The Green Gap

In the Cold War, we feared a Missile Gap was a strategic weakness. Nowadays, we must awaken to the fact that the Green Gap is true strategic weakness: the nations whose economies will thrive in the coming years will not be those with the biggest factories, but those with the most sustainable, efficient, and ecological markets. What we require is a Strategic "Green Reserve" of ecological design to weather the coming changes that both climate and resource scarcity will force on the international economy.

Friday, 8 May 2015


When consulting with developing countries about restructuring their debt, the IMF generally determines what cash crops would grow best in the area and encourages their cultivation as one way to bring in foreign currency. As advice, this is not terrible. In theory, if a Ghanaian farmer can crop cocoa to sell, he can buy cassava to eat and pocket a profit for himself in Ghanaian cedi that were purchased with the US dollars that bought his cocoa. A boon for him and his government, the constant purchase of Ghanaian currency by US dollars ensures baseline demand for the cedi. With a baseline value set for the cedi, the currency can float within a reasonable margin. This allows Ghana to purchase US dollars at a steady rate so they can acquire strategic resources such as oil at a stable relative price. In this theoretical instance, everyone benefits.

In reality, things are slightly different. While exports of Ghanaian cocoa do create a baseline demand for Ghanaian currency, that is about where the benefits cease. Cassava, once the staple starch of a large portion of sub Saharan Africa, is much less available as cultivation of cocoa has replaced it. You see, as one country goes, so have gone her neighbours. If one country has had its debt restructured by the IMF and the rest have not, then trade of cash crop income for staple crops might allow for one country to arbitrage its agricultural sector against another country's. In reality, however, everyone is chasing the same strategy, because everyone is having their debt restructured by the IMF. Cassava plantations still exist, but the fact is that you make real cash with cocoa, and buy Thai and American grain to eat.

Ironically, the only states that can pursue the production of low-value staples are first-world countries which typically subsidise this production heavily. So, instead of Ghana producing profits through cocoa sales and buying cassava from Benin, they spend their capital on Thai and Chinese rice and American corn. The Ghanaian diet has changed due to the changes in their markets. Whereas the cash cropping brings in a relative monetary gain, it gets spent in nations that don't need the money, on subsidised produce that is not the traditional food of Ghana. While temporarily liberating the countries in question from want of money, they become yoked to first world nations for want of calories – and fertilizer.

Cash cropping deals in dollars per acre. This way of looking at agriculture is not going to be fruitful if the price of staples increases. An increase in the price of staples means a reduction in profit for all the nations who, like Sri Lanka and its tea, Ghana and its cocoa, and Colombia and its coffee, are depending on arbitraging that difference in value between luxuries and staples to remain fed. When the prices of staples rise, calorie farming is more important than cash cropping. Word to the wise: the price of staples is rising. What’s more, in order to increase yields per acre, developing countries with cash crops have gotten themselves onto the agribusiness treadmill. While I am pretty ambivalent about the health issues surrounding GMOs (I don’t really think they are that terrible for you), I am completely livid about the economic implications of addicting farmers to seed contracts. Agribusiness has a way of eating up the profit of farmers big and small to pay for seeds and chemicals. If we look at this issue fundamentally, it’s a question of good, old-fashioned mercantilism. The proverbial North demands the proverbial South to produce its luxuries, the South obliges, and find itself unable to feed its populations. Never fear, says the North – we will sell you the grain you need to survive, and we’ll give you the pesticides and seeds you need to grow more cash crops. Just give us back that profit you made on the first shipment of coffee, and we’ll be on our way…

Agriculture is one sector that can't turn on a dime. Olives take 20 years to mature. Apples might take five. Shifting from one field crop to another might take one year, but it also entails selling one's entire product one year for enough money to buy the seeds or plantings for the next. If the tea market goes flat, and it makes sense to pull up the tea bushes (Gods forbid) and plant something starchy, there's the loss on the fire sale, the labour to pull up the old production, but then the investment in the precursor implements and seeds for a whole new type of farming. That's an enormous opportunity cost. When money is scarce, this change is difficult at the best of times. Like any one of us changing to a completely new line of work, we have to start at the bottom, and that is a choice any one of us would put off as long as humanly possible. This is why, if we hit a price barrier for any given agricultural commodity, it is possible a large plurality of farmers would simply give it up en-masse because they had held out to the last minute and had no other way out. Like cacao farmers infested with frosty pod, they will keep producing until they can produce no more.

The solution? Under the current economic regime there is no real solution. Scientists in the North will develop more interesting varieties of cacao and sell them to the people in the South, diminishing the South’s profit while still shackling them to the task of producing our luxuries. The creation of a GMO is certainly a solution to the problem of a chocolate shortage. It is not a solution to the systemic problem of the mercantilist exploitation of the proverbial South. Lack of crop diversity will make them more prone to food shortages, and reliant on agricultural subsidies in other countries to maintain the low cost of their own labour. This is both a fragile and abusive relationship that simply increases long-term instability in the system.

In the end, the economic system is made up of every single relationship it facilitates. A failure in one part is never isolated, and those who perceive themselves to be immune from shocks are delusional. If we increase the fragility of the links in our economy, we are ensuring future failures. If understanding of the economy from a systemic perspective were the norm, we would curb our own profit motive not simply out of altruism, but for our own self-preservation.