Nature's Frugality

This post builds on the concept of frugal engineering discussed in two articles this week.  It applies the barriers to innovation that are explained in The Importance of Frugal Engineering to the American agriculture industry and suggests how "natural" farming strategies can be understood as a form of frugal engineering.  Joel Salatin, a nationally renowned farmer, is mentioned as an example.  Information about his farm can be found here: http://www.polyfacefarms.com.

"Constant expansion of features available to consumers in the developed world, frivolous or not, has provided many business with their riches profit margins.  Mature market customers continue to accept price premiums for new features, leading companies to over-engineer their product lines—at least from the point of view of the customer."

-The Importance of Frugal Engineering

Large capital investments in factories, specialized tools and reliable supply chains prevent large established producers and service providers from radically changing their products and services.  Consequently, they tend to compete with each other by adding extra features to their products and services.  Often, their innovations are targeted at increasing their firm's brand equity more than the core functionality of their product/service.  The point is that large capital investments entangle firms in a long term commitment to a product concept, a service delivery process or a market strategy.  New firms, which lack those commitments, can more easily innovate.

The trend over the last 60 years in American agriculture has been towards capital-intensive operations.  Tractors and combines have replaced draft animals and have grown larger and larger.  Industrially manufactured synthetic NPK fertilizers have replaced composted manure.  Computers and GPS systems facilitate more precise plowing, fertilizing, irrigation and harvesting.  These innovations have increased the division of labor, dramatically increased the productivity of a farmer and enable immense economies of scale.  However, increased fixed costs have lowered margins, necessitating massive production volumes to sustain profitability.  

Putting aside the fact that such intensive use of land is most likely environmentally unsustainable and potentially catastrophic, the trend in farming stifles innovation--the economies of scale create barriers to entry and the legacy investments in capital and regional agricultural infrastructure dissuade farmers from challenging the status quo.

Joel Salatin, an entrepreneurial and incredibly productive farmer in Virginia's Shenandoah Valley, vehemently discourages new and small farmers from overcapitalizing their farm.  His model, which is argued to be the most productive by far in his county, uses pigs instead front-loaders in the spring to aerate the winter barn's 6 foot layer of compressed cow manure and bedding.  Instead of applying pesticides, he deploys an army of egg-laying chickens to eat the insect larvae that nest in 2-day old cow pies.  Instead of using a mechanical manure spreader common to large scale organic operations, he intensively manages the cows' migration through the fields and depends on the same chickens to spread the cow pies as they scratch them open looking for the larvae.

Yes, Salatin's margins are higher because he charges a premium for his "natural" meat products.  But they are also higher because his fixed costs are lower.  Leveraging the natural life cycle processes in agriculture is a form of frugal engineering that shows promise in the present and will be essential in a post-fossil fuel economy.  Currently, the legacy costs of large industrial farm operations stifle their incentive to radically innovate and create market entry barriers to new small farms.  As fossil fuel costs rise, leveraging nature's frugality will become more and more essential in farming.