Why we are not solving the climate challenge

November 30, 2018

The latest report on climate change published last week was not cheerful. Instead of making progress towards the goals, it appears that we are off course and actually deviating further away. None of the G20 countries will achieve their goals. The world has had plenty of notice and time to act, but clearly success is further away than before, but probably less so than next year and the years after. Why is it so difficult to do the right thing, then? Well, there are a number of reasons for this and this does not bode well. Here they are, in no particular order.

Reason #1: We are not scared, yet

Whenever a devastating climatic event hits us, it is not really perceived as a threat for those who have not been affected. Like any dramatic piece of news, people read about it, think how terrible it is for a few moments and then move on and forget. It is a bit like car accidents. Everyone thinks that it won’t happen to them. Even if you are a good driver, you never know when a bad one will cross your path, and it is the exact same thing with climate. The consequences do not stay within the borders of the countries that produce emissions. It takes only one bad neighbour to spoil it for everybody. The consequences go all over to the neighbours just as well. In my book We Will Reap What We Sow, I addressed the denial and procrastination by making a comparison with Pharaoh in the movie The Ten Commandments by saying that the leaders of the world may pay attention when their first born will be killed in such a natural disaster and just like in the movie, they might grieve for some time and then decide to taunt fate again. I believe that is exactly where we are heading.

Next to that, as long as insurances are willing to cover the damage, a false illusion of protection will still exist. Be assured that if insurers decided to not cover climate change related damages, the debate would change rather quickly. Last summer, there was a wildfire rather close to my place. It was the second year on a row that the region had been hit by forest fires. I can tell you that this time, considering the location and the direction and strength of the wind, I was seriously worried. We were lucky and the fires were eventually contained. We had to breathe very smoky air for weeks and our air quality was worse than Beijing or Delhi, though. In my opinion, we should be a bit more scared by what is going on than we currently are.

It is difficult to scare people by talking about just a couple of degrees in 80 years from now. Presented in those terms, it sounds benign. That, too, is part of the procrastination problem. We need to hear where there is going to be devastation, how big it will be and how much it will cost. If the problem is big and serious, it must sound that way.

Reason #2: We have no real vision for a different, better world

It is nice to look at alternative energies and all sorts of innovations, but they will not happen unless the numbers (meaning the $$$) work out well. That is the problem. Technically, everything is possible. We could replace fossil fuels rather quickly but the economics as stated today do not stimulate change. To change the economics, it would be nice to start by stopping subsidizing the disaster, but we do not do that. The problem with climate a change and economics is that there is a simple reality: it will cost money and we all will have to pay a share. The worst part about this is that the longer we wait to invest in our future, the more expensive it will get.

But beyond the boring money concerns, what we need is a vision of our future world. How will it look like? How will people be able to have a decent standard of living (oops, money matters again)? What are the jobs of the future and which ones will disappear? Will it be a safe or dangerous world? There are many questions to answer if we want to create good will for change. There is no such thing as fear of change as such. Fear of change is actually the fear of loss. What I might lose is the primary concern. To alleviate this concern, clear and reliable vision is a prerequisite, and we do not have any at this moment. There is too much focus on problems and not enough on solutions. Without a vision that speaks to people, there is no reason why they should get excited about change.

Reason #3: There is no plan

Since there is no clear and strong vision, there cannot be a plan. When it comes to climate change, all we hear is an abstract-sounding target of limiting temperature increase to 2 degrees maximum, even though it sounds specific. What does that mean concretely for our daily lives, starting today? Who is supposed to do what and by when? All the climate agreements have been non-binding, which means that, in terms of determination, they compare with the average person’s New Year’s resolutions. It is obvious why the agreements are non-binding. If they were, there is not one single country who would commit. Countries have goals. It almost sounds like a plan, except that the goals are not really specific. Indeed, which sectors of society, business, governments and non-governmental organizations are supposed to do what? Does any industry have goals to achieve? Not really. Look at the car industry. Since the economy runs better, they have decided to stop the production of small cars and focus on larger cars, mostly SUVs and trucks, which consume more fuel  than the smaller sedans. Why? Just because the profit margin on larger vehicles is higher. At least, during the Great Recession of 2008 and the following years, when gas prices were much higher and the economy was hurting, sales of small economical cars were out performing the big gas guzzlers. Maybe economic hardship is what is needed to fix the problem. We just never really learn, it seems. Let’s face it, we have no plan and everybody does what is in his/her best interest, or just suits them best, on the short term.

If we and all the leaders in all sectors of society had a plan, there would be clear instructions about what is required from us. Nobody is giving instructions to people like me about how I should and could reduce my environmental footprint. There is a lot of PR and marketing, though, but the underlying message from businesses is really the same as before: buy as much goods as you can from me. It is all about volume, while the solution is to replace volume to shift from always more to always enough.

The most important part of the plan would be the transition plan. Setting targets without defining all the concrete practical steps and how to measure progress is rather pointless. How do we get from situation A to situation B? How long does it take and how do we ensure progress? Let me know if you know because I do not see anything of the kind.

Reason #4: There is no collective coordination

Besides the goals, a good plan would indicate clearly what the respective responsibilities are of all organizations and individuals. It would be clear what the contribution of each entity needs to be. This is essential for a plan and in particular for the transition plan. Since we are all in this together, success is about team work. Everybody must be motivated, must believe it is the right thing to do and participate. How many of you have received clear goals and a mandate to participate?

Yes, we can fix the problem. We did fix the hole in the ozone layer, didn’t we? We also fixed acid rains, didn’t we? How did we do that? Simply by defining very clear and specific goals and allocating them clearly. The team knew what to do, who had to do what… and they did it. Regarding climate change, we are just 25 years late. Countries reject the blame on each other instead of finding good agreements on how to fairly solve the problems and help each other out of trouble.

Reason #5: We prefer to blame than to fix

As I mentioned earlier, emissions from one country travel all around the Earth. Eventually, we all own and share all emissions, not just the ones we create. We are collectively responsible and the problem can be solved only collectively. That is tricky in a world where individualism spreads everywhere. The result is that we focus much more on who is to blame than on fixing the problem. We have limited time to fix the problem, but once it is fixed, we will have ample time to figure out who was to blame if we think it is a useful way to spend time.

Let’s face it, everyone who indulges in the consumption society is to blame, but of course, as Jean Paul Sartre wrote “Hell is the others”. Unfortunately, we have created a society in which we all feel so entitled to pretty much everything; we have lost the sense of what the value of things really is. Our entire economic system is about more for me here and now. Of course, changing this philosophy will not be easy because to fix the problem is going about to give up something and that is tough. Of course, we can choose not to act and Mother Nature is going to fix it for us. I suspect that then all the consumption aficionados will turn to their mother (nature) and say angrily that is it not fair and that they hate her. That is always how it goes when mommy decide to clean the little one’s messy bedroom. So who will fix it:  we or Mother Nature? The choice is ours.

Reason #6: Short term prevails

This is a basic human nature trait. The short-term always comes first, before the long-term. It is certainly interesting to try to bring a message of responsibility about future generations but the human animal is not wired that way. Only very few people are truly altruistic and have the willingness to give up their own interest. The only way to get people to have a balanced approach between the short term and the long term is by creating a trade off that is worth it. Here, the key word is trade. If we want people to give some of their short-term comfort for future generations, we must give them something in return. Give and take is a very basic human characteristic, too. So what can we trade off? Let’s not be naive, what will work is always something of a material nature, in particular money. As time runs out, there is not much time for cute negotiations. We are going to have to bribe the current generations to do something for the future ones. It is just that simple. Of course, somebody is going to have to pay for it. My guess is that it will be all of us, present and future. There is no real alternative to that, and it is time we all realize this it is what it is going to be.

