By Joel McNair, Belleville, Wisconsin — Talk of $200 per barrel crude oil and seven-dollar per gallon gasoline grabs headlines and earns sound bites, and indeed these things may be reality sooner rather than later. Or they may not.
History and common sense tell us the current oil price trend line will not continue unabated. My own guess, shared by others but still mainly conjecture, is that a severe global economic slowdown created by a nasty combination of U.S. fiscal problems and entwined energy/food price inflation will depress oil demand over the next few years. U.S. use is already dropping, and the rapid pace of growth in India and China will be slowed, although probably not reversed.
Meanwhile, the new round of exploration, drilling and oil shale exploitation incited by hyper-inflating oil prices will bring new supplies to the market, and conservation efforts will get trendier in the U.S.
For a while, we will have a situation roughly similar to what happened starting in the mid-‘80s, when energy use declined because of our lousy economy and our conservation measures, OPEC opened its supply spigots, and oil and gasoline prices plummeted. We were off to Happy Land, which saw seemingly endless wonders in the 25 years that real oil prices were far below the early-‘80s peak.
But this time the party won’t last nearly that long, and there are likely at least three reasons for this. One is the Peak Oil theory discussed last month — we may be near, or even at, the point where global oil production cannot be increased no matter how hard we try. A plateau with a few upward production bumps in response to new drilling or emergency OPEC efforts may be the best we will get. Unlike the 1970s and early ‘80s oil scares, this episode is not 90% politics: It is largely a response to worldwide supply and demand realities, and thus will not subside for long periods when a political event comes to its end.
Second, political events are likely to be more numerous than in the ‘80s and ‘90s. Most of the oil that will be easily available in future years is produced in the Middle East, Russia, Africa, Venezuela and other hotbeds of political insecurity. “Friendly” oil supplies in Mexico and the North Sea that supplied the U.S. in the ‘80s and ‘90s are in severe decline, leaving us more beholden to dictatorships and theocracies that aren’t nearly as friendly. One or two boom-booms at a Saudi oil port would wreak utter havoc in oil markets.
The third reason stems from the fact that the U.S. doesn’t control global events and oil consumption to the degree it did in the ‘80s and ‘90s. China, India and others, while dependent upon the U.S. for a portion of their economic growth, are not likely to adjust that growth based on any American desires to conserve global energy supplies for the benefit of Americans. We sold capitalism to the rest of the world, and the world has opened its checkbook. Or, to overdo the metaphors, we popped the cork on the bottle, the genie escaped, and we are not going to stuff it back in.
So it would not surprise me that about the time everyone is getting comfortable with gasoline prices roughly equal to today’s levels, and GM is rolling out its new line of “fuel-efficient” SUVs, some event or events will propel oil prices to levels no one is even talking about today. Seven-dollar gasoline will be seen as cheap, if we can buy gasoline at all. Maybe five years from now, maybe 10, maybe 15 — at some point this seems likely. Only fools and con men predict the future with confidence. However, a statement that we will live in 20 years with the energy freedoms we have today is based almost entirely on blind faith, and very little upon the reality of the situation.
So where does this leave those of us with a role in animal agriculture? All of the changes in our business over the past century have been generated by cheap fossil fuels. The grains, the fertilizers to grow them, the machinery to harvest them, the biotechnological and chemical wonders, the feedlots, the packing plants, the long-distance travel to markets, the types of animals we manage — all of this is based on the assumption that we can gain easy access to relatively cheap gasoline, electricity, diesel, and natural gas — plus adequate water.
It is always — always — interesting to read and listen to the conventional agricultural media, and see how all theories of what will happen tomorrow are based on the assumption that the availability of energy and everything related to it will be similar to today’s. Yes, we’ll add energy production (methane digestion, cellulose-derived fuels) to our mission, but otherwise it will be business as usual, only with better technology.
Just once I would like to see one of these articles center on the idea that diesel might cost $20 per gallon, and that it might not always be available at planting. Or that natural gas is no longer available for fertilizer production. Or that corn sells for more than $20 a bushel as millions of acres are planted to switchgrass, and scarce grains are diverted to eight billion human mouths. Or that creeping desertification sends ever-greater amounts of irrigation water to urban uses. Or that all of the basic water, food, feed and energy commodities that we have taken for granted for so many years are about to become a lot more scarce and expensive.
This is the crux of the matter: The plentiful and cheap basic commodities that have been a given for most of U.S. history may no longer be very cheap or plentiful within a very few years. What happens then?
