Sustainability

 

Toirdhealbheach Beucail  wrote a few thoughts about "Sustainability"

I do not dispute a thing he wrote. I do want to add that the money/cost/price mechanism is, at its heart, an information system.

Consider the urge many smallholders have to purchase a tractor or other large piece of equipment.

A new Kioti CK2510 lists for about $15k.

While a few tractors last 60 years or more, many do not. Let's use a thirty-year life cycle. That means your tractor will be depreciating roughly $500 a year. Throw in maintenance, fuel and sundry implements and call it an even $1000 a year.

That is $80 a month.

The issue is that the tractor is a "sunk cost" and consequently those costs  become invisible. Costs that are not visible can gull managers into stupid decisions.

A short story

One local guy had 15 or 20 brood cows. One sunny spring morning wife was giving him crap about him being a lousy money manager. She saw how much meat cost at the grocery store and she was SURE he was holding money back from her.

The man knew that numbers were not real to his wife so rather than show her the numbers, he suggested that she manage the cattle for the next year. He was polite about it and even agreed to operate the tractor to run bales of hay out to them.

She lunged at the bait.

She had a glorious time. She hired somebody to truck the animals to market. She cashed the check. Things were lovely.

Then, in late-September the man asked a simple question, "Have you thought about buying any hay for this winter?"

"What do you mean?" his wife asked.

The man pointed at the knoll where he kept hay. It was well drained and conveniently located next to their drive. The couple drove by it every time they left the property.

There were about six bales of hay left on the knoll.

"You gotta buy enough round bales to cover that hill if you want to get through the winter." the man informed her.

He wasn't mean about it. She hadn't asked. He hadn't told her. A big part of being a manager is to ask questions.

Predictably, she blamed him for the fact that she had spent all of the money from the sale of the calves. Oh, she had a delightful summer. But she didn't have any money left to buy hay.

She ended up paying top-dollar for round-bales because of the time of year. She ended up paying top-dollar to have them trucked-in because the man had no intention of helping her after she yelled at him for being a jerk.

I don't know where she got the money.

The point of the analogy is that those bales of hay on the hill were totally visible to the woman. She knew they fed hay in the winter. Winter comes every year to Michigan. And yet...she was totally blind to the looming problem.

Playing through

In one way, the man was masterful in letting the conflict play out the way it did. She had to own the problem. Afterward, she never gave him crap about the money he paid into the family fund from the sale of cattle.

One thing that hit her between the eyes was that her husband would be losing money hand-over-fist if he was paying himself an hourly wage. He was buying hay in the field and transporting it to their farm. He got up every day and fed and watered the cattle. He handled the marketing.

The "business model" was not sustainable, in part, because he raised far more cattle than could be supported with the forage he could grow on-farm. That meant he had to buy hay and grain. That meant he needed a tractor. Those payments locked him into raising 15-to-20 cattle to pay the monthly nut.

From an environmental standpoint, buying in large amounts of hay results in super-fertile soil. It can also result in nitrates and potassium leaching into the ground water and phosphorous run-off. The flip-side is the hay fields where the hay was removed are depleted of those same nutrients.

Tractors are handy things to have

There is no doubt that tractors are handy to have for a multitude of tasks from plowing snow to mowing to dragging logs. That is a minefield that I don't want to get into.

But from the standpoint of his cattle enterprise, the fixed cost of the tractor locked him into a situation that was less sustainable than if he had respected his forage base and sized accordingly.

There are countless places where sunk costs have become invisible. Rust, rot, depreciation, the soldiers of entropy quietly diminish those foundations. 

Sewer pipes, old books, institutions, equipment in factories all crumble over time and no consideration is given for their maintenance or replacement.

And no, Krystle...we cannot replace them with an app. It doesn't work that way.