Reason #7: Lame leadership

I wish I did not have to say that, but it is truly part of the problem. Our leaders are not really leading when it comes to climate change. As I mentioned earlier, they have not presented a vision of where our world is going and how our lives, private and professional, will be in the coming decades. They have no detailed specific plan to transition to the future and they do not have the gut to enforce change. They mostly give lip service. I understand that. When you have to face elections every so many years, you do not want to upset the voters. You do not want to put their jobs at risk and you do not want to cause a recession or worse. That, too, is very human. But the job of governing is not about trying to please all the time. Just as there is a difference between being friends and being parents, there is a difference between being a head of state and being a demagogue. In exceptional times, tough decisions come with the territory. As a leader, if you cannot take the heat, get out of the kitchen! Being a leader is first of all to take good care of your followers so that they can make it to the destination. Communication is a crucial part of leadership, especially when it comes to change. A leader must explain what must change, how it must change and what it will take to succeed. There is never enough communication about change. It is the only way of making it sink in the people’s minds. They have to get acquainted with the idea and they also must be part of the conversation to develop a sense of ownership of where things are going. About the climate change issue, the communication has been insufficient by far. This lack of communication is largely responsible for the lack of trust in politicians and why the people think their leadership is disconnected with the reality of their daily lives and concerns. Leaders must reassure people. Instead, they too often worry them.

Reason #8: There are powerful opponents

Not everybody is pleased with the potential change that the climate change challenges are calling for. This is the main reason why they work hard to discredit the scientists who report about their findings. As I said earlier, fear of change is really about fear of loss and the climate change deniers are no different than the average man about that, even when they happen to be millionaires or higher. What are they afraid to lose? Well, it is always about the same: money. Either because they would have to accept higher costs of operation or possibly seeing their business die or simply lose their jobs and livelihoods. I can understand such a fear when the person in question could lose his/her job and not find employment easily and land into financial hardship. I find it much more difficult to understand that from billionaires who have nothing to worry about in terms of financial security. Actually, I would expect from true captain of industries that they see opportunities in new business activities and venture into them for both their benefit and society’s. Perhaps, it depends if they are billionaires by hard work or just by birth.

Reason #9: We are addicted to materialism

The so-called consumption society has been acting like a drug dealer in a way. Most people are so hooked on buying stuff that they can’t stop. The banks have contributed greatly to the problem but lending money too easily so that people who cannot afford stuff can go to the mall and buy just like the rest. The flip side of this addiction is that withdrawal is not easy. Everything is about tempting the client. It is not just businesses that lure consumers but peer pressure joins into pushing people into buying more stuff. Perhaps, it is easy for me to say this because I must have some sort of a temptation resistance gene. Marketing leaves me completely cold and I buy something only if I need it, not because someone wants to sell it to me. My wife calls me a minimalist. I am not sure what that means but maybe I am. All I know is that I live happily and I do not have any creditor breathing in my neck. Along with this personality trait of mine, I also have no problem making sacrifices if needed. I can wait to buy something. In a way, my motto could be “if you don’t need it don’t buy it/if you can’t afford it, don’t buy it”.

About climate change, sacrifice will be part of the game one way or another. I believe that it will be quite useful to realize that life cannot be about instant gratification all the time and that happiness can be found through many other ways than through buying “stuff”. Of course, such an approach is going to conflict with our dominant economic model.

Reason #10: The economy and financial system is all about growth

All our economy revolves around always more. In a finite world, it is just a matter of time before such a model comes to an end. In biology, there is a distinction between growth and development. And it is a very important distinction.  I believe that when it comes to economy and finance, the distinction between the two terms has blurred out and it might very well be the root of a misunderstanding that might prove very costly in the future. I am all for development, but I have mixed feelings about growth. As an example, I would mention an animated graph that has been circulating recently on social media about the variation of GDP per country between 1961 and 2017. It is a cute animation, but I do not find it all that interesting because the GDP depends for a part of the size of the population. A graph showing the GDP per capita would have been a better indication of the wealth of the inhabitants of the different countries, although an average does not say much about distribution. I also would have preferred to see a graph showing the distribution of that wealth with the people of the countries, as this would be a good indication of whether the countries takes good care of their people or not. I also would have liked to see the graph with the ratio debt/GDP and deficit/GDP. I suspect those graphs would have told very interesting stories. For a country, the GDP is just the same as what the sales revenue is for a business. It is not a particularly good indicator of the profit or of cash-flow.

Growth is also the magic word for stock markets, and in particular of the share price. Since the entire financial system is locked in stocks directly and indirectly, any stock market crash will affect everyone, because even people who do not own stocks depend on the markets (just think of how deep in stocks some pension plans are).

This is why the climate is tricky to handle because if company stocks from environmentally damaging companies or industries crash, the entire system can potentially implode. The best way to prevent this would be to have a plan, and in particular a transition plan ready so that company could transition smoothly and thus avert a market crash, but we haven’t got that. As we all know, there is a lot of short-term activity on stock markets and there, too, short-term prevails over long-term. Speaking of short term, CEOs have to present their results quarterly to financial analysts. Compare that with elections only every 4 or 5 years!

Reason #11: We are increasingly disconnected from Nature

This is a consequence of how our societies and economies have evolved since the first Industrial Revolution. Today’s most obvious consequences are mass production and mass consumption, which relocated human populations from rural and agricultural areas into urban centers and the trend, continues. There are a couple of generations who have never really been in much contact with Nature. Surveys for city people about where they think food comes from are always revealing. In particular, with animal products, it is amazing to see how many people do not make a connection between eggs and hens or between milk and cows, or even between a live animal and its meat. I strongly believe that when we lose the connection with nature, we also lose a sense of where we come from and what we are about. If we do not understand how Nature works, it is difficult to respect it and when we do not understand our biological nature, we also lose respect for life. Unfortunately, we look at ourselves less and less as biological entities and more and more as legal entities. This trend worries me.

In a way, the so-called primitive societies (which I am less and less sure that they were that primitive at all) had a strong respect and fear for the forces of Nature. The term Mother Nature that I have used above is reminiscent from this respect and fear. We would not mess with it because we understood that we could be punished. Once the connection with Nature fades, the punishment part fades too. Then, we are just too happy to take and not give back and this is a serious mistake. Sustainability and circular economy are all about giving back so that the cycle can continue. This part we tend to have forgotten and this is why we shifted away from always enough to always more and that we will have to revert to the original concept because always more is not sustainable but always enough is. Here is your challenge!

Reason #12: We put too much faith in technology

Understand me well, I am all for technology and innovation. That said, technology is only as good as how we use it. I have mentioned in earlier articles how important this subtle distinction is. I am convinced that as of today we already have all the technology we need to mitigate climate change and have happy lives. So, why don’t we solve the problem? Once again the magic word is: money. For many of these technological solutions, the economics do not favour them, but favour the current destructive system. A part of the problem is in the allocation of where subsidies go. We encourage non-sustainable systems to survive while we do not reward enough sustainable solutions. Another important aspect of whether technology can help us overcome the challenges lies in our behaviour and that is independent of technology. Technology can only help us if we want to help ourselves first. Keeping our same bad habits of wasting and overconsumption and hoping that some new technology is going to clean the mess for us without us having to make any effort of any sort is completely delusional, not to say completely immature. There cannot be any solution if we do not change ourselves. I could paraphrase both Einstein’s quote saying that insanity is doing the same thing and expecting a different result and Ghandi’s saying that we must be the change we want to see.

Copyright 2018 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

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Running out of time or simply not running at all?

