's no fairy-dust being evoked here, we could build such a structure now.

It would take about 1,200 such to feed the entire UK population - more sensibly, 150 to feed London. Now, I'm not thinking of "rewilding" but of opening up more space for us to live in, if we use less land for industrial agriculture, we can more in and garden the rest - I think the results would be equally eco friendly, and we could all spread out.

But, this would represent the conquest of the countryside by the city, the turning of farming into another factory/desk job with industrial scale feeding going on. Coupled with algae biofuel (which we could grow in some of the space abandoned from farming as well), a picture emerges that suggests we could return to the 1950's sci-fi vision of urban progress. Maybe we could build the megacities of the future. After all,t he algae might provide the energy source to make the whole shebang efficient...

Marketing poverty

So, according to the according to the FAO:

Per capita food production has declined in Africa for the past 30 years and farm productivity in Africa is just one-quarter the global average. Today, more than 200 million people are chronically hungry in the region, and 33 million children under age five are malnourished.

and we hear from the BBC, Kofi Annan:

Attending the Rome conference in his new role as the chair of Agra, the Alliance for a Green Revolution in Africa, he said the African farmer was the only farmer in the world that still took all the risks, often operating without financial support, expertise or safety nets.

AGRA makes an interesting point:

Markets can play an important role in improving the incomes of poor farmers. However, markets in Africa are generally poorly organised and volatile, and often inaccessible to small-scale farmers. Also lacking is the market information that farmers need to negotiate good prices for their produce. Even such basic information as current wholesale and retail prices is rarely available. Therefore, building efficient and well-integrated input markets (through which farmers can buy supplies), and output markets (enabling farmers to sell their harvest) is key to encouraging farmers’ adoption of sustainable agricultural technologies.

All of which is to highlight two things - firstly, that most of the world does not play by market rules when it comes to food - food security is national security, and security of food prices stabilises labour markets (food soars, we strike). Secondly, the state of Africa's markets shows that people left to themselves do not just create functional markets.

Now, I seem to recall reading one African post-liberation leader, discussing how traditional African markets were inherently socialist (I can't remember who) - but the fact of the matter is that the sharing of information is a necessary prelude to socialism - if, as I heard on the radio last night, after a bit of investment Malaw has trebled its food output, there is reason to hope that this programme will work, and the horror of starvation may be obliterated. but, mark you, it isn't sponanteous markets that will be doing the work, but conscious investment, and co-operation. The capital markets have failed in Africa.