Industrial Ag Model Is Broken, Says Ag Economist

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It’s just a matter of time before small towns humming with diversified, locally based economic activity surrounded by a thriving countryside filled with hard-working farm families start making a major comeback on the rural landscape.


There’s simply no other choice going forward, according to John Ikerd, a retired U. S. agricultural economist and author of numerous books on rural economics.

Not only is the global financial system in tatters, but Peak Oil – the point where demand for petroleum permanently outstrips supply – is set to sink its teeth into any hope of a normal recovery by making cheap oil, the lifeblood of modern economies, a thing of the past.

“There’s also environmental problems, climate change and Peak Oil. At no time in human history have we been confronted with problems of this magnitude,” said Ikerd, in a rousing speech that was met with thunderous applause from the 200 delegates attending the Western Canadian Holistic Management conference here last month.

“There’s general agreement in the petroleum industry that we’re either at, past, or very near the peak in global production. From here on out, there’s going to be less petroleum every year, and it’s going to be more costly than it was the year before.”

Alternative energy sources such as coal, biofuels, or solar will help with the transition, he added, but they will never be as plentiful or as inexpensive as high-quality, easy-to-extract crude oil – the ultimate fossil fuel – was in past decades.

“What we are doing in our industrial, economics-driven society today is not working and it is not going to work,” he said.

“I can’t tell you when it is going to totally collapse, but I can tell that if we continue doing what we’ve been doing, it is simply not sustainable and it will collapse.”


Ikerd says that instead of the outdated, industrial, “mechanistic” model that originated in the 17th century in which the world was seen as a gigantic machine, the new way of looking at economies, farms and rural life must be based on a conception of the Earth as a living organism in which humans are an important part.

Ikerd says the current industrial model of farming makes no allowance for nature’s need for regeneration and renewal. It is also incredibly wasteful, he added, producing just one calorie of food energy for every 10 calories of fossil energy inputs.

“Everything is ultimately about energy,” said Ikerd. “Our houses, our clothes, our food all require energy to make and use. Even the things that we do that are useful as human beings, our working, thinking, our creativity, all of that requires energy.”

Ikerd says conventional economists, who studiously ignore the law of entropy – which states that energy only runs down, not up – were blindsided by the present economic crisis due to their unbridled, near-religious faith that human ingenuity and market incentives can always be counted on to solve every problem of scarcity.

The “dismal” science of economics is inherently short sighted, he added.

“From the standpoint of economics, the present is worth more than the future,” he said.

For example, at seven per cent compound interest, a pledge to pay $1 in 10 years is only worth 50 cents today. Over 70 years – or a lifetime – it’s worth only a penny. Payable in 200 years, a million dollars is worth about $1 today.

“From an economics standpoint, anything more than three to five years into the future just doesn’t make much difference.”


As fossil energy sources become increasingly scarce, humans will be forced to depend once again on whatever amount of sunlight-based energy can be captured on a daily or seasonal basis. That means all human endeavours will by necessity be forced to revolve around agriculture as the only sustainable, resilient, and renewable source of energy.

Farms will need to shrink from their current size, said Ikerd, simply because farms will need to be managed as “living organisms” in order to become genuinely sustainable.

He credited U. S. agrarian philosopher Wendell Berry’s landmark essay, “What are humans for?” for providing a vision of farming that describes “real” farms, where the farm and the family that farms it become an inseparable, holistic entity.

“In essence, we must have farmers on the land who know and love the land. And folks, you can only know and love so much land,” he said.

“He also says that you have to have farmers on farms that they love, using tools that they love, in the presence of neighbours that they know and love. And I would say, producing food for people that they know and love.”

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