October 15, 2018

Last week, the UN had a message. We must take unprecedented action if we want to avert a catastrophe because of rising temperatures. The tone is pessimistic, and we all should be, too. We have had warning after warning and let’s face it, we have not done much to really address the challenge. It kind of reminds me that episode from The West Wing https://www.youtube.com/watch?v=-RzF-Wg2g-k (the interesting bit starts at time point 1:00). It is not that concerns about modern technology and so-called progress are new. We knew long before there even were COP conferences, the Kyoto agreement or Al Gore’s Inconvenient truth. Sixty years ago, In 1958, the American (ironic isn’t it, considering the current US views on climate change) movie The Unchained Goddess was already warning about what was coming (see it here https://www.youtube.com/watch?v=x1ph_7C1Jq4 – duration 55 minutes). Sixty years ago, I was not born yet. All that time, we have chosen to not think about it and mortgage the future (possible bankrupt it) for the sake of short-term fun and I guess trying to be cool in some way.

The thing with procrastination is that the longer we wait to take action (and we already have procrastinated more than long enough), the steeper the hill on which we will have to fight the battle. The longer we wait, the more expensive it will be, but I suppose we all think it is someone else who will pay. I consider highly likely that the consequence of that will be a triple bottom line crisis: environmental, social/human and financial (The 1929 Great Depression will look like a holiday camp in comparison). That is my prediction. I am thrifty and cautious on predictions but history tells me that I tend to have a talent for predictions.

There has been and there is no shortage of conferences. You know those places where the self-proclaimed elite meet in obscenely luxurious surroundings enjoying a good time with plenty of good food and drinks. I wrote in an article a few years ago that the “deciders” (who never really decide anything that involves their accountability and commitment) should carry out their negotiations in a locked room without food, water and energy and be released only when they have done their work. I still think it is a good idea, although I have absolutely no expectations that it will ever happen. Well, except when Mother Nature is going to take charge of that.

The question now is: are we going to take unprecedented action? The answer is easy: NO. The obvious clue is that the news lived for about 3 days on the media websites and was not even the main headline. It gives a feeling of humankind is on the brink of extinction, but there are more important news. Perhaps. Clearly, not many people really care. Now that the economic crisis of 10 years ago seems to be a thing of the past (psst: beware it is coming back) and gas prices have been back to lower levels than a decade ago (psst again: they are rising again), car manufacturers have focused their production on the gas guzzlers again. Bigger cars that satisfy the fragile egos of males with insecurity issues in the downtown area is what sells. Well it sells because smaller, more efficient cars do not generate enough margin in comparison, and therefore are not going to be produced. Have you noticed how cars never get mentioned as a problem for climate change? No! Cars are fine and the more they consume, the better it seems to be, not to mention the decisions from the USA to pretty much eliminate anything that tried to alleviate the problem. Apparently, the real problem is agriculture and especially the cows. Those damn cows have been sneakily waiting their hour to take their revenge and finally free eradicate humankind by farting. OK, I will drop the cheap sarcasm. It is true that agriculture contributes to the problem, but I resent agriculture being singled out this simplistically. I will get back about this in a next article.

Agriculture is like most industries. It has evolved from mixed systems in which its by-products where reused and recycled on the farms. As one of my teacher at the Agricultural University used to say: animal production has moved from making high-value protein and fat from cheap food scraps to making cheap fat and protein from high-value feed ingredients. The loops have been open and food production moved from a circular system into a linear one in which by-products are considered useless and thrown away and replaced at the input area by their “replacement” produced with much resources and energy. The good news in this is since we knew how to have a circular food and agriculture, we can revert to it. The only problem is… $$$. The industrialization of agriculture led to much more affordable foods, just like most other industries that enjoy the so-called consumption society, which is actually a transaction society. Sellers do not really care if you even actually use their products. They just want you to buy again and again. This economic system is purely production-driven and linear: large volumes from large capacity units to keep costs low. The problem is this picture is that never ever are the collateral long-term costs taken in the cost break down. These negative externalities, as they are called, are never factored in the accounting and of course never addressed at the quarterly financial reports. There is no true circular economy without factoring externalities in the costs. Here is a note for the young readers, if you have been reading this far without falling asleep with my drivel: you, my poor friends, are the ones who are going to foot the bill of externalities that your parents and grandparents are leaving behind. They are the lucky ones because they have lived in obscene abundance on credit and you are the ones who will pay the interest. Unfortunately for you, Mother Nature (from whose bank the interest will come) does not do bailouts. She does not do politics or BS either. She does not print currency. Mother Nature is a ruthless accountant that believes not in liberalism or socialism or whatever dogma humans have invented to give a meaning to their lives. Mother Nature only lives by immutable laws of physics. Mother Nature is kind, though because she sends us message after message to warn us. We, on the other end, we act like squatters who do not even look in the mailbox to go through the unpaid bill reminders or threats of eviction notices. I hate to bring it to the young ones, but your life is going to be quite different than what you parents and grandparents have enjoyed. I am not a spring chicken anymore, but not really old (at least, that what I like to tell myself), and I am sure that I am going to face a very different world in the coming decades. For me, too, the good times are going to fade out. At least I will have had some. I suppose I could complain that it is not fair to me because I live quite a simple and frugal life and my environmental footprint is low. It won’t matter because life is not fair, and that is a fact of life. If everyone were like me, Wall Street would crash in less time than it takes to type “Wall Street”. I spend very little. I drive about 5,000 km per year and walk or bike every time I can. I repair instead of replacing every time I can, although it is not easy. Yep, I know how to repair socks, believe it or not, and I do it when it is needed. I cook all my meals and as you can see on my good food page, I eat quite well. I have a garden that produces a large chunk of my produce yearly needs. I can and preserve the summer surpluses. I make my own bread, and I also make my own wines. I have a little vineyard out of which I am going to make 6 different types this year. I have a small car because I need one, since I live in a rural area, but it unlike my neighbors who seem to need big engines, my little mules runs a gentle 5 liters/100 km (or if you prefer 47 miles per gallon). Speaking of fossil fuel, I am also the only one in the neighborhood who uses a broom instead of a gas-engine blower and uses a push mower instead of a gas-engine lawn mower, and the funny thing is that I do the job faster than my neighbors and much more quietly, which is a bonus. Another bonus is that it keeps me fit. I have a six-pack while my neighbors have beer kegs.

My point, I suppose, is that a good life is not about lots of stuff and/or being so afraid of missing out on something that you need to be addicted to consumption. Actually, the issue is not so much about consumption as it is about excesses, and the always more, as I have mentioned in previous articles (do a search in the window on top of this page), while we should strive to always enough. When you have enough, you are good every time. If you never have enough, perhaps it is time to reflect about why that is so.

Excessive consumption is only the visible part of the problem. The other –hidden- part is waste. And how wasteful are human beings. The amounts of resources, water, energy and food that are wasted are staggering. Earlier, I was mentioning my little car and my neighbors’ thirsty vehicles. On a same trip, at the same speed, I am sure that they consume between 2 and 3 times as much gas as I do. The extra gas consumption does not add anything to the outcome of the trip. Though, the result is that I use fewer resources, emit fewer gases than they do per mile, and most importantly of all: I spend between half and a third of the dollars at the pump. I have more money left for other things. Frugal pays off, big dividends.

A large part of the waste is truly a behavioral problem. Technology may help, but if behavior and attitude towards waste do not change at the same time, do not expect technology to save us. It won’t. Only WE can save ourselves, technology won’t, other people won’t. It comes down to the quote from Ghandi “Be the change you want to see in the world”. We want technology for a simple reason: we do not want to change because we are lazy and lack self-discipline.

Food waste has become a mainstream topic. I addressed it in my two books but it was before the UN addressed it. Sad that such a large organization with their resources could not figure that out before an independent guy like me working from his home office. I even had estimated the cost right. Can you imagine? Anyway and even with the higher profile the issue has received, they are a few waste issues that I never read about.

