Thanksgiving Thoughts on Agriculture and the Knowledge Era

November 22, 2011 by  

Thanksgiving celebrates a story that unites Americans around the idea of sharing (and being thankful) for the food and many blessings we enjoy. It harkens to an agricultural era that pre-dated the industrial era that marked much of our country’s history. So I thought this would be a good week to share a few thoughts on how agriculture has changed over the years—and how it will undergo many more changes as we shift to the knowledge era.

The systemization of agriculture made the industrial age possible, freeing workers from subsistence to production of goods.

And then the industrial age brought increased automation and “industrialization” to the sector. Today, agriculture is a perfect reflection of the design constraints and practices of the industrial era including large scale production and distribution as well as heavy use of machinery and chemicals. The underlying assumption was/is that mechanization should be used to replace human labor. In the industrial era, fuel consumption, greenhouse gases and other forms of pollution were not as important as they are becoming today.

Every day I read about exciting new developments in agriculture that reflect the new design constraints of our times and the new possibilities of the knowledge era. Here are a couple.

The first is a fun article in Entrepreneur called Foodie Inc.  It explains how the locavore movement can have huge effects in local economies in terms of investment and job creation, using the example of the state of Ohio:

These days, the average metropolitan area in America still grows or raises less than 2 percent of the food it consumes–and it consumes a lot of food, some $15 billion of it in northeast Ohio alone each year, including the breakfast cereals, fast-food burgers, bottled condiments, frozen pizzas and soft drinks that are the staples of many diets. That makes the economic arguments for farm-to-table food compelling. Moving the needle just 5 percent in Greater Cleveland would mean $750 million more in revenue for local purveyors.

The last time a $750 million business relocated to Cleveland was … well, probably never. So it’s easy to see why politicians and policymakers are excited about the possibilities. Recently, five entities combined resources to commission a study by local-business-development analyst Michael Shuman and his two partners on what would happen if northeast Ohio managed to produce 25 percent more of the food it consumed. The report calculated that such a shift would create more than 27,000 new jobs, increase annual regional output by $4.2 billion and grow tax revenue by more than $125 million. “Local food is fast becoming a powerful economic development strategy,” it concludes.

So why is an intangibles blogger talking about this? Because the way that this agriculture is going to develop will not be a clone of the way it was done 100+ years ago. The methods and organization of markets will be very different.

How different? It’s hard to say but here’s another example from Fast Company called Sysco’s New System.  The article explains that demands for local produce is driving the behemoth of food distribution to find a way to help facilitate the connection between small-scale local producers and large-scale institutions:

When Michigan State University wanted to serve more locally grown produce, Mike Passorelli’s basil would have been ideal. He grows it in a greenhouse two hours west, and labels it organic gardens. But the school can’t buy directly from tons of farms; that would be an organizational nightmare. So in 2007, it asked its food supplier, Sysco, to provide. That turned into a lesson on just how complex our nation’s food system is: To distribute local food, Sysco had to first spend three years restructuring its produce division in Michigan …. Now Jennisch has a blueprint for local sourcing that Sysco executives say lessens the company’s carbon footprint and provides fresher produce. That hasn’t yet led to huge profits, but Sysco is excited anyway. “The minute you cut a fruit or a vegetable out of its natural growing environment, it starts to die,” says Sysco VP of produce Rich Dachman. “The sooner you can get it to the consumer, the better off you are. And that makes our customers happy.”

I’ve written before about innovative approaches to agriculture that are intangible capital-intensive. The Sysco solution is heavy on the intangible capital—training and collaboration with local producers, software and planning to create a steady, healthy supply.

Both of these examples also pass the intangible bottom line test: they enhance the reputation of everyone involved. They allow companies to find the way to a new kind of profitability that takes into account sustainability of companies themselves, of the environment and, hopefully, a healthier future. This is an opportunity that we can be thankful for—and inspired to deliver.

Wishing you a very Happy Thanksgiving!

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