There are many dire forecasts centering on war, famine, massive depopulation and the decline of civilization as we know it. Let’s say these forecasts are vastly overblown while also assuming that major changes in agriculture and food systems will be required.
Food imports to the U.S. will dwindle as the rest of the world deals with the same problems we’ll face. There will be a massive reduction in production and consumption of meat from any stock with fewer than four stomachs. Pigs and chickens will return to being something closer to the foragers and scavengers they once were, which means pork, poultry and eggs will be scarce in today’s terms.
The western cattle feedlot systems — both beef and dairy — are finished. It’s just a matter of time as energy and water problems spike. The vegetarians are absolutely correct in stating that running grain through a ruminant is extremely wasteful; such waste will be greatly reduced in the not-too-distant future. There will be an attempt to re-establish these feedlot systems around midwestern ethanol plants, but the glaring inefficiencies of corn-based ethanol production will ultimately doom such projects. Beef will become more of a luxury item as productivity wanes without the lubricating effects of easy oil, and so will milk.
For alternative agriculture, terms such as “organic” and “grass-fed” will become largely irrelevant, as the great majority of the livestock sector moves closer to organic/grass-fed out of necessity, and today’s premium markets for such production shrivel due to the transportation and overall economic pressures that will hold sway in the new era. “Local” won’t often draw a premium, either, because a much greater percentage of food will be produced not too far away from the ultimate consumer. The premium market will be smaller in this new age, as almost entirely we’re talking about providing enough basic nutrition to keep people healthy and reasonably happy.
We will see more grazing out of all of this because it will be cheaper to produce livestock products this way, and ultimately it may be the only way to do so. The great challenge will be to produce all of our feed energy and soil fertility close to home in relatively closed cycles while maintaining some semblance of productivity. That means nutrient husbandry ranking as important as animal husbandry, and grazing management being paramount.
This will break down in many different ways, almost all of them depending upon seasonal livestock production cycles. The Corn Belt will become the Long Term Rotation Belt, with no more than two years of annual grain crop seedings for every several years of perennial forage in the rotation. The Northeast and rougher portions of the Midwest and mid-South will be all-forage systems with a few small grains for dairy and summer/fall beef finishing.
The dry western Plains will continue to at least background beef and sheep on grass, and we may even finish them there. The return of railroads is certainly possible: North-South feeder cattle shipments for seasonal grass finishing could certainly make sense. Forget large-scale feedlot agriculture in the desert West — it has been a fiction of the easy-energy era.
The mega-farm era could go the way of mega-machinery that fueled it, which is toward extinction. Then again, we could evolve into a South American-style system of huge farms operated by cheap labor, the latter available when non-farm economic sectors no longer offer opportunities.
I prefer to believe those who say that we will need 50 million independent farmers in the U.S. I’m not exactly sure how this will happen, as we don’t have enough Plain farmers to do the entire job of buying big properties and splitting them up, and most of the rest of us don’t even know where our food comes from. I am also not sure if we are talking about literal horsepower in this future, but we could be.
So I guess the questions for you are these. How would your business and life operate if the great majority of fossil-fuel energy you have used — directly or indirectly — went away, or at least could not be automatically depended upon in your everyday life? Can you pencil out a path from here to there, and have that “there” be sustainable?
As I’ve said before, graziers have a window of opportunity in the coming few years as energy-based inputs, although likely to be expensive, will at least be available on a fairly reliable basis (organic grain excepted?). Prices for many of the finished products you sell will generally be high because the drivers of these markets — the feedlots — will need a lot of money to stay in business. Probably more money than you’ll need.
If your farm isn’t capable of operating well with few outside inputs, it will likely pay to spend this time importing all the feed that makes economic sense, applying the resulting nutrients wisely, and getting soil fertility to at least moderate levels. It will certainly be worthwhile to also work at learning to grow clovers and improve overall forage production management without great amounts of synthetic fertilizers — a course that will have the important side benefit of producing healthier soils.
The animal side of this is a bit trickier, as the stock that will make best use of the imported nutrients are not necessarily those that will be best suited to producing without them. It’s your call as to how fast to make the switch from one to the other.
None of this is really new, of course, as it would not be all that far from the animal agriculture of many decades ago. You may argue that this is all ludicrous, and I will listen, but probably respectfully disagree.
Or you may argue that if it gets this bad, survival will be the real focus, as economic and societal systems bearing any resemblance to today’s ways will be extinct, and that without the oil-based inputs we will be unable to produce enough food for the projected global population. Wrong magazine for that one.
In addition to publishing Graze, Joel McNair grazes dairy heifers and sheep on a small farm in southern Wisconsin.