Obesity is presented as a health issue. It is, but it is also a major waste issue as well. Over consumption of calories that end up being stored in body fat are wasted calories. They serve no purpose, since the overweight people never really benefit from them, or when they die, the fat is buried under ground or cremated. Totally wasted calories that never fulfilled their purpose. In a world where, like in developed countries, people consume twice their nutritional needs in calories, fats and protein, feeding 9 or 10 billion people is not feeding 9 or 10 billion people; it is feeding 18 to 20 billion!

Other waste topic, I never read about (but I suspect I will in a few months from now) is also about fat: the fat in the meat that consumers cut off and throw away. The sad thing about fat in meat is that it requires much more energy for an animal to grow fat in its tissue than it requires to grow muscle. For the biochemists among you, the difference is fat requires two times as many ATP (Adenosine Tri Phosphates) to fix the same amount of fat than it does for muscle. ATP is the fuel used in mitochondria, the microscopic power plants inside our cells. Roughly, throwing fat away cost twice as much as throwing lean meat.

And what to say about food recalls? Food that is unfit for consumption gets destroyed and all the resources used along the entire value chain to produce have been wasted. It represents a lot more than just the tonnage of food that must go to destruction. I suspect the reason why we never connect the dots between the links of entire value chain is just because the different links of the chain are active within their own area. In a linear system, collateral waste and externalities are always someone else’s problem. In a circular system, it is everyone’s problem. It creates very different dynamics in terms of co-responsibility and solidarity and also willingness to act.

I hate waste, and in particular food waste. I am very rigorous in how I manage the foods I have at home. Unfortunately, it happens sometimes that something goes bad. It is rare, but it happens and it ticks me off beyond belief. Ask my wife about that! When that happens, I always cut out just what is not edible at all but no more than that. I will pinch little crumbs of bread out where the mold is and I eat the rest. Sometimes it does not taste great, but if I screwed up, it is only fair that I get some punishment for it. It never made me sick. All in all, I do not think that I waste even a pound of food a year, so I guess I am doing fine. Further, any organics, such as potato peels or even egg shells all end up in the compost that I use in my veggie garden. In town, we have a yard waste collection schedule from the municipality, but I hardly ever use it. I recycle all I can.

My conviction to meet the “unprecedented” efforts to curb the effect of climate change is to live a good but simple life. There is nothing that frustrates me more than those who oppose action on environment and jobs. They are not mutually exclusive. Actually they can work together, but the rules and laws need to change and integrate the externalities. Unfortunately, I do not see government leaders or business leaders even trying to get this done. After all, it is easier to pass it onto the next generation.

Trying to keep up with the Joneses or impress one’s little social circle with stuff is not my thing. Actually, moderation helps appreciate things better. Much better. Instead of wasting money on always more stuff, I prefer to buy quality stuff that lasts and to buy only when I need something. If I don’t need it, why should it clutter my home while not fulfilling any function? That is pretty stupid if you ask me. A long time ago, I posted on this blog an article titled “We will change or eating habits, one way or another”. You can be sure that sustainability, especially with a world population growing, is about “we will become frugal, one way or another”. Sustainability and excess do not match well. Be assured that Moderation is a key word if we want a prosperous future, and prosperity really is about inner harmony and happiness. Prosperity is not about more stuff; that is for empty people. The other key word for the future –and that is in stark contrast with our current philosophy of economy and of life is: Humility. How do we move from a world where so many of us use social media as their own narcissistic issue of People magazine in which they take center stage as self-proclaimed I-am-the center-of-the world-look at me? I venture for some time on Twitter and I left. I did not even try Facebook as soon as I got the form asking for personal information on my screen, and I think it was the smart thing to do.

So, will we make it? I believe the answer is the same as the one I gave to a journalist who was asking me if I thought we could feed the world in 2050: “Yes we can but it will take a terrifying crisis before we do what it takes”. I ended up Future Harvest with “we can but will we?” and We Will Reap What We Sow takes it from there. The cover has two halves: a prosperous farm field and a devastated barren land. I see many more signs that we are heading towards the latter, not the former. Maybe there is hope, though. Today, the Great Pumpkin said that he did not think climate change was a hoax after all.

Copyright 2018 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Changing economics to overcome future challenges

October 21, 2016

First, a personal story

A year ago, I moved away from Vancouver to the Okanagan Valley Region some 300 miles east from Vancouver. There, I bought a property with a decent yard where I will have a garden and with a small vineyard. In some way, it is an illustration of what is necessary to foster sustainable practices. The parallel is obvious with some of the global challenges the world is facing and will continue to face in the future. For eight months of the year, the area looks and feels quite similar to the Mediterranean. Precipitations are not abundant with an annual quantity of only 337 mm. Clearly, water is scarce and needs to be preserved, even though an extensive system of lakes fed by mountain snow ensures an adequate supply of water. The region is quite agricultural with many orchards and vineyards, all thanks to irrigation. There are also many lawns in the area and the estimate is that about 25% of the water consumed in the region is just to keep the lawns green.

My plan is to install rain barrels to collect the water from rain and snow and use it for the yard. This is where the economics do not go in parallel with all the talk from politicians about sustainability. Around the house I would need five rain barrels. The lowest and best retail price I can find is of about $80 for a 200 liter barrel. To set up my water collection system, it will cost me $400 to provide me with a 1 cubic meter storage capacity. In comparison, the price for a cubic meter that the municipality charges for water is $0.30 per cubic meter. In the most ideal situation, that is if I were able to collect all the rain and snow through my five barrels, I would at most collect about 30 cubic meters per year. In money, it comes down to a saving of roughly $10 per year. To break even, I’d better hope that the barrels will last 40 years, which they might, but considering my current age, there is a fair chance I may have moved to a much smaller underground dwelling by then. Of course, my example is about quite a small investment and if the return is lousy, it will not change my life. At least, the barrels will help me save water.

The point of my story is that the comparison between cost and benefit would deter most people to consider buying rain barrels. It just does not make financial sense, if money is what matters. I always say that money talks and what it says here is to forget about being sustainable. One of my neighbours also considered installing solar panels on the roof of their house. After comparing the price of the panels plus installation and maintenance with the electricity savings, they discovered that it would last twice the life of the panels to break even. In terms of money, solar panels are a different kettle of fish than my five rain barrels. Recently I saw the price of a propane generator that produces 3650 watts for Canadian $350 while a solar panel that produces 100 watts is sold for Canadian $250. I can understand people decide to not pursue the solar option.

The economics of water and energy savings that I just described can be extrapolated to the much larger picture. All through the food and agriculture value chains, many changes for more sustainable systems face the same kind of dilemma. What makes sense from an environmental point of view often does not make sense financially in the current economic environment. Demanding more sustainable production system is quite legitimate and sensible, but the conditions must also be there to make it happen. The numbers have to add up for farmers and businesses to make the switch. As usual, money is of the essence and it can come from different sides.

First, the purchase price and the cost of operation of alternatives have to come down and be competitive. Either suppliers are able to drop their prices or offer more efficient systems. Governments also can help through subsidies to ease the pain. Subsidies, being public money for the general interest, it is only fair that we all must pay if what we want is a sustainable. Subsidies must of course be set up properly and be effective

Second, the customers, which in a fair value chain would be eventually the consumers, have to pay for extra cost of the better production systems, simply because our consumption societies with their sense of entitlement have to understand that there is no such thing as a free lunch. Such a realization also means that producers also understand that mass production that only deplete resources do not fit in the long-term picture and that value will have to replace volume.

