Archive for the Blog Category

On Tuesday of this week I attended an investor presentation by a very interesting new company that was offering equity investments to allow successful and sophisticated family farming operations to acquire additional land to scale up their operations as necessary to survive and thrive in the world of Big Agriculture.  I was interested in the concept for two reasons.  First, the company was offering units in a Fund that might make for a good diversification strategy for my personal portfolio.  But perhaps more importantly the program concept sounded like one that might well have some application to the area of succession finance, an aspect of the finance market for which TAO has immediate ambitions.

At the pre-presentation reception, I met a very earnest and thoughtful fellow who also had an interest in investing in the Fund.  He too had a second motivation for his interest in the program, but one that was indisputably more altruistic than mine.  He was an advocate of all things Green, and structured his professional and investment activities accordingly.  It was his believe that this opportunity would not only yield superior risk adjusted returns but would also further the cause of Green agriculture by expanding the application of the environmental stewardship that he believed to be characteristic of family farms.  His thesis, in simple terms, was that the continual growth in the application of toxins upon our food crops in the form of pesticides and herbicides was not a consequence of any real productivity benefits in the form of increased yields, but rather the conspiratorial complicity of corporate farm operations and multinational chemical companies to eschew more effective organic alternatives.  Being a reflexive contrarian and in a bit of an impish mood, I impudently suggested that, on the basis of my admittedly limited but not scant reading on the topic, the apparent ability of family farms to incorporate more organic techniques had less to do with corporate callousness to the health of the world’s population and more to do with the realities of maximizing yield and minimizing cost in the context of ever larger farming operations.

His exasperated smile made clear that he would be very interested in seeing just how far up my neck my tie could be tightened, but the increasingly tense conversation was cut short by the presentation.  Part of the show included a presentation from the head of a family farm that had utilized funding from the Fund to increase his acreage four fold to over 12,000 acres, with a corresponding increase in yields, enhanced capital investment, lowering of costs and a myriad of other benefits.  And, they proudly noted, a transformation that was achieved without losing sight of the necessity of addressing sustainability. My new friend beamed.

Then came the inevitable question regarding the extent of organic farming in the operation.  The farmer was again proud to detail their commitment to “rotational organics”, a cornerstone of their sustainability commitment.  Rotational organics is a strategy that sadly reflects a pedestrian commitment to profitability rather than a messianic devotion to a Green manifesto.  You see, produce that is certified organic can sell at prices that are twice as profitable as equivalent volumes of its non-organic counterparts.  However, after four or five years without the benefit of modern herbicides, the dry Alberta soil is inevitably riven with weeds that reduce yields by as much as 60%.  The answer is a seven year rotation – two seasons of conventional farming to beat back the weeds, three seasons of continued farming without new application of pesticides or herbicides as are required before a field can be certified eligible to produce organic produce, then two years of certifiable organic production until the returning weeds force the cycle to start again.  Continual organic production, it seems is only possible in small scale operations in which hand weeding and extensive irrigation are possible, but scale does not permit the cost of such an approach to enlarged acreages, and particularly not in the relatively arid soil of Alberta.

As you can see, this crop strategy does not incorporate a philosophical commitment to organics.  It is a strategy that adopts the nakedly capitalistic objective of maximizing crop value and productivity.  Yet the application of price signals to the business model through the development of consumer preferences for organic produce has resulted in a profit maximizing strategy that contemplates the application of pesticides and herbicides in only two of every seven growing seasons.  Whether or not this Western consumer preference is based on fad or fact, it is an excellent reminder of the power of consumers to effect change.  It seems that Adam Smith’s invisible hand has a green thumb.

The August star show has once again dazzled.  We shouldn’t be surprised; it is a regular recurring event.  We always know it is coming; we get plenty of reminders, but somehow we always wind up being unexpectedly mesmerized by the spectacle of an array of never before seen stars that briefly and delightfully captivate our attention.  Especially this year, when the Perseid meteor shower placed twice the usual annual number of fireballs into the night sky, the most since the most recent outlier year of 2009.

You can be forgiven if you thought I was referring to the Summer Olympics, now being contested in the middle of the Brazilian winter (talk about first world privilege; we even get to define the seasons!).  These two phenomena bear an eerie number of parallels.  The Perseid meteor showers are the product of the entry into Earth’s atmosphere of parts of the debris field left by the orbit of the Comet Swift-Tuttles.  The comet itself is 16 miles wide and has been orbiting the Sun for as long as the Earth has.  The portions of detritus left in its trail that burn up in our atmosphere are relative grains of sand; they are very ordinary bits of small debris in the galactic scheme of things. But it is the juxtaposition of that ordinariness with their brief and beautiful luminescence that so entrances us.

