Food security: Do economies of scale suppress risk resilience?
In responding to catastrophe – an 8.0 and above earthquake, a thousand year flood, a cascading biological contagion, etc. – right after providing potable water is the problem of food distribution. In some of Lee Clarke’s worst case scenarios there is a more basic problem of maintaining food production.
This week both of Australia’s leading political parties added food security to their list of policy priorities for the current national election. One member of the Australian Senate writes, “The world has embarked on a dangerous era of food insecurity and imperialism which will fuel conflict and famine if it is ignored. Australia is not immune. Land and water should be treated as strategic resources by us as they are by many in the world.”
The Department of Homeland Security explains that Homeland Security Presidential Directive 9, “establishes a national policy to defend the agriculture and food system against terrorist attacks, major disasters, and other emergencies. America’s agriculture and food system is an extensive, open, interconnected, diverse, and complex structure providing potential targets for terrorist attacks. U.S. agriculture and food systems are vulnerable to disease, pest, or poisonous agents that occur naturally, are unintentionally introduced, or are intentionally delivered by acts of terrorism.”
Given the obvious importance of food, are there vulnerabilities in the current food system worth particular attention? Well, as a possibility, help me refine this hypothesis: Economies of scale suppress risk resilience.
The food system is one context where this hypothesis might be tested. Over the last half century increasing scale and specialization of production and processing have significantly reduced the consumers cost of food as a proportion of overall income. The source of this savings has, however, also substantially reduced the number, diversity, and distribution of producers and processors. This narrows the ability of the food system to bounce back from a catastrophic event.
If this is true for the food system might it also be the case for other supply chains?
I am the son and grandson of grocers. I grew up working on the farms of downstate Illinois. In my lifetime I have seen the food system move from what now seems simple, to complicated, to a sort of complexity and – if a catastrophe would occur – to potentially teetering on the edge of chaos.
Some of my earliest memories are of farmers backing their trucks up to grandpa’s slaughterhouse. The hogs and cattle — rarely some sheep — were off-loaded into the two dozen wooden stalls attached to the white cinder-block slaughterhouse.
Monday through Saturday nearly everyone listened to the Dick Herm Report on WBYS radio (We Bore You Stiff, the older kids called it). With the bark of an auctioneer Herm would give the regional and Chicago prices for agricultural commodities. Grandpa paid a few cents less per pound than the Peoria market. For some bigger producers it made financial sense to get more per pound by trucking their livestock to Peoria or beyond. But for others, given the cost of time and gasoline, one of several nearby receiving yards or processing plants did fine. For most farmers livestock was only one of several products. When I chored with my friend Jeff we would slop the hogs, feed the chickens, hay the beef cattle, weed the beans, and give the dairy cows grain to eat while we milked them.
My dad’s grocery stores bought dressed hogs from my grandpa’s (and other’s) slaughterhouse. At each grocery store a butcher would saw the carcass into various cuts of pork and grind the sausage.
Cause and effect was knowable even by a six year-old. The livestock were born, raised, slaughtered, packaged, sold, and eaten all within several miles of each other. I knew the farmer, processor, butcher, and buyer. The production, processing, and distribution nodes of the food system — at least in downstate Illinois — were thick and overlapping. The supply chain was densely redundant, complicated and in some ways complex.
Above, the Cynefin Framework
Today pork production — and most agricultural production – is much more highly concentrated. In 1969, according to the US Department of Agriculture, 644,882 farms raised 89,296,278 swine. By 1992 186,627 production operations sold 109,775,439 pigs and hogs. That’s a shift of 138 head per farm to 588 per farm. In 2002 the number of production sites had fallen by more than half to 78,895. In 2002 over half of all swine were raised on “farms” with over 5000 head each.
The geographic range of pork production has also narrowed. Take out Northern Iowa and Eastern North Carolina and very few of us will have ham for Christmas or even a ham sandwich for lunch. Pork processing is even more concentrated than production. Many food products have experienced similar consolidation and concentration.
Today, compared to my early days, the supply chain for food is much more streamlined, specialized, and price efficient. In 2004 a hog producer with 1000 head spent about $40 per hundredweight. The same year raising a hog farrow-to-finish cost the producer with fewer than 100 head almost $80 per hundredweight. (See Hogs Lead Way in Transformation) In 1969 the retail cost of pork chops was about $1.39 per pound. This week many stores are selling assorted pork chops at $2.49 per pound. At least one regional chain is advertising a “Big Sale” with pork chops at $1.99 per pound. Given forty-one years of inflation that is an extraordinary bargain.
Economies of scale in production, processing, and distribution have contributed to price containment of pork and other foodstuffs. This is a real benefit. Is there a cost?
I just came back from several days visiting my parents. Most of the 400 acre family farms that I knew as a kid have been consolidated. Except for acreage owned by the Amish and a few small organic operations, corn, soybeans and cattle are what you see again and again stretching over the horizon (and there are long horizons in central Illinois).
Dad has sold his grocery stores and grandpa’s slaughterhouse closed twenty years ago. When I asked the local market’s meat manager (no longer a butcher) about where his meat comes from he laughed and said, “Off the truck, before that who knows.” Because the supply chain originates far away and draws on unknown sources there is an impression of complexity. And across these attenuated supply chains there are complex characteristics: lots of filters, need for pattern recognition, and some aspects of adaptive response.
But is the food system “complex” as defined by the Cynefin framework? The crowd sourcing of many more independent producers and processors has been reduced and standardized. Open markets have been replaced with much more predictable production contracts. The entire system has been reengineered and squeezed to maximize every penny-per-pound. In some ways, with fewer participants and fewer relationships the food system is actually much simpler than four or five decades ago.
Toward the end of his brief video overview of the Cynefin framework David Snowden warns, “The boundary between simple and chaotic is different from the other boundaries… If you start to believe that things are simple — you start to believe that they’re ordered, you start to believe in your own myths, you start to believe that past success means you are invulnerable to future failure — you effectively move to the complacent zone which is the boundary between simple and chaotic and you fall over the edge in a crisis… and recovery is very, very expensive.”
Have economies of scale so simplified the food system that we can now sense it on the very edge of chaos?
(Editorial Note: Last week John Comiskey encouraged me to apply Cynefin and/or Tara to a prospective problem. He suggested a cyber threat. I decided to focus on a network — the food system — that I understand better than I understand most cyber networks. But it seems to me these issues of consolidation, centralization, simplification, and such might have analogies to the cyber domain. For now, though, that is only a hypothesis.)