Searching for a new economic model

With the many challenges arising from a growing world population, it becomes more and more obvious that the economic model of the past six decades needs some refreshing. As such providing consumer goods at an affordable price for the masses is not a bad idea. Helping people to have a more comfortable and pleasant life is certainly welcome by most of us. The problem is that the so-called consumption society is not so much aboutpillars-of-economy consumption as it is about people buying and giving their money to someone else. In the current system, consumption is optional. Research has shown that consumers use 75 to 80% of the goods they buy no more than once.  What really matters is the act of purchasing the goods. It is good for growth and the GDP, currently the leading metrics for the state of the economy. The problem is that mass production has gradually shifted from affordability to cheapness and from value to price. It has focused mostly on volume and has not taken into account that consumers would have to get rid of what they bought after usage. Negative externalities have been kept external indeed. Short-term financial results have had the preference and long-term impact has been ignored. The system is hitting a wall and issues of greenhouse gases emissions and waste of resources are now becoming urgent matters to address. All industries will be affected one way or the other. Food and agriculture will be no exception.

The big question is how to change the system without having it implode. That is not an easy one to answer but sooner or later it will have to change. Vision and leadership are crucial to manage the transition. I wish I had seen more of it. So far, I see and hear more about pro this and anti that. It is highly insufficient and produces more noise than results.

In my opinion, the problem is not so much about growth as it is about what growth means. Over the past decades, growth has been mostly about volume numbers. It has been a quantitative growth. I believe that the best transition towards the next model is to focus on what I call qualitative growth. It is not so much about volume as it is about adding value to the buyer. For consumers and countries, qualitative growth would be to quantitative growth what EVA (economic value added) is to turn-over for a business. It is about prosperity.

For food producers, such a shift will lead to a different approach. The most valuable areas of value added for consumers and society lies probably in providing good and enjoyable nutrition, yet affordable, through advice and education. The industry will have to help consumers eat better and help them have healthy diets. It will go beyond just supply food. Consumers will also have to rediscover what proper nutrition is. Initiatives such as the Global Access to Nutrition Index can play a pivotal role in helping food producers make the transition towards quantitative growth. The food sector has also an important role to play in keeping our environment livable. The trend towards transparency is an important part of the evolution on both health and environment fronts.

Of course, such a change of economic model means that the economics must change, too. It is also essential that those who do the right thing must be rewarded. A new reward system must be introduced in the set of rules and regulations so that producers get the proper incentive to make the shift because adding the type of value that I mention to consumers also requires a different price tag in the store, or at least a different breakdown of costs and benefits along the entire chain from producers to consumers. How to distribute fairly the cost tag of the change is still open for debate. The reward system has to apply for the business activity by allowing margins to be comparatively competitive in the new situation. Consumers doing the right thing must also be rewarded. The reward system should also apply at the remuneration level. In particular, the share of qualitative improvements in companies’ bonus systems will have to increase at the expense of qualitative growth targets.  The adjustments needed in the food and agriculture sectors will not end in this sector. They will have to include other area of government. In particular the health sector will have to be involved, as the consequences of the quality of nutrition on health are obvious for individuals and society both at the personal as at the financial level.

I also believe that such a shift in economic model will mean that business partners within the value chain will have to challenge each other to carry out the transition and it will become a critical point in choosing with whom to do business in the future.

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

 

 


China is evolving – A look towards future consequences

March 13, 2014

Recently, interesting economic news has come from the Empire of the Middle. On the one hand, financial markets reacted worried on the softening of the Chinese economy, but on the other hand they reacted rather positively about the first corporate debt default allowed in the country. To me, all of the above is good news. If financial markets get a bit nervous for a few days, then so be it! It cannot be a complete surprise that at some point the growth of the Chinese economy would slow down. Double-digit growth cannot last forever, and growth cannot keep going on a straight line without some corrections along the way. If markets are worried about a growth of 5% for China, then how will they react when China lands into a recession, as it surely will happen at some time?

Personally, I find China’s performance over the last 30 years quite impressive to say the least. I am old enough to have seen dramatic changes about that country. When I was a kid, all the news from China was rather sad. There was a chronic situation of near-famine, and what I heard then, true or not, was that the Chinese had only one bowl of rice per person for a whole day. The Great Leap Forward and the Cultural Revolution directed by Mao Zedong did not exactly spelled prosperity, by far not. After the arrival of Deng Xiaoping, things changed and a new direction took place, which had led the country to where it is today. Pragmatism took over from blind dogma. Deng Xiaoping’s quote “It doesn’t matter whether the cat is black or white, as long as it catches mice” summed it up nicely. I have to admit that I was still rather young and did not pay much attention to what happened in China. That came later during my professional life. In the early 1990s, the price of wheat increased, and this became cause for concern in the poultry industry, in which I was working by then. I remember a conversation with one of my customers. We came to the conclusion that China had decided to feed its people, and that was the sign of a new era. Since that day, I have followed with much interest the evolution of China, and until this day it has not stopped fascinating me.

Bringing a country of 1.5 billion people in 30 years from hunger to the world’s largest economy is no small deed. Western economies with a much lower population should know, since they struggle to provide enough jobs to their populations, which in many cases would fit in only one of the large Chinese cities. Chinese leaders have shown a remarkable pragmatic approach in the way they have carried out this change. They have performed an impressive balancing act to stay in power through economic development that allowed the population to not have enough reason to start a revolution, which is the only way to change a government when there are no elections. Feeding their people was definitely a sound strategy to achieve the double objective of power continuation and increasing prosperity. However, this economic success has come at a high price. China suffers from major environmental damage, and the rest of the world also undergoes the consequences. This is where the news of the past few days sends some interesting signals about the future. China is now entering a phase of optimization. Growth is not anymore just about more, but it is about better. Phase one, providing for the basic needs seems on its way to completion. Now, focusing on the quality of future growth becomes necessary, as keeping the course of the previous decades would probably soon lead to make the country hardly liveable. But allowing the pace of growth to slow down in order to get the time to improve the situation and clean some of the damage is not the only sign that shows that Chinese leaders have the confidence that the country has achieved a level of economic prosperity sufficient to absorb this slowdown. The recent debt default of the solar panel company Chaori shows that China has decided to stop to protect business from failure, as until this case, various levels of government would guarantee the debt. The message seems to be that the economy is strong enough to take such hits. This is a strong signal that China will no longer bail out businesses and that they will let market forces select the winners and the losers. That is quite the move toward liberalism. A number of Western countries do not appear this bold, lately. In the same area of a changed economic philosophy, China is also currently allowing market forces to regulate the value of its currency, which is currently weakening, even though Western countries have always put pressure on China to re-evaluate the Yuan. The ability to persevere on long-term objective and not let outsiders interfere more than necessary is one of the quality of the Chinese that I like particularly. They do what is good for China and do not allow foreigners to undermine they progress. They run their economy with the same resilience and determination as they did with the Long March. Personally, I like the approach of the Chinese leaders. They are smart, focused and pragmatic. The new generation of entrepreneurs and executive also shows these good qualities. I also am quite impressed by the enthusiasm and curiosity of young Chinese students. They have the momentum on their side and it feeds their desire to succeed.

As I mentioned earlier, a couple of decades ago China decided to feed its people, mostly to avoid social unrest that could get out of control. In the area of food security, China has, like in the rest of its economy, achieved impressive results, but at a high cost, too. I believe that part of the current shift in economic philosophy can be looked at from the perspective of Maslow’s pyramid of needs. The objective number one for China has been to meet the basic needs: food, shelter, safety. Although there is still a part of the population living in poverty, the basic needs, from a collective point of view, are more or less met, as the majority of the population has now entered the middle class or better and the rest seems to follow in that direction. In the first phase, it is clear that environmental damage was under little scrutiny, as the end justified the means. After all, hungry people are not picky about what they eat, if it means surviving. In the today’s Chinese society, just eating what is available is no longer the only priority. Once the basic needs are met, the emotional takes gradually over from the biological. Consumers start to think and to question. It is not anymore about surviving today only, but about living in the future. The population is expressing its discontent of the quality of life and against the environmental recklessness of businesses more and more often. If food was used to be considered a potential source of unrest, now the problem has shifted to air and water. Heavy air pollution, contaminated water and the sight of thousands of dead pigs floating in the river that flows through Shanghai, as was the case a few months ago, are no longer tolerated by the population.