Every four years, the Olympic star show bursts upon our consciousness.  We are drawn by the big “comets”; Usain Bolt, Michael Phelps, the celestial bodies that have burned bright enough to draw the man-made illumination of celebrity culture and reality television.  We recognize that their sheen is at least in part artificial, and that our appreciation of them is tainted by the “otherness” with which we have anointed them.  They are not ‘everymen’; they are Usain Bolt and Michael Phelps.  And we are drawn to them in awe.

But each night, when the artificial lights dim slightly as those celebrity stars are absent from the stage, as we continue to stare hypnotically at the glow of their approach or the tail of their retreat, we unavoidably see smaller bursts of light that hold our attention just long enough to transfix us.  As we change our perspective enough to allow us to focus on those smaller, more ordinary lights, an amazing thing happens.  We find ourselves powerfully moved when we discover in those dimmer dancing lights the realization of the extraordinary despite if not because of their seeming ordinariness.  As Canadians, we are moved by the precocious humility of phenoms like swimmer Penny Olesiak and sprinter Andre DeGrasse, the graceful sportsmanship of rising stars like diver Jennifer Abel and pole vaulter Shawn Barber and the aching and stoic disappointment of fallen champions like kayaker Adam van Koeverden and swimmer Ryan Cochrane.  These are our Canadian everymen, but rest assured that every participating country has their own cosmic grain of dust that finds its opportunity to shine in the wake of the great comets.

The August summer sky is full of light.  Humans have looked into that light for eons and seen not only evidence of the eternal and superhuman but also the comforting reflection of our own essence.  This year is no different.

The past week has been a harrowing one for everyone in North America, and obviously more so for our neighbours to the South.  Two separate and undeniably unnecessary killings of Black men by US law enforcement one day apart and the appalling retaliatory attack by a Black army veteran upon Dallas police officers that left five officers dead have exposed once again the vastness of the continuing racial divide among the world’s most prosperous and well-armed populace.

There is of course no shortage of commentators in Canada who have angrily and fairly dismissed the notion that Canadians can regard this inflection point in civil society as merely an American phenomenon.  The continuing racial biases evident in the practice of carding in my home city of Toronto and the demonstrably callous treatment of crimes against our indigenous populations throughout the country are more than sufficient evidence of our own shortcomings in our policing practices and our systemic inclinations.  American history may be more infamous for its race-based injustices, but no society has fully addressed the remnants of our less enlightened traditions.

That being said, there are aspects of the contemporary American experience with these social issues that are uniquely problematic.  The festering racial tensions between police and marginalized communities become far more dangerous in the context of concealed carry laws that turn even routine traffic stops or misdemeanor encounters into potentially deadly interactions.  It is more than a coincidence that both Alton Sterling and Philando Castile, the victims of the police shootings in Baton Rouge and St. Paul, respectively, were carrying concealed weapons in accordance with the laws of Louisiana and Minnesota.  That is not to blame the victims, who no one has suggested did anything to manifest a threat to the police officers that they encountered, but only to point out the fraught context in which Americans must work out the lingering symptoms of racial discord.

Similarly, the Dallas police force did not find itself confronted by an angry and arguably mentally ill young Black man brandishing a knife, but one carrying an AR-15, a weapon that demonstrated very devastatingly its ability to generate mass casualties.  In the US, even the outlet of healthy or even angry protest is compromised by the reality of a heavily armed population on both sides of the racial divide.

Despite the understandable anger and not infrequently intemperate excesses, the dialogue around race issues in North American society today is a healthy and inevitable precursor to change.  These sorts of revolutionary times are, however, unduly dangerous where they take place in a society that has a pathological yet constitutional belief in the wisdom of gun ownership as both a source of individual protection and means for promoting social progress.  Conflict has been and always will be the catalyst to social progress and, among the increasingly heterogeneous communities in our cities and nations is bound to become even more frequent.  If it is truly fundamental to the unity of the US that the revolutionary means as well as spirit of the American Founding Fathers be forever honoured, let the laws of the land put a flintlock musket in the hands of every citizen.  At least they are hard to conceal and even harder to aim and reload.