China Food Map (Photo: Zhang Yanlin/Asianewsphoto)The phase of optimization is also going to take place in food and agriculture. The situation about corn is a good indicator. Until 2012, China was self-sufficient for corn. With the increasing demand for meat as a result of economic improvement of the population, China has now become a net importer. The type of demand for the various food groups, together with the environmental toll of pursuing the objective of food self-sufficiency has reached its limits. It is important to acknowledge the performance of the Chinese agriculture, though. Even is the cost of achieving food security is high, one needs to remember that China is the world’s largest producer of rice, wheat, pork, eggs, fruit and vegetables, and cotton. It is the second largest producer of corn, behind the US. Considering the size of the country, being the main producer for all those commodities is quite an achievement. Yet China, announced last February that it was changing its objective, and that grain self-sufficiency was no longer sacred. It makes very good sense. The long term is as important as the present. China needs to work hard now to protect and restore its soils and its fresh water. On other area where the country can also achieve substantial results is by fixing post-harvest losses. Infrastructure will be developed further. Optimization of the food value chains will also take place, largely in the form of a consolidation of businesses. The seed sector will be interesting to follow in this regard, as many small seed producers will either disappear or be absorbed by larger entities. Considering the crucial role of genetics for crop yield, this rationalization of the sector should also contribute to a further improvement of the Chinese agriculture.

With land purchases abroad, world agricultural production up, international trade and a more astute food stocks strategy, China does not need to try to produce all its food itself. The bulk of the basic needs is covered. Now, it is time to optimize and repair without having to fear shortages. The focus is going to be more on waste reduction and efficiency than before. It definitely will be about doing more with less, to use a commonly used expression. An example of this tightening of standards is the so-called Green Fence for the recycling goods that China imports. Now the recycling materials need to be cleaned to enter the country. China simply does not want to use its energy and water resources. They want the waste producers to do that in their own countries. That is wise.

Another area for optimization is food safety and food quality. In a previous article , I wrote about a strategic shift towards speeding up the learning curve to meet higher standards. The shift from quantity to quality is a reflection of the pyramid of needs. When people have enough to eat, as is the case in large Chinese urban centers, they start to look at how food is produced and question what they do not like. Food security is for most no longer a worry, as the alarming rise in overweight and diabetes shows. When food security is no longer a worry, the focus shifts to food safety. That is quite normal.

My expectation is that China is no longer in the logic of just copying and producing cheap low quality. Although this reputation is still quite alive in Western countries, in my opinion it is incorrect. But after all, similar prejudices lived long about Japan, too, until the time that Americans realized that Japanese goods were of a better quality and Japanese companies were better run than their domestic counterparts. We will see the same thing about China. Some people will wake up too late. The Chinese are quite awake. Don’t worry for them.

Although the food industry, like all industries, resents criticism, it is actually the sign of a developed society. Basic standards do not satisfy anymore. People look for the something extra, and that is where opportunities arise. Those who listen to consumers and offer them what they want increase their chances of capturing the high-margin market positions. Let’s face it; markets for undifferentiated commodities are attractive mostly because of the large volumes they represent. In China, too, health and environment will be the drivers of future food supply. This will definitely offer good possibilities in the future. The Chinese will also take a look at their diet, and the per capita consumption of meat, just like economic growth, will not keep increasing forever. In the same way as it did in Western countries, it will reach a plateau, probably in 10 years from now, and later will gradually decline, for the same reasons as it is doing in the West, and also because the population of China is expected to decrease to 1.4 billion by 2050 and to 1.1 billion by 2100. That decrease represents a lot of consumers. It will be important to notice this change of trend on time. When consumption of certain food items in Western countries reached that plateau, most companies did not anticipate it. As usual in such situations, denial is the first reaction. First the change of trend is considered a temporary hiccup. Investments to increase capacity have often been made on the expectation of continuous growth, causing an overcapacity of production, and the production capacity needs to be used fully to be economically efficient. This creates a lack of flexibility and all producers enter the difficult times with the same cost profitability concerns. When the stagnation appears to last, producers like to think that indeed there will be a consolidation of the sector, but they usually all seem to think that they will weather the storm and will not be affected. Of course, it never works that way. Bad things do not happen only happen to others. Then, the crisis follows and usually a vigorous restructuring takes place. I have seen this many times and it is amazing to see how history repeats itself. There is no doubt that when food consumption will have reached its top, the same mechanism will show. This time, the problem will be quite robust, though. To supply China, production volumes will be much higher than previous similar scenarios of stagnation in the various Western regions. Further, just as much any marginal increment of consumption per capita multiplied by 1.5 billion means large volumes, any decrease of consumption will represent significant pain. This point is not here, yet. There are years of growth for most food groups ahead, but it is time to start thinking, and especially start planning, about a change of strategy. When the plateau appears, differentiation will become the main theme, and niches will be the place to be. Considering that the Chinese culture is long-term oriented and that relationships are a fundamental element of business in China, I would recommend starting paving the path for this shift sooner than later. After all, 10 years pass quite fast.

Copyright 2014 – The Happy Future Group Consulting Ltd.


A couple of billion reasons why Africa is a priority for the future

December 13, 2013

More than three years ago, I had posted on this blog the list of the 16 most populated countries in the world by then. It helped put things in perspective in today’s world, but looking ahead, another table is more useful. Here is the list of the 16 most populated countries in 2050 and 2100 according to the UN.

2010

Country

Population

(millions)

% of world population

World

6,794

 

China

1,337

19.6

India

1,180

17.3

USA

309

4.5

Indonesia

231

3.4

Brazil

193

2.8

Pakistan

169

2.5

Bangladesh

162

2.4

Nigeria

155

2.3

Russia

142

2.1

Japan

128

1.9

Mexico

108

1.6

Philippines

92

1.4

Vietnam

86

1.3

Germany

82

1.2

Ethiopia

79

1.2

Egypt

78

1.2

Top   16

4,531

66.7

2050

Country

Population

(millions)

% of world population

 

      9,551

 

India

1,620

17.0

China

1,385

14.5

Nigeria

440

4.6

USA

401

4.2

Indonesia

321

3.4

Pakistan

271

2.8

Brazil

231

2.4

Bangladesh

202

2.1

Ethiopia

188

2.0

Philippines

157

1.6

Mexico

156

1.6

RD   Congo

155

1.6

Tanzania

129

1.4

Egypt

122

1.3

Russia

121

1.3

Japan

108

1.1

 Top   16

6,007

62.9

2100

Country

Population

(millions)

% of world population

        10,854  
India

1,547

14.3

China

1,086

10.0

Nigeria

914

8.4

USA

462

4.3

Indonesia

315

2.9

Tanzania

276

2.5

Pakistan

263

2.4

DR   Congo

262

2.4

Ethiopia

243

2.2

Uganda

205

1.9

Nigeria

204

1.9

Brazil

195

1.8

Philippines

188

1.7

Bangladesh

182

1.7

Kenya

160

1.5

Mexico

140

1.3

 Top   16

6,642

61.2

Immediately, some interesting information appears. China is already reaching a plateau and it will decline later. Most of Asia will have reached its peak of population by mid-century. India’s population is going to keep growing in the coming decades and with regards to food security, the country has still lots of work ahead. However, with the growth of its middle class, the situation should improve gradually in the future. The continent that will see the strongest population growth is Africa. Between now and the end of the century, eight countries will account to over half of the world’s population increase from currently 7.2 billion to 10.9 billion, with six of these countries being on the African continent. These eight countries are Nigeria, India, Tanzania, the Democratic Republic of Congo, Niger, Uganda, Ethiopia and the USA. It is worth noticing that the population of Nigeria will pass the population of the USA before mid-century. For a country the size of Texas, the challenge is huge, especially considering the current political instability. Other small countries such as Tanzania and Uganda are going have to cope with a very strong population increase.

The challenge for Africa is clear. Most of the countries with a strong population increase are poor countries that already have serious difficulties to feed themselves. African agriculture has not followed the pace of other regions in terms of productivity and yields. Many rural communities are poor and can hardly subsist. The flip side Africa having lagged in agricultural development is that it has huge potential to increase its food production. At the beginning of the current decade, the FAO estimated the area of unexploited arable land in Africa to be roughly the size of continental USA. By increasing acreage in production with higher yields, there is plenty of room to increase production volumes to sufficient levels. Food production is the not the only problem. To solve hunger, these countries must eliminate poverty. People who have enough money to buy food are not hungry. Only the poor are. And to have enough money, one needs a decent paying job. For the future of Africa, employment is really where the battle will be won or lost. Between now and the end of the century, Africa will have to create 600 million new jobs, and to get jobs, people need to have the proper education and training. They also need to be healthy. As the expectation is that most of the population will be living in cities, another challenging goal will be to build these urban centers and all the necessary infrastructure to move the goods and the people. Such megacities will also need to be food secure and urban planning will need to take food distribution and food production into account. Education, health care, construction, infrastructure, jobs, food and agriculture… This sounds like building an entire continent doesn’t it? And that is exactly what it is. Expect Africa to be a huge construction site! Action must be taken and properly phased out over the next nine decades. If the challenges are many, so are the opportunities and the benefits in the long term.

So what does it take to make this happen? The answer to this question is rather simple. The implementation and proper execution is less so. It will take money, and a lot of it. There is plenty of that, though. The Central bankers of developed countries did not have to think too long to start printing a couple of trillion dollars, emitting bonds and doing the quantitative easing as needed to save the financial sector when the system was imploding in 2008 and since then. Building Africa would not require more money than that. If there has ever been a need for Keynesian economics, the Africa of the coming decades is it! Not only the money pumped in the system would allow projects to happen, but it will be the basis to create the many jobs that will be required to build all that is needed. The challenge for Africans is to have and to provide the training required to qualify for the jobs come.

To rise from its current situation, the task is somehow comparable to rebuilding Europe after World War II. Both the Europeans and the Americans who provided financial help by then can tell the Africans what a great period of prosperity followed for them. Africa needs a Marshall plan of its own, but it also must convince the rest of the world that it will put the money at work. And that is where the second crucial component of success – or failure – resides: leadership. Africa needs strong visionary leadership with integrity that will not only make things happen, but also will keep the energies focused on a long-term effort. Another eighty-six years to complete it all before the end of the century will not be too many. Africa will have to bring forward a new generation of leaders that will follow a course that is quite different from the one many of their predecessors followed. Encouraging investors will require fighting corruption, starting with a leadership by example. Corruption is a theme that I hear regularly from businesses that would like to engage in Africa, but that feel reluctant to do so for that very reason. Endeavours may be risky, but they have the potential to be quite rewarding for those who will dare and have the patience to wait to reap the fruits. As for anything else anywhere else, there will be success stories and some failures, but that is the way the world goes. It will be important to factor in disappointments and a percentage of mistakes and failures to assess the true future return. One thing is sure: searching for a quick return is probably not the best strategy over there.

Africa is diverse. The challenges will vary per country and so will the quality of the leadership. I expect the political geography of Africa to change between now and 2100 (actually much earlier than that). Borders are inherited from the independence from the colonial power and they do not always reflect a good partition for the future. Sometimes this may happen peacefully and sometimes unfortunately not. Note that I never said it will be easy. Nonetheless, the continent must move forward and the countries must develop their economies.

Although it will not be simple, I am optimistic about future changes in Africa. In my limited dealings with young professionals from Africa, I can say that this new generation is highly motivated and keen to succeed. In my contacts, I have many bright, smart and well-educated young African professionals in the field of food and agriculture. I enjoy their energy and desire to change the course of the future. They have travelled and they know quite a bit about food production in other places. They push relentlessly to bring new dynamics and I do believe that they will make good things happen. But they will need all the help and support to have access to the right resources and knowledge to succeed.

For some reason, since I started the Food Futurist, I have always considered that Africa will be playing an important role in the future of food and agriculture. I have believed immediately in its potential and I have never been shy about it. This has sometimes created interesting situations such surprise or disbelief from my audiences and clients. I guess I was a little early with my predictions, but I have had the pleasure to hear some of them who looked at me as if I had a sunstroke who now advocate in favour of Africa’s food and agriculture potential. It just took them a year or two to come to the same conclusion. I guess the first part of my work has been done. Now, I really would like to be involved with organizations that want to build solid pragmatic market-oriented food production in Africa.

Copyright 2013 – The Happy Future Group Consulting Ltd.


Food prices, one year later – Some lessons

September 16, 2013

According to the data gathered by the FAO, global food prices are on the decline. They have been so for some time. However, this good news does not seem to make the headlines. Reassuring news does not score with the mainstream media. What a difference with the past year during which all of a sudden they discovered that food might not be taken for granted after all! What have we not heard and read by then. The most absurd theories and pseudo-analyses have been spread around by some who know nothing better than copying and pasting the internet without exercizing the slightest sense of critical thinking. Of course, the fear mongers got plenty of publicity while they really did not contribute to anything productive, as I had described in a previous article (Fear mongering does not build a strong future).

What a difference a year makes! And that is a very good thing. It shows that agriculture and farmers are much more resilient and have much greater potential than some want to make believe. That confirms what I have always claimed and that I relentlessly repeat in my presentations and publications. I have lost the count of how many times I have been told that “Christophe, you are quite the optimist”, in particular about the content of Future Harvests. Frankly, I do not think that I am particularly optimistic. Actually, I can see many reasons why we will face serious crises along the way to meeting the goals of feeding a growing population. That warning is the message behind We Will Reap What We Sow. I see human nature and in particular our leadership, as serious reasons for temporary failures. But if I do not consider myself as an optimist, I definitely have a positive attitude. I truly believe we can manage and overcome future challenges, because I crunched the numbers and I have demonstrated in my literature and my talks that feeding 9 billion people in a sustainable manner is quite possible. It is possible, but it is not a given. There is work ahead. That makes it interesting and exciting.

Next to the potential and the future development that can make us overcome the coming challenges, I am also a firm believer of market forces. Market fluctuations trigger action and reaction. Nothing like high prices and solid profits get food producers increase production. Similarly, nothing like poor financial results have the ability to tamper any desire to increase production. The so-called invisible hand works. Sometimes, it holds a carrot. Sometimes, it holds a stick. It makes things move in the right direction. Over the past year, I have presented during a number of events how market forces would influence prices in different sectors in the years to come. By looking at it from the consumer demand end and by going back in the production and supply chain, I showed how the different actors would react to their own particular situations. So far, my predictions have come true, the reactions of retailers, food service, animal protein producers, crop farmers and input suppliers have been as expected. The drop in global food prices is one of these predictions. Those who attended some of my presentations know what I mean. For the others, here is a link to a video showing an excerpt my talk about the dynamics of future agricultural markets that will illustrate what I am writing about.

The past year contains many lessons. Some of them are about us, and some of them are about how to look at the future. The main lesson is probably that the situation of food and agriculture cannot be looked at in a simplistic manner and can certainly not be described or commented with scary slogans. The population is growing but so is agricultural production. The famine that is supposedly around the corner is far from happening. In a year time, the world population has increased by a few dozen million people, who on average tend to eat more food, and in particular meat. Yet, supply is able to meet demand better this year than last year, as global food prices and grain stocks indicate. Another lesson is that even though severe climatic events affect food supply negatively, there is no reason to panic. The fact that last year a severe drought depleted production numbers in one of the essential producing countries, the USA, the system was able to absorb the shock. There has been no food riot in 2012 like in 2008. The reason needs to be looked at what products were the most affected.  Supply of basic food stables remained in balance with demand. There was no particular shortage of bread or rice in sight. The commodities that were affected were business to business products, destined to the animal feed and the corn ethanol industries. Another lesson is that even though the prices of 2012 did not lead to riots, climatic events are a serious threat and need to be factored in future supply and demand scenarios to build enough of a buffer to reduce the risks of supply disruption. Another area that requires more attention is the regulation of financial markets, and in particular the regulatory aspects. It is clear that derivatives amplify market price fluctuations. By deciding who is allowed to be active on the markets of agricultural commodities and for which quantities, the functioning of markets can be more representative of the physical reality. In particular, the participation of players who have no physical production or supply functions in the food and agriculture need to be taken under strict scrutiny. As it is important to have fair market rules for a proper functioning of markets, it will be also useful to look at the functioning of crop insurance. Last year’s drought in the US cost insurance companies much money, while it appeared that US crop farmers ended up the season with the second highest profit level on record. No one will argue that farmers need to be protected from such unpredictable events.  Insurance should guarantee them a minimum income so that their future would not depend from forces out of their control. That is just fair. Opposite to that, it sounds beyond normal that, thanks to other contributors, farmers could go through such a drought without hardly feeling the slightest pinch in the wallet.

After the past year, am I still an “optimist”? Yes, I do believe that farmers will meet demand in the future. For all the reasons above, I am convinced as ever that the potential is largely there and that the world can absorb tough years. But I would attach a warning to my optimism. It is not because it can be done that it will be done. It is necessary to keep thinking ahead, to come with innovative ideas, products and services to be able to plan and forecast better, to make better and faster decisions. It is also essential to pass knowledge and information better and faster, and to choose the attitude of helping others succeed before one’s particular interest. Our societies have succeeded by acting together. Nobody will be able to do it all alone. Providing help and support will be critical for success, just as much as asking for them will be. It also becomes crucial to be able to look beyond one’s area of business and to connect the dots even – or maybe actually in particular – with events and activities that have, at least apparently, several degrees of separation with agriculture in order to anticipate, adapt and be prosperous. That is the core of what I do, and I can only encourage you to take the same approach.

As markets ease, it will be quite tempting to drop the guard. In my opinion, this would be a serious mistake. The time things seem to be under control is the right time to prepare for the future and to do some foresight. Markets will change again as the bargaining power of the different links of the chain will shift. Be assured that there will be some severe price hikes again. My best guess is within five years from now. Those who will do this exercise will have a strong advantage over those who will procrastinate.

Copyright 2013 – The Happy Future Group Consulting Ltd.


Dealing with complexity

February 1, 2013

Looking at the future of food and farming goes far beyond agriculture. It comes down to looking at the future of humankind. Balancing future supply and demand of food is an exercise that includes many disciplines and dimensions, probably more so than any other human economic activity. Anything that affects life and its level of prosperity must be taken into account. Feeding the world is not just a matter of production. Of course, the ability to produce and to keep producing enough food is paramount, but there is more to it than that. The consumption side is just as important. Demand will depend on the diet, which also depends on how much money people have available to pay for food.

Total future food demand is a combination of which foods and food groups people in the various regions of the world will buy and eat. This is a function of demographic, economic, cultural, religious and ethical factors. If future demand is about consuming according to the nutritional needs of a human being, clearly the situation will be different than if people demand twice as many calories and protein as the actual nutritional needs. The relative share of animal products in the total diet will also change the situation in terms of production and of production systems. Food production must adjust to the demand and do its best to meet it, but not at all costs. Therefore, it is essential to optimize food production at the global level so that the largest quantity of food can be produced at the lowest environmental cost. At the local level, production depends of course on natural conditions, but also on economic, political and cultural conditions as well. This may be the most profound change that we must deal with: feeding the world of the future is a global exercise. As more and more people worldwide have more and more money to spend on food, demand is now global, and therefore production plans must also be global. The times of producing food simply for the own people and exporting surpluses is over. Markets will now react to any event that will affect production or consumption somewhere else. Borders do not make this shift in thinking easy. It is always tempting to think that having one’s house in order is enough, but it is not. What happens in other countries on the other side of the world will affect us just as well. Why is that? Just one word to explain it: markets. There used to be a time, not so distant when if there was a drought in Russia, China or Brazil, markets would not react as strongly, and anyway not so much in the media, as we have seen over the past few years. This was the case because only a minority of the world was consuming large quantities and that minority did not have competition. Now the competition is wide open. Markets will keep reacting on this and the relative price levels of various foods will influence how much of what is consumed and where. We will see eating habits change because of this economical aspect of food supply.

At the same time, food production is also adapting to a changing environment, and to face its future challenges. The amount of new developments in technology, access to information and knowledge and in decision-making tools is amazing. Innovation is flourishing everywhere to solve environmental issues, to cope with new energy and water situations. The dominant themes are the reduction waste of all sorts, as well food as agricultural inputs and by-products, and the prevention of the release of harmful contaminants. Innovation is developing towards better and more efficient systems that must ensure the future continuity of food production and, at the same time, keeping food affordable for consumers. Interestingly enough, many innovations that will be useful for agriculture do not originate from the food sector. Food producers will need to be curious and look beyond the field to prepare for the farming of the future.

Clearly, the number of factors affecting both consumption and supply are many. To add to the complexity, many of these factors are not of an agricultural nature. Many of them originate from the population, its activities and its needs for all sorts of goods. I mentioned earlier that what happens in one region affects others, but the natural resources markets, such as energy, metals and minerals, that must meet demand for non-food consumer goods also affects agriculture and its production costs. Although many see rising costs first as a threat, I tend to welcome them, as they always stimulate innovative solutions to increase efficiency and reduce waste. Two examples show that it works. One is the car market in the USA that shifted from gas-guzzlers to high gas mileage vehicles since gas at the pump became much more expensive than it was only 5 years ago. The second one is food markets. Had you heard as much about food prices, food security or food waste before the food price hikes of 2008 and 2012?

In my work, I always try to make my clients and audiences aware of how everything that has to do with food is interconnected with many other sectors, and how economic, demographic and political events are linked to food security or how they might affect it in the future. That is an underlying them in my books.

Even, within the food and farming sectors, organizations do not realize enough how their future will be influenced by other food productions and vice-versa. I always get reactions of surprise at the magnitude of the interconnection and the interdependence with these factors, and how they affect their activities indirectly. It is a normal reaction, as most people tend to focus on what has a direct connection with their activities. After all, that is why I do what I do: to help them see and decipher this complexity, and understand what actions to take to adapt and prosper. I never shy away from show the complexity. My audience needs to get a flavor of the any dimensions and many layers involved. However, I always take a practical approach and show them that complexity is not the same as complicated. Deconstructing the complexity actually works well to show the many levels of actions there are. It helps my clients connect the dots between their activities and what will affect them and how. It gives them a level of confidence in how to deal with the future and take action. I also like to warn against oversimplifying, which is another tendency that I observe from time to time. The mainstream media is rather good at that. But I also get questions that sound like those who ask hope that I have a magic wand and will be able to give them a foolproof recipe for success. That simply does not exist.  If preparing the future were easy, nobody would even talk about it. It would be done. It it was easy, I guess many of the organizations that have been involved in agricultural development and food aid for decades would have already succeeded, and they would not exist anymore. Yet, they still have to keep up with their work.

Feeding the world is work in progress. Developing the right actions is complex, but not as complicated as it sounds. However, the true difficulty is in the execution, and in particular bringing other stakeholders with different agendas and different views on board to contribute to the success.

Copyright 2013 – The Happy Future Group Consulting